Deck 13: Sales Contracts: Formation,title,and Risk of Loss

Question 1

In a contract with a merchant for which no delivery is required,risk of loss passes to the buyer when the buyer picks up the goods.

Answer 1

True

Question 2

Braxton has a contract to deliver 500 cases of green beans to CostLess Wholesalers for $10,000.He sells CostLess the beans that he acquired through allegation of fraud from another vendor.If true,then Mary,who is another vendor,has voidable title to the green beans and can void the title to the green beans if she chooses to do so.However,she cannot sell the goods to her customers because of the clouded title.

Answer 2

False

Question 3

The CEO of Intermountain Medical Equipment and the VP of Purchasing at ValleyCare Hospital in Boise entered into an oral agreement to manufacture 15 oversized electric/pneumatic gurneys for the operating room at ValleyCare Hospital in Boise,at a cost of $6,000 each,total contract price of $90,000.The gurneys were made to the specific instructions of ValleyCare and could not be easily sold to another hospital.After the gurneys were manufactured,ValleyCare can refuse to take them on the grounds that the oral contract was unenforceable.

Answer 3

False

Question 4

Ross Plants Wholesalers contracts with Bi-Mart,Inc.for the sale of 24 pallets of fresh herbs and shrubs,to be delivered FOB to Bi-Mart in Emmett,Idaho.The 24 pallets are identified and put on a receiving dock.Before the shipper,EXpress Trucking,can pick them up and sign appropriate documentation,a fire destroys the plants causing a total loss.In this case,Ross Plants bears the risk of loss.

Question 5

Roberta receives a document of title for lumber she purchased.Even though she does not yet possess the lumber,the document transfers to her both title to the lumber and risk of loss for it.

Question 6

Under the UCC,if a sale of goods contract offer between merchants is silent concerning the method of acceptance,it must be accepted by electronic means within 48 hours.

Question 7

Alaskan Seafood Enterprises Inc. ,a wholesaler of fresh fish,agrees with Red Lobster Inc.to sell 12 boxes of fresh-caught lobsters at 'market value.' The contract is unenforceable because the UCC requires a price for the goods.

Question 8

The main issue in the Classic Case of XCEL v.DeVault involved a question as to whether XCEL's shipment of conforming goods acted as an acceptance of DeVault's purchase order.

Question 9

A gift is legally considered the same as a sale of goods,since title passes in both a gift and a sale.

Question 10

Merchant A orally enters into a $1,000 contract with Merchant B.Merchant B will not be legally bound if she sends a confirmation,because Merchant A did not sign it,but she did object to it 3 days after she received the written confirmation.Merchant A sends out a conforming shipment the following week.The merchants have a binding agreement.

Question 11

Fish sold on contract,but not yet caught by a commercial fisherman's coop,are called goods.

Question 12

If the seller is not a merchant,the risk of loss passes to the buyer when the seller tenders the goods to the carrier.

Question 13

If Company A in New York and Company B in Chicago sign a contract that states "FOB Chicago," it means the parties have agreed to a shipment contract and the title and risk of loss passes to Company B when they are placed in the carrier's possession in New York.So,for example,if the goods are destroyed in transit Company B bears the risk of loss.

Question 14

While 25 tractor mowers from the John Deere distribution center in Des Moines,Iowa were being shipped via shipment contract by EXpress Trucking to the Home Depot in Little Rock,Arkansas,the truck carrying the shipment was hijacked and all the mowers stolen.Since the mowers were being shipped by a shipment contract,EXpress bears the risk of loss.

Question 15

The Convention on Contracts for the International Sale of Goods (CISG)requires a written contract for the sale of goods when the price exceeds $5,000.

Question 16

In an auction without reserve,the auctioneer must accept the highest bid.

Question 17

Intermountain Medical Supply states by an e-mail to the CEO of ValleyCare Hospital that its offer to sell hemostats for the operating room for $35.00 each will be held open for 40 days.IMS's e-mail is a firm offer that requires a consideration to be legally binding.

