Deck 9: Contracts and the Sales of Goods Law

Question 1

Which of the following is NOT a buyer's remedy under the UCC?

A) Difference between the contract price and the cover price.
B) Cancellation of contract and punitive damages.
C) Rejection and cancellation.
D) Difference between the contract price and the market price at the time of breach.
E) All of these remedies are available to a buyer under the UCC.

Answer 1

B

Question 2

Under the reply doctrine, if both contracting parties are merchants, a written confirmation that indicates a contract has been formed and that is signed by the sender will be enforceable against the recipient unless the recipient objects in writing within how many days?

A) 10 days.
B) 15 business days.
C) 15 days.
D) 21 days.

Answer 2

A

Question 3

On July 1, Mr. Burns makes an oral offer to sell used well piping to a steel mill for recycling into new steel. On July 15, the steel mill mailed Mr. Burns its acceptance. However, on July 17, before the acceptance reaches him, Mr. Burns revokes the offer by faxing his revocation to the mill. The acceptance arrives on July 20. Is there a contract?

A) No, because Mr. Burns revoked his offer before he learned of the mill's acceptance.
B) No, because the acceptance has to be in the same media as the offer.
C) Yes, because oral offers must remain open for 10 days.
D) Yes, the mill's acceptance is effective at the time of dispatch.

Answer 3

D

Question 4

Under the UCC, to satisfy the Statute of Frauds, a writing must meet several requirements. Which of the following is NOT one of the requirements?

A) The writing evidences a contract for the sale of goods.
B) The writing must state the price of the goods purchased.
C) The writing is signed by the party against whom enforcement is sought.
D) The writing must state the quantity of goods purchased.
E) All of these are requirements of the UCC Statute of Frauds.

Question 5

In order to get around gift tax laws, your rich Uncle Michael agrees to sell you his house in exchange for a peppercorn. You readily agree, but Uncle Michael changes his mind and transfers ownership of the house to a trust he created for his favorite chimpanzee, Bubbles. You are mad that Bubbles has a nicer house than you do so you sue to enforce the agreement. What is the likely result?

A) There is a contract because courts will not delve into the adequacy of the exchange.
B) Courts will invalidate the contract because it appears to be a sham.
C) You get the house because a chimpanzee does not have the capacity to contract.
D) There is a contract but it is void because Uncle Michael revoked the offer before your acceptance.

Question 6

On July 1, Mr. Burns makes an offer to sell used well piping to a steel mill for recycling into new steel. On July 15, the steel mill mails Mr. Burns its acceptance. However, on July 17, before the acceptance reaches him, Mr. Burns revokes the offer by faxing his revocation to the mill. The acceptance never arrives. Is there a contract?

A) No, Mr. Burns has to receive the acceptance before it will become effective.
B) Yes, the mailbox rule holds that a contract is created when the acceptance is dispatched.
C) No, the mill has the duty to assure that the offeror knows of the acceptance, even if he does not receive it.
D) Yes, but only if the mill gave Mr. Burns some form of consideration to keep the offer open.

Question 7

On April 10, Call-Mart sends Buffy a purchase order for 1000 Buffy BMX bikes at $75 a piece. Call-Mart's purchase order includes terms on the back of the form that the seller warrants that the goods are free of defects and are merchantable. On April 11, Buffy receives the purchase order, sends Call-Mart a confirmation with additional terms on the back of the document that limit any warranties, and specifically disclaims any warranty of merchantability. On April 15, Buffy ships the bikes along with an invoice stating identical terms as the confirmation. Assuming both parties are merchants and that Call-Mart's April 10 communication was an offer, is there an implied warranty of merchantability in the contract?

Question 8

Which of the following is not a provision of the Uniform Electronic Transaction Act UETA)?

A) Records or signatures are valid even if stored only in electronic format.
B) A contract is enforceable even if it was formed electronically.
C) An electronic signature satisfies any legal signature requirements.
D) An electronic contract supercedes any paper copy signed by the parties.

Question 9

If the seller does not meet the perfect tender rule, which of the following is NOT a remedy to available to the buyer?

A) Reject the whole lot.
B) Accept the whole lot.
C) Accept some units and reject the rest.
D) Revoke the contract and keep the goods as liquidated damages.
E) All of the above are remedies available under the perfect tender rule.

