Deck 16: Formation of Sales and Lease Contracts

Question 1

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

Answer 1

D

Question 2

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 provides 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) finance lease
C) sale of goods
D) option contract

Answer 2

B

Question 3

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.

Answer 3

C

Question 4

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 5

According to the UCC,an indefinite contract can be enforced if ________.

A) there is no basis for providing appropriate remedies
B) the parties intended to make the contract
C) open terms are prohibited from being read into the contract
D) additional terms are accepted in the contract

Question 6

Parris Boutique decides to lease a new property of Green Floor Company.To finance the acquisition,Parris goes to a local bank.The bank purchases the property from Green Floor and leases it to Parris Boutiques.Which of the following is true about this scenario?

A) The lessee is liable to make payments to the lessor.
B) The supplier receives the physical delivery of the property.
C) The lessor is liable for the construction of the property.
D) The supplier delivers the property directly to the lessor.

Question 7

Article 2 (Sales)and Article 2A (Leases)of the ________ are intended to provide clear,easy-to-apply rules that place the risk of loss of the goods on the party most able to either bear the risk or insure against it.

A) Law Merchant
B) Uniform Sales Act
C) Uniform Commercial Code
D) common law

Question 8

The common law of contracts governs personal property sales and leases when ________.

A) either Article 2 or Article 2A of the UCC is silent on an issue
B) the UCC places the risk of loss on a contracting party
C) disputed contracts can be enforced by the UCC
D) the contracts are not subject to the regulation of the UCC

Question 9

Article 2 of UCC applies to a mixed sale of goods and services if the ________.

A) goods sold are of lesser value than the services
B) sale provides equal provisions for goods and services
C) goods are the predominant part of the transaction
D) sale involves services and goods in different transactions

Question 10

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 11

A person who deals in the goods of the kind involved in a transaction is referred to as a ________.

A) merchant
B) lessee
C) debtor
D) plaintiff

Question 12

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 13

Parris Boutique and the New Line Clothes Company decide to lease a new property of Green Floor Builders for their joint venture.To finance the acquisition,they go to a local bank.The bank purchases the property from Green Floor and leases it to the firms.In this case,________ is the supplier of the lease.

A) Green Floor Builders
B) the New Line Clothes Company
C) Parris Boutique
D) the bank

Question 14

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 15

Which of the following would be considered as goods?

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

Question 16

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 17

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 18

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 19

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 20

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 21

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 22

If the parties to a contract do not agree on payment terms,and a delivery is authorized and made by way of document of title,payment is due at the ________.

A) place where the contract was initially signed
B) time the seller dispatches the goods to the buyer
C) place where the goods are to be delivered as per the original contract
D) time and place at which the buyer receives the right of possession

Question 23

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 24

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 25

If an order or other offer to buy goods requires immediate or current shipment,the offer is accepted ________.

A) after the seller sends a written confirmation within 3 months of the contracting
B) after the buyer has reasonable opportunities to inspect the goods
C) if the seller promptly ships either conforming goods
D) if the seller reasonably notifies the buyer that the shipment is an accommodation

Question 26

Which of the following sources outside a contract is considered first while interpreting the express terms of a written contract?

A) course of dealing
B) course of performance
C) prior oral or written agreements
D) usage of trade

Question 27

Under the UCC,if an offer is received by mail,the acceptance ________.

A) will be made in a manner that the acceptance becomes a counteroffer
B) of the offer must be made by any other medium other than mail
C) should be made by mail unless specified otherwise
D) can be made in any manner by any reasonable medium of acceptance

Question 28

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 29

Which of the following is the correct order of prioritizing the external sources used to interpret the terms of a written contract?

A) course of dealing, usage of trade, and course of performance
B) usage of trade, course of performance, and course of dealing
C) course of performance, course of dealing, and usage of trade
D) course of dealing, course of performance, and usage of trade

Question 30

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

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

Question 31

________ 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 32

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 may be added by the offeree.

Question 33

According to the parol evidence rule,________ that alter,contradict,or are in addition to the terms of the written contract are inadmissible in court regarding a dispute over a written contract.

A) courses of dealing
B) courses of performance
C) prior oral or written agreements
D) usages of trade

Question 34

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 35

What does "course of dealing" refer to 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 36

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 sale of goods has been performed under the contract

Question 37

A written modification to an oral contract is required if the oral modification to the contract ________.

