Deck 18: Formation of Sales and Lease Contracts

Question 1

The formation of sales and lease contracts requires consideration.

Answer 1

True

Question 2

In a lease contract,the title of goods is passed from the lessor to the lessee.

Answer 2

False

Question 3

Article 2 of the UCC applies to sales contracts for the sale of intangible goods.

Answer 3

False

Question 4

Contracts for the provision of services are not covered by Article 2 of the UCC.

Question 5

Modification to a sales or lease contract is binding even if it is made under duress.

Question 6

Sales that contain provisions of services and goods in the same transaction are not covered by Article 2 of the UCC.

Question 7

If a person buys a computer,the sale of contract for it would be subject to Article 2 of the UCC.

Question 8

Article 2 of the UCC defines a merchant as a person who deals in the goods of the kind involved in the transaction.

Question 9

Article 2 of the Uniform Commercial Code is also applied by federal courts to sales contracts governed by federal law.

Question 10

The open price term requires for a contract to mention a specific price.

Question 11

According to the UCC,a seller or buyer who reserves the right to fix a price must do so in good faith.

Question 12

The firm offer rule allows the offeror to revoke an offer at any point of time prior to the acceptance.

Question 13

Revised Article 2A (Leases)includes provisions that recognize the importance of electronic lease contracts.

Question 14

If the parties to a sales contract do not agree to the time,place,and manner of delivery of the goods,the place for delivery is the seller's place of business.

Question 15

A contract is only created when the offeror receives the offeree's acceptance.

Question 16

Article 2A of the UCC deals with lessors and lessees.

Question 17

The UCC does not allow for open terms to be read into a sales or lease contract.

Question 18

A finance lease involves a lessor leasing money to a lessee.

Question 19

In a finance lease,the lessor manufactures and supplies the goods of the contract.

Question 20

Only movable goods come under the scope of Article 2 of the UCC.

Question 21

If one or both parties to a sales contract are merchants,any additional terms are considered proposed additions to the contract.

Question 22

The mirror image rule is the default form of acceptance under the UCC.

Question 23

As per the UCC law of sales,contract modifications do not require considerations.

Question 24

Under the UCC,the offeree's acceptance must be a mirror image rule acceptance.

Question 25

A ________ is defined as the passing of title of goods from a seller to a buyer for a price.

A)lease
B)sale
C)loan
D)gift

Question 26

Which of the following would be considered as goods?

A)company shares
B)crops
C)trade secrets
D)money

Question 27

Shipment of the original offer to a buyer is called an accommodation.

Question 28

Option contracts are an example of irrevocable offers.

Question 29

Under common law,additional terms in the acceptance of a offer are considered a counteroffer.

Question 30

The written confirmation rule requires that both parties to an oral agreement send written confirmation of the sale or lease.

Question 31

A sales contract evidenced by writing cannot be contradicted by a prior oral or written agreement.

Question 32

The battle of the forms occurs when the offeror receives an acceptance drafted from the offeree's own form contract.

Question 33

The ________ is a model act passed in 1949 that includes comprehensive laws that cover most aspects of commercial transactions.

A)Gramm-Leach Bliley Act
B)Sarbanes-Oxley Act
C)Uniform Sales Act
D)Uniform Commercial Code

Question 34

Article 5 of the UCC governs letter of credit.

Question 35

Course of performance between the parties is taken into account when the express terms of their written contract are not clear.

Question 36

The common law of contract allows for gap-filling terms that are implied in the contract.

Question 37

The battle of the forms takes place between a merchant and a nonmerchant.

Question 38

Which of the following articles in the UCC deals with the sale of goods?

A)Article 2
B)Article 4
C)Article 5
D)Article 8

Question 39

As per the Statute of Frauds provisions,all contracts for the sale of goods costing $500 or more must be in writing.

Question 40

Under the common law,a written contract must be signed by the party against whom enforcement is sought.

Question 41

Which of the following is true of a finance lease?

A)It involves leasing out money to a lessee.
B)The lessor is the supplier of goods.
C)It consists of a lessor,a lessee,and a supplier.
D)The lessee acquires the title of the goods.

Question 42

Which of the following does Article 2A of the Uniform Commercial Code govern?

A)mixed sales
B)sale of goods
C)leases
D)letters of credit

Question 43

Which of the following sales would be covered by Article 2 of the UCC?

