- To what extent is the food processor liable for the loss of the corn? Select one.
Answer: The processor is liable for 25% of the value of the corn.
The correct answer is C. Under UCC § 2-510(3), where a buyer repudiates a contract for conforming goods already identified to the contract, the seller may, for a commercially reasonable time, treat the risk of loss as resting on the buyer to the extent of any deficiency in the seller's effective insurance coverage. Here, the processor (buyer) repudiated. The loss occurred five days later, which is within a commercially reasonable time. The seller's insurance had a deficiency of 25% (100% - 75%). Therefore, the processor is liable for that 25% deficiency. Choice A is incorrect because the buyer's breach shifts the risk. Choice B is incorrect because the buyer is only liable for the deficiency in the seller's insurance. Choice D miscalculates the deficiency.
- Although your client has a clear claim for breach of contract, what was the status of the risk of loss at the moment before the seller sold the machine to the other buyer? Select one.
Answer: The risk of loss remained with the seller because the goods had not yet been delivered to the carrier.
Risk of loss questions test when responsibility for damaged or destroyed goods transfers from seller to buyer. The key is identifying the precise moment of transfer based on delivery terms and actions taken.
Under UCC § 2-509, when a contract specifies "F.O.B. seller's place" (like "F.O.B. the seller's factory"), risk of loss passes to the buyer when the seller delivers the goods to the carrier. This is a shipment contract, meaning the seller's delivery obligation is complete once goods are properly delivered to a carrier for transport to the buyer. Here, the seller had merely placed the machine on the loading dock awaiting pickup—the carrier had not yet arrived, so no delivery to the carrier had occurred. Therefore, risk of loss remained with the seller at the moment before the wrongful sale.
Choice A incorrectly suggests that tendering delivery at the factory transfers risk. Under F.O.B. seller's place terms, tender alone isn't sufficient—actual delivery to the carrier is required. Choice B mentions the buyer's opportunity to arrange carriage, but this isn't the controlling factor under F.O.B. seller's place terms. Choice C focuses on identification and payment, but neither determines risk of loss timing under these delivery terms—only delivery to the carrier matters.
When you see F.O.B. questions, immediately determine whether it's "F.O.B. seller's place" (shipment contract) or "F.O.B. buyer's place" (destination contract), then identify the exact moment of delivery to the carrier or destination. The seller's preparation or the buyer's payment doesn't control risk transfer—only the specified delivery event does.
- As between the manufacturer and the buyer, who bears the risk of loss? Select one.
Answer: The manufacturer, because the goods had not yet been tendered to the buyer in Miami.
The correct answer is B. The term 'F.O.B. Miami' makes this a destination contract under UCC § 2-319. In a destination contract, the seller must transport the goods to the named destination and there tender delivery to the buyer. The risk of loss does not pass to the buyer until the goods are duly tendered at the destination (UCC § 2-509(1)(b)). Because the goods were destroyed in Kansas, they were never tendered in Miami, and the risk of loss remained with the manufacturer. Choice A describes the rule for a shipment contract. Choice D is incorrect because while the default is a shipment contract, the specific term 'F.O.B. Miami' (the buyer's city) creates a destination contract. Choice C is incorrect because while the carrier may be liable for the loss, as between the buyer and seller, the UCC's risk-of-loss rules determine who must bear the initial loss and seek recovery from the carrier.
- Who bears the risk of loss for the tractor? Select one.
Answer: The seller, because he had not yet given the buyer the keys or the means to access the locked barn.
The correct answer is C. The seller is a non-merchant, so risk of loss passes on tender of delivery. Tender under UCC § 2-503 requires the seller to 'put and hold conforming goods at the buyer's disposition and give the buyer any notification reasonably necessary to enable him to take delivery.' By locking the tractor in the barn without providing the buyer with access (e.g., a key or ensuring he would be there to unlock it), the seller did not fully put the goods at the buyer's disposition in a way that would enable the buyer to take delivery. Therefore, tender was not completed, and the risk of loss remained with the seller. Choice A uses the wrong standard (receipt, for merchants). Choice B is incorrect because the notification was insufficient to constitute full tender without providing for access. Choice D is incorrect as the UCC allocates risk, it does not split it for acts of God.
