Deck 19: Introduction to Sales and Leases

Question 1

A contract to purchase stocks and bonds is governed by Article 2 of the UCC.

Answer 1

False

Question 2

Unless an auction is advertised or announced as being without reserve, the sale is with reserve, and the auctioneer may withdraw the goods at any time until he announces completion of the sale.

Answer 2

True

Question 3

A finance lease is a special type of lease transaction that generally involves three parties instead of two.

Answer 3

True

Question 4

The UCC definition of "unconscionable" is clear and unambiguous.

Question 5

If a merchant makes a written offer to buy or sell goods, this will be irrevocable only if accompanied by consideration.

Question 6

The Code addresses the "battle of the forms" problem by comparing the fine print on each form and eliminating all conflicting terms.

Question 7

If a UCC contract does not contain all the terms necessary to carry it out, there will be no contract.

Question 8

If the original agreement was oral, a subsequent oral modification, which brings the resulting contract within the statute of frauds, is binding on and enforceable by the parties.

Question 9

The purpose of Article 2 of the UCC is to modernize, clarify, simplify, and make uniform the law of sales.

Question 10

A lessee under a consumer lease and a buyer under a sale of goods are provided with the same protections against unconscionability under the UCC.

Question 11

The common law "mirror image" rule has been modified by the Code.

Question 12

If a merchant signs a written offer to buy or sell goods, this will be irrevocable only if accompanied by consideration.

Question 13

A lease is the transfer of title to goods from seller to buyer for a price.

Question 14

Article 2A is an attempt to codify in one statute all the rules governing the leasing of personal property.

Question 15

Rudolph, the owner of a shoe store, purchased 500 Fleet X24 running shoes from his supplier, but a price was not stated in the contract.The contract is voidable at Rudolph's option until the parties agree on a price.

Question 16

The definition of "goods" in the UCC may include timber, minerals, growing crops, or a building.

Question 17

Substantive unconscionability involves scrutiny by the court for "bargaining naughtiness."

Question 18

Under the Code, if the parties have reached no agreement on price, the price is a reasonable one at the time of making the contract.

Question 19

"Goods" for purposes of the Code are essentially defined as tangible, movable, personal property.

Question 20

Article 2A of the UCC affords special treatment for consumer leases.

Question 21

Edie telephoned the office supply store and agreed to buy a dozen ink cartridges at $26 each.She then realized what a good buy this was and called the store with a request to modify the contract to read two dozen.What is the consequence?

A) The modified contract is unenforceable.
B) The modified contract is valid and enforceable.
C) There is no consideration, so the contract is void.
D) The modified contract is void.

Question 22

Under the CISG, which of the following would not always be considered a material alteration to an offer?

A) A change in time of delivery.
B) A change in color of goods ordered.
C) The addition of an arbitration clause for settlement of disputes.
D) A change in payment.

Question 23

The CISG governs only the formation of the contract of sales and the rights and obligations of the seller and buyer.It does not cover the validity of the contract or any of its provisions.

Question 24

Contracts containing unconscionable clauses are void and unenforceable.

Question 25

The UCC modifies the common law rule by requiring additional consideration for the modification of a contract.

Question 26

Which of the following is true regarding unconscionability under the Code?

A) It is defined in Article 2 as "extortionately harsh, showing no regard for conscience."
B) The Code denies or limits enforcement of an unconscionable contract for the sale of goods.
C) Unconscionability of a contract for the sale of goods makes the contract void.
D) Unconscionability may be substantive, but it cannot be procedural.

Question 27

A "merchant" is defined as a person who:

A) is a dealer in a particular type of goods.
B) employs an agent or broker whom he holds out as having such knowledge or skill.
C) by his occupation holds himself out as having knowledge or skills peculiar to certain goods or practices.
D) All of these.

Question 28

The Code provides that its remedies shall be liberally administered to place the aggrieved party in a position as good as the one she would have occupied had the defaulting party fully performed.

Question 29

The definition of "usage of trade" includes:

A) a practice regularly observed and followed in a place, vocation, or trade.
B) a sequence of previous conduct between the parties that may fairly be regarded as establishing a common basis of understanding for interpreting their expressions and agreement.
C) separation rules that apply to transactions between merchants.
D) All of these.

Question 30

Who among the following is most likely not considered a merchant according to Article 2 of the UCC?

A) Kay who sells her 3-year-old fishing boat to her neighbor.
B) Jan, who is not knowledgeable about selling sailboats, but who employs an experienced expert in the trade.
C) Tom who, as a hobby, builds and sells birdhouses on the weekends.
D) Jim who owns a wholesale auto parts business.

Question 31

In determining whether a contract containing both a sale of goods and a service is a UCC contract or general contract, a majority of states follow the predominant purpose test.

Question 32

Amendments to UCC Articles 2 and 2A were promulgated in 2003 to accommodate electronic commerce and to reflect developments in business and law and, as of 2011, these amendments had been adopted in all of the states.