Question 18

An automobile title certificate under the UCC has the legal status of a document of title.

Question 19

The purchasing manager of Ethan Wholesale Furniture,Inc.sends an e-mail to the CEO of Ashley Furniture,Inc.promising to sell new couches for a total of $5,000,and to keep the offer open for 30 days.The promise is unenforceable because there is no consideration.

Question 20

Joe leaves his $25,000 Rolex watch with Zayer's Jewelers to be cleaned and maintained.When the watch or jewelry is ready to be picked up,Zayer's usually displays it in a special counter.One day during a special sale,Mary comes into Zayer's and inquires about the watch and is told the watch is on sale for only $18,500.If Zayer's sells the watch to Mary,Joe has a cause of action against both Zayer's and Mary to recover the watch.

Question 21

Joshua,a merchant,promises in a signed writing to Pedro,a consumer,to hold an offer to sell goods open for five months without Pedro giving consideration in exchange.However,Joshua sells the goods to another consumer and Pedro sues him for breach of contract.Which of the following is true of this case?

A)Joshua is not bound by the contract,since firm offers cannot exceed three months.
B)Since Joshua is a merchant and is bound by a firm offer made to Pedro,he has breached contract.
C)The UCC will not enforce this contract as a firm offer as both parties are not merchants.
D)Joshua is bound by this offer only if a five month offer is customary for this type of good.

Question 22

A(n)________ can make a(n)________ because it deals in ________ in the ordinary course of business or has knowledge or skills peculiar to those goods.

A)obligor;gift;specially manufactured goods
B)merchant;firm offer;goods of the kinds sold
C)merchant;open price contract;goods of the kinds sold
D)seller;firm offer;goods of the kind sold

Question 23

Massive Equipment Company sends machinery on approval to Mountain Moving Company.While in possession of the machinery,but prior to acceptance,Mountain becomes insolvent.The machinery is subject to the claims of Mountain's creditors.

Question 24

If both parties are merchants,the UCC modifies the common law "________" rule,by allowing ________ terms to become a part of the contract,unless they ________ change it.

A)hybrid contract;additional;materially
B)course of dealing;additional;materially
C)plain view;different;slightly
D)mirror image;additional;materially

Question 25

In what respect is a bailment legally different from a sale?

A)Title does not transfer in a bailment.
B)Title transfers in a bailment,but no price is involved.
C)In both,there is a transfer of title,but in a bailment the title reverts to the bailor at the end of the bailment.
D)In a sale,the title transfer includes all rights of ownership,but in a bailment,the title transfer includes limited rights of ownership.

Question 26

Which of the following is true of oral contracts for the sale of goods of $500 or more?

A)All oral contracts are unenforceable unless they are for the sale of goods of $500 or more.
B)An oral contract is not enforceable,unless a written confirmation is received and signed by one party,and sent to the other for approval.
C)An oral contract by a merchant is enforceable if a written confirmation is received by another merchant who does not object to within 10 days.
D)An admission in court about the terms of the contract does not negate the general rule.

Question 27

________ is a method of commercial dealing that is commonly used in a particular field or industry.

A)Usage of trade
B)Contract for sale
C)Good faith
D)Firm offer

Question 28

The Emmett School District (ESD)contracts with the GoldenFarms Dairy for "all of the milk" GoldenFarms can produce during ESD's current school year.The contract specifies a price,but no exact quantity of milk to be purchased is set in the contract.This contract is a(n):

A)invalid contract because no quantity is set.
B)valid requirements contract.
C)valid output contract.
D)invalid contract because consideration is missing.

Question 29

Which of the following is considered to be future goods?

A)Office furniture
B)Stocks
C)Fish in the sea
D)Gasoline at a gas station

Question 30

Sellers always retain an insurable interest in the goods,even if they do not have title to them.