Question 10

When you were in high school, your parents were concerned that you would start smoking so they made you an offer. If you did not smoke a cigarette until you were 16 years old, they would give you $3,000 towards a new car. You comply with the terms of the deal but when the big day arrives, your parents surprise you with a new moped instead of the cash. You cannot let your friends see you on a moped so you sue your parents for the cash. Who wins?

A) You win because you accepted your parents offer through your performance.
B) Your parents win because you lacked the capacity to contract.
C) You win, but only if your parents do not void the contract.
D) Your parents win because you did not give them any consideration.

Question 11

Lisa is flipping through the Sunday paper when she sees the following advertisement: "For sale: 5 Sony stereos, Model 10b-5, only $250.00, first come first served." Lisa is the first person at the store that morning but the store refuses to sell the stereos, saying that the advertisement was not an offer, only an invitation for consumers to make the store an offer. The store will not sell the stereos for less than the fair market value of $500.00. Discuss the rules concerning contract formation through advertisements and then apply the rule to the above facts.

Question 12

Under the UCC, which of the following is NOT one of the elements that must be present for a contract to exist?

A) The signature of the party against whom enforcement is sought.
B) The price of the goods sold.
C) A statement of the quantity of goods sold.
D) Some sort of indication that the agreement exists.
E) All of the above elements must be present for a UCC contract to exist.

Question 13

In hybrid contracts involving the sale of goods and services, how do courts generally decide whether to apply the UCC?

A) Courts look at the predominant focus of the contract.
B) Courts only apply the UCC to the goods portion.
C) Courts will not apply the UCC to a hybrid contract.
D) Courts look where the UCC and the common law agree and apply those portions of the law.

Question 14

Which of the following is NOT a seller's remedy under the UCC?

A) Specific performance.
B) The difference between the resale and the contract price.
C) The difference between the market price and the unpaid contract price.
D) Lost profits, if the seller is a lost volume seller.
E) All of these remedies are available to a seller under the UCC.

Question 15

Explain the contract concept of consideration.

Question 16

Which of the following is NOT an element of a contract?

A) Offer.
B) Equal exchange.
C) Consideration.
D) Acceptance.
E) All of these are elements of a contract.

Question 17

Bob owns a store that sells ice fishing bait and tackle. He is negotiating for a large shipment of nightcrawlers large worms) for the annual December rush. Jim contacts Larry, Darrell, and Darrell's House of Worms, and the guys tell Bob that they will supply all his nightcrawler needs for $5.00 per hundred. Bob thinks about the price and agrees to get back to Larry, Darrell, and Darrell. Jim thinks $5.00 is a fair price and mails off his purchase order for 10,000 worms. Before Larry, Darrell, and Darrell receive Bob's acceptance, they call him to revoke the offer. It turns out that the price of worms is now $6.50 per hundred, and they want a higher price. Assume that the mailbox rule applies to this scenario. Discuss the rule and apply it to this problem.

Question 18

Dwight goes to Bakersfield Cadillac and tries to work out a deal on a new Caddy. Dwight picks out the model he likes and makes an offer of $25,000. Sensing that he is opposite a man of means, the salesman laughs and suggests a price of $35,000 is more in order. Dwight counters with a price of $30,000. The salesman thinks about the price for a minute, then counters with a price of $32,500. Dwight leaves, upset that he could not get the car for $30,000, the price he was willing to pay. The next day, the salesman calls to tell Dwight that his car is on the way and that the salesman thinks $30,000 is a good price. Dwight thinks he is bound to the deal because the salesman has apparently accepted Dwight's last price. Bewildered, Dwight just hangs up the telephone. Is there a contract at $30,000?

A) Yes, because Dwight made the $30,000 offer in good faith.
B) Yes, because Dwight was silent when the salesman told him the car was on its way.
C) No, the salesman's counteroffer of $32,500 terminated Dwight's $30,000 offer.
D) No, because Dwight's offer was only open for a reasonable time, and more than a day is not reasonable.

Question 19

Which of the following is the best definition for the common law mirror image rule?

A) No contract is formed unless the offer and acceptance are identical in every respect.
B) No contract is formed unless the offer and acceptance are substantially similar.
C) A contract is formed when the offer has the same price and quantity terms as the offer.
D) An acceptance is only effective if it is communicated the same way as the offer.

Question 20

Which of the following is NOT a type of transaction that generally must meet the common law Statute of Frauds requirements?

A) Contracts for the sale of real property.
B) Contracts that take more than a year to complete.
C) Contracts where one person agrees to assume another person's debts.
D) All of these contracts must meet the common law Statute of Frauds requirements.