Question 33

Albert has a contract to buy 100 tables from Bartholomew at a price of $50 a table.Five days before Bartholomew is to deliver the tables, he calls Albert to say that he is sorry but $50 won't cover his costs, and he will now need at least $75 a table.Albert agrees, because he needs the tables for his special sale.The modified contract is enforceable even though Albert isn't getting any new consideration, so long as Bartholomew is acting in good faith and the agreement to the new price is put in writing.

Question 34

Under the CISG, contracts for the sale of goods do not have to be evidenced by a writing to be enforceable, unless one of the parties has its place of business in a country that provides otherwise.

Question 35

In the case of Pittsley v.Houser, the court:

A) found the CISG governed the contract in question.
B) found the "predominant factor" test was the better, more prudent rule.
C) held that the "predominant factor" test contravened the UCC's declared purpose.
D) held that the contract should be severed into different parts, applying the UCC to the part of the contract involving goods and the common law to the services part of the contract.

Question 36

If a contract does not comply with the statute of frauds, it is void.

Question 37

The Code defines __________ as " honesty in fact and the observance of reasonable commercial standards of fair dealing ."

A) good faith
B) merchantability
C) entrusting
D) unconscionability

Question 38

Leases of personal property exceed $100 billion annually and are governed by Article 2A of the UCC.

Question 39

Categorizing a transaction as a lease rather than a security interest:

A) has significant implications for the parties and for third parties.
B) has significant implications only for the parties to the transaction.
C) would mean the provisions of Article 9 of the UCC apply to the transaction.
D) Two of these are correct.

Question 40

Under the Code, a contract to sell or lease personal property is recognized whenever the parties manifest such an intent, even if they cannot identify a precise moment the contract was formed.

Question 41

Which of the following transactions is governed by Article 2 of the UCC?

A) The sale of an apartment complex.
B) The sale of common stock of a soft drink company.
C) A contract to receive medical services in a hospital.
D) The sale of oranges to be picked from a 10-acre grove.

Question 42

A "sale" of goods happens when:

A) the parties sign the contract.
B) a promise to transfer title is made.
C) title to the goods is passed.
D) the parties agree.

Question 43

Davis Co.and Ruby Creations enter an oral contract providing that Ruby will deliver three dozen dresses to Davis at $20 per dress.The next day, Davis sent Ruby a letter signed by Davis's purchasing agent confirming the quantity and item, but not mentioning the price.Which of the following is true?

A) Ruby Creations and Davis Co. were bound in an enforceable contract at the time they entered the oral agreement.
B) Davis is bound by the contract when its authorized agent sends the letter, but Ruby Creations is bound by the oral contract ten days after receiving the letter, unless it objects in writing within that time.
C) Davis Co. is not bound by the terms of the letter unless Ruby responds in writing to verify the agreement.
D) The parties cannot be bound by the contract because the price term was missing from the written confirmation.

Question 44

Haven orally agrees to buy 50 digital cash registers from Thomas for $15,000.Thomas delivers 30  cash registers  to Haven , who receives and accepts them.Which of the following is correct with regard to this transaction?

A) The contract is enforceable to the extent of the 30  cash registers  that have been received and accepted.
B) Haven can enforce the contract for the additional 20  cash registers  .
C) The entire contract is in violation of the statute of frauds and cannot be enforced.
D) This is a bad deal, and is therefore commercially unconscionable from the beginning and is unenforceable.

Question 45

Mary and Remaldi Co.have dealt with each other for many years.Mary's Boutique orders 100 assorted lipsticks at $2.00 each from Remaldi Co.Remaldi sends back a confirmation letter with an additional, nonmaterial term.There is:

A) a contract with the additional term only if Mary agrees.
B) a contract without the additional term.
C) no contract, but a counteroffer.
D) a contract with the additional term unless Mary objects.

Question 46

Which of the following is not true about auctions?

A) Unless an auction is advertised as being without reserve, the sale is with reserve.
B) If the auctioneer knowingly receives a bid on behalf of the seller and notice has not been given that the seller reserves the right to bid at the sale, the bidder to whom the goods are sold can avoid the sale.
C) The UCC provides that if an auction sale is advertised or announced in explicit terms to be with reserve, the auctioneer may not withdraw the article put up for sale unless no bid is made within a reasonable time.
D) Whether an auction is with or without reserve, a bidder may retract his bid at any time prior to acceptance by the auctioneer.

Question 47

An example of the "course of dealing" concept that courts will use in interpreting a contract under the UCC would be:

A) Bob sees an ad in the local paper for heritage flower seeds sold by Mel. He calls Mel and is so excited by his find that he orders a quantity of the seeds to be shipped as soon as possible but does not inquire as to price. Mel sends him the seeds and the invoice.
B) Temaco, Superior Oil, and AllBig, are the largest national oil companies in the country. In each refinery, orders are placed at the beginning of each quarter for priority delivery to distributors.
C) Steven and Michelle have been involved in contracts together for over 5 years. Steven maintains the sign for Michelle's restaurant. Each time Steven sees the sign needs repair, he fixes it without need of express consent from Michelle. Michelle has always paid the bill promptly.
D) All of these are examples of "course of dealing."

