Bar Exam (Uniform) Quiz: Ucc Performance

20 questions · exam conditions

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Ucc PerformanceQuestion 1 of 20

A furniture retailer, a merchant, sold a custom-made sofa to a customer. The contract did not specify delivery terms or the allocation of risk of loss. The retailer completed the sofa and telephoned the customer, stating, 'Your sofa is ready for you to pick up at your convenience.' The customer replied that they would pick it up in two days. The following day, before the customer arrived, a fire in an adjacent building spread to the retailer's showroom and destroyed the sofa. The retailer was not at fault for the fire.

Who bears the risk of loss for the sofa? Select one.

The retailer, because the customer had not yet taken physical possession of the sofa.

The customer, because the retailer had tendered delivery by notifying the customer that the sofa was ready.

The retailer, because the contract was for a sale of future goods, and risk cannot pass until goods are shipped.

The customer, because the goods had been identified to the contract and were ready for delivery.

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Bar Exam (Uniform) Quiz

Bar Exam (Uniform) Quiz: Ucc Performance

Practice Ucc Performance in Bar Exam (Uniform) with focused quiz questions that help you check what you know, review explanations, and build confidence with test-style prompts.

What this quiz covers

This quiz focuses on Ucc Performance, giving you a quick way to practice the rules, question types, and explanations that matter most for Bar Exam (Uniform).

How to use this quiz

Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

All questions

Question 1

Who bears the risk of loss for the sofa? Select one.

The retailer, because the customer had not yet taken physical possession of the sofa. (correct answer)
The customer, because the retailer had tendered delivery by notifying the customer that the sofa was ready.
The retailer, because the contract was for a sale of future goods, and risk cannot pass until goods are shipped.
The customer, because the goods had been identified to the contract and were ready for delivery.

Explanation: 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.

Question 2

A Seattle-based manufacturer entered into a contract to sell 5,000 circuit boards to a buyer located in Miami. The contract's only shipping term was 'F.O.B. Miami.' The manufacturer arranged for a common carrier to transport the circuit boards. The train carrying the shipment derailed in Kansas due to a track malfunction, and the entire shipment was destroyed.

As between the manufacturer and the buyer, who bears the risk of loss? Select one.

The buyer, because risk passed when the manufacturer delivered the goods to the common carrier in Seattle.
The manufacturer, because the goods had not yet been tendered to the buyer in Miami. (correct answer)
The common carrier, because it was in possession of the goods when they were destroyed.
The buyer, because the default rule under the UCC creates a shipment contract.

Explanation: 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.

Question 3

A collector agreed to sell a rare painting to a buyer. The painting was being held for safekeeping in a secure, climate-controlled storage facility, making the facility a bailee. The collector provided the buyer with a signed, written order directing the facility to release the painting to the buyer. The buyer received the order on Tuesday. On Wednesday, before the buyer had contacted the storage facility, a tornado destroyed the facility and the painting. The storage facility had not acknowledged to the buyer that it was holding the painting for them.

Who bears the risk of loss for the painting? Select one.

The buyer, because receipt of the written direction to the bailee was sufficient to transfer the risk.
The storage facility, because it had a bailee's duty to protect the property.
The collector, because the bailee had not yet acknowledged the buyer's right to possession. (correct answer)
The collector and the buyer share the risk of loss because neither was at fault for the tornado.

Explanation: 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.

Question 4

A grain elevator company contracted to sell 20,000 bushels of corn to a food processor. The contract required the processor to pick up the corn at the elevator on or before July 1. On June 15, the processor sent a letter to the elevator operator wrongfully repudiating the contract. On June 20, a fire, not caused by the elevator company, destroyed the elevator and the corn identified for the contract. The elevator company's insurance policy covered 75% of the value of the destroyed corn.

To what extent is the food processor liable for the loss of the corn? Select one.

The processor is not liable for any of the loss because risk had not yet passed.
The processor is liable for the entire value of the corn.
The processor is liable for 25% of the value of the corn. (correct answer)
The processor is liable for 75% of the value of the corn.

Explanation: 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.

Question 5

You are advising a client who runs a commercial bakery. The client purchased a new industrial oven from a manufacturer. The contract provided 'F.O.B. Buyer's Bakery.' The manufacturer hired a carrier to deliver the oven. The carrier's truck arrived at your client's bakery, and the driver notified your client that the oven was on the truck, ready to be unloaded. Before the oven could be unloaded, the carrier's driver negligently struck a loading dock pillar, causing the oven to fall and sustain severe damage.

What is the most accurate advice regarding who bears the risk of loss for the oven? Select one.

Your client bears the risk because the oven had arrived at the specified destination.
The manufacturer bears the risk because the oven was not yet properly tendered to your client. (correct answer)
The carrier is solely responsible, and your client must pay the manufacturer and seek recovery from the carrier.
Your client bears the risk because they had the opportunity to inspect the oven upon its arrival.