- Who bears the risk of loss for the dresses? Select one.
Answer: The boutique, because the contract was a shipment contract, and the risk passed in Los Angeles.
The correct answer is A. When a contract for the sale of goods is silent on delivery terms, the UCC presumes it is a shipment contract. In a shipment contract, the risk of loss passes to the buyer when the seller duly delivers the goods to the carrier (UCC § 2-509(1)(a)). The manufacturer fulfilled its duties by delivering the goods to the carrier and notifying the buyer. Therefore, the risk of loss passed to the boutique when the dresses were handed over to the trucking company in Los Angeles. Choice B states the rule for a destination contract. Choice C is incorrect because the allocation of risk between buyer and seller is governed by their contract and the UCC. Choice D is incorrect unless the choice of route was commercially unreasonable, which is not suggested by the facts.
- Which of the following statements is most accurate regarding the risk of loss? Select one.
Answer: The seller bears the risk because its failure to obtain a required document meant the delivery to the carrier was improper.
This question tests your understanding of risk of loss in F.O.B. contracts and the requirement of proper delivery to carriers under the UCC. When you see "F.O.B." followed by a shipping point, you're dealing with a shipment contract where risk typically passes when goods are delivered to the carrier.
Under UCC § 2-504, when a seller uses a carrier to ship goods, the seller must obtain and deliver proper documents (like a negotiable bill of lading) to enable the buyer to obtain the goods. If the seller fails to make a proper contract with the carrier or obtain necessary documents, the delivery is considered improper, and risk of loss remains with the seller.
Here, the seller's failure to obtain the negotiable bill of lading—which the buyer needed to claim the goods in New York—made the delivery to the carrier defective. This breach of the seller's documentary obligations means risk never properly passed to the buyer, so the seller bears the loss when the ship sank.
Answer A incorrectly assumes that physical loading alone transfers risk, ignoring the documentary requirements. Answer B mischaracterizes this as a destination contract—"F.O.B. Port of San Francisco" creates a shipment contract since San Francisco is the shipping point, not the destination (New York). Answer C treats the documentary failure as merely a separate breach, but UCC § 2-504 makes proper documentation a condition of effective delivery itself, not just an independent obligation.
Remember: In shipment contracts, the seller must complete both physical delivery AND proper documentation. If either element fails, risk doesn't pass.
- What is the most accurate advice to give your client regarding the risk of loss? Select one.
Answer: The marina bears the entire risk of loss.
The correct answer is B. Under UCC § 2-510(2), where a buyer rightfully revokes acceptance, the buyer may treat the risk of loss as having rested on the seller from the beginning, but only to the extent of any deficiency in the buyer's effective insurance coverage. Here, the client rightfully revoked acceptance. The client had no insurance coverage, meaning the deficiency in their coverage was 100% of the boat's value. Therefore, the marina (the seller) bears the entire risk of loss.
- Who bears the risk of loss for the damaged water? Select one.
Answer: The seller, because the failure to make a reasonable contract for carriage was a breach of its delivery obligations.
The correct answer is B. The term 'F.O.B. Phoenix' creates a shipment contract. Under a shipment contract, the seller has certain duties outlined in UCC § 2-504, including the duty to 'make such a contract for their transportation as may be reasonable having regard to the nature of the goods and other circumstances.' Shipping water in a non-insulated car during a heatwave is not a reasonable contract for carriage. Failure to fulfill this duty means that risk of loss does not properly pass to the buyer, and the buyer has grounds for rejection if material loss ensues, as it did here. Therefore, the seller retains the risk of loss. Choice A ignores the seller's breach of its shipment duties. Choice C may be true, but as between buyer and seller, the risk remains with the seller. Choice D incorrectly suggests the risk passed but that the buyer's only remedy is a separate damages claim.
- Who bears the risk of loss for the stolen tablet? Select one.
Answer: The electronics store, because the reviewer had not yet accepted the tablet.