Question 21

On July 14, Emerson Corp. entered into a written agreement to sell to Thomas Corp. 120 cartons of pencils at $4 per carton total price of $480), delivery within 30 days. The agreement contained no other terms. On July 15, Emerson Corp. and Thomas Corp. orally agreed to modify their July 14 agreement so that the new quantity specified was 150 cartons total price of $600), same price and delivery terms. The modification is unenforceable for lack of consideration.

Question 22

Farrar Products Co. is a packer and shipper of produce. Farrar ordered 20,000 produce boxes from Wilson Paper Co. According to the contract, the boxes were each to hold between 20 and 30 pounds of produce for shipping. When the boxes arrived at Farrar's packing plant, Farrar discovered that the boxes were of a lesser quality and were only capable of holding 10 pounds of produce each. Because it had a backlog of produce to ship, Farrar used 8,000 of the boxes immediately, packing twice as many boxes as it ordinarily would for that amount of produce to accommodate the lesser strength of the tendered boxes. Farrar also immediately went out and purchased 16,000 boxes from another supplier, at a cost of $.10 a box more than Farrar had contracted to pay Wilson.

Question 23

On August 14, 1997, Burns Boiler Co. sold a boiler to Clarkson Manufacturing Co. Clarkson paid for the boiler in full, and Burns delivered to Clarkson a bill of sale. The bill of sale stated that Burns was transferring "all of its right, title, and interest" in the boiler to Clarkson. Clarkson had no immediate need for the boiler, so it remained in storage at Burns' Florida factory. On January 18, 1998, Burns delivered the boiler to Clarkson in Michigan. The state of Florida then sued Clarkson, alleging that sales tax had been due to it when title passed to Clarkson, which the state claimed was on August 14. Clarkson responded that title did not actually pass until January 18. Who is correct, and why?

Question 24

Nocking Furnace Co. sold a commercial furnace to Glond Manufacturing Inc. Glond was to take delivery of the furnace from Nocking's factory. On November 12, 2007, Glond paid for the furnace in full, and Nocking provided a bill of sale to Glond stating that it had transferred title to Glond. Glond asked to delay delivery until December 1, however, so that it could prepare its building for installation of the new furnace. On November 29, 2007, Nocking's building caught on fire and the furnace was destroyed. Because title had passed to Glond on November 12, Glond must bear the risk of loss on this furnace.

Question 25

Tobias Novelties is a company that manufactures and sells various sports-related novelty items, including giant "we are number 1" foam hands. Tobias is revamping its product line-up, and wants to sell the equipment it uses to manufacture these giant foam hands. Tobias did not manufacture this equipment itself, and does not want to give any warranties when re-selling it to other users. Because the implied warranty of merchantability arises automatically, Tobias will only be able to disclaim such a warranty if it does so explicitly, conspicuously, and in writing.

Question 26

Masters Corp. contracted to buy from Harrison Ceramic Co. 3 tons of ceramic rods to be shipped FOB Harrison's factory by S&B Railroad Co. Harrison delivered 2 tons of ceramic rods to the railroad. While in transit, the train derailed and the rods were destroyed. Between Masters and Harrison, who bears the risk of loss, and why?

Question 27

Common law is state law that is uniform, or "common" among all the states, such as the Uniform Commercial Code or Uniform Trade Secret Act.

Question 28

Explain how UCC § 2-207 changed the mirror image rule.

Question 29

Sanford Ventilating Co. sold a fan unit, model 674, to Bishop Manufacturing Co. The contract of sale required delivery on December 10. On December 2, Sanford delivered a fan unit, model 694, to Bishop. Bishop immediately notified Sanford that the wrong fan unit had been delivered. Bishop informed Sanford that it was holding Sanford in breach of contract, and that it would pursue all remedies available to it under law. Sanford did not respond to this communication. On December 9, Bishop filed suit against Sanford for breach of contract. On December 10, Sanford delivered a fan unit, model 674, to Bishop. Bishop refused delivery, and Sanford sued for breach of contract. Who wins, and why?

Question 30

Gecko Corp. sent Watson Co. a purchase order for 100 Watson compasses for $2,500. Watson accepted Gecko's offer by sending back an acknowledgment form. However, Watson added a clause providing for interest on any overdue invoices pertaining to the sale, a practice that is standard within the industry. If Watson and Gecko are both merchants and the parties do not communicate further about the terms, a contract is formed that includes Watson's additional term regarding interest.