Deck 18: Formation of Sales and Lease Contracts

Question 1

If a homeowner sells a used lawn mower to his neighbor,Article 2 of the UCC does not apply.

Answer 1

False

Question 2

The UCC applies only to sales between merchants.

Answer 2

False

Question 3

In a lease,the lessee does not acquire title to the leased goods.

Answer 3

True

Question 4

Article 2 of the UCC applies to transactions in goods.

Question 5

Article 2 of the UCC applies to real estate,because real estate generally has severable things that are goods according to Article 2 of the UCC.

Question 6

A transaction that includes both a goods and a services component will be covered by the UCC so long as the goods are the predominant part of the transaction.

Question 7

In order for title to pass from a seller to a buyer,the purchase of the good must be by cash.

Question 8

The UCC applies to contracts for services as well as to contracts for the sale of goods.

Question 9

A party is considered a merchant if that party holds herself out as having special knowledge of the goods involved in the transaction,even if she does not regularly deal in the goods.

Question 10

Growing crops that are severable from real estate may be classified as goods and subject to Article 2.

Question 11

The lessee is the party who holds himself or herself out as having knowledge or skill peculiar to the goods involved in the transaction.

Question 12

The common law of contracts governs if either Article 2 or Article 2A is silent on the issue.

Question 13

A sale involving both goods and services is known as a mixed sale.

Question 14

A sporting goods dealer is a merchant with respect to golf clubs but not if he sells a wheelbarrow to a neighbor.

Question 15

A party that is a merchant in one transaction is a merchant for all transactions in which he/she is involved.

Question 16

A finance lease is a three-party transaction comprised of the lessor,the lessee,and the offeror.

Question 17

The installation of a pacemaker by a hospital is a sale of goods subject to Article 2 of the UCC.

Question 18

Sales of stocks and bonds are covered by Article 2 of the UCC.

Question 19

Every state except Louisiana has enacted the UCC as its commercial statute.

Question 20

Article 2A of the UCC directly addresses personal property leases.

Question 21

Under Article 2 of the UCC,acceptances are effective when dispatched.

Question 22

A general purpose of the UCC is to:

A) protect the merchant who deals in goods
B) protect the consumer
C) standardize commercial law and facilitate commercial transactions
D) protect parties from entering into unconscionable contracts

Question 23

In a contract for the sale of goods,if the seller does not have a place of business and the contract does not mention delivery in any way,delivery is to be made at the buyer's house.

Question 24

The proper relationship between the common law and the UCC regarding sales is:

A) common law no longer applies to sales
B) the UCC no longer applies to sales
C) the UCC controls sales,but where the UCC is silent,common law still controls
D) the common law controls sales,but where the common law is silent,the UCC controls

Question 25

An agreement modifying a sales or lease contract needs consideration to be binding.

Question 26

The UCC applies to a mixed sale:

A) whenever a sale of goods is a part of the transaction
B) only if there is no service involved
C) if the sale of the goods is the predominant part of the transaction
D) only if the contract provides that the UCC applies

Question 27

The "battle of the forms" is a reference to the insistence by many merchant sellers that customers sign the seller's standard form contract without modification.

Question 28

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

Question 29

Under the UCC,the mirror-image rule applies in the same manner as under common law.

Question 30

The formation of sales and lease contracts requires no consideration.

Question 31

Articles 2 and 2A of the UCC cover which types of transactions:

A) sales of goods and sales of real property
B) sales of goods and leases of goods or real property
C) sales of goods and contracts for the providing of services
D) sales of goods and leases of goods

Question 32

A "firm offer" may be made by a nonmerchant seller.

Question 33

If both parties to an oral sale or lease contract are merchants,the Statute of Frauds requirement can be satisfied if one of the parties sends a written confirmation and the other merchant does not object within 10 days of receiving the confirmation.

Question 34

Additional terms to a contract are considered proposed additions if one or both parties to a sales contract are nonmerchants.

Question 35

Under the Uniform Commercial Code,it is possible for a nonmerchant to be liable on a contract for the sale of goods of $500 or more without having signed any writing.

Question 36

Under Article 2 of the UCC,there are detailed rules for the proper methods of acceptance in various situations.

