Deck 14: Sales and Lease Contracts

Question 1

Generally, if an acceptance to a sales contract between merchants includes terms additional to those in the offer, the terms automatically become part of the deal.

Answer 1

True

Question 2

Under the law that governs the international sale of goods, a merchant's firm offer is irrevocable only if the merchant gives assurances in a signed writing.

Answer 2

False

Question 3

In response to an order for a hundred baseballs, the shipment of a hundred basketballs is both an acceptance of the offer and a breach of the contract.

Answer 3

True

Question 4

If a contract for a sale of goods leaves the quantity term open, a "reasonable quantity" is the standard for determining a remedy.

Question 5

Parties to sales and lease contracts are not free to agree to terms different from those stated in the UCC.

Question 6

An excessive price for goods and unequal bargaining power can indicate to a court that a sales contract is unconscionable.

Question 7

Corporate stocks and bonds meet the requirements to be among the items of property characterized as goods under the UCC.

Question 8

To the extent that it has not been modified by the UCC, the common law of contracts applies to sales contracts.

Question 9

Risk of loss cannot pass from seller to buyer unless the goods are identified to the contract.

Question 10

Under the law that governs the international sale of goods, when an acceptance to a contract includes terms additional to those in the offer, the terms automatically become part of the deal.

Question 11

If a court determines that a contract involving both goods and services is primarily a goods contract, any dispute over the deal will be decided under the UCC.

Question 12

The UCC provides that a sale or lease contract will fail for indefiniteness if more than one of its terms is left open.

Question 13

Identification is the express designation of the goods provided for in a contract, and the parties to the deal can agree in their contract when this will take place.

Question 14

An auto dealer is a merchant when selling or leasing a new car but not when selling or leasing a pre-owned vehicle.

Question 15

If a sales contract prohibits any changes unless they are in a signed writing, then only those changes agreed to in a signed writing are enforceable.

Question 16

Generally, the buyer acquires whatever title the seller has to the goods sold.

Question 17

If the acceptance to a sales contract between non-merchants includes terms different from those in the offer, no contract is formed under the UCC.

Question 18

Under the UCC, if a dispute occurs over the existence of a contract, a purchase order can be sufficient to indicate that there is a contract.

Question 19

If a person buys cattle at a livestock auction, unless the parties agree otherwise, title will pass to the buyer when the cattle are physically delivered.

Question 20

Title to goods can pass to the buyer from the seller before the goods are identified to the contract.

Question 21

A buyer will be deemed to have accepted delivered goods if, after a reasonable opportunity to inspect the goods, the buyer does not reject them.

Question 22

If a buyer wrongfully refuses to accept tendered goods, the seller can bring an action for damages equal to the difference between the contract and market prices at the time and place of tender.

Question 23

It is not possible for the implied warranty of merchantability to be breached if a merchant does not know or could not have discovered that its product was defective.

Question 24

If a seller fails to deliver the goods, the buyer can purchase other goods to substitute for those due under the contract, but cannot then sue for consequential damages.

Question 25

If a seller supplies ten dishwashers in response to an order for ten washing machines-"F.O.B. the seller's warehouse"-and the goods are damaged in transit to the buyer's store, the loss falls on the seller.

Question 26

If the seller is a merchant who is holding the goods for the buyer to pick up, the risk of loss passes when the buyer takes physical possession of the goods.

Question 27

Seacoast Transport Company pays Trucks & Trailers Inc. a stated price for the use of seven tractor-trailer rigs for a year. Under the UCC, this is

A) a contract for services.
B) a sublease.
C) a lease.
D) a sale.

Question 28

Meds-Free Inc. enters into a contract to sell its product line to Naturopath Clinic, which later sells some of the items to Oneida, a patient and consumer. Article 2 of the UCC applies to

A) both transactions.
B) the sale from Med-Free to the clinic only.
C) the sale from the clinic to its patient only.
D) none of the transactions.

Question 29

Sellers can effectively disclaim or modify title warranties by asserting that they are transferring only such rights, title, and interest as they have in the goods.

Question 30

Mining Corporation purchases the business assets of Open Pit Inc., including its equipment and supplies, for an agreed-to price, payable in installments. Under the UCC, this transaction is

A) a contract for services.
B) a sublease.
C) a lease.
D) a sale.