When you encounter questions about "sale on approval" arrangements, remember that this is a special type of bailment where the buyer gets to test goods before deciding whether to purchase them. The key principle is that title and risk of loss remain with the seller until the buyer actually accepts the goods.
In a sale on approval, acceptance can happen in two ways: express acceptance (explicitly telling the seller you want to keep the item) or implied acceptance (keeping the goods beyond the trial period or using them inconsistently with the trial purpose). Here, the reviewer was simply testing the tablet during the 30-day trial period, which is exactly what the arrangement contemplated.
Answer A is correct because the electronics store retains the risk of loss until acceptance occurs. Since the reviewer hadn't expressed acceptance and was still within the trial period, the store bears the loss from the theft.
Answer B incorrectly assumes that physical possession determines risk of loss. In sales on approval, possession is temporary and doesn't shift risk to the buyer until acceptance.
Answer C misunderstands implied acceptance. Using the tablet for 20 days during a 30-day trial period is normal testing behavior, not acceptance. Acceptance would require use beyond the trial period or conduct clearly inconsistent with a trial.
Answer D incorrectly suggests risk-sharing. Contract law typically assigns risk to one party or the other based on established rules, and the involvement of a third-party criminal doesn't change the fundamental risk allocation in a sale on approval.
Remember: In sales on approval, the seller keeps both title and risk until the buyer accepts—regardless of who has physical possession.
- Who bears the risk of loss for the sofa? Select one.
Answer: The retailer, because the customer had not yet taken physical possession of the sofa.
The correct answer is A. Under UCC § 2-509(3), in a case not involving a shipment or destination contract, or goods held by a bailee, the risk of loss passes to the buyer on receipt of the goods if the seller is a merchant. Here, the retailer is a merchant. 'Receipt' means taking physical possession (UCC § 2-103(1)(c)). Because the customer had not yet picked up the sofa, they had not received it, and the risk of loss remained with the merchant-retailer. Choice B is incorrect because the rule for non-merchant sellers is tender of delivery; for merchants, the standard is receipt. Choice C is incorrect because the UCC provides rules for risk of loss that do not require shipment. Choice D is incorrect because identification of the goods to the contract is not sufficient to pass the risk of loss in this situation; receipt is required.
- Who bears the risk of loss for the conference table? Select one.
Answer: The paralegal, because the law firm had tendered delivery of the table.
The correct answer is B. A merchant is a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction. The law firm is not a merchant with respect to selling used furniture. As a non-merchant seller, its duty under UCC § 2-509(3) is to tender delivery. The firm tendered delivery by making the table available for pickup and notifying the paralegal. At that point, the risk of loss passed to the paralegal-buyer. Choice C states the rule for merchant sellers (receipt), which does not apply. Choice A incorrectly characterizes the law firm as a merchant in this context. Choice D is incorrect because the UCC assigns risk rather than sharing it.
- Who bears the risk of loss for the painting? Select one.
Answer: The collector, because the bailee had not yet acknowledged the buyer's right to possession.
The correct answer is C. Under UCC § 2-509(2), where goods are held by a bailee to be delivered without being moved, the risk of loss passes to the buyer in one of three ways. When there is a non-negotiable document of title or a written direction, risk passes on acknowledgment by the bailee of the buyer's right to possession. Since the buyer had not yet contacted the facility, the bailee had not acknowledged the buyer's rights. Therefore, the risk of loss remained with the seller-collector. Choice A is incorrect because mere receipt of a direction is not enough; the bailee must acknowledge it, or the buyer must have a reasonable time to present it. Choice B is incorrect because while the facility may have liability, the question is about the allocation of risk between the buyer and seller. Choice D is incorrect as the UCC allocates the risk entirely to one party.
- In a dispute between the seller and the neighbor, who bears the risk of loss? Select one.
Answer: The neighbor, because the seller had tendered delivery of the car.