A)the sale of intangible goods
B)the sale of tangible goods
C)the sale of real estate
D)the sale of stocks

Question 44

Under the UCC,if the time,place,and manner of delivery of goods are not mentioned in a contract,________.

A)the place of delivery is the buyer's place of business
B)the contract is void for lack of definiteness
C)the place of delivery is the seller's place of business
D)the seller is obligated to pay for shipping to the buyer's place of business

Question 45

A person who transfers the right of possession and use of goods under a lease is known as the ________.

A)lessor
B)lessee
C)seller
D)consignee

Question 46

How are additional terms in an acceptance to a contract viewed under the common law?

A)They are viewed as proposed additions to the contract.
B)They are seen as a counteroffer.
C)They are allowed into the contract by the battle of the forms rule.
D)They must be accepted under the mirror image rule.

Question 47

Which of the following describes a mixed sale?

A)a sale that involves two or more intangible goods
B)a sale that involves the passing of title of goods from a seller to a buyer for a price
C)a sale that involves the possession and use of named goods for a set
D)a sale that involves the provision of a service and a good in the same transaction

Question 48

Whistle Cabs,a taxi service company,has been ordered by the traffic department to update their taximeters to digital ones.Whistle Cabs decides to contract with Running Electricals,who provide digital taximeters.But to acquire it on such short notice,Whistle Cabs approaches Goldmint Bank.Goldmint Bank purchases the taximeters,and the taximeters are delivered to Whistle Cabs.The contract between Whistle Cabs and Goldmint Bank allows the taxi service company to use the taximeters for a period of time by providing monthly rentals till that period is completed.What is the nature of the contract made between Goldmint,Whistle Cab,and Running Electricals?

A)counteroffer
B)lease
C)sale of goods
D)option contract

Question 49

The rule states that a merchant who offers to buy,sell,or lease goods and gives a written and signed assurance on a separate form that the offer will be held open cannot revoke the offer for the time stated or,if no time is stated,for a reasonable time is referred to as ________.

A)gap-filling rule
B)firm-offer rule
C)mirror image rule
D)open term rule

Question 50

Kimberley,a merchant-seller in Kansas,had an oral contract to sell goods to Jane,a merchant-buyer in Memphis for $100,000.Two days after contracting,Kimberley sends a sufficient written confirmation to Jane of the agreed-upon transaction.Jane,who has reason to know the contents of the written confirmation,fails to object to the contents of the confirmation immediately.Two weeks after receiving the written confirmation,Jane receives a delivery of the goods from Kimberley.Jane immediately sends an objection to the confirmation to Kimberley.Which of the following is true of the contract between Kimberley and Jane?

A)The Statute of Frauds can be raised against the contract because a letter of objection was sent to the offeror.
B)The offer is valid as the offeree knew the contents of the confirmation and did not object within 10 days.
C)The contract is void as the offeror did not receive a letter of confirmation from the offeree for delivery.
D)The Statute of Frauds can be raised because the offeree did not sign the contract.

Question 51

What is the function of the gap-filling rule used under the UCC?

A)It helps open terms be read into a contract.
B)It helps a merchant revoke his offer even after acceptance.
C)It assures the offeree that goods will be held open for a reasonable time.
D)It protects the offeror from additional terms that maybe added by the offeree.

Question 52

A contract is created when ________.

A)the acceptance has been received by the offeror
B)an acknowledgement is sent by the offeror to the offeree of receiving an acceptance
C)the offeree dispatches the acceptance
D)a written acceptance has been passed between the offeror and the offeree

Question 53

In which of the following cases do additional terms contained in an acceptance become part of the contract as per the battle of the forms rule?

A)if the additional terms materially alter the original contract
B)if the sale is between two nonmerchants
C)if the additional terms expressly limit the acceptance to the terms of the offer
D)if the offeror notifies the offeree that he or she does not object to the additional terms

Question 54

A shipment that is offered to a buyer as a replacement for the original shipment when the original shipment cannot be filled is referred to as a(n)________.

A)consideration
B)accommodation
C)surrogate
D)open delivery

Question 55

The ________ requires all contracts for the sale of goods costing $500 or more and lease contracts involving payments of $1,000 or more to be in writing.

