Question 1

With respect to non-merchants,how does the Uniform Commercial Code define good faith?

Accepted Answer

A) Honesty in fact 
B) Equity 
C) Honesty in fact and reasonable commercial standards of fair dealing 
D) Equity and reasonable commercial standards of fair dealing 
E) Honesty in fact and equity 
A) Honesty in fact 
B) Equity 
C) Honesty in fact and reasonable commercial standards of fair dealing 
D) Equity and reasonable commercial standards of fair dealing 
E) Honesty in fact and equity

Question 2

Which of the following was the result in Hill v.Gateway 2000,the case in the textbook in which the purchaser of a computer failed to read a contract requiring arbitration that came packaged with the computer and asked the court to determine that a seller of computers could not limit buyers' remedies or require arbitration by bundling hardware and legal documents?

Accepted Answer

A) The contract was binding on the purchaser because the purchaser accepted the risk of not reading the contract. 
B) The contract was binding on the purchaser because the contract's requirement of arbitration was reasonable. 
C) The contract was binding on the purchaser because the contract's requirement of arbitration was actually in the purchaser's favor. 
D) The contract was unconscionable and nonbinding. 
E) The contract was nonbinding because it should have been provided to the purchaser for review before the computer was shipped. 
A) The contract was binding on the purchaser because the purchaser accepted the risk of not reading the contract. 
B) The contract was binding on the purchaser because the contract's requirement of arbitration was reasonable. 
C) The contract was binding on the purchaser because the contract's requirement of arbitration was actually in the purchaser's favor. 
D) The contract was unconscionable and nonbinding. 
E) The contract was nonbinding because it should have been provided to the purchaser for review before the computer was shipped.

Question 3

Which of the following is true regarding warranties under common law?

Accepted Answer

A) For a warranty to exist,it must first be requested by the buyer. 
B) Only the implied warranty of assignability arises automatically under common law. 
C) Only the implied warranty of merchantability arises automatically under common law. 
D) Only warranties of title arise automatically under common law. 
E) Express warranties,the implied warranty of assignability,and warranties of title arise automatically under common law. 
A) For a warranty to exist,it must first be requested by the buyer. 
B) Only the implied warranty of assignability arises automatically under common law. 
C) Only the implied warranty of merchantability arises automatically under common law. 
D) Only warranties of title arise automatically under common law. 
E) Express warranties,the implied warranty of assignability,and warranties of title arise automatically under common law.

Question 4

Refused Furniture.Selina arranges to sell furniture from her furniture store to Roland for $3,000.Roland was supposed to give Selina a $500 deposit on February 1 and pay the remainder in monthly installments.Selina was to deliver the furniture by February 7.Roland did not pay Selina as promised on February 1.He asked her to wait until March 1,but she refused.She also refused to deliver the furniture.Selina was able to sell the furniture for only $2,500 because of a downturn in the economy.Roland told Selina that she had no right to withhold or sell his furniture and that he was suing.Selina incurred $100 in additional amounts in advertising costs to advertise the furniture that Roland initially purchased.Selina saved $40 in delivery costs because the subsequent purchaser picked up her own furniture.Which of the following is true regarding any deduction in damages to which Roland is entitled?

Accepted Answer

A) Roland is not entitled to any deduction because he was the breaching party. 
B) Roland is entitled to a deduction for the delivery expenses,but only if he can establish that Selina agreed in writing to deduct those in the event of a breach. 
C) Roland is entitled to a deduction for the delivery expenses,but only if he can establish that Selina agreed orally or in writing to deduct those in the event of a breach. 
D) Roland is entitled to a deduction for the delivery expenses because that was a savings to Selina. 
E) Roland is entitled to a deduction for the delivery expenses,because Selina breached the contract by not delivering the furniture to him and then pursuing an action for damages. 
A) Roland is not entitled to any deduction because he was the breaching party. 
B) Roland is entitled to a deduction for the delivery expenses,but only if he can establish that Selina agreed in writing to deduct those in the event of a breach. 
C) Roland is entitled to a deduction for the delivery expenses,but only if he can establish that Selina agreed orally or in writing to deduct those in the event of a breach. 
D) Roland is entitled to a deduction for the delivery expenses because that was a savings to Selina. 
E) Roland is entitled to a deduction for the delivery expenses,because Selina breached the contract by not delivering the furniture to him and then pursuing an action for damages.

Question 5

Which of the following types of warranties arises by operation of law under certain circumstances?

Accepted Answer

A) Express 
B) Implied 
C) Due-on-sale 
D) Express,implied,and due-on-sale 
E) Express and implied,but not due-on-sale 
A) Express 
B) Implied 
C) Due-on-sale 
D) Express,implied,and due-on-sale 
E) Express and implied,but not due-on-sale

Question 6

Which of the following is needed in order for the implied warranty of fitness for a particular purpose to arise?