Question 31

In an ________,after the auctioneer calls for bids on an article or lot,that article or lot cannot be withdrawn unless no bid is made within a reasonable time.

A)auction with reserve
B)enforced auction
C)auction without reserve
D)entitled auction

Question 32

Which of the following is true of a firm offer?

A)It occurs when parties intend to be bound by a contract,but fail to mention the price.
B)It occurs when a seller agrees to sell all it can produce to a particular buyer.
C)It occurs when a merchant promises to hold an offer open without any consideration.
D)It occurs when a buyer agrees to buy all its requirements from a particular seller.

Question 33

It is important to identify a ________ contract because it includes both goods and services.If the sale of goods dominates the contract,then it will be governed by ________;however,if services dominate the contract,then it will be governed by ________.

A)blended;CISG;common law
B)blended;common law;UCC Article 2
C)hybrid;UCC Article 2;common law
D)hybrid;common law;Restatement of Contracts

Question 34

Starbucks Coffee contracts with Juan Valdez coffee farms to purchase "all the coffee beans Starbucks needs for the next twelve months." The parties have a(n)________ contract.

A)open price
B)requirements
C)output
D)firm offer

Question 35

Under the ________,an electronic signature is defined as "an electronic sound,symbol,or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record."

A)E-Sign Act
B)UETA
C)UCC
D)CSIG

Question 36

Which of the following is true regarding Convention on Contracts for the International Sale of Goods (CISG)?

A)The CISG governs only the formation of a sales contract and the rights and duties that arise from it.
B)The CISG is concerned with the validity of a contract that would be governed by other laws.
C)The CISG applies to the liability of the seller for death or personal injury caused by the goods to any person.
D)The CISG applies to auctions sales,sales of stocks,securities,negotiable instruments or money.

Question 37

________ goods are those that are in accordance with the obligations under the contract.

A)Future
B)Nonconforming
C)Tangible
D)Conforming

Question 38

Buyers obtain an insurable interest even though they might later reject or return the goods to the seller.

Question 39

The seller is said to have a security interest in shipped goods if the agreement between the buyer and seller allows the seller to retain title after the goods are shipped.

Question 40

A(n)________ includes any symbol,made with the intent to authenticate a writing.

A)seal
B)informal note
C)mark
D)signature

Question 41

Seth was the highest bidder for an antique chest at an auction sale.There was nothing to indicate whether the auction was with or without reserve.The auctioneer withdrew the chest from the auction without accepting Seth's bid because the bid was too low.Is the auctioneer legally entitled to withdraw the chest from the sale? Explain.

Question 42

Downtown Construction Co.obtained possession on April 1 of a bulldozer from Bulldozer Sales Co.to use in Downtown's business with a right to return the bulldozer no later than June 1 with no obligation other than to pay for the fuel the bulldozer used.Downtown is owned by Alice who allows her fifteen-year-old son,Bob,to operate the bulldozer on May 1 on a Downtown job.Bob is inexperienced and wrecks the bulldozer.Explain who has the risk of loss.

Question 43

If a person obtains property as a result of another's fraud,misrepresentation,mutual mistake,undue influence,or duress,the person is said to hold only:

A)voidable rights.
B)contract rights.
C)insured rights.
D)valid rights.

Question 44

Ralph,of Miami,Florida,ordered "100 red widgets" from Maria's business located in Seattle,Washington.Shipment was f.o.b.Seattle via Red Freight Co.By mistake Maria sent "100 green doodads" to Ralph.The shipment was destroyed when the Red Freight truck was involved in a traffic accident in Oklahoma City.Ralph had insurance coverage that includes "items purchased that are in transit." Explain whether Ralph or Maria has the risk of loss.

Question 45

Warren left his watch to be cleaned at a jewelry store.By mistake,a clerk sold the watch to Foley.Foley did not know that the watch rightfully belonged to Warren.Analyze the case.

Question 46

Which of the following is true of insurable interest?