The correct answer is B. Under UCC § 2-509(3), if the seller is a non-merchant, the risk of loss passes to the buyer on tender of delivery. Tender of delivery requires the seller to put and hold conforming goods at the buyer's disposition and give the buyer any notification reasonably necessary to enable them to take delivery (UCC § 2-503). Here, the seller is a non-merchant. By placing the car in the driveway with the keys and title as agreed and notifying the neighbor, the seller tendered delivery. Therefore, the risk of loss passed to the neighbor. Choice A states the rule for merchant sellers (receipt of goods), which is inapplicable here. Choice C is incorrect because under the UCC, the location of title is not determinative of risk of loss. Choice D is incorrect because the UCC allocates the entire risk to one party; it does not split the loss in this situation.
- What is the most accurate advice regarding who bears the risk of loss for the oven? Select one.
Answer: The manufacturer bears the risk because the oven was not yet properly tendered to your client.
The correct answer is B. This is a destination contract. Under UCC § 2-509(1)(b), the risk of loss in a destination contract passes to the buyer when the goods are 'duly tendered as to enable the buyer to take delivery.' Tender requires the seller to put and hold conforming goods at the buyer's disposition (UCC § 2-503). The oven being damaged before it was even unloaded from the truck means it was not properly held at the buyer's disposition to enable them to take delivery. Therefore, the risk of loss had not yet passed from the manufacturer to your client. Choice A is incorrect because arrival is not enough; proper tender is required. Choice C is incorrect because as between buyer and seller, the risk remains with the seller. Choice D is incorrect because the opportunity to inspect is irrelevant to the passage of risk before proper tender has occurred.
- Who bears the risk of loss for the sculpture? Select one.
Answer: The gallery, because the buyer had not yet received the sculpture.
Risk of loss questions test who bears financial responsibility when goods are damaged or destroyed during a sales transaction. The key is determining when risk transfers from seller to buyer under the UCC.
Under UCC § 2-509, risk of loss generally passes to the buyer upon the seller's tender of delivery. However, "tender of delivery" requires that the seller put and hold conforming goods at the buyer's disposition and give reasonable notification. Here, while the gallery identified the goods and held them, there's no indication they tendered delivery by notifying the buyer the sculpture was ready for pickup. The gallery was simply storing the sculpture as agreed in the contract.
When a seller holds goods after sale for the buyer's convenience (as here, for site preparation), the seller typically retains risk of loss until actual tender occurs. Since the buyer never had the opportunity to take possession and the damage resulted from the gallery's storage conditions, the gallery bears the risk.
Choice A incorrectly assumes that identification and payment alone transfer risk - they don't without proper tender. Choice B suggests loss-sharing, but the UCC provides clear rules rather than splitting liability. Choice C wrongly concludes that identification plus storage constitutes tender of delivery, but tender requires notification that goods are available for pickup.
Remember: identification of goods and payment don't automatically transfer risk of loss. Look for whether the seller has actually tendered delivery by making goods available and notifying the buyer, not just whether goods are paid for or tagged as sold.
- Is the buyer obligated to pay for the lost parts? Select one.
Answer: No, because the failure to notify the buyer of the shipment is a ground for rejection when a material loss ensues.
The correct answer is C. The default rule under the UCC creates a shipment contract. Under a shipment contract (UCC § 2-504), the seller must promptly notify the buyer of the shipment. Failure to do so is a ground for rejection only if a material delay or loss ensues. Here, the complete loss of the goods constitutes a material loss that ensued from the situation, which was compounded by the lack of notice (e.g., the buyer could not arrange for insurance or track the shipment). Therefore, the buyer can reject the goods (and the transaction), meaning they are not obligated to pay. Choice A states the general rule but ignores the exception for breach of seller's duties. Choice B is incorrect because a total loss of the goods is a material loss. Choice D is incorrect because the failure does not void the contract automatically; it gives the buyer grounds for rejection.
- Who bears the risk of loss for the damaged beam? Select one.
Answer: The steel mill, because it had not yet completed delivery of the beam to the carrier.
This question tests your understanding of when risk of loss transfers in a sales contract under the UCC, specifically in "destination" versus "shipment" contracts and the timing of delivery completion.
