CHAPTER 16

The Sales Contract: Transfer of Title and Risk of Loss

CASE PROBLEMS

Read the case problems below. For each problem, answer yes or no, and then explain your answer in the space provided.

1. Rogers ordered some electrical equipment from Cobb in Dayton, Ohio. The equipment was shipped to Utica, New York, terms FOB Utica, New York. An accidental fire destroyed the equipment soon after it left Dayton. Must Rogers bear the loss in this case?

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2. Gornig bought a dozen sport shirts from Rock’s Men’s Shop, paid for them, and asked the merchant to hold the shirts in the store until he could pick them up the next day. During the night, a fire destroyed the store and its contents. Gornig demanded his money back, claiming that he had not yet taken physical possession of the shirts. Is Gornig entitled to the money?

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3. Roman, a consumer, purchased a VCR from a merchant on ten days’ approval. Five days later, the VCR was stolen. Was Roman responsible for the loss?

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4. Otterman purchased an oriental rug in good faith from a house-to-house salesperson. Later he sold the rug to Redstone. Philips proved that the rug had been stolen from her before it was sold to Otterman. Did Philips have a legal claim to the rug?

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5. Klein sold his entire ice cream business—merchandise and equipment—to Hartman. Hurst, a creditor of Klein, sought to have the sale set aside, claiming that as a creditor, he was entitled to notice of the sale. Was Hurst correct?

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6. Tomari, a manufacturer’s representative, and Gould, a real estate agent, entered into a written contract for the sale of Tomari’s minivan to Gould for $8,000 cash. Tomari agreed to tune up the motor on the van, which he did, and on the night of August 1 phoned to tell Gould that the van was ready for pick-up. Upon pick-up, Gould was to make payment. Gould replied to Tomari by saying: “I’ll be there in the morning to pick up the van and to pay you the $8,000.” The next morning, however, Gould held an unexpected meeting with a potential client and decided to pick up the van later in the week. On the night of August 2, the van was destroyed by fire of unknown origin. Neither Tomari nor Gould had any comprehensive insurance (which would have included protection from fire) on the van. Who must bear the loss?

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