National American University

BUSINESS L 3100

Chapter 22-LEGAL ASPECTS OF SUPPLY CHAIN MANAGEMENT

TRUE/FALSE

1)All bailments are created equally.

 

                                           

 

2. The storage of goods in a warehouse and the shipment of goods by a common carrier are examples of special bailments.

 

                                           

 

3. To be engaged in warehousing, an enterprise must have appropriate storage buildings.

 

                                           

 

4. A warehouser is an insurer of goods.

 

                                           

 

5. The rights and duties of warehousers are regulated by the UCC.

 

                                           

 

6. A public warehouser has a specific lien against the goods stored for reasonable costs incurred from the storage.

 

                                           

 

7. A warehouse receipt is not considered a document of title.

 

                                           

 

8. A warehouse receipt may be either negotiable or nonnegotiable.

 

                                           

 

9. A transferee of a nonnegotiable warehouse receipt acquires only the title and rights that the transferor had actual authority to transfer.

 

                                           

 

10. A negotiable warehouse receipt states that the goods received will be delivered to the bearer or to the order of any named person.

 

                                           

 

11. A negotiable warehouse receipt that provides for delivery of the goods to the order of Jill Jones may be negotiated by delivery of the document to the purchaser.

 

                                           

12. If a warehouse receipt provides for the delivery of the goods “to the bearer,” the receipt may be negotiated by transfer of the document.

 

                                           

 

13. The rights of a holder of a duly negotiated warehouse receipt are extinguished by the warehouser's surrender of goods to the depositor.

 

                                           

 

14. The purchase of a warehouse receipt by due negotiation eliminates all prior claims.

 

                                           

 

15. Field warehousing is the storage of farm crops in the field where they have been grown.

 

                                           

 

16. General contract law determines whether a limitation clause is a part of the contract between the warehouser and the customer.

 

                                           

 

17. A contract carrier holds itself out as willing to furnish transportation for compensation without discrimination to all members of the public who apply.

 

                                           

 

18. Bills of lading for intrastate shipments are governed by the UCC, while those for interstate shipments are regulated by the Federal Bills of Lading Act.

 

                                           

 

19. A bill of lading will be negotiable if its terms are that the goods are to be delivered to "bearer" or to "the order of" a named person.

 

                                           

 

20. The rights of a transferee of a negotiable bill of lading are defeated if the goods have been stopped in transit.

 

                                           

 

21. If a common carrier delivers goods to the wrong person, the carrier is liable for breach of contract and for the tort of conversion.

 

                                           

 

22. A common carrier is liable for all delays in the delivery of goods.

 

                                           

23. Contract clauses that limit a common carrier's liability are void as contrary to public policy.

 

                                           

 

24. A common carrier transporting goods under a COD shipment is liable if it takes a check in payment and the check bounces.

 

                                           

 

25. A factor is a consignee.

 

                                           

 

26. A sale by a factor can pass title to goods from the consignor to the purchaser.

 

                                           

 

27. A person who attends a banquet given at a hotel is considered a guest for purposes of determining the liability of the hotelkeeper.

 

                                           

 

28. With respect to property expressly entrusted to a hotelkeeper’s care, the hotelkeeper has a bailee’s liability.

 

                                           

 

29. In most states, statutes limit or provide a method of limiting the common law liability of a hotelkeeper.

 

                                           

 

30. As a general rule, a hotelkeeper has a lien on the property of boarders or lodgers.

 

                                           

 

MULTIPLE CHOICE

 

1. A warehouser that holds itself out to serve the public generally without discrimination is called a(n):
   1. public warehouser.
   2. general warehouser.
   3. nondiscriminatory warehouser.
   4. ordinary warehouser.

                                           

 

2. The common law rights and duties of a warehouser, in the absence of modifying statutes, are for the most part those of a bailee in:
   1. a bailment for the sole benefit of the bailee.
   2. an ordinary mutual-benefit bailment.
   3. a bailment for the sole benefit of the bailor.
   4. none of the above.

                                           

3. Which is not a true statement about a warehouser?
   1. A warehouser is a bailee.
   2. A warehouser may issue a negotiable or nonnegotiable receipt.
   3. A warehouser is an insurer of the goods.
   4. A warehouser is liable for damaged goods if damage is caused by the warehouser's negligence.

                                           

 

4. The rights of a holder of a warehouse receipt depend on whether the receipt is:
   1. negotiable.
   2. rescissory.
   3. notarized as a document of title.
   4. notarized as a bill of lading.