Question 37

Under UCC 2-206(1)(b),an accommodation:

A) neither applies to merchants nor nonmerchants
B) applies to nonmerchants only
C) is a shipment that is offered to the buyer as a replacement for the original shipment when the original shipment cannot be filled
D) is a bonus shipment when items are temporarily out of stock

Question 38

Under the UCC,courts will frequently enforce a contract that does not state a price.

Question 39

A "firm offer" can be held open as long as 3 months.

Question 40

Under the UCC,a court can find that a contract exists as long as the moment of its making is determined.

Question 41

A merchant is a person who:

A) deals in goods of the kind involved in the transaction
B) by his or her skill or occupation,holds himself or herself out as having special skill or knowledge regarding the goods in the transaction
C) employs a merchant as his or her agent
D) Any of the above would qualify a person as a merchant.
E) A,B,or C are all required to qualify a person as a merchant.

Question 42

For the firm offer rule to apply,who must be a merchant?

A) the offeror
B) the offeree
C) both the offeror and the offeree
D) neither the offeror nor the offeree

Question 43

Under the UCC,if a purported acceptance to an offer contains additional terms:

A) it is treated as a rejection and counteroffer
B) if both parties are merchants,there is a contract and the additional terms may or may not become part of the contract
C) if neither party is a merchant,there is no contract
D) it is treated as a counteroffer,but it does not reject the original offer

Question 44

Regarding differences under the UCC in the treatment of merchants and nonmerchants,which is true?

A) The UCC applies to merchants,but not to nonmerchants.
B) The UCC requires merchants' contracts to be in writing,but not those of nonmerchants.
C) The requirements for a merchant to form a contract are less stringent than those for nonmerchants,and merchants receive fewer protections than nonmerchants.
D) The consideration requirement has been eliminated for contracts between merchants,but is still present in contracts involving at least one nonmerchant.

Question 45

Where a contract for the sale of goods does not mention the place of delivery for the goods,which of the following is true?

A) The seller is obligated to deliver the goods to the buyer's place of business.
B) The contract fails for failure to state a material term.
C) The seller is obligated to deliver the goods at the seller's place of business.
D) Sellers without a place of business are obligated to deliver the goods at the seller's home.
E) Both C and D are true.

Question 46

If the time,place,and manner of delivery of goods is 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 47

Which of the following statements is true regarding sales contract terms left open under the UCC?

A) Leaving terms open makes the contract unenforceable.
B) If not stated,the price is a "reasonable" price at the time of delivery.
C) The price may be fixed by a market,a third person,or another standard,if so provided in the contract.
D) A and C only are true.
E) B and C only are true.

Question 48

Under the UCC,firm offers can be made:

A) orally or in writing by either merchants or nonmerchants
B) orally or in writing by merchants
C) orally or in writing by merchants,but only in writing by nonmerchants
D) in writing by either merchants or nonmerchants
E) in writing by merchants

Question 49

What is "course of performance?"

A) the previous conduct of the parties regarding the contract in question
B) the conduct of the parties in prior transactions and contracts
C) any practice or method of dealing that is regularly observed or adhered to in a place,a vocation,a trade,or an industry
D) an exception to the Statute of Frauds

Question 50

What is required to meet the writing requirement of the Statute of Frauds under the UCC?

A) In all cases,a writing signed by all parties to the contract.
B) In all cases,a writing signed by the party to be charged.
C) In cases where at least one party is a merchant,either a writing signed by the party to be charged or a written confirmation of an oral agreement that is sent to the merchant and not objected to by the merchant. In transactions not involving a merchant,a writing signed by the person to be charged.
D) In cases where both parties are merchants,a writing signed by the party to be charged or a written confirmation of an oral agreement that is sent by one party to the other and not objected to by the other party. In all other transactions,a writing signed by the party to be charged.

Question 51

An order or other offer to buy goods which requires prompt or current shipment may be accepted by:

A) a prompt shipment of conforming goods
B) a prompt shipment of nonconforming goods
C) a prompt promise to ship the goods
D) A,B,or C
E) A or B only

Question 52

For the written confirmation rule to apply,who must be a merchant?

A) the offeror
B) the offeree
C) both the offeror and the offeree
D) neither the offeror nor the offeree

Question 53

Where the offeror is a merchant and the offeree is a nonmerchant,what is the effect of minor different terms contained in an acceptance?