Explanation: 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.

Question 6

A farmer sold his used tractor to a neighboring farmer. As the seller was not a merchant of tractors, the parties agreed the buyer would pick up the tractor from the seller's barn on Saturday. On Friday, a severe storm was forecast. The seller, concerned for the tractor, moved it from an open field into his locked barn for protection. He then texted the buyer, 'Tractor is safe in the barn. You can pick it up tomorrow as planned.' Overnight, the barn was struck by lightning and burned down, destroying the tractor.

Who bears the risk of loss for the tractor? Select one.

The seller, because the tractor had not yet been picked up by the buyer.
The buyer, because the seller's notification that the tractor was in the barn constituted tender of delivery.
The seller, because he had not yet given the buyer the keys or the means to access the locked barn. (correct answer)
The buyer and the seller, because the loss was due to an act of God.

Explanation: 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.

Question 7

A construction company purchased a large, custom-fabricated steel beam from a steel mill. The contract specified the company would arrange for its own carrier to pick up the beam from the mill's yard. The company hired a heavy-haul trucking firm. The mill notified the company and the trucking firm that the beam was ready. The trucking firm's crew arrived at the mill. As the mill's crane operator was loading the beam onto the truck, a cable on the mill's crane snapped, and the beam was irreparably damaged.

Who bears the risk of loss for the damaged beam? Select one.

The steel mill, because it had not yet completed delivery of the beam to the carrier. (correct answer)
The construction company, because risk passed as soon as the beam was identified to the contract and ready for pickup.
The trucking firm, because it was present and directing the loading operation.
The construction company, because it had hired the carrier responsible for taking possession.

Explanation: 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.

Question 8

An art gallery, a merchant, sold a large sculpture to a buyer. The sales contract stipulated that the gallery would hold the sculpture for 30 days to allow the buyer to prepare a site for its installation. The buyer paid in full. The gallery moved the sculpture to its secure, private storeroom, attaching a tag that read 'SOLD - Property of Buyer.' Twenty days later, a sprinkler system in the storeroom malfunctioned and caused irreparable water damage to the sculpture.

Who bears the risk of loss for the sculpture? Select one.

The buyer, because the goods were identified to the contract and paid for, and the gallery was acting as a bailee.
The parties share the loss, as the gallery was holding the sculpture for the buyer's convenience.
The buyer, because the gallery had tendered delivery by identifying the goods and holding them for the buyer.
The gallery, because the buyer had not yet received the sculpture. (correct answer)

Explanation: 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.

Question 9

An electronics store sent a new model of tablet to a tech reviewer with a letter stating, 'Feel free to use this for 30 days. If you decide to keep it, just let us know. Otherwise, return it at our expense.' This arrangement constitutes a 'sale on approval.' On the 20th day, the reviewer was carrying the tablet when a pickpocket stole it from her bag. The theft was not due to any negligence on the part of the reviewer.

Who bears the risk of loss for the stolen tablet? Select one.

The electronics store, because the reviewer had not yet accepted the tablet. (correct answer)
The reviewer, because the tablet was in her physical possession when it was stolen.
The reviewer, because she implicitly accepted the tablet by using it for 20 days.
The parties share the loss because the theft was a third-party criminal act.

Explanation: 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.

Question 10

Who bears the risk of loss for the sofa? Select one.

The retailer, because the customer had not yet taken physical possession of the sofa. (correct answer)
The customer, because the retailer had tendered delivery by notifying the customer that the sofa was ready.
The retailer, because the contract was for a sale of future goods, and risk cannot pass until goods are shipped.
The customer, because the goods had been identified to the contract and were ready for delivery.

Question 11

A pet supply company ordered 1,000 bags of premium dog food from a wholesaler. The contract was a shipment contract. The wholesaler inadvertently shipped 1,000 bags of cat food instead. While in transit, the truck carrying the shipment was struck by lightning, causing a fire that destroyed all the cat food.

Which party bears the risk of loss for the shipment? Select one.

The pet supply company, because the contract was a shipment contract, and risk passed upon delivery to the carrier.
The wholesaler, because it shipped non-conforming goods. (correct answer)
The pet supply company, but it has a claim against the wholesaler for breach of contract.
The carrier, because the goods were destroyed while in its possession.

Explanation: 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.

Question 12

You are representing a client, a buyer, who purchased a piece of heavy machinery from a seller in another state. The contract stated the price was '$50,000, F.O.B. the seller's factory.' Your client paid for the machinery. The seller notified your client that the machine was on its loading dock awaiting pickup by the carrier. However, before the carrier arrived, the seller sold and delivered the same machine to another buyer for $60,000. The seller then informed your client that the machine was 'unavailable.'

