Question 1

A contract has an open price term if the agreement:

Accepted Answer

A)  says nothing as to price. 
B)  provides that the parties shall agree later as to the price and they fail to so agree. 
C)  fixes the price in terms of some agreed market or other standard, as set by a third person or agency, and the price is not so set. 
D)  All of these. 
E)  None of these. 
A)  says nothing as to price. 
B)  provides that the parties shall agree later as to the price and they fail to so agree. 
C)  fixes the price in terms of some agreed market or other standard, as set by a third person or agency, and the price is not so set. 
D)  All of these. 
E)  None of these. D

Question 2

In the case of Pittsley v. Houser, the court:

Accepted Answer

A)  held that the contract should be severed into different parts, applying the UCC to the part of the contract involving goods and the common law to the services part of the contract. 
B)  held that the "predominant factor" test contravened the UCC's declared purpose. 
C)  found the "predominant factor" test was the better, more prudent rule. 
D)  found the CISG governed the contract in question. 
A)  held that the contract should be severed into different parts, applying the UCC to the part of the contract involving goods and the common law to the services part of the contract. 
B)  held that the "predominant factor" test contravened the UCC's declared purpose. 
C)  found the "predominant factor" test was the better, more prudent rule. 
D)  found the CISG governed the contract in question. C

Question 3

List four areas of contract law where the common law of contracts and the law of sales differ. Give both the common law rule and the rule under Article 2.

Accepted Answer

There are at least nine possible answers. Students should mention four of the following possibilities. (1) An underlying policy of the Code is to permit the continued expansion of commercial practices through custom, usage, and agreement of the parties. In particular, the Code places great emphasis on course of dealings and usage of trade in interpreting agreements. (2) A novel feature of the Code is the establishment of separate rules that apply to transactions between merchants or involving a merchant as a party. (3) A firm offer is not revocable for lack of consideration. Under the common law, an offer can be revoked at any time unless there is detrimental reliance or consideration to support an option contract. (4) The court, to determine whether in its commercial setting, purpose, and effect it is unconscionable, may scrutinize every contract of sale. (5) All parties who enter into a contract or duty within the scope of the Code must perform their obligations in good faith. (6) The Code's basic approach to validation of a contract is to recognize contracts whenever the parties manifest such intent. This is so whether or not the parties can identify a precise moment at which they formed the contract. Even though one or more terms to a contract may have been omitted, the contract need not fail for indefiniteness. (7) The common law "mirror image" rule, by which the acceptance cannot vary or deviate from the terms of the offer, is modified by the Code. The Code addresses the battle of the forms problem by focusing on the intent of the parties. (8) The Code provides that where the language in the offer or the circumstances do not otherwise clearly indicate, an offer to make a contract invites acceptance in any manner and by any medium reasonable in the circumstances. (9) The Code has abandoned the common law rule requiring that a modification of an existing contract be supported by consideration in order to be valid. A contract for the sale of goods can be effectively modified without new consideration, provided the modification is made in good faith.

Question 4

A lease is the transfer of title to goods from seller to buyer for a price.

Accepted Answer

A) True 
 B)False

Question 5

Explain when a writing is required under the UCC for a contract for the sale of goods and what is needed in that writing. Identify three exceptions to the requirement of a writing or record for the sale of goods.

Accepted Answer

The UCC statute of frauds provides that

Question 6

The UCC modifies the common law rule by requiring additional consideration for the modification of a contract.

Accepted Answer

A) True 
 B)False

Question 7

The definition of "goods" in the UCC may include timber, minerals, growing crops, or a building.

Accepted Answer

A) True 
 B)False

Question 8

Edie telephoned the office supply store and agreed to buy a dozen ink cartridges at $26 each. She then realized what a good buy this was and called the store with a request to modify the contract to read two dozen. What is the consequence?

Accepted Answer

A)  The modified contract is unenforceable. 
B)  The modified contract is void. 
C)  The modified contract is valid and enforceable. 
D)  There is no consideration, so the contract is void. 
A)  The modified contract is unenforceable. 
B)  The modified contract is void. 
C)  The modified contract is valid and enforceable. 
D)  There is no consideration, so the contract is void.

Question 9

A(n) __________ is a special type of lease transaction generally involving three parties instead of two.

Accepted Answer

A)  consumer lease 
B)  sale 
C)  finance lease 
D)  option 
A)  consumer lease 
B)  sale 
C)  finance lease 
D)  option

Question 10

Mary and Remaldi Co. have dealt with each other for many years. Mary's Boutique orders 100 assorted lipsticks at $2.00 each from Remaldi Co. Remaldi sends back a confirmation letter with an additional, nonmaterial term. There is:

Accepted Answer

A)  no contract, but a counteroffer. 
B)  a contract with the additional term unless Mary objects. 
C)  a contract with the additional term only if Mary agrees. 
D)  a contract without the additional term. 
A)  no contract, but a counteroffer. 
B)  a contract with the additional term unless Mary objects. 
C)  a contract with the additional term only if Mary agrees. 
D)  a contract without the additional term.

Question 11

Which of the following transactions is governed by Article 2 of the UCC?

Accepted Answer

A)  The sale of an apartment complex. 
B)  The sale of oranges to be picked from a 10-acre grove. 
C)  The sale of common stock of a soft drink company. 
D)  A contract to receive medical services in a hospital. 
A)  The sale of an apartment complex. 
B)  The sale of oranges to be picked from a 10-acre grove. 
C)  The sale of common stock of a soft drink company. 
D)  A contract to receive medical services in a hospital.

