Contractual Risk And Responsibility

Summary

In contract law, once goods are identified to a contract, the risk of loss typically passes to the buyer, making them responsible for any loss. If goods are stolen, the buyer cannot have a valid title, even if they paid for it. In a sale on approval, possession is transferred to the buyer, but the title remains with the seller until approval. If a buyer rightfully revokes acceptance of nonconforming goods, the risk of loss reverts to the seller, regardless of the buyers insurance status.

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Howard stole a computer and then sold it to his friend Ivan for $*. Ivan has: Question 18Select one: a. a void title to the computer. b. a voidable title to the computer. c. good title to the computer, because he paid for it. d. good title to the computer, because he is a good faith purchaser for value.
In the scenario where Howard stole a computer and sold it to Ivan, the correct option is:
a. a void title to the computer.
Since the computer was stolen, Howard never had a valid title to pass on to Ivan. Therefore, Ivan cannot have a valid title either, regardless of whether he paid for it or acted in good faith.
In a sale on approval: Question 19Select one: a. possession and title are transferred to the buyer for a stated period of time. b. title, but not possession, is transferred to the buyer for a stated period of time. c. possession, but not title, is transferred to the buyer for a stated period of time. d. neither title nor possession is transferred to the buyer for a stated period of time.
In a sale on approval:
c. possession, but not title, is transferred to the buyer for a stated period of time.
In a sale on approval, the buyer gets possession of the goods to evaluate them, but the title remains with the seller until the buyer approves the goods.
Kevin delivers to Zach nonconforming goods. Zach accepts, but later discovers the defect and rightfully revokes acceptance. If the goods are destroyed through no fault of Kevin or Zach: Question 20Select one: a. Zach will bear the loss, whether he has insurance or not. b. if Zach's insurance is adequate, it will cover the loss and Kevin would not bear any of the loss. c. Kevin would bear the loss of these nonconforming goods, whether or not Zach has insurance. d. Kevin and Zach will equally share the loss.
Case Rating: *
In Indiana, if Zach rightfully revokes acceptance of nonconforming goods, Kevin would bear the loss, regardless of Zach's insurance status.
Relevant points:
- Revocation of acceptance transfers the risk of loss back to the seller.
- The destruction of goods through no fault of either party means the seller (Kevin) is responsible.
Does this help with your understanding of the situation?
Kevin delivers to Zach nonconforming goods. Zach accepts, but later discovers the defect and rightfully revokes acceptance. If the goods are destroyed through no fault of Kevin or Zach: Question 20Select one: a. Zach will bear the loss, whether he has insurance or not. b. if Zach's insurance is adequate, it will cover the loss and Kevin would not bear any of the loss. c. Kevin would bear the loss of these nonconforming goods, whether or not Zach has insurance. d. Kevin and Zach will equally share the loss.
Case Rating: *
Based on the scenario you provided, the correct answer would be:
c. Kevin would bear the loss of these nonconforming goods, whether or not Zach has insurance.
This is because when Zach rightfully revokes acceptance, the risk of loss reverts to Kevin, the seller, regardless of any insurance Zach may have.
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