                                           

 

5. A purchaser of a nonnegotiable warehouse receipt:
   1. receives no implied warranties.
   2. may acquire rights superior to those of the transferor.
   3. acquires only the title and the rights the transferor had authority to transfer.
   4. may be considered to have the rights of a holder in due course.

                                           

 

6. Jeff purchased in good faith a warehouse receipt for 1,000 pairs of running shoes without notice of any defense to it, for value, and in the regular course of his business. Unknown to Jeff, the goods had been stolen from Jane and delivered to the warehouse that issued the receipt purchased by Jeff. Which of the following statements is true?
   1. Jeff holds a duly negotiated document of title and is not subject to Jane's title.
   2. Jane is entitled to the goods and will prevail over Jeff.
   3. Jeff is not a holder of a duly negotiated document.
   4. Jane cannot recover the goods but can sue the warehouse for conversion.

                                           

 

7. The major purpose of field warehousing is to:
   1. create warehouse receipts that the owner can pledge as security for loans.
   2. create additional space in the firm's own warehouse.
   3. allow warehousers an opportunity to service common carriers.
   4. transfer title to buyers without requiring them to pick up merchandise at the plant's location.

                                           

 

8. When a carrier accepts goods for land shipment, it ordinarily issues to the shipper a(n):
   1. bill of lading.
   2. intent to transport memorandum.
   3. warehouse receipt.
   4. trust receipt.

                                           

 

9. A carrier owned and operated by the shipper is:
   1. a common carrier.
   2. a contract carrier.

1. 3. a private carrier.
   4. a consignor.

                                           

 

10. A bill of lading that consigns the goods "to bearer" is called a:
    1. nonnegotiable bill of lading.
    2. straight bill of lading.
    3. negotiable bill of lading.
    4. common bill of lading.

                                           

 

11. A transferor makes certain implied warranties to the transferee when a bill of lading is transferred. These warranties are:
    1. that the bill of lading is genuine.
    2. that the transfer is rightful.
    3. that the transferor has no knowledge of any defects.
    4. all of the above.

                                           

 

12. A common carrier of goods has the right to:
    1. make reasonable and necessary rules for the conduct of its business.
    2. charge a rate that enables a fair return.
    3. charge demurrage.
    4. all of the above.

                                           

 

13. What is not included in a common carrier's lien on goods that it transports?
    1. consequential damages
    2. demurrage
    3. costs of preserving the goods
    4. costs of a sale to enforce the lien

                                           

 

14. A common carrier must:
    1. receive and carry proper and lawful goods of all persons who offer them for shipment.
    2. furnish adequate facilities.
    3. follow the instructions of the shipper.
    4. all of the above.

                                           

 

15. When goods are delivered to a common carrier for immediate shipment and while they are in transit, who is normally liable for any loss or damage to the goods?
    1. the shipper
    2. the consignee
    3. the carrier
    4. the individual designated as responsible in the bill of lading

                                           

 

16. A common carrier transporting goods under a COD shipment may:

1. 1. make delivery without first obtaining payment.
   2. not make delivery without first receiving payment.
   3. accept a check as payment and have no liability.
   4. not avoid liability without a signed release.

                                           

 

17. When consigned goods are sold by a factor:
    1. title passes when the consignor approves the sale.
    2. title passes even if the goods have been stolen, provided the factor is ignorant of this fact.
    3. the sale passes the title of the owner to the buyer.
    4. strict compliance with the Federal Factors Act is required to pass title.

                                           

 

18. The legal definition of a guest of a hotel requires that the person:
    1. live at least five miles from the hotel.
    2. is a guest of a registered occupant of the hotel.
    3. is a transient.
    4. stay at the hotel for at least 24 hours.

                                           

 

19. The relationship of guest and hotelkeeper ends when the guest:
    1. pays his or her bill.
    2. advises the hotelkeeper of his or her departure .
    3. leaves or ceases to be a transient.
    4. has stayed for 30 days and becomes a boarder.

                                           

 

20. A hotelkeeper's lien on the baggage of a guest is terminated when:
    1. the guest checks out of the hotel.
    2. the guest pays the hotel bill in full.
    3. the hotelkeeper posts a notice to limit liability.
    4. all of the above.

                                           

 

CASE

 

1. The Willett Seed Company stored its goods with the Augusta Warehouse Company and received a negotiable warehouse receipt. The Willett Seed Company then borrowed money from the Georgia Railroad Bank and pledged the warehouse receipt as security. The seed company defaulted, and the bank demanded the goods from the warehouse. The warehouse stated that it already had delivered the goods to the seed company on the strength of that company's promise that it would surrender the receipt shortly thereafter. The bank sued the warehouse for the value of the goods. Will the bank win?