Question 31

To create an express warranty, a reasonable buyer must regard a seller's representation of fact-in an ad, for example-as part of the basis of the bargain.

Question 32

On a contract-"F.O.B. New York"-for a sale of almonds by a broker in California, the risk of loss passes to the buyer when conforming goods are placed in the possession of the carrier.

Question 33

A buyer or lessee has an insurable interest in identified goods.

Question 34

Minh owns a beach house that she rents to vacationers. Minh gives her son Ngo a trip to Omaha on his graduation from community college. Minh sells her car to her neighbor Phan for $4,500. UCC Article 2 covers

A) the beach house rentals.
B) the gift to Ngo.
C) the sale to Phan.
D) none of the choices.

Question 35

When the goods delivered are not as promised, the measure of recovery in the buyer's suit for damages is the difference between the values of the goods as accepted and if they had been delivered as warranted.

Question 36

Brooke is an art collector and hires a broker to buy and sell artworks on her behalf. Under the UCC, in those transactions, Brooke has the status of

A) a consumer.
B) an agent or other intermediary.
C) a merchant.
D) an employer and manager.

Question 37

A seller who tenders nonconforming goods with a price allowance has reasonable grounds to believe that the buyer will accept the tender.

Question 38

When the time for performance under a contract expires, the seller or lessor's right to cure also expires.

Question 39

If a seller fails to deliver conforming goods, the measure of recovery in the buyer's suit for damages is the difference between the contract price and the market price at the time the buyer learns of the breach.

Question 40

Because each type of warranty is created in a different way, the manner in which a warranty can be disclaimed varies with the type of warranty.

Question 41

Grass Farm LLC offers to sell fifty bales of hay at a certain price to Horse Stable Inc. The owner of the stable responds, "We agree if you agree to make it 100 bales for the price." Their contract is formed according to

A) the new terms of the acceptance.
B) whatever is reasonable.
C) the terms of the original offer.
D) none of the terms.

Question 42

Nature's Eggs Inc. agrees to supply Omelet Express with five hundred eggs. Nature's Eggs can reasonably ask Omelet Express to pick up the eggs at

A) no specific time-only a buyer can set the time.
B) any reasonable hour.
C) no time-as a seller, Nature's Eggs must deliver the goods.
D) any hour.

Question 43

In a sale of oranges from Citrus Grove Farms to Donuts & Juice Inc. to be delivered after the harvest, a fire destroys the fruit before it is picked. Under the UCC, the rights and liabilities of Citrus and Donuts in this circumstance are generally determined by

A) the right of ownership.
B) who has title.
C) the concepts of identification and risk of loss.
D) all of the choices.

Question 44

When the risk of loss passes is generally determined by

A) the passage of title to identified goods.
B) the acquisition of an insurable interest in specific goods.
C) the expression of a buyer or lessee's interest in obtaining certain goods.
D) the terms of a contract for a sale or lease of goods.

Question 45

Security Insurance Agency contracts with Town Motors to buy six cars. The contract lists the cars by their VINs (vehicle identification numbers). Under the UCC, identification

A) requires the filing of a copy of the contract in the appropriate state office.
B) has taken place.
C) cannot take place unless the cars are in the seller's possession.
D) cannot take place until the cars are in the buyer's possession.

Question 46

Bean Processor Inc. agrees to ship a certain quantity of coffee beans to Coffee Café LLC. Bean sends to Coffee an e-mail indicating that the parties intended to form a contract. Against Bean, as a contract, the e-mail will be sufficient

A) if it is signed by Bean.
B) if it is signed by Coffee.
C) if Coffee responds with an acknowledgment of the deal.
D) under no circumstances.

Question 47

Jo owns a condominium that she leases to Kia. Jo gives her daughter Liu $450 on her sixteenth birthday. Jo sells her car to her neighbor Maia for $1,500. Article 2 of the UCC covers

A) the lease with Kia.
B) the gift to Liu.
C) the sale to Maia.
D) all of the choices.