A)parol evidence rule
B)open price term
C)firm offer rule
D)Statute of Frauds

Question 56

According to the gap-filling rule,if a sales contract does not contain a specific price,________.

A)the contract has to be redrafted to include a price
B)the contract is considered void due to indefiniteness
C)the contract can be enforced by either party by fixing an open term price
D)the contract cannot be enforced upon the buyee

Question 57

Which of the following is true of additional terms being added under the UCC?

A)They are considered to be counteroffers.
B)It can be added when the sale is between two merchants.
C)It can be added into the contract without the consent of the offeror.
D)It can be added in a sale that involves one or both parties being a nonmerchant.

Question 58

Which of the following is true of consideration for modifying a sales or lease contract under the UCC?

A)An agreement modifying a contract needs no consideration to be binding.
B)Modifying a contract requires consideration from the offeree's side.
C)An offeror who modifies a contract must do so by providing reasonable consideration.
D)The party providing the consideration must complete it within three months of acceptance.

Question 59

Which of the following is true for goods under the purview of Article 2 of the UCC?

A)Goods can be replaced by money.
B)Intangible goods must be exchanged with other intangible goods.
C)Goods in the contract must be movable.
D)Immovable goods like real estate must have provisions of service attached to their contracts.

Question 60

A ________ is a transfer of the right to the possession and use of named goods for a set term in return for certain consideration.

A)trade
B)gift
C)lease
D)sale

Question 61

Article 5 of the UCC governs ________.

A)sales of intangible goods
B)finance leases
C)letters of credit
D)general provisions

Question 62

________ is a rule that says that if a written contract is a complete and final statement of the parties' agreement,any prior or contemporaneous oral or written statements that alter,contradict,or are in addition to the terms of the written contract are inadmissible in court regarding a dispute over the contract.

A)Parol evidence rule
B)Firm offer rule
C)Open terms rule
D)Gap-filling rule

Question 63

What are the provisions for contracts with services under Article 2 of the UCC?

Question 64

Which of the following is true for terms to be expressed in a contract under the common law of contract?

A)Additional terms can be added during acceptance.
B)Additional terms can be added without consideration.
C)Gap-filling rules are permitted for time,delivery,and prices of goods.
D)Contract must contain all the material terms of the parties' agreement.

Question 65

Which of the following is an example of an irrevocable offer?

A)counteroffer
B)gift promise
C)option contract
D)accommodation

Question 66

Miranda Airways,a commercial air carrier,has a contract with Wurtherton Inc.,an airplane manufacturer,to purchase a new plane.Due to a sudden shortage of cash,Miranda Airways goes to MetrosBank.MetrosBank issues a document to Wurtherton that if Miranda does not pay for the transaction,MetrosBank would.Wurtherton considers the offer,and then sends an acceptance with additional terms.The additional terms stipulates that Miranda Airways could have the new airplane for a period of 10 years,and then return it to Wurtherton.Miranda Airways agrees to the acceptance,and Wurtherton hands the new airplane over to them.
What is the nature of the contract between Miranda Airways and Wurtherton?

A)sale of goods
B)lease
C)counteroffer
D)option contract

Question 67

Miranda Airways,a commercial air carrier,has a contract with Wurtherton Inc.,an airplane manufacturer,to purchase a new plane.Due to a sudden shortage of cash,Miranda Airways goes to MetrosBank.MetrosBank issues a document to Wurtherton that if Miranda does not pay for the transaction,MetrosBank would.Wurtherton considers the offer,and then sends an acceptance with additional terms.The additional terms stipulates that Miranda Airways could have the new airplane for a period of 10 years,and then return it to Wurtherton.Miranda Airways agrees to the acceptance,and Wurtherton hands the new airplane over to them.
Which of the following documents did MetrosBank issue to Wurtherton to help Miranda Airways secure the airplane?

A)a bill of exchange
B)a proforma invoice
C)a letter of credit
D)a remittance advice

Question 68

Miranda Airways,a commercial air carrier,has a contract with Wurtherton Inc.,an airplane manufacturer,to purchase a new plane.Due to a sudden shortage of cash,Miranda Airways goes to MetrosBank.MetrosBank issues a document to Wurtherton that if Miranda does not pay for the transaction,MetrosBank would.Wurtherton considers the offer,and then sends an acceptance with additional terms.The additional terms stipulates that Miranda Airways could have the new airplane for a period of 10 years,and then return it to Wurtherton.Miranda Airways agrees to the acceptance,and Wurtherton hands the new airplane over to them.
What UCC rule was applied when Miranda Airways agreed to the additional terms acceptance provided by Wurtherton?

