Exam 20: Formation of Sales and Lease Contracts

A lessee is a party who transfers a right to the possession and use of goods under a lease.

Fact Pattern 20-B1 (Questions B16-B18 apply) Ripe Produce, Inc., and Southeast Asian Bistro & Market enter into a contract for the delivery of locally grown fruits and vegetables. The parties use a standard Ripe Produce form that contains some of the terms the parties agree on but not others. Some of the produce spoils before it can be cooked, served, and eaten, or sold. Southeast Asian refuses to pay for the spoiled goods. -Refer to Fact Pattern 20-B1. Ripe Produce files a suit against Southeast Asian, claiming that the buyer assumed the risk of the spoilage of the unsold goods. The court may allow evidence of this term if it finds that the parties' contract is

Nature's Products, Inc., sends its standard order form to Omni Distribution Corporation to evidence a sale of packing materials. Omni responds with its own standard purchase order form. Additional terms in the purchase order automatically become part of the contract unless

Under the UCC, an offeror must be notified within a reasonable time that the offeree has accepted.

Under the UCC, an agreement modifying a contract needs no consid?eration to be binding.

American Coffee Company and Beans Brokers, Inc., enter into a contract for the sale of a certain quality and quantity of coffee beans, with Beans Brokers to determine the price. The price must be set according to

A contract for a sale of real property or services is a contract for a sale of goods.

When no delivery terms are specified in a contract for a sale of goods, there is no basis for determining a remedy.

Under the UCC, good faith means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.

Stop n' Gas Convenience Stores, Inc., is an East Coast-based firm that does business throughout the United States. With respect to this circumstance, the UCC has been adopted by, and applies in,

Perfect Poultry Company agrees to sell chicken, turkey, and other meats to Quik Markets, Inc., to sell to its customers. Normally, their contract would not be en?forceable unless it includes

Fresh Dairy, Inc., is the offeror and Gelato Ice Cream Company is the offeree under a unilateral sales contract in which Hector's Helado Corporation is also interested. Gelato is not notified of Fresh Dairy's performance within a rea?son?able time. Gelato

Toro, S.A., which is based in Mexico, enters into a contract for the purchase of portable livestock fencing from United Fencing Company, which is based in the United States. This contract is governed by

NationPoints Trucking, Inc., has a requirements contract with Oil & Gas Corporation that obligates Oil & Gas to supply NationPoints with all the gasoline it needs for its vehicles for one year at $2.30 per gallon. A clause inserted in small print in the contract by NationPoints, and not noticed by Oil & Gas, states, "The buyer reserves the right to reject any shipment for any reason without liability." For six months, NationPoints orders and Oil & Gas delivers under the contract without any controversy. Then, because of a war in the Middle East, the price of gasoline to Oil & Gas increases substantially. Oil & Gas tells NationPoints it cannot possibly fulfill their contract unless NationPoints agrees to pay $2.50 per gallon. NationPoints, in need of the gasoline, agrees in writing to modify the contract. Later that month, NationPoints learns it can buy gasoline at $2.40 per gallon from Purified Fuel Company. NationPoints refuses delivery of its most recent order from Oil & Gas, claiming, first that the contract allows it to do so without liability, and second, that it is required to pay only $2.30 per gallon if it accepts the delivery. Discuss NationPoints's contentions.

All oral contracts are enforceable under the UCC.

La-Z Days Motels, Inc., and Beds R Us Corporation enter into a contract that does not specify the payment terms. Payment may be made in

Goods associated with real estate often fall within the scope of Article 2.

An unconscionable contract is one that is so unfair and one sided that it would be unreasonable to enforce it.

Downtown Contractors and Equipment Rental Corporation are parties to an oral agreement for a one-year lease of a crane with payments totaling more than $10,000. They may satisfy the Statute of Frauds by

Under the UCC, a contract for a sale of goods that does not include the quantity will not fail for indefiniteness.