Deck 15: Formation of Sales and Lease Contracts

Question 1

Money bought and sold as a commodity is included in the definition of goods.

Answer 1

True

Question 2

A court must enforce the terms of a written sales contract, even if they are unfair.

Answer 2

False

Question 3

Blacklaw in a signed letter to Ekis made the following request (offer): "Ship promptly 100 dozen of the new light saver type light bulbs." This offer

A) may be accepted only by a prompt shipment.
B) may be accepted only by a prompt promise to ship.
C) may be accepted by either a prompt promise to ship or a prompt shipment.
D) is invalid because no price was mentioned.

Answer 3

C

Question 4

The UCC allows a sales contract to be enforced as long as the parties intended to make a contract, even in cases in which essential terms, such as the purchase price, are missing.

Question 5

An agreement modifying a contract for the sale of goods needs no consideration to be binding.

Question 6

The UCC makes a distinction between a professional and an occasional seller.

Question 7

The UCC allows a contract to be formed as long as the parties intended to contract even even in cases in which essential terms such as price, quantity, and terms of payment are missing.

Question 8

Under the UCC, a merchant is a person who is

A) a regular dealer in the sale of goods involved in the sales contract.
B) especially knowledgeable about goods involved in the sales contract.
C) a commercial expert.
D) all of these.

Question 9

The distinction between whether contracts are covered by the UCC and those that are not depends upon whether or not the contract involves the purchase or sale of goods.

Question 10

A written agreement for the sale of goods need be signed only by the buyer.

Question 11

A lawsuit for breach of a sales contract must be brought within four years.

Question 12

Under the UCC, a change in an existing contract must be based on consideration.

Question 13

An oral contract can be enforced only for the quantity of goods actually received and accepted by the buyer.

Question 14

An item attached to real property is considered goods if it can be removed easily.

Question 15

Freedom of contract is a basic principle of the UCC. Consequently, its provisions are not mandatory.

Question 16

Arnold who worked for the Clean Corporation sold vacuum cleaners house to house. He called on Anna, a single mother on welfare with five children. Convinced by Arnold's sales presentation Anna signed a sales contract to purchase a vacuum cleaner. While the contract stated the price of $600 payable in weekly installments, there were hidden charges (fine print) covering insurance and a service contract for one year bringing the total to $900. After paying in $300, a neighbor pointed out the hidden charges to Anna who then stopped payments at the suggestion of Legal Aid under the theory of

A) fraud.
B) duress.
C) misrepresentation.
D) unconscionability.

Question 17

Which of the following statements does not apply to a written contract governed by Article 2 of the UCC

A) the contract must involve the sale of goods of $5,000 or more.
B) the contract may involve the sale of personal property.
C) the requirements of the contract must be carried out by both parties in good faith.
D) the obligations of a merchant may be different from those of a non-merchant.

Question 18

Under the UCC only a person who deals regularly in the sale of goods involved in the sales contract is considered a merchant.

Question 19

The "mirror-image" rule has been incorporated into the UCC.

Question 20

Article 2 of the UCC does not cover a contract for

A) services.
B) the sale of growing crops.
C) the sale of a computer.
D) the sale of goods that have been specially manufactured.

Question 21

A contract for the sale of goods may be ____________________ even though it does not state a purchase price.

Question 22

Castner orally agreed to purchase a desk from the Arman Furniture Company and paid $850 cash. When the desk was delivered the next day, Castner refused to accept it, saying he had changed his mind. When Castner insisted on a return of the $850, claiming that since the agreement was not in writing, he was not bound to accept the desk, Arman Furniture refused. Is Castner correct?

A) Yes; Castner has a legal right to change his mind.
B) Yes, if Castner can prove that the desk wasn't worth $850.
C) No; Castner is bound on the contract because he had paid for the desk in full.
D) Yes; Castner would not be bound unless the agreement to buy the desk was actually in writing.

Question 23

Jacobson Wholesale Company and Kutner, the owner of a retail men's store, signed a written contract under which Jacobson was to sell 300 boxes of hosiery to Kutner at $5 per box. Jacobson sent the hosiery, and Kutner paid the $1,500. Jacobson sued Kutner for an additional $900 and at the trial offered evidence that shortly before signing the contract, Kutner had orally agreed to pay an additional $3 per box. The court held the evidence inadmissible. The principle that best justifies the legal decision in this case is that

A) all contracts must be in writing to be enforceable.
B) written contracts may not be modified at the will of the parties.
C) generally, evidence of a prior oral agreement contradicting a written contract is inadmissible.
D) a contract of guaranty must be in writing to be enforceable.

Question 24

On January 5, the Rolland Corporation sent a letter offering to sell a new line of above-ground pools to Tibbets, the owner of Tibbets Leisure Center, at a considerably reduced introductory price. The letter stated that the offer would be good until January 20. When Tibbets received the letter on January 10, he immediately sent a telegram of acceptance. However, because an employee of the telegraph company lost the telegram, the telegram never reached the Rolland Corporation's office. Was a contract formed between the Rolland Corporation and the Tibbets Leisure Center?

A) Yes, on January 10; Tibbets used a commercially reasonable means of acceptance.
B) Yes, on January 20; Tibbets used a commercially reasonable means of acceptance.
C) No. Rolland Corporation had specified the method by which acceptance must be made.
D) No, a "firm offer" was not valid in this case.

