Exam 15: The Formation of Sales and Lease Contracts

If a seller is not a merchant, and the goods are not to be moved, the risk of loss passes to a buyer on tender of delivery.

A firm offer by a merchant may be oral.

The contract term "free on board" indicates that the selling price of goods includes transportation costs to the specific F.O.B. place named in the contract.

Big Red Drinks, Inc. contracts to buy two tons of cranberries from Super Fruits, Inc. The contract states that Super Fruits is required to ship the cranberries to Big Red Drinks by Speedy Wind Air Freight. The contract is

Future goods are goods that are not both existing and identified to the contract.

If a sale involves crops that are to be harvested within twelve months, identification takes place when the seeds for the crops are purchased.

The contract term "delivery ex-ship" means that the risk of loss does not pass to the buyer until the goods are properly unloaded from the ship or other carrier.

Article 2 of the UCC covers any transaction that creates a lease of goods.

If there is no definite period stated, a firm offer by a merchant is irrevocable without the necessity of consideration for up to six months.

In most situations involving sales, rights and liabilities are determined by who has the title to the goods.

Even if goods are not identified to the contract, the title and risk of loss can still pass from the seller to the buyer.

Big Beef, Inc. raises calves to sell. Big Beef breeds its cows in April, and the cows calve in February of the following year. In January Andrea contracts with Big Beef to buy fifty calves. Identification takes place in

Summit Sales Corporation orders goods from OverStock Company. Summit plans to market the goods to consumers generally. OverStock identifies the goods. Before they are shipped to Summit, an insurable interest in the goods exists in

Under the UCC, an agreement modifying a contract needs no consideration to be binding.

A buyer and a seller cannot normally have an insurable interest in identical goods at the same time.

Roy's Chick'n Shack orders chicken from Standard Food Supplier, but Standard does not deliver. Roy's will probably be unable to enforce the agreement if the parties

Rita, the manager of the State University (SU) soccer team, orally agrees to lease a certain number of specially made SU banners from Top Banners, Inc. This lease is enforceable only if Top has made a substantial start on making the banners and

Thorpe buys an HD TV from Viewpoint Electronics store, which agrees to keep the TV for Thorpe until he picks it up. Before Thorpe gets the TV, a fire destroys the store and the set. The loss is suffered by

Jason contracts with Golf Carts Unlimited, Inc. to buy five golf carts. The contract lists the five carts as GC001, GC002, GC003, GC004, GC005. Identification

All oral contracts are enforceable under the UCC.