Under UCC § 2-509, risk of loss generally passes to the buyer when the seller completes delivery. The key issue here is determining when delivery was actually completed. Since the construction company arranged for its own carrier to pick up the beam, this creates a shipment contract where the seller (steel mill) must put the goods in the possession of the carrier. However, delivery isn't complete until the goods are actually loaded and in the carrier's possession.
The correct answer is A because the mill had not yet completed delivery to the carrier. The beam was still being loaded by the mill's equipment when the accident occurred. Until the loading process is finished and the carrier has actual possession, the seller retains the risk of loss.
Answer B is incorrect because merely identifying goods and making them ready for pickup doesn't transfer risk—actual delivery to the carrier must be completed. Answer C wrongly assigns liability to the trucking firm, but carriers aren't automatically liable for damage during loading by the seller's equipment, especially when they haven't yet taken possession. Answer D misapplies the rule about buyer-arranged carriers; while this does make it a shipment contract, risk still doesn't pass until the seller completes delivery to that carrier.
Remember: Risk of loss transfers when delivery is completed, not when it begins. Watch for the distinction between preparation for delivery and actual completion of delivery.
- Which party bears the risk of loss for the shipment? Select one.
Answer: The wholesaler, because it shipped non-conforming goods.
The correct answer is B. UCC § 2-510(1) states that where a tender or delivery of goods so fails to conform to the contract as to give a right of rejection, the risk of their loss remains on the seller until cure or acceptance. Shipping cat food instead of dog food is a delivery of non-conforming goods that gives the buyer a right of rejection. Therefore, even though it was a shipment contract, the risk of loss did not pass to the buyer but remained with the seller-wholesaler. Choice A is incorrect because the general rule for shipment contracts does not apply when the seller breaches by shipping non-conforming goods. Choice C is incorrect because the risk itself does not pass; the buyer is not in the position of bearing the loss and then suing for damages. Choice D is incorrect as it misstates the allocation of risk between buyer and seller.
- Who bears the risk of loss for the server? Select one.
Answer: The manufacturer, because the tender of non-conforming goods meant that the risk of loss never passed to the business.
When you encounter a contracts question involving risk of loss and defective goods, focus on how non-conforming delivery affects the normal risk allocation rules. Under the UCC, risk of loss typically passes to the buyer when goods are delivered to a carrier in shipment contracts. However, this rule changes dramatically when the seller tenders non-conforming goods.
The correct answer is D because when a seller delivers non-conforming goods, the risk of loss never passes to the buyer, even if the goods are physically delivered. Since the manufacturer delivered a lower-spec server than ordered, this was a non-conforming tender. The business's rightful rejection confirms the non-conformity, but the key point is that risk never transferred in the first place due to the defective delivery.
Answer A incorrectly applies the normal risk-passing rule without accounting for the non-conforming goods exception. While risk typically passes upon delivery to carrier, this rule doesn't apply when goods don't conform to contract specifications.
Answer B creates a fictional insurance-based limitation that doesn't exist in contract law. Risk allocation between buyer and seller isn't determined by insurance coverage gaps.
Answer C focuses on physical possession, but possession alone doesn't determine risk of loss in commercial sales. The UCC's risk allocation rules override simple possession-based analysis.
Remember this key distinction: conforming goods follow standard risk-passing rules, but non-conforming goods create an exception where risk remains with the seller until the defects are cured or the buyer accepts despite the non-conformity.
- As between the wholesaler and the retail store, who bears the risk of the theft? Select one.
Answer: The retail store, because the risk of loss passed to it upon delivery and remains with it until the goods are returned.
The correct answer is B. Under a 'sale or return' contract, the transaction is treated as an ordinary sale for risk of loss purposes. UCC § 2-327(2) provides that under a sale or return, the risk of loss passes to the buyer under the normal rules (here, upon delivery) and remains with the buyer until the goods are returned to the seller. Therefore, the retail store (the buyer) bore the risk of loss when the rings were stolen. Choice A is incorrect because title is not determinative of risk of loss, and in a sale or return, the transaction is not a consignment. Choice C is an incorrect statement of law regarding entrustment and risk of loss. Choice D is incorrect as the UCC allocates the risk fully.