A)firm offer rule
B)mirror image rule
C)battle of the forms rule
D)gap-filling rule

Question 69

Stelwire LLC,a vintage car dealer,advertises the sale of a 1964 Ford Thunderbolt.Ralph responds to the advertisement with an offer of $80,000 for the car.Stelwire signs a written assurance to keep that offer open to Ralph for a fortnight.Five days before the fortnight is up,Stelwire sells the car to another buyer.At the end of the fortnight period,Ralph tenders $80,000 for the car,but the car has already been sold.Ralph then buys the same model car from another dealer for $90,000 and sues Stelwire for breach of contract.The court rules that Stelwire is liable to Ralph for breach of contract,and orders Stelwire to pay Ralph the difference of $10,000 he paid extra to the second dealer for the car.
What was the nature of the contract between Ralph and Stelwire?

A)counteroffer
B)open terms contract
C)option contract
D)lease contract

Question 70

A computer program or an electronic or other automated means used independently to initiate an action or respond to electronic records or performances in whole or in part,without review or action by an individual,is known as ________.

A)electronic agent
B)electronic record
C)digital mapper
D)automation

Question 71

A ________ is a document that is issued by a bank on behalf of a buyer who purchases goods on credit from a seller that guarantees that if the buyer does not pay for the goods,then the bank will pay the seller.

A)remittance advice
B)certified check
C)cashier's check
D)letter of credit

Question 72

When is the parol rule evidence used in contracts?

A)when a written confirmation has not been sent for an oral contract
B)when the party against whom enforcement of an oral contract is sought has not admitted in pleadings of such a contract
C)when an oral modification is required in a written contract
D)when there is a written statement that contradicts an agreed written contract

Question 73

Explain the 'open delivery' term.

Question 74

When is the course of performance considered in a written contract?

A)when oral modification is required for a written contract
B)when a sale or lease contract is not evidenced by writing
C)when the express terms of a written contract are not clear
D)when there is a prior oral or written agreement statement contradicting the written agreement

Question 75

What is "course of dealing" when interpreting the express terms of a written statement?

A)the previous conduct of the parties regarding the contract in question
B)the conduct of the parties in prior transactions and contracts
C)the conduct of contractual parties with parties not involved in the contract
D)any practice of dealing that is regularly observed or adhered to in an industry

Question 76

Which of the following acceptances is allowed for an offer under common law?

A)mirror image rule acceptance
B)open term acceptance
C)accommodation
D)additional terms acceptance

Question 77

In which of the following situations involving oral contracts can the Statute of Frauds be raised?

A)if a written confirmation has not been objected by a party in an oral agreement
B)if the seller of specially manufactured goods has made a commitment for their procurement
C)if the party against whom enforcement of an oral contract is sought has not admitted in pleadings in court of such a contract
D)when a contract that requires written confirmation has been agreed orally

Question 78

In which of the following can the Statute of Frauds be raised under common law of contract?

A)when a seller of specially manufactured goods has made commitments for procurement for an oral agreement
B)when the party against whom enforcement of an oral sales or lease contract is sought admits of such a contract in court
C)when the writing must be signed by the party against whom enforcement is sought
D)when there has been no written confirmation of a contract between two merchants

Question 79

How does the UCC define the term 'merchant'?

Question 80

Stelwire LLC,a vintage car dealer,advertises the sale of a 1964 Ford Thunderbolt.Ralph responds to the advertisement with an offer of $80,000 for the car.Stelwire signs a written assurance to keep that offer open to Ralph for a fortnight.Five days before the fortnight is up,Stelwire sells the car to another buyer.At the end of the fortnight period,Ralph tenders $80,000 for the car,but the car has already been sold.Ralph then buys the same model car from another dealer for $90,000 and sues Stelwire for breach of contract.The court rules that Stelwire is liable to Ralph for breach of contract,and orders Stelwire to pay Ralph the difference of $10,000 he paid extra to the second dealer for the car.
Which of the following rules governs the execution of this contract?

A)firm offer rule
B)mirror image rule
C)battle of the forms rule
D)gap-filling rule