Acme, a Dover, Delaware company, is to send widgets to a
customer in Elmira, New York, under a destination contract. The
contract will read
F.O.B.Elmira, New York
F.A.S.Elmira, New York
If goods are destroyed while in the buyer’s possession, and the
buyer holds the goods under a sale on approval contract, the loss
will fall on
Whichever party has insured the goods.
The buyer and the seller equally
The buyer only
The seller only
Seller, a Chicago business, sent a shipment of tractor parts to
Buyer, a Detroit business, under a contract that read:
“F.O.B.Chicago, Illinois.” The parts were not those specified in
the contract and Buyer rejected them. A few hours after Buyer
notified Seller of the rejection, the parts were destroyed in a
fire at Buyer’s place of business. Which of the following best
states the rights and duties of Buyer and Seller in this
Buyer has the risk of loss because this was a shipment
Buyer rightfully rejected the tender, but risk of loss did not
pass to Seller again until Seller regained physical possession of
Seller has the risk of loss because this was a destination
Seller has the risk of loss because the tender was
non-conforming, but only to the extent that Buyer’s insurance does
not cover the loss.
Sandy bought a large air conditioner from Big Box Home Store for
525. For an additional 100, the store delivered, installed and
programmed the unit. Does this sale come under Article 2 of the
Yes, because at least one element of the transaction was a sale
Yes, because the sale of goods predominates
No, because this is an employment contract
No, because this is a contract for the sale of services.
Which of the following is not a duty that a merchant buyer owes
to a seller who sends a non-conforming tender?
The buyer must accept whatever part of the tender is
At the seller’s request, the buyer must detail in writing the
goods’ defects or non-conformities.
The buyer must follow the seller’s reasonable instructions for
the disposition of the goods.
The buyer must try to sell the goods for the seller’s benefit if
the goods are perishable or likely to decline in value rapidly.
In the past 6 months Supplier has made late deliveries to a
number of customers and a good portion of the goods delivered have
been defective. Buyer is worried that an important scheduled
delivery will be late or non-confirming. He sends a written request
to Supplier asking for confirmation that the contract terms will be
met. When Buyer purchases these goods from another seller after
Supplier repudiates the contract, Buyer has exercised his right