Deck 17: The Formation of Sales and Lease Contracts

Question 1

A lessoris a party who acquires a right to the possession and use of goods under a lease.

Answer 1

False

Question 2

Under the UCC, good faith means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.

Answer 2

True

Question 3

The terms of a fully integrated contract can be contradicted by evidence of any prior agreements.

Answer 3

False

Question 4

Under the UCC, an offeror must be notified within a reasonable time that the offeree has accepted.

Question 5

Under the UCC, an oral contract for a sale of goods is enforceable if goods have been received and accepted.

Question 6

According to the UCC, one open term will cause a sales contract to fail for indefiniteness.

Question 7

Under the UCC, an offeree can accept an offer to buy goods by a prompt shipment of conforming goods.

Question 8

A merchant's firm is revocable at any time before acceptance.

Question 9

Title and risk of loss can pass to the buyer from the seller before the goods are identified to the contract.

Question 10

If the parties to a contract for a sale of goods have not agreed on a price, a court will determine a reasonable price at the time for delivery.

Question 11

Under the UCC, parties to sales and lease contracts are free to establish whatever terms they wish.

Question 12

Under the UCC, if a contract for a sale of goods does not specify the quantity, a court will objectively determine what is a reasonable quantity.

Question 13

The UCC requires a contract modification to be supported by new consideration.

Question 14

If an owner holds fungible goods as an owner in common, he or she can pass title without actually separating the goods.

Question 15

In interpreting a commercial agreement, a court will assume that the usage of trade was taken into account when the agreement was phrased.

Question 16

Goods associated with real estate never fall within the scope of UCC Article 2.

Question 17

To be characterized as a "good" under the UCC, an item of property must be movable.

Question 18

Under the UCC, the meaning of any agreement must be interpreted in light of commercial practices.

Question 19

When no delivery terms are specified in a contract for a sale of goods, there is no basis for determining a remedy.

Question 20

Under the UCC, a sale is the passing of title from a seller to a buyer for a price.

Question 21

Josefina owns a condominium that she leases to Katrina. Josefina gives her daughter Lucia $450 on her sixteenth birthday. Josefina sells her car to her neighbor Maria for $1,500. UCC Article 2 covers

A)the lease with Katrina.
B)the gift to Lucia.
C)the sale to Maria.
D)all of the choices.

Question 22

Under the United Nations Convention on Contracts for the International Sale of Goods, an international sales contract does not need to be evidenced by a writing or to be in any particular form.

Question 23

A seller with voidable title has the power to transfer good title to a good faith purchaser for value.

Question 24

When a merchant keeps the goods for the buyer to pick up, the risk of loss passes when the buyer actually takes possession of the goods.

Question 25

When the risk of loss for goods passes from a seller to a buyer is generally determined by the contract between the parties.

Question 26

Bert sells his car to Conrad for $5,000 and his bike to Del for $600. Bert sells his vinyl collection to Elena for $1,000 and his stock in Altogether Now, Inc.—a firm that markets an app for organizing digital music files—to Franz for $4,000. UCC Article 2 covers all of these transactions except the sale of

A)the car.
B)the bike.
C)the vinyl.
D)the stock.

Question 27

In a destination contract, the seller is required or authorized to ship goods by carrier.
​

Question 28

In contracts involving a sale of unborn animals to be born within twelve months, identification takes place when the animals are conceived.

Question 29

Under the United Nations Convention on Contracts for the International Sale of Goods, there are no irrevocable offers.

Question 30

If a sale involves crops that are to be harvested within twelve months, identification takes place when the crops are harvested.

Question 31

Expert Stitching Corporation enters into a contract to sell denim clothing to Fine Fashion Company, which in turn sells a pair of jeans to Grady, a consumer. In contrast to standards that apply to consumers, the UCC imposes on merchants​

A) ​less strict legal standards.
B) ​special business standards.
C) ​stricter ethical standards.
D) ​the same overall standards.

Question 32

When a buyer breaches a contract, the risk of loss immediately shifts to the buyer.

Question 33

Any explicit understanding between the buyer and the seller determines when title passes.

Question 34

Both the buyer and the seller can have an insurable interest in identical goods at the same time.

Question 35

The risk of loss in a shipment contract passes to the buyer when the goods are delivered to the buyer at the specified destination.

Question 36

Lexi pays Mobile Edge Electronics $600 and receives a new phone. Under the UCC, this is

A)a merchant's firm offer.
B)a lease.
C)a sale.
D)a requirements contract.

Question 37

When goods are held by a bailee, risk of loss cannot pass to a buyer.

Question 38

If the goods are so nonconforming that the buyer has the right to reject them, the risk of loss does not pass to the buyer.
​

Question 39

Under the UCC, the risk of loss necessarily passes with title.

Question 40

Bram buys a bulldozer from Construction Equipment Corporation, which he leases to Earth Movers, Inc. In this situation, the lessee is

A)Bram.
B)Construction Equipment Corporation.
C)Earth Movers. Inc.
D)none of the choices.

Question 41

Omni Metals Company and Piecework Fabrication, Inc., enter into a contract under which Omni agrees to deliver a certain quantity of sheet metal to Piecework each month. The contract does not include a price term. In a suit between the parties over the price, a court will​

A) determine a reasonable price.
B) impose the lowestmarket price.
C) ​impose the highest market price.
D) ​return the parties to the positions they held before the contract.

Question 42

TalkTalk, Inc., offers to buy from Voice Media Corporation (VMC) 1,000 smartphones. Without notifying TalkTalk, VMC timely ships phones of a different quality. With respect to the offer and a possible contract, this shipment is an acceptance and​

A) ​a breach.
B) ​an accommodation.
C) ​complete performance.
D) ​a counteroffer.