A) has been performed to an extent
B) is within the Statutes of Frauds
C) involves specially manufactured goods
D) is worth less than $500 in costs

Question 38

A shipment of nonconforming goods does not constitute an acceptance if the shipment is offered only as a(n)________.

A) accommodation
B) additional offer
C) consideration
D) open delivery

Question 39

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 40

If the parties to a contract do not set a specific time of performance for any obligation under the contract,the contract ________.

A) must be performed within a reasonable time
B) is considered to be unenforceable under the UCC
C) can be satisfied at a time the offeree insists upon
D) is not created at that time

Question 41

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

Question 42

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 43

Under the written confirmation rule,the Statute of Frauds writing requirement can be satisfied if ________.

A) a party to receive a confirmation does not know of its content
B) a party that receives the confirmation, signs it, and sends it back to the other merchant within a reasonable time
C) a merchant does not give written notice of an objection to the contract within 10 days after receiving a confirmation
D) none of the parties to an agreement sends a written confirmation

Question 44

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 45

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 46

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

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 47

Under the UCC,the inclusion of additional terms in an acceptance is considered a(n)________.

A) counteroffer
B) presentment
C) accommodation
D) objection

Question 48

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 49

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 of the agreed-upon transaction to Jane.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 50

Under the written confirmation rule,a buyer cannot raise the Statue of Frauds against the enforcement of a contract if ________.

A) the written confirmation is not sufficient to assume an acceptance to the contract
B) he does not have a reason to know the contents of the confirmation
C) he fails to object to the contract within 10 days of receiving the confirmation
D) the seller does not send a written confirmation of the sale after contracting

Question 51

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 52

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 53

Stelwire LLC,a vintage car dealer,offers to sell a 1964 Ford Thunderbolt for $80,000 to Ralph.Ralph accepts the offer and insists on adding a satellite radio to the car.This is a proposed addition to the contract.What is the nature of the contract between Ralph and Stelwire under the common law?

A) counteroffer
B) open terms contract
C) proposed additions
D) lease contract

Question 54

According to the firm offer rule,an offeror is restricted from revoking a contract prior to its acceptance for a period of ________.

A) 4 months
B) 10 months
C) 3 months
D) 5 months

Question 55

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) if a contract that requires written confirmation has been agreed orally

Question 56

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.

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

Question 57

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 pro forma invoice
C) a letter of credit
D) a remittance advice

Question 58

Article 5 of the UCC governs ________.

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

Question 59

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 60

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

A) They are considered to be counteroffers.
B) The contract is automatically terminated if both the parties are 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 61

Article 2 of the UCC generally applies to all sales contracts irrespective of the involvement of merchants.

Question 62

The UCC provides that a buyer must accept accommodation sent by the seller if the goods under the contract are not available.

Question 63

The provisions of the Article 2A of the UCC are by no means similar to the provisions of Article 2.

Question 64

The formation of sales and lease contracts requires an offer but seldom requires an acceptance.

Question 65

A lessor cannot acquire title to goods that it does not select,manufacture,or supply.

Question 66

Under the Uniform Commercial Code,businesses are subject to the laws of each state in which they operate.

Question 67

Contracts for the complete provision of services are covered by Article 2 of the UCC.

Question 68

The common law of contracts allows the offeror to revoke the offer any time prior to its acceptance.

Question 69

The shipment of conforming goods signals an acceptance of a buyer's offer.

Question 70

The UCC-established rules for the formation of sales and lease contracts often differ considerably from the common law.

Question 71

Accommodations are considered as acceptance rather than as a counteroffer.

Question 72

The UCC does not allow for open terms in a sales or lease contract.

Question 73

A lease transaction can involve a supplier apart from the lessor and lessee.

Question 74

Article 2 of the UCC contains provisions that either apply only to merchants or impose a greater duty on merchants.

Question 75

The UCC provides that an acceptance of goods occurs if a buyer fails to reject the goods within a reasonable time after the delivery.

Question 76

The UCC provides that a contract is created when the offeror receives the acceptance.

Question 77

According to the UCC,an agreement modifying a sales or lease contract needs consideration to be binding.

Question 78

The Uniform Commercial Code became quickly outdated as mass production and distribution of goods developed in the twentieth century.

Question 79

The customs and rules of the Law Merchant were absorbed into the common law.

Question 80

Subjects that are severable from real estate may be classified as goods subject to Article 2 of the UCC.