Question 12

A "merchant" is defined as a person who:

Accepted Answer

A)  is a dealer in a particular type of goods. 
B)  by his occupation holds himself out as having knowledge or skills peculiar to certain goods or practices. 
C)  employs an agent or broker whom he holds out as having such knowledge or skill. 
D)  All of these. 
A)  is a dealer in a particular type of goods. 
B)  by his occupation holds himself out as having knowledge or skills peculiar to certain goods or practices. 
C)  employs an agent or broker whom he holds out as having such knowledge or skill. 
D)  All of these.

Question 13

Mike inherited some antiques. Pat agrees to buy them. In the contract, Mike and Pat agree to value the antiques at whatever the Sotheby's representative says. If the valuation is much higher than either of them anticipated, Pat:

Accepted Answer

A)  has to buy at the price set by the Sotheby representative. 
B)  has to buy, but at what Pat and Mike believe was a reasonable price. 
C)  has no obligation to buy the antiques. 
D)  can treat the contract as canceled. 
A)  has to buy at the price set by the Sotheby representative. 
B)  has to buy, but at what Pat and Mike believe was a reasonable price. 
C)  has no obligation to buy the antiques. 
D)  can treat the contract as canceled.

Question 14

"Goods" for purposes of the Code are essentially defined as tangible, movable, personal property.

Accepted Answer

A) True 
 B)False

Question 15

The CISG governs only the formation of the contract of sales and the rights and obligations of the seller and buyer. It does not cover the validity of the contract or any of its provisions.

Accepted Answer

A) True 
 B)False

Question 16

The UCC definition of "unconscionable" is clear and unambiguous.

Accepted Answer

A) True 
 B)False

Question 17

In the Carter v. Tokai Financial Services, Inc. case, the agreement was found to:

Accepted Answer

A)  fit within the definition of a secured transaction. 
B)  be governed by UCC Article 9. 
C)  be for an initial term of five years, which ARC had an option to renew for nominal consideration. 
D)  be a true finance lease. 
A)  fit within the definition of a secured transaction. 
B)  be governed by UCC Article 9. 
C)  be for an initial term of five years, which ARC had an option to renew for nominal consideration. 
D)  be a true finance lease.

Question 18

What does Article 2 say with regard to the following? 
a. Good faith. 
b. Unconscionability. 
c. Expansion of commercial practices.

Accepted Answer

a. All parties who enter into a contract

Question 19

The common law "mirror image" rule has been modified by the Code.

Accepted Answer

A) True 
 B)False

Question 20

If a UCC contract does not contain all the terms necessary to carry it out, there will be no contract.

Accepted Answer

A) True 
 B)False

Exam 19: Introduction to Sales and Leases

A contract has an open price term if the agreement:

In the case of Pittsley v. Houser, the court:

List four areas of contract law where the common law of contracts and the law of sales differ. Give both the common law rule and the rule under Article 2.

A lease is the transfer of title to goods from seller to buyer for a price.

Explain when a writing is required under the UCC for a contract for the sale of goods and what is needed in that writing. Identify three exceptions to the requirement of a writing or record for the sale of goods.

The UCC modifies the common law rule by requiring additional consideration for the modification of a contract.

The definition of "goods" in the UCC may include timber, minerals, growing crops, or a building.

Edie telephoned the office supply store and agreed to buy a dozen ink cartridges at $26 each. She then realized what a good buy this was and called the store with a request to modify the contract to read two dozen. What is the consequence?

A(n) __________ is a special type of lease transaction generally involving three parties instead of two.

Mary and Remaldi Co. have dealt with each other for many years. Mary's Boutique orders 100 assorted lipsticks at $2.00 each from Remaldi Co. Remaldi sends back a confirmation letter with an additional, nonmaterial term. There is:

Which of the following transactions is governed by Article 2 of the UCC?

A "merchant" is defined as a person who:

Mike inherited some antiques. Pat agrees to buy them. In the contract, Mike and Pat agree to value the antiques at whatever the Sotheby's representative says. If the valuation is much higher than either of them anticipated, Pat:

"Goods" for purposes of the Code are essentially defined as tangible, movable, personal property.

The CISG governs only the formation of the contract of sales and the rights and obligations of the seller and buyer. It does not cover the validity of the contract or any of its provisions.

The UCC definition of "unconscionable" is clear and unambiguous.

In the Carter v. Tokai Financial Services, Inc. case, the agreement was found to:

What does Article 2 say with regard to the following? a. Good faith. b. Unconscionability. c. Expansion of commercial practices.

The common law "mirror image" rule has been modified by the Code.

If a UCC contract does not contain all the terms necessary to carry it out, there will be no contract.

Introduction to Law

Business Ethics

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remedies

Performance

Transfer of Title and Risk of Loss

Product Liability: Warranties and Strict Liability

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transfers

Relationship of Principal and Agent

Relationship With Third Parties

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature and Formation of Corporations

Financial Structure of Corporations

Management Structure of Corporations

Fundamental Changes of Corporations

Secured Transactions and Suretyship

Bankruptcy

Securities Regulation

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

Environmental Law

International Business Law

Introduction to Property, Property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Wills

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