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.

The risk of loss had passed to your client because the seller had tendered delivery at its factory.
The risk of loss remained with the seller because your client had not yet had a reasonable opportunity to arrange for carriage.
The risk of loss had passed to your client because the goods were identified to the contract and fully paid for.
The risk of loss remained with the seller because the goods had not yet been delivered to the carrier. (correct answer)

Explanation: 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.

Question 13

An individual who is not a car dealer sold his vintage sports car to his neighbor for $30,000. The written contract specified that the neighbor would pay on Friday and pick up the car from the seller's garage on Saturday. On Friday, the neighbor paid in full. On Saturday morning, the seller moved the car into his driveway, left the keys and title in the unlocked car as agreed, and texted the neighbor, 'The car is in the driveway, ready to go!' Before the neighbor could retrieve the car, a large tree branch unexpectedly fell and crushed the car's roof.

In a dispute between the seller and the neighbor, who bears the risk of loss? Select one.

The seller, because the neighbor had not yet taken physical possession of the car.
The neighbor, because the seller had tendered delivery of the car. (correct answer)
The seller, because he still held title to the car until the neighbor registered it.
The neighbor and the seller share the loss equally, as neither was at fault.

Explanation: 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.

Question 14

Who bears the risk of loss for the tractor? Select one.

The seller, because the tractor had not yet been picked up by the buyer.
The buyer, because the seller's notification that the tractor was in the barn constituted tender of delivery.
The seller, because he had not yet given the buyer the keys or the means to access the locked barn. (correct answer)
The buyer and the seller, because the loss was due to an act of God.

Question 15

As between the manufacturer and the buyer, who bears the risk of loss? Select one.

The buyer, because risk passed when the manufacturer delivered the goods to the common carrier in Seattle.
The manufacturer, because the goods had not yet been tendered to the buyer in Miami. (correct answer)
The common carrier, because it was in possession of the goods when they were destroyed.
The buyer, because the default rule under the UCC creates a shipment contract.

Question 16

A seller in Phoenix, Arizona, contracted to sell 100 cases of bottled water to a buyer in Buffalo, New York. The contract's price term was 'F.O.B. Phoenix.' The seller delivered the cases to a railroad carrier in Phoenix. The seller, however, failed to make a reasonable contract for carriage, shipping the water in a non-insulated boxcar during a record heatwave. As a result, the water was unfit for consumption upon arrival. The buyer rejected the shipment.

Who bears the risk of loss for the damaged water? Select one.

The buyer, because risk passed in Phoenix under the 'F.O.B. Phoenix' term.
The seller, because the failure to make a reasonable contract for carriage was a breach of its delivery obligations. (correct answer)
The railroad carrier, because its failure to use a proper car caused the damage.
The buyer, but the buyer has a separate claim against the seller for damages.

Explanation: 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.

Question 17

Who bears the risk of loss for the damaged beam? Select one.

The steel mill, because it had not yet completed delivery of the beam to the carrier. (correct answer)
The construction company, because risk passed as soon as the beam was identified to the contract and ready for pickup.
The trucking firm, because it was present and directing the loading operation.
The construction company, because it had hired the carrier responsible for taking possession.

Question 18

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.

The risk of loss had passed to your client because the seller had tendered delivery at its factory.
The risk of loss remained with the seller because your client had not yet had a reasonable opportunity to arrange for carriage.
The risk of loss had passed to your client because the goods were identified to the contract and fully paid for.
The risk of loss remained with the seller because the goods had not yet been delivered to the carrier. (correct answer)

Question 19

Who bears the risk of loss for the sculpture? Select one.

The buyer, because the goods were identified to the contract and paid for, and the gallery was acting as a bailee.
The parties share the loss, as the gallery was holding the sculpture for the buyer's convenience.
The buyer, because the gallery had tendered delivery by identifying the goods and holding them for the buyer.
The gallery, because the buyer had not yet received the sculpture. (correct answer)

Question 20

A jewelry wholesaler sent a collection of diamond rings to a retail jewelry store under an agreement that stated the retailer could return any unsold rings within 90 days. This type of agreement is a 'sale or return.' Thirty days after delivery, and through no fault of the retail store, a sophisticated burglar bypassed the store's security system and stole the entire collection of rings.

As between the wholesaler and the retail store, who bears the risk of the theft? Select one.

The wholesaler, because it retained title to the rings until they were sold to a customer.
The retail store, because the risk of loss passed to it upon delivery and remains with it until the goods are returned. (correct answer)
The wholesaler, because a merchant who entrusts goods to another merchant retains the risk of loss.
The parties share the loss, because the theft was a criminal act for which neither party was responsible.

Explanation: 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.