Accepted Answer

A) Both parties must be merchants,and a sale must be involved. 
B) Both parties must be merchants,and either a sale or lease must be involved. 
C) The seller must be a merchant,and a sale must be involved. 
D) The seller or lessor must be a merchant,and either a sale or lease must be involved. 
E) A sale or lease must be involved,but the seller or lessor does not have to be a merchant. 
A) Both parties must be merchants,and a sale must be involved. 
B) Both parties must be merchants,and either a sale or lease must be involved. 
C) The seller must be a merchant,and a sale must be involved. 
D) The seller or lessor must be a merchant,and either a sale or lease must be involved. 
E) A sale or lease must be involved,but the seller or lessor does not have to be a merchant.

Question 7

The Uniform Commercial Code does not allow a seller to resell or dispose of the goods when the buyer is in breach and the goods have not yet been delivered; instead,the seller must seek an order of specific performance against the breaching buyer.

Accepted Answer

A) True 
 B)False

Question 8

As an exception to the perfect tender rule,parties may agree with a level of performance that is less than perfect.

Accepted Answer

A) True 
 B)False

Question 9

Under the Uniform Commercial Code,a seller must bring a lawsuit on a breached contract within ________ of when the breach occurred or when the seller became aware of it.

Accepted Answer

A) 180 days 
B) one year 
C) two years 
D) four years 
E) six years 
A) 180 days 
B) one year 
C) two years 
D) four years 
E) six years

Question 10

Specific performance usually allows the seller to deliver substitute goods to the buyer.

Accepted Answer

A) True 
 B)False

Question 11

New Furniture.Penny purchased $3,000 worth of furniture from Bob's furniture shop.Through an arrangement with Bob,Penny financed the purchase through a financing company called Let Us Help You.Twenty-nine days after the goods were delivered to her,Penny had a disagreement with Let Us Help You regarding the amount of interest she would be required to pay.She notified Bob on that day that she was rejecting the goods.Bob claimed that she did not properly reject the furniture and also that she acted in bad faith.Penny says that she properly rejected and denies that she acted in bad faith.She also says that,in any event,she cannot be sued for both wrongful rejection and also bad faith because of double jeopardy.Which of the following is true regarding Bob's claim that Penny failed to act in good faith?

Accepted Answer

A) Bob is incorrect because under the Uniform Commercial Code,Penny had 30 days within which to reject the goods. 
B) Bob is incorrect,but only if Penny can establish that Let Us Help You miscalculated the amount of interest she owed. 
C) Bob is incorrect,but only if Penny can show that the goods were overpriced. 
D) Bob is correct,because Penny made no claim that the goods were nonconforming. 
E) Bob is correct,but only if Bob can show that the goods were priced at reasonable market value. 
A) Bob is incorrect because under the Uniform Commercial Code,Penny had 30 days within which to reject the goods. 
B) Bob is incorrect,but only if Penny can establish that Let Us Help You miscalculated the amount of interest she owed. 
C) Bob is incorrect,but only if Penny can show that the goods were overpriced. 
D) Bob is correct,because Penny made no claim that the goods were nonconforming. 
E) Bob is correct,but only if Bob can show that the goods were priced at reasonable market value.

Question 12

Refused Furniture.Selina arranges to sell furniture from her furniture store to Roland for $3,000.Roland was supposed to give Selina a $500 deposit on February 1 and pay the remainder in monthly installments.Selina was to deliver the furniture by February 7.Roland did not pay Selina as promised on February 1.He asked her to wait until March 1,but she refused.She also refused to deliver the furniture.Selina was able to sell the furniture for only $2,500 because of a downturn in the economy.Roland told Selina that she had no right to withhold or sell his furniture and that he was suing.Selina incurred $100 in additional amounts in advertising costs to advertise the furniture that Roland initially purchased.Selina saved $40 in delivery costs because the subsequent purchaser picked up her own furniture.Which of the following is true regarding Roland's claim that Selina had no right to sell the furniture he initially purchased?

Accepted Answer

A) Roland is correct.Selina had no right to sell the furniture,but she retained the right to sue him for any deficiency. 
B) Roland is correct,but only because of the special Uniform Commercial Code exception for consumer goods. 
C) Roland is incorrect.Selina had a right to resell the furniture. 
D) Roland is incorrect,but only if Selina can prove that she had no reason to believe that he was a credit risk prior to signing the contract of sale. 
E) Roland is correct because of federal consumer protection laws. 
A) Roland is correct.Selina had no right to sell the furniture,but she retained the right to sue him for any deficiency. 
B) Roland is correct,but only because of the special Uniform Commercial Code exception for consumer goods. 
C) Roland is incorrect.Selina had a right to resell the furniture. 
D) Roland is incorrect,but only if Selina can prove that she had no reason to believe that he was a credit risk prior to signing the contract of sale. 
E) Roland is correct because of federal consumer protection laws.

