Question

1. Abe steals Marvin's BMW in the middle of the night and promptly sells it to Elaine for $35,000 cash. Two weeks later, the police locate the car in Elaine’s driveway and seize it. Can Elaine keep the car? Why or why not?

2. Sam the seller in Houston sells 500 cases of grapefruit to Ben the buyer in New York. The written contract says Sam will ship them F.O.B. Houston. If the grapefruit are lost in transit who bears the risk of loss? Explain

Answer 1

1) Elaine would not be entitled to keep the car as in the first case, the title of the car would still remain in Marvin's name. Since the car is stolen, obviously there is no change of title and hence once the car is discovered it can be seized by the police and Elaine would not be able to claim any lien on the car since the title is legally in the name of Marvin.

2) Since the contract tells that goods are shipped FOB which is Free on Board so the risk and title of the goods shifts to the buyer at Houston itself. So in this case Ben who is the buyer will have to bear the loss for the fruits which are lost in transit.