Question 48

Confection Corporation orders Double Chocolate Bars from Edible Distribution Company. Edible identifies the goods. Before they are shipped via Fast Shipping LLC, an insurable interest in the goods exists in

A) Confection only.
B) Edible only.
C) both Confection and Edible.
D) Confection, Edible, and Fast.

Question 49

EverSafe Corporation in New York sells a truckload of protective suits, masks, and other safety gear to Foundry Inc. in Connecticut, "F.O.B. New York." EverSafe arranges with Geo Truckline to transport the goods. The cost of the transport will be paid by

A) EverSafe.
B) Foundry.
C) Geo.
D) all businesses through an increase in the price of shipping.

Question 50

Bon, an agent for City Motors Inc., e-mails Dale on May 1 that the dealer will sell to her a 2018 Ford pick-up truck for $25,000 between May 1 and July 1. Bon's offer to Dale is

A) irrevocable for the stated period.
B) irrevocable until Dale responds.
C) revocable at any time.
D) revocable on the payment of consideration to Dale.

Question 51

Grinders Mill agrees to sell to Harvest Company a certain quantity of refined grains. Some of the other terms in the deal are left open. In the case of a dispute, a court will generally presume

A) whatever favors the non-breaching party.
B) whatever favors the plaintiff.
C) whatever is reasonable.
D) nothing.

Question 52

Runners Feet, a shoe store, orders one hundred pair of athletic shoes from Speedster Inc. Absent a contrary agreement between the parties, title will pass to Runners Feet when

A) the parties sign the contract.
B) the goods exist and are identified.
C) the seller physically delivers the goods.
D) the buyer pays for the goods.

Question 53

Embers Corporation orders twelve fire extinguishers from Firefighting Inc., which delivers the equipment. This is most likely

A) a gift.
B) a lease of goods.
C) a sale of goods.
D) a contract for services.

Question 54

Outdoor Outfitters Store contracts to buy fifty tents from Pitched Camp, Inc. Unless the contract states otherwise, this document is assumed to be

A) a bill of lading.
B) a destination contract.
C) a shipment contract.
D) a warehouse receipt.

Question 55

Elle sells a motorcycle to Fran for $5,000, a bike to Gwen for $600, a pool table to Holly for $200, and three shares of stock to Inez for $100. Article 2 of the UCC does not apply to the sale of

A) the motorcycle.
B) the bike.
C) the pool table.
D) the stock.

Question 56

An insurable interest is

A) an interest in goods permitting a party to insure against their damage.
B) an interest in ensuring that goods are of a certain quality.
C) interest that can accrue from investing in insurance of certain goods.
D) none of the choices.

Question 57

Quaff Café buys twenty-five crates of apples from Reynaldo Produce, Inc. The parties agree to ship the apples "F.O.B. Quaff" via Swift Trucking Company. The apples rot in transit. The loss is suffered by

A) Quaff.
B) Swift.
C) F.O.B.
D) Reynaldo.

Question 58

Mara and Nim enter into a contract for a sale of orchids that requires payment within thirty days of delivery. Under the UCC, the payment term in the contract

A) removes the entire transaction from the UCC.
B) is superseded by the UCC rule that payment is due on delivery.
C) is fully enforceable.
D) is not enforceable because it does not specify a definite date.

Question 59

Dona offers to sell her used sofa, chair, coffee table, end table, and lamp to Etta for $700. Etta responds that she will pay that price if Dona's TV set is included. Neither party is a merchant. Their contract is formed according to

A) the new terms of the acceptance.
B) whatever is reasonable.
C) the terms of the original offer.
D) none of the terms.

Question 60

Power Company offers to buy from Quality Transformers LLC a specific quantity of a certain type of transformer for a stated price. Quality can accept the offer by

A) a counteroffer within a reasonable time.
B) a promise to ship the goods.
C) a rejection of the offer with an invitation to negotiate a different price.
D) any of the choices.

Question 61

ABC Hardware Store orders one hundred power hand-drills from Drilling Tools Inc. When the hand-drills are delivered, they are all missing pieces. ABC rejects the shipment. To exercise a right to cure, Drilling must

A) promptly notify ABC of the intent to cure.
B) pay a cure fee.
C) pick up the nonconforming tools before the end of the business day.
D) enter into a new contract with ABC.