Question 13

Define "course of dealing" and "course of performance" and how these concepts affect the perfect tender rule.

Accepted Answer

Uniform Commercial Code Section 1-205(1)

Question 14

A dirt bike purchased at a bicycle shop is covered by the implied warranty of merchantability,but a bike that is bought from a neighbor is not,unless the neighbor is a bicycle merchant.

Accepted Answer

A) True 
 B)False

Question 15

Common law usually substitutes the perfect tender rule with the doctrine of substantial performance.

Accepted Answer

A) True 
 B)False

Question 16

Which option have most states adopted regarding the rights of third-party beneficiaries of warranties?

Accepted Answer

A) A seller's warranties extend to the buyer's household members and guests. 
B) A seller's warranties extend to any reasonable and foreseeable user. 
C) A seller's warranties extend to anyone injured by the good. 
D) A seller's warranties do not extend beyond the buyer and the buyer's immediate family. 
E) A seller's warranties do not extend beyond the buyer and the buyer's immediate family living in the same household. 
A) A seller's warranties extend to the buyer's household members and guests. 
B) A seller's warranties extend to any reasonable and foreseeable user. 
C) A seller's warranties extend to anyone injured by the good. 
D) A seller's warranties do not extend beyond the buyer and the buyer's immediate family. 
E) A seller's warranties do not extend beyond the buyer and the buyer's immediate family living in the same household.

Question 17

There are three basic categories of warranties: conditional warranties,unconditional warranties,and implied warranties.

Accepted Answer

A) True 
 B)False

Question 18

Under the Uniform Commercial Code,buyers may recover goods identified in the contract if the seller becomes insolvent within ________ days after receiving the first payment due under the agreement.

Accepted Answer

A) 5 
B) 10 
C) 16 
D) 30 
E) 60 
A) 5 
B) 10 
C) 16 
D) 30 
E) 60

Question 19

Set forth what the Uniform Commercial Code requires in terms of good faith and the duty imposed on merchants and non-merchants with regard to fair dealing.

Accepted Answer

The Uniform Commercial Code (UCC)require

Question 20

The Uniform Commercial Code allows a seller or lessor to cancel the contract if the buyer or lessee is in breach.

Accepted Answer

A) True 
 B)False

Exam 16: Sales and Lease Contracts: Performance, Warranties, and Remedies

With respect to non-merchants,how does the Uniform Commercial Code define good faith?

Which of the following is true regarding warranties under common law?

Which of the following types of warranties arises by operation of law under certain circumstances?

Which of the following is needed in order for the implied warranty of fitness for a particular purpose to arise?

The Uniform Commercial Code does not allow a seller to resell or dispose of the goods when the buyer is in breach and the goods have not yet been delivered; instead,the seller must seek an order of specific performance against the breaching buyer.

As an exception to the perfect tender rule,parties may agree with a level of performance that is less than perfect.

Under the Uniform Commercial Code,a seller must bring a lawsuit on a breached contract within ________ of when the breach occurred or when the seller became aware of it.

Specific performance usually allows the seller to deliver substitute goods to the buyer.

Define "course of dealing" and "course of performance" and how these concepts affect the perfect tender rule.

A dirt bike purchased at a bicycle shop is covered by the implied warranty of merchantability,but a bike that is bought from a neighbor is not,unless the neighbor is a bicycle merchant.

Common law usually substitutes the perfect tender rule with the doctrine of substantial performance.

Which option have most states adopted regarding the rights of third-party beneficiaries of warranties?

There are three basic categories of warranties: conditional warranties,unconditional warranties,and implied warranties.

Under the Uniform Commercial Code,buyers may recover goods identified in the contract if the seller becomes insolvent within ________ days after receiving the first payment due under the agreement.

Set forth what the Uniform Commercial Code requires in terms of good faith and the duty imposed on merchants and non-merchants with regard to fair dealing.

The Uniform Commercial Code allows a seller or lessor to cancel the contract if the buyer or lessee is in breach.

An Introduction to the Fundamentals of Dynamic Business Law

Business Ethics and Social Responsibility

The Uslegal System and Alternative Dispute Resolution

Administrative Law

Constitutional Law

Criminal Law and Business

Tort Law

Real, Personal, and Intellectual Property

Introduction to Contracts and Agreement

Consideration

Capacity and Legality

Reality of Assent

Contracts in Writing and Third-Party Contracts

Discharge and Remedies

Formation and Performance of Sales and Lease Contracts

Negotiable Instruments: Negotiability and Transferability

Holder in Due Course, Liability, and Defenses

Secured Transactions and Bankruptcy

Agency and Liability to Third Parties

Forms of Business Organization

Corporations: Formation and Organization

Securities Regulation

Employment and Discrimination Law

Consumer Law

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