Question 48

The case of Construction Associates, Inc.v.Fargo Water Equipment Co.illustrates the doctrine of:

A) usage of trade.
B) a transaction outside the Code.
C) course of dealing.
D) unconscionability.

Question 49

A(n) __________ is a special type of lease transaction generally involving three parties instead of two.

A) sale
B) consumer lease
C) finance lease
D) option

Question 50

Which of the following is not true about a consumer lease under UCC Article 2A?

A) There is no dollar limit on the amount of a consumer lease under Article 2A.
B) Consumer protection provisions are contained in Article 2A, and these may not be varied by the parties' agreement.
C) The lessee cannot be an organization.
D) The lessor must be regularly engaged in the business of leasing or selling goods.

Question 51

The most important element in determining whether a sales contract has been made is the:

A) intent of the parties to make a contract.
B) fact that the terms of the offer and acceptance are exactly alike.
C) language of the contract.
D) number of open terms.

Question 52

Under Article 2A:

A) a court faced with an unconscionable contract or clause must refuse to enforce the entire contract.
B) consumers in an unconscionable consumer lease contract receive an additional remedy over consumers in unconscionable sales contracts. Reasonable attorneys' fees may be awarded.
C) there is no provision for relief for unconscionable conduct in the collection of a claim arising from a consumer lease contract.
D) lessees under all types of leases of personal property have the same protections against unconscionable contracts.

Question 53

A contract that does not satisfy the writing requirement of the Article 2 statute of frauds, but which is otherwise valid, is enforceable in which of the following situations?

A) Where the goods have been delivered and accepted.
B) Where payment has been accepted.
C) Where the goods have been specially manufactured and are not suitable for resale in the ordinary course of business.
D) All of these are situations where the contract would be enforceable.

Question 54

Mike inherited some antiques.Pat agrees to buy them.In the contract, Mike and Pat agree to value the antiques at whatever the Sotheby's representative says.If the valuation is much higher than either of them anticipated, Pat:

A) can treat the contract as canceled.
B) has to buy at the price set by the Sotheby representative.
C) has to buy, but at what Pat and Mike believe was a reasonable price.
D) has no obligation to buy the antiques.

Question 55

Karen has agreed to buy Sara's car, but the two have not agreed on the price.When there is no agreement as to price in a contract for a sale of goods, what effect does it have on the contract?

A) The price is a reasonable price at the time of delivery.
B) The price is whatever the seller decides.
C) The price is a reasonable price at the time of making the contract.
D) There is no contract, because the agreement is not definite and certain enough.

Question 56

A contract has an open price term if the agreement:

A) says nothing as to price.
B) provides that the parties shall agree later as to the price and they fail to so agree.
C) fixes the price in terms of some agreed market or other standard, as set by a third person or agency, and the price is not so set.
D) All of these.
E) None of these.

Question 57

Which of the following is correct with respect to "finance leases"?

A) A finance lease generally involves four parties.
B) Finance leases are governed by the Truth in Lending Act rather than the UCC.
C) The finance lessor functions as a source of credit.
D) All of these are correct.

Question 58

The doctrine of unconscionability has evolved through its application by the courts to include:

A) substantive contract terms.
B) contract negotiating procedures.
C) good faith.
D) Both contract negotiating procedures  and substantive contract terms  are correct.

Question 59

The CISG specifically excludes sales of:

A) electricity.
B) goods bought for personal, family, or household use.
C) ships or aircraft.
D) All of these.

Question 60

In the Carter v.Tokai Financial Services, Inc.case, the agreement was found to:

A) fit within the definition of a secured transaction.
B) be for an initial term of five years, which ARC had an option to renew for nominal consideration.
C) be governed by UCC Article 9.
D) be a true finance lease.

Question 61

Explain when a writing is required under the UCC for a contract for the sale of goods and what is needed in that writing.Identify three exceptions to the requirement of a writing or record for the sale of goods.

Question 62

Discuss the concept of freedom of contract under Articles 2 and 2A of the UCC.

Question 63

Discuss the similarities or possible differences between the parol evidence rule under the common law of contracts and the parol evidence rule found in Article 2.

Question 64

What is a "merchant?" Identify four provisions in Article 2 that apply to merchants, but not to others.

Question 65

List four areas of contract law where the common law of contracts and the law of sales differ.Give both the common law rule and the rule under Article 2.

Question 66

What does Article 2 say with regard to the following?
a.Good faith.
b.Unconscionability.
c.Expansion of commercial practices.

Question 67

The Code has made certain offers irrevocable without the offeree's giving any consideration for the promise to keep the offer open.These offers are known as:

A) options.
B) firm offers.
C) variant acceptances.
D) auctions.