A) A contract will be formed incorporating the different terms of the acceptance.
B) No contract is formed,and the purported acceptance is treated as a counteroffer.
C) A contract is formed,but only if the parties resolve the differences in the offer and the acceptance.
D) A contract is formed according to the terms of the offer,and the additional terms are treated as proposed additions to the contract.
E) The purported acceptance is treated as a rejection,except that the original offer remains open under the firm offer rule.

Question 54

Which of the following statements is not true about a finance lease as defined in Article 2A of the UCC?

A) A finance lease is a two-party transaction where the lessor sells the goods to the lessee and provides the financing of the goods.
B) A finance lease results in the title being transferred from the seller of the goods to the lessor.
C) The UCC covers all finance lease transactions regardless of the dollar amount of the lease.
D) Once the lease term begins,the seller generally is no longer involved in the transaction.
E) The lessor is usually not involved in manufacturing or supplying the goods to the lessee.

Question 55

Which of the following is true relating to a "firm offer" under the UCC?

A) It can be made only by a merchant.
B) It must be in writing and signed by the merchant.
C) It may provide that the offer remain open for any period of time up to 4 months.
D) A,B,and C are true.
E) A and B only are true.

Question 56

Which of the following is not true about Article 2A of the UCC?

A) Many of its provision are similar to corresponding provisions of Article 2.
B) The primary motivation in creating a separate Article for leases was to address those areas where the sales provisions didn't exactly fit a lease transaction.
C) Article 2A was drafted in the late 1950s,a few years after Article 2 was drafted.
D) Consumer leases are defined as having a maximum value of $25,000.

Question 57

According to the UCC,which of the following will be enforceable even if it is not in writing?

A) admissions in pleadings or court
B) part acceptance by the buyer or lessee
C) specially manufactured goods
D) All of these are correct.
E) None of these are correct.

Question 58

Under Article 2 of the UCC,a contract is usually enforceable even if which of the following terms is omitted:

A) price
B) quantity
C) price or quantity
D) neither price nor quantity may be omitted

Question 59

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

A) must also be made by mail
B) can be made by other means,but only if the offer so states
C) is effective only once it is received by the offeror
D) can be canceled by the offeree at any time during the period of a firm offer
E) can be made in any commercially reasonable manner

Question 60

Under the UCC Article 2,unless otherwise agreed,an acceptance of an offer is effective:

A) when dispatched
B) when dispatched,but only if the acceptance reaches its destination within a reasonable time
C) when the acceptance is received
D) when the goods are received
E) when the offeree acknowledges receipt of the acceptance

Question 61

Why did contract law develop for hundreds of years and function well without a Uniform Commercial Code? Why did any need for standardized laws from one jurisdiction to another not get addressed until the beginning of the twentieth century?

Question 62

A grocery store mails an offer to purchase 50,000 pounds of bananas to a produce importer.The importer immediately ships the 50,000 pounds of bananas by truck to the buyer but does not send notification to the buyer that it is making the shipment.Which of the following is true?

A) There has been an effective acceptance merely by shipping the bananas.
B) There would be an acceptance only if the seller sends a written acceptance by mail because the offer was received by mail.
C) The seller must send an acceptance to the buyer by any commercially reasonable method.
D) When the bananas arrive at the grocery store,their arrival will be treated as an offer.

Question 63

A buyer agrees to purchase "two cars" from an elevator company.All material terms are contained in a written contract,but "two cars" is not further defined.Which of the following evidence can be admitted if there is a dispute over what "two cars" refers to?

A) Oral evidence that before the signing of the contract the parties intended the contract to be for the purchase of three cars.
B) Oral evidence that before the signing of the written agreement the elevator company said it would extend its normal 1-year warranty (which is stated in the written contract) to 2 years.
C) Oral evidence that the word "car" refers to an elevator,since that is normal in the elevator industry,and that it does not refer to any of the company's automobiles.
D) Written evidence from prior to the signing of the written contract that the parties intended the contract to be for the purchase of three cars.

Question 64

A retailer ordered some inventory by phone from a manufacturer.The order was for 1,000 machines from the manufacturer's inventory at $300 each.The manufacturer sent the retailer a fax moments later detailing the order.The retailer looked at the fax and was satisfied that it stated the terms of the contract,but never responded in any way.When the goods were delivered on time a month later,the retailer refused to accept them,asserting that the contract was unenforceable.Which is true?