A)Sellers can retain the insurable interest to goods as long as they have the title to them.
B)Buyers cannot place insurance on goods.
C)Buyers cannot obtain an insurable interest if they might later reject the goods.
D)Buyers can obtain insurable interest on goods that are not mentioned in the contract.

Question 47

Sun Supply Co.offered to sell Apartment Management Inc.air conditioner filters at $15 per case in a signed writing that stated the price was good for sixty days.Apartment Management discovered that other sellers charge $20 per case for identical air conditioner filters,but before it can accept Sun Supply's offer,Sun Supply withdrew the offer after only 30 days,stating that changed market conditions had forced it to charge more.Discuss the case.

Question 48

On Saturday,Hussein purchases a sofa from Big Box Furniture Inc. ,who agrees to deliver the sofa without charge to Hussein at 3 p.m.the following Monday.Hussein forgets about the delivery and is not home at 3 p.m.on Monday when the Big Box delivery truck arrives.The delivery truck takes the sofa back to the Big Box store where it is destroyed in a fire that occurs at 9 p.m.Monday.Discuss the risk of loss in this case.

Question 49

Samantha was looking for a certain shade of thread to complete her needlework on a tablecloth.At a local shop,however,she was unable to decide which of the five selected shades would be the closest match to the cloth.The shop owner allows Samantha to take the selected shades home and decide which one she would want to have.This is an example of which of the following?

A)Destination contract
B)Sale on approval
C)Sale on acceptation
D)Approval contract

Question 50

Big Choppers orally contracts with Jane to make a custom motorcycle for Jane for $30,000.When completed,Jane refuses to accept the motorcycle or pay for it.Discuss the validity of the oral contract.

Question 51

Mike and Jane contract to purchase and sell $1,000,000 worth of computer chips to be manufactured in Japan and shipped to San Francisco.The contract is silent about the method of delivery.Mike asserts that delivery is by ship,which is customary in the computer chip industry,but Jane insists that delivery is by air,which is what a previous contract between Mike and Jane provided.Explain how a court will resolve this dispute.

Question 52

Lucky Used Cars,using their contracts form,agree to sell Alvin a truck for $5,000.The contract provides that it may not be modified-except by a signed writing.After entering into the contract,Lucky and Alvin orally agree that Lucky will include new floor mats and a bed liner for an extra $100.At the time of delivery,Lucky refuses to provide the new floor mats and bed liner unless Alvin pays an extra $250.Discuss the enforceability of the oral agreement Lucky and Alvin had.

Question 53

A document of title allows the person who possesses it to:

A)receive the goods named in the document.
B)conclusively prove ownership of the goods named in the document.
C)receive the goods named in the document free of any creditor claims.
D)conclusively prove that the goods are free of defects.

Question 54

Which of the following is true of destination contracts?

A)It requires a seller to turn the goods over to a carrier for delivery to the buyer.
B)Both title and risk of loss pass to the buyer when goods are given to the carrier.
C)Title and risk of loss pass to the buyer once the seller tenders goods at a place as per the contract.
D)The seller bears no responsibility for seeing that the goods reach their destination.

Question 55

MeatPackers,Inc.bought a new kind of refrigeration system from Coolit,Corp.for storage of its meats.As part of the contract,Coolit delivered the refrigeration system to the MeatPackers plant,installed it,set its temperature,and then monitored it for several hours to make sure it worked.Before they left,Coolit's technicians handed MeatPackers a bill of sale.Absent any other terms or conditions,MeatPackers,Inc.received title to Coolit's refrigeration system when:

A)Coolit delivered the system to the MeatPackers plant.
B)MeatPackers paid for the Coolit system prior to delivery.
C)Coolit delivered,installed,and tested the system.
D)Coolit handed MeatPackers the bill of sale.

Question 56

When goods are sent f.o.b.shipment,the title and risk of loss pass to the:

A)carrier at the point of origin.
B)buyer at the point of origin.
C)buyer at the destination.
D)buyer when he/she accepts the goods.