Question 43

Olivia contracts to buy a refrigerator from a Prairie State Appliance store with the price to be paid in monthly installments. Later, Olivia files a suit against Prairie State, claiming that their contract is so unfair and one-sided that it would be unreasonable to enforce it. Olivia is asserting​

A) ​the concept of good faith.
B) ​the entrustment rule.
C) ​the mirror image rule.
D) ​the doctrine of unconscionability.

Question 44

Brian, an agent for Clarion Motors, Inc., writes a letter to Dina on November 1 stating that he will sell her a 2016 Subaru Outback for $20,000 between November 1 and December 31. Brian's letter to Dina is​

A) ​a merchant's firm offer.
B) ​an acceptance.
C) ​an option contract.
D) ​none of the choices.

Question 45

Refined Grains, Inc., agrees to sell to Sunny Cereal Company a certain quantity of refined oats each week but no mention is made of where the goods are to be delivered. In general, the UCC requires that the delivery take place at​

A) ​a neutral place of business halfway between the parties' locations.
B) ​a "reasonable" place of delivery.
C) ​Refined's place of business.
D) ​Sunny's place of business.

Question 46

Equipment Rentals Corporation (ERC) agrees to lease two backhoes to Dig & Fill Construction, Inc. Before any interest in the backhoes can pass from ERC to Dig & Fill, they must be

A) ​in existence and identified as the goods in the contract.
B) ​in ERC's physical possession.
C) ​in Dig & Fill's physical possession.
D) ​listed in a document of title and filed in the appropriate state office.

Question 47

County Dentists Clinic offers to buy from Dental & Medical Supplies Company a certain quantity of floss and other items for a certain price. Dental & Medical can accept the offer by​

A) ​a material alteration of the terms within a reasonable time.
B) ​a promise to ship or a prompt shipment of the goods.
C) ​a prompt shipment of the goods only.
D) ​a shipment of nonconforming goods with a notice of accommodation.

Question 48

Great Harvest Farms offers to sell Hearty Bakeries, Inc., fifty bushels of wheat. Hearty's representative Ilene responds, "We agree to buy fifty bushels only if the wheat is Grade A quality." Between Great Harvest and Hearty Bakeries​

A) ​a contract is formed.
B) ​a contract is formed only if Great Harvest can deliver the wheat fast.
C) ​Ilene's statement is not an acceptance.
D) ​Ilene's statement is an acceptance.

Question 49

iSharp, Inc., and Jenene, the owner of a Kitchen Time shop, orally agree to a sale of knives and other utensils for $12,000. Jenene gives iSharp a check for $4,000 as a partial payment. This contract is​

A) ​enforceable to the extent of $4,000.
B) ​fully enforceable because it is for specially selected goods.
C) fully enforceable because it is oral.
D) ​not enforceable.

Question 50

Car n' Truck Body & Paint Company orders custom paint from Diverse Hues Inc., but Diverse does not deliver. Car n' Truck will probably be unable to enforce the agreement if the parties omitted​

A) ​a price term.
B) ​a delivery date.
C) ​a quantity term.
D) ​shipping arrangements.

Question 51

Bert's Bagels & Nosh, Inc., and other bakeries refer to a "baker's dozen" as consisting of a collection of thirteen baked goods. This is​

A) ​a course of dealing.
B) ​a course of performance.
C) ​none of the choices.
D) ​a usage of trade.

Question 52

Quaff n' Quench Café buys twenty-five crates of oranges from Reynaldo Produce, Inc. Reynaldo ships the oranges "F.O.B. Quaff n' Quench" via Sham Shipping Company. The oranges rot in transit. The loss is suffered by​

A) ​Quaff n' Quench.
B) Sham.
C) ​F.O.B.
D) ​Reynaldo.

Question 53

Marine Expeditions, Inc., pays Nate's Boats $4,000 to use an oceangoing vessel for a month. For the purposes of the UCC, this​ is

A) a merchant's firm offer.
B) ​an option contract.
C) ​a lease.
D) ​a sale.

Question 54

Pam buys from Midtown Motors a used sport utility vehicle (SUV). The SUV was manufactured by GEM Vehicles, Inc., and previously owned by Ron. Regarding title to the SUV, Pam acquires​

A) ​whatever title Midtown had.
B) ​whatever title Gem had.
C) ​whatever title Ron had.
D) ​no title.

Question 55

Jack sells a grand piano to Kyle for $5,000 and a gold ring to Lauren for $999. A writing is required to enforce the sale of​

A) ​the piano only.
B) ​the piano and the gold ring.
C) ​neither the piano nor the gold ring.
D) ​the gold ring only.

Question 56

Swiftline Trucking, Inc., and Trailer Rents Corporation are parties to an oral agreement for a one-year lease of six doublewides with payments totaling more than $40,000. They may satisfy the Statute of Frauds by​

A) ​mutually agreeing not to commit fraud.
B) ​repeating the terms in a phone call.
C) ​setting out the terms in a memo.
D) ​shaking hands on the deal.

Question 57

Brad leaves an iPod at Computer Sales & Repair (CSR) to have the battery replaced. CSR sells the iPod to Doris, who does not know that it belongs to Brad. Brad can recover from​

A) ​no one.
B) ​CSR.
C) ​Doris.
D) ​Apple, Inc., the maker of the iPod.

Question 58

Fits Like A Glove Shoes, Inc., and Retail Footwear Stores enter into a contract for a sale of shoes. The contract indicates that the price includes transportation costs to a specific destination by including the term​

A) ​C.I.F.
B) ​delivery ex-ship.
C) ​F.A.S.
D) ​F.O.B.

Question 59