Seller's Rights and Obligations Quiz

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Questions and Answers

Under what condition does an unpaid seller lose his lien on goods?

When the goods are sold at a discount
When the goods are damaged during transit
When the buyer obtains possession legally (correct)
When the buyer expresses intent to purchase

What is the primary right of an unpaid seller in the event of buyer insolvency?

Right to demand immediate payment
Right to stop goods in transit (correct)
Right to claim damages from the buyer
Right to renegotiate the sale price

When do goods cease to be considered in transit?

When the goods reach a predetermined destination
When the carrier charges a fee for storage
When the buyer has not yet seen the goods
When the goods are transferred to the buyer’s possession (correct)

Which of the following is NOT a condition that leads to the loss of an unpaid seller's lien?

The buyer changing the shipping address (B) Signup and view all the answers

What happens to the rights of an unpaid seller when he stops goods in transit?

He regains the same rights as if he never parted with possession (A) Signup and view all the answers

In what scenario are goods considered to be still in transit after rejection by the buyer?

When the carrier holds the goods awaiting instruction (A) Signup and view all the answers

What occurs if a carrier wrongfully refuses to deliver goods to the buyer?

The goods are considered still in transit (D) Signup and view all the answers

Which right is preserved for an unpaid seller even after ownership has passed to the buyer?

Right of stoppage in transit (A) Signup and view all the answers

Under what circumstance can a seller be considered unpaid?

When the entire price has not been paid or tendered. (B) Signup and view all the answers

Which right does an unpaid seller have concerning goods, even if ownership has passed to the buyer?

A lien on the goods while in possession. (B) Signup and view all the answers

What does the right of stoppage in transitu allow an unpaid seller to do?

Stop goods being transported to the buyer after parting with possession. (D) Signup and view all the answers

What happens to the rights of an unpaid seller in case the buyer becomes insolvent?

The seller has the right of stopping the goods in transitu. (D) Signup and view all the answers

What is a condition that makes a seller unpaid when a bill of exchange is received?

When the buyer defaults on payment or the bill is dishonored. (A) Signup and view all the answers

In which situation can an unpaid seller retain possession of goods until payment is made?

If the goods have been sold without credit stipulations. (A) Signup and view all the answers

What can an unpaid seller do after making a part delivery of goods?

Exercise the right of lien on the remainder unless it shows intent to waive. (D) Signup and view all the answers

What is the seller's right concerning goods if the ownership has passed to the buyer?

The seller has rights of withholding delivery similar to lien rights. (C) Signup and view all the answers

What happens when goods are sold by a seller who is not the owner and does not have consent from the owner?

The buyer gains ownership rights equivalent to those of the seller. (B) Signup and view all the answers

Which of the following provisions does NOT affect the circumstances when goods are sold without the owner's consent?

Personal agreements between the seller and buyer (C) Signup and view all the answers

In the case of a seller with a voidable title at the time of sale, under what conditions does the buyer secure good title?

If the buyer acts in good faith, for value, and without notice of defect. (A) Signup and view all the answers

What should be the default place of delivery if no contract specifies otherwise?

The seller's residence or business place. (B) Signup and view all the answers

In the context of a negotiable document of title, what does it convey?

The goods will be delivered to the bearer or to the order of a specified person. (D) Signup and view all the answers

If a minor sells a car to an adult who then sells it to an unaware buyer, what is the outcome regarding ownership?

The original owner can recover the car without compensation if the title is proven to be void. (C) Signup and view all the answers

What implication does the Code of Commerce have on purchases made in a merchant's store?

The Code eliminates the buyer's responsibility for verifying ownership. (D) Signup and view all the answers

Which scenario suggests a buyer has better rights over goods in the context of insolvency implications?

Purchasing goods at a public auction. (B) Signup and view all the answers

Study Notes

Seller's Obligations

A seller is considered unpaid when the entire price has not been paid or tendered.
A bill of exchange or other negotiable instrument counts as conditional payment until, among other reasons, the buyer becomes insolvent or the instrument is dishonored.

Seller's Rights

An unpaid seller has several rights, including a lien on the goods, the right to stop the goods in transit, the right to resell, and the right to rescind.
The seller's rights continue even if ownership of the goods has passed to the buyer.

Seller's Lien

The unpaid seller can retain possession of the goods until payment or tender of the price in various circumstances:
- If the goods were sold without credit terms.
- If the term of credit has expired.
- If the buyer becomes insolvent.
The seller may also exercise a lien on the remaining goods if partial delivery has been made.
The seller loses their lien in specific circumstances:
- When the goods are delivered to a carrier or bailee without reserving ownership or possession.
- When the buyer or their agent lawfully obtains possession of the goods.
- Through waiver.

Stoppage in Transit

If the buyer becomes insolvent, the unpaid seller can stop the goods in transit.
The seller can resume possession of the goods while they are in transit and regain the same rights they had before relinquishing possession.
Goods in transit are those delivered to a carrier or bailee for transmission to the buyer until the buyer or their agent takes delivery.
Goods are no longer in transit if:
- The buyer or their agent takes delivery before arrival at the destination.
- The carrier or other bailee acknowledges holding the goods on behalf of the buyer.
- The carrier wrongfully refuses to deliver the goods to the buyer or their agent.
A seller without ownership rights cannot convey better title than they have, unless the owner is estopped from denying the seller's authority.
Provisions regarding factors' acts, recording laws, statutory power of sale, and purchases in merchant's stores or fairs are not affected.

Voidable Title

A buyer acquires good title if the seller has a voidable title which has not been avoided, provided the buyer:
- Acts in good faith.
- Pays value.
- Has no notice of the seller's defect of title.

Negotiable Documents of Title

A document of title stating that the goods will be delivered to the bearer or the order of a named person is a negotiable document of title.

Place of Delivery

The place of delivery is determined by the contract, express or implied, between the parties.
In the absence of a contract, the place of delivery is the seller's place of business or their residence.
If the goods are in a specific location known to both parties, that location is the place of delivery.

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Description

Test your knowledge on the obligations and rights of sellers in transactions. This quiz covers aspects such as unpaid seller rights, liens, and conditions under which sellers can reclaim goods. Understand the intricate details of seller obligations effectively.