Question 62

Holiday Corporation sells Idyll-brand campers and trailers. Under most circumstances, Holiday will be presumed to have warranted that its title to the goods is

A) the same as every other merchant who deals in goods of the kind.
B) none of the choices-a warranty of title is not presumed.
C) good and valid.
D) only such as the seller has acquired in the goods.

Question 63

Nano Watches Inc. offers to sell to On-Time Company one hundred digital watches at $50 a piece, subject to certain specific delivery dates. On-Time replies with a signed purchase order that reads, "Accept your offer for 100 watches at $50 each. Must be delivered to our warehouse." Nano does not respond or deliver the goods. On-Time files a suit for breach of contract, to which Nano answers that there is no contract because On-Time's purchase order contained additional terms and is not signed by Nano. Can On-Time recover? Explain.

Question 64

Real Stones Inc. and Sparkling Jewelry stores enter into a contract for a sale of gemstones. The seller fails to deliver. Sparkling can recover as damages the difference between

A) any loss avoided and any profit gained.
B) the actual price and the hoped-for price.
C) the contract price and the market price.
D) the current prices in the contracting parties' places of business.

Question 65

Elegant Carpet Inc. agrees to sell a certain quantity of carpeting to Fabulous Floor stores under a shipment contract. Elegant must

A) allow the buyer to reject the goods for any reason.
B) deliver the goods to a particular destination.
C) inspect the goods before shipping it.
D) place the goods into the hands of a carrier.

Question 66

Digital Video Company contracts to deliver one hundred television sets to a new retail customer, Electric Warehouse, on May 1, with payment to be made on delivery. The seller tenders delivery in its own truck. The buyer's manager notices that some of the cartons have scrape marks. Electric's owner phones Digital's office and asks whether the sets might have been damaged as they were being loaded. Digital assures Electric that the sets are in perfect condition. Electric tenders a check, which Digital refuses, claiming that the first delivery to new customers is always for cash. Electric promises to pay the cash within two days. Digital leaves the sets with Electric, which stores them in its facility pending its "Grand Opening Sale" on May 15. Two days later, Electric's stocker opens some of the cartons and discovers that a number of the sets are damaged beyond ordinary repair. Digital claims that Electric accepted the sets and is in breach for failing to pay on delivery. Will Digital succeed on these claims? Explain.

Question 67

Chair Company contracts to deliver a dozen suites of dining room tables and chairs to Furniture Store on May 1. On April 15, Chair tells Furniture that delivery will be delayed until June 1. Furniture may

A) await performance, sue Chair, or suspend its own performance.
B) only await Chair's performance for a commercially reasonable time.
C) only sue Chair for breach of contract.
D) only suspend its own performance.

Question 68

Bike Shop sells a trail bike to Ciena. When Ciena rides the bike, the frame breaks apart. The cause is something that Bike Shop did not know about and could not have discovered. This is a breach of

A) a warranty of title.
B) the implied warranty of merchantability.
C) an express warranty.
D) puffery.

Question 69

Jess, a salesperson for Kitchens Inc., shows Lane, a buyer for Metro Diner, display items in Kitchens' showroom, stating that any purchased equipment will match the display. This is

A) an express warranty.
B) an implied warranty.
C) a statement of opinion.
D) puffery.

Question 70

Fiesta LLC contracts to buy 1,000 balloons from Gas Bags Inc. for $1 per item. When the market price decreases to 50 cents per balloon, Fiesta refuses to go through with the deal. Gas Bags can recover

A) $1,500.
B) $1,000.
C) $500.
D) $0.

Question 71

Steel Buildings Inc. agrees to sell four portable garages to Truck Service Center. Five days later, Truck refuses delivery and cancels the contract. Steel is entitled to

A) force Truck to accept the garages.
B) recover any damages from Truck but not resell the garages.
C) resell the garages and recover any damages from Truck.
D) resell the garages but not recover any damages from Truck.

Question 72

Builder Inc. and Concrete Supply Company enter into a contract for a sale of cement. Concrete delivers, but Builder does not pay. Concrete can recover as damages

A) any profit lost minus any loss avoided.
B) whatever amount Concrete wishes to claim.
C) the purchase price plus incidental damages.
D) the market price at the place at which Concrete delivered the goods.