Question 25

Gerber, a Georgia merchant who sells toys, placed a telephone order for fifteen dozen toy computers from NCE, a wholesaler of toys in Cleveland, Ohio. NCE sent Gerber a signed invoice for the toy order (written confirmation), giving details of their oral agreement. The oral (telephone) contract will be enforceable

A) if it would be unreasonable not to enforce it.
B) if Gerber does not send NCE a written objection to the contents of the invoice within ten days of receipt of the invoice.
C) under no circumstances.
D) if the courts say that this case is governed by common law.

Question 26

____________________ is a group of laws governing business transactions.

Question 27

Ramsey, the owner of a retail candy store, ordered ten boxes of chocolate rabbits from Johnson's Wholesale Candy Company. Johnson's shipped ten boxes of marshmallow rabbits, the only kind in stock. It then notified Ramsey that the marshmallow rabbits were sent as an accommodation, knowing that Ramsey needed the rabbits immediately to meet customer demands for Easter. Under these circumstances, which of the following statements is correct?

A) Shipment of the marshmallow rabbits is not an acceptance but a counteroffer, and a contract will result only if Ramsey decides to accept the marshmallow rabbits.
B) Johnson's Wholesale Candy Company is in breach of contract.
C) What Johnson's Wholesale Candy Company did was unconscionable.
D) None of these.

Question 28

To offset the relaxed rules for sales contracts, the UCC insists on ____________________, especially when misunderstandings arise or when unforeseen circumstances occur.

Question 29

Johnson and Wales are both merchants. Johnson offers to sell Wales several items, and Wales accepts but adds additional terms to the acceptance. Wales' terms automatically become part of the contract unless

A) the offer expressly limits acceptance to the terms of the offer.
B) the new terms materially alter the contract.
C) the offeror rejects the new terms and notifies the offeree within a reasonable time.
D) all of these.

Question 30

The UCC defines goods as tangible ____________________ property.

Question 31

Under the UCC, if a merchant offers to keep an offer open

A) the offer must be in writing.
B) the offer may be withdrawn at any time.
C) the offer is firm for at least three months.
D) the offeree must have given consideration.

Question 32

Under Article 2 of the UCC, a firm offer will be created only if the

A) offer states the time period during which it will remain open.
B) offer is made by a merchant in a signed writing.
C) offeree gives some form of consideration.
D) offeree is a merchant.

Question 33

Marks, a retailer, wrote and ordered 10 dozen red, white, and blue T-shirts for a July 4^th celebration from the Whitney Wholesale Company. Since the Whitney Company did not have the colors requested, it sent blue and white shirts, thinking that Marks could use them. The Whitney Company did not, however, notify Marks that the substitution had been made. Shipping the wrong goods

A) constitutes an acceptance of Marks' offer.
B) constitutes a breach of contract.
C) has no effect on the formation of a contract.
D) constitutes an acceptance of Marks' offer and constitutes a breach of contract.

Question 34

Under Article 2 of the UCC, when a contract involves a mixed sale such as a sale of goods and a sale of services, which of the following statements is correct?

A) The courts ordinarily will apply Article 2 to any contract that involves goods.
B) The courts ordinarily will apply Article 2 when the sale of goods is the primary purpose of the transaction
C) The courts ordinarily will not apply Article 2 to any contract that involves the sale of services.
D) Whether article 2 applies depends upon the dollar amount of the contract.

Question 35

An oral sales contract for goods costing $500 will be enforced

A) if the buyer pays for the goods in full.
B) if the goods were specially manufactured for the buyer.
C) if the buyer receives and accepts all of the goods.
D) in all of these situations.

Question 36

Richardson offered to sell her used motorcycle to Evans for $450. Evans said, "I accept, but would you also replace the front tire." Neither Richardson nor Evans is a merchant.

A) Evans has accepted the offer.
B) Evans has rejected the offer.
C) Richardson may treat her offer as accepted or rejected.
D) Evans's statement "I accept" is of no legal significance.

Question 37

Under the UCC, parties to a sales contract may modify it without new ____________________.

Question 38

A(n) ____________________ is a contract in which ownership and title to goods passes from seller to buyer for a price.

Question 39

Under the UCC, between merchants, any additional terms added to the acceptance of an offer

A) have no effect on the original offer.
B) are a counteroffer that terminates the original offer.
C) will automatically become part of the contract if the offeree's response indicates a definite acceptance of the offer.
D) are a rejection of the original offer.

Question 40

Under the UCC, the one term of a sale that must be in writing is the

A) date.
B) quantity.
C) unit price.
D) total sale price.

Question 41

Darien, Inc. orally contracted to manufacture 1,500 square yards of carpet specially designed for American Health's offices. The agreed price was $40 per square yard. When the carpeting was completed, American Health refused to accept it, claiming that it was not bound by the oral contract. Is American Health correct?

Question 42

If a person being sued admits in court (on the witness stand) that an oral contract for the sale of goods of $500 or more was in fact made, the contract is ____________________.

Question 43

A contract that is so extremely unfair to one of the parties as to "shock the conscience" of the court is said to be ____________________.

Question 44

How does the UCC (Article 2) change the "mirror-image" rule?

Question 45

____________________ goods are those that meet the standards set down by the contract.

Question 46

Under Article 2 of the UCC when is a party to a sales contract considered a merchant?

Question 47

What precautions should merchant sellers take to protect themselves against consumers who legally challenge contract terms formed online?

Question 48

With the advent of contracts being formed online, why has the need for the mailbox rule which a majority of the courts uphold under the common law of contracts become obsolete?

Question 49

What is the significance of the seller sending conforming goods to the buyer?

Question 50

____________________ evidence can be presented in court to give meaning or add clarity to unclear language in a contract.