A) No writing is needed because of one of the exceptions to the Statute of Frauds.
B) The contract is unenforceable because the retailer has not signed a writing.
C) The contract is enforceable because it would be unconscionable to not enforce it.
D) The contract is enforceable under the written confirmation rule.
E) Because the fax was not responded to,this was an accommodation shipment.

Question 65

Which terms will be implied in a contract under the UCC if they are omitted in the express contract? Why does the UCC so freely imply these omitted terms? What are the risks of such a liberal policy of implying omitted terms?

Question 66

Company A signs a lease contract with Company B on Monday.The signor leaves the contract on his desk until Tuesday.The contract is brought to the post office on Tuesday afternoon.The post office temporarily misplaces the document,and does not locate it until Thursday.The contract is delivered to Company B on Friday.At what point was the contract accepted?

A) upon the signing of the document by Company A on Monday
B) upon delivery of the document to the post office on Tuesday
C) upon the relocating of the document by the post office on Thursday
D) upon delivery of the document to Company B on Friday

Question 67

If a buyer and seller agree to a contract for the sale of goods amounting to $400,which modifications must be in writing in order to be enforceable?

A) all modifications
B) any modification increasing the price by $500 or more
C) any modification increasing the price by $100 or more
D) No modification to such a contract needs to be in writing because the original contract did not need to be in writing.

Question 68

Is the purpose of the UCC undermined by allowing nearly every one of its provisions to be made nonapplicable to a particular contract if the parties agree? Doesn't this interfere with the goal of the standardization of contract law? Why do you think that the UCC allows this?

Question 69

A newly opened retailer contracted with a computer component manufacturer for the purchase of some accessory keyboards.The contract was very detailed,specifying all aspects of the contract except for the quantity.Under these circumstances,a court would most likely:

A) enforce the contract,filling in the gap with a reasonable quantity
B) order the parties to reach agreement regarding the number of keyboards to be purchased
C) not enforce the contract because it would be impossible to determine the number of keyboards that would be a reasonable quantity
D) set the quantity based on the seller's average sale quantity to similar retailers

Question 70

A buyer purchases some equipment that costs $20,000.As part of the contract,the seller agrees to install this equipment for an additional $2,000.After the buyer begins using the equipment,problems develop.Some of the problems relate to how the equipment was installed,while others relate to the equipment itself.Which of the following is true?

A) The sales portion of the contract is covered by the UCC,but the installation services are covered under common law.
B) The entire contract is covered under the UCC.
C) The entire contract is covered under common law.
D) Either the entire contract is covered under the UCC or the entire contract is covered under common law; which one covers it depends on whether more of the problems relate to the equipment itself or to the installation.

Question 71

Seller offers to sell to Buyer 1,000 widgets at $5 each.Buyer responds in writing,stating that Buyer accepts the offer,but at a reduced price of $4.95.Seller refuses to deliver at this price.Buyer sues.Both parties are merchants.In this situation,which of the following is true?

A) There is no contract.
B) There is a contract; the $4.95 price is an additional term,which becomes part of the contract because it is not material.
C) There is a contract; the $4.95 price is an additional term,which does not become part of the contract because it is material.
D) This is a firm offer.

Question 72

Is it reasonable for certain provisions of the UCC to apply to merchants only or to apply differently to merchants than to nonmerchants? Shouldn't anyone who chooses to enter into a commercial transaction be held to the same standard? Is it unfair to have the two standards?

Question 73

A lessor and lessee orally agree to a lease of goods in the amount of $400 per month.The lease is later modified to $600 per month.Must the modification be in writing?

A) No; the original lease was already in effect.
B) No; oral contracts in this amount are common.
C) Yes; every modification must be in writing.
D) Yes; a lack of writing would violate the Statute of Frauds.

Question 74

Melissa purchased a compact satellite dish as part of a contract to obtain satellite television service.Melissa owns a small bar and plans to use the dish and cable service in her bar.The contract provided that she pay $200 for the dish,after which she would receive 12 months of television service through the satellite dish at no charge.After 12 months,in order to receive continued service,she would have to pay the company's regular monthly charge of $21,or her dish would be disabled.The dish is specially manufactured such that it can receive only the signals provided by the company that provided her with the dish.The company installed the dish in Melissa's bar as provided in the contract.For the first couple of months,Melissa was happy with the service.It was less expensive than regular cable television and the quality of the picture was superior.In the fourth month of the contract,Melissa began having problems.First,the dish became slightly warped.Second,the signals received by the dish began to fail frequently,at least once every week when bar patrons wanted to watch television.Melissa assumes the signal fails at other times when patrons are not watching.The warping of the dish appears to have affected the quality of the picture.Melissa had a friend hold the dish and push it into its original shape while Melissa watched the television,and the picture improved as long as the friend held the dish.The company refuses to address Melissa's complaints.Discuss whether the Uniform Commercial Code or common law would apply in resolving each of Melissa's problems.Also,discuss whether Melissa would be considered a merchant under the UCC.

Question 75

JetRed Airlines wants a new plane that is manufactured by the Boeing Corporation.A local bank agrees to purchase the plane from Boeing,and lease the aircraft to JetRed.The plane is delivered directly to JetRed.Who is the lessor in this arrangement?

A) Boeing Corporation
B) the bank
C) JetRed Airlines
D) none of the above

Question 76

A small consulting firm entered into a contract with an office machine retailer to purchase a photocopier for $3,000.The contract included a service agreement.The consultants inquired into dropping the service agreement,but because that would lower the price by only $250,they decided to pay the $3,000.After using the copier for several months,it began to need a few service calls.The copier generally worked well,and the problems were minor,but there were problems with the service.Many times it would take a couple of days for a technician to arrive and take care of the problem.More frustrating was the fact that many of the problems required only minor adjustments.Other times parts were not available.The consultants read the provisions of the agreement relating to the servicing and concluded that there had been numerous breaches.In a dispute over the service,what laws would apply and why?

Question 77

A buyer and seller enter into a written contract for the sale of some specialty steel to be used by the buyer in the manufacture of some appliances.The contract specified all the terms of the contract except the price.Which of the following is true?

A) There is no contract because there is no meeting of the minds as to a material term.
B) There would be a contract except that the price cannot be implied in this contract because it is not a contract for the sale of a commodity with an easily determined market price.
C) A price will be implied only if the contract called for the price to be determined at a later date.
D) A reasonable price will be implied.

Question 78

Seller orally contracts to sell goods to Buyer for a total price of $450.Several days later,both parties orally agree to raise the price to $550 because of a shortage of these goods.When the goods are delivered,Buyer refuses to accept them.Seller sues.Both parties are merchants.In this situation,which of the following is true?

A) Buyer wins; this contract must be in writing to be enforceable.
B) Seller wins; the contract is enforceable without a writing and Seller can collect $550.
C) Seller wins; the contract is enforceable without a writing,but Seller can collect only $450.
D) Buyer wins; both the original contract and the modification needed to be in writing.

Question 79

A homeowner orally contracted to buy some custom-made parts that the homeowner will use to build a retaining wall in the homeowner's back yard.The contract price for these materials was $2,000.The buyer refused to take delivery even though the materials were conforming.The seller is unable to sell these parts to anyone else because they were individually designed for the homeowner.In a lawsuit against the homeowner by the seller of the parts,which of the following is true?

A) The UCC would not apply because these goods will become real property when installed by the homeowner.
B) This contract is not enforceable because the price is $500 or more.
C) This contract is not enforceable,assuming that the homeowner is not a merchant in the materials purchased.
D) This contract is fully enforceable even though it is not in writing.

Question 80

A buyer who is not a merchant in boats is at a boat store and orally agrees to purchase a sailboat for $2,000.The buyer sends a written confirmation to the boat dealer the next day describing all relevant terms of their agreement.When the buyer goes to the store a week later to pick up the boat,the store refuses to sell the boat for $2,000.Which is true?

A) This contract is not enforceable because it is not in writing.
B) This contract is enforceable because the boat dealer did not object to the written confirmation.
C) This contract is enforceable if $2,000 is a reasonable price for the boat.
D) This contract is enforceable because the boat dealer is a merchant.
E) The firm offer rule would require the boat to be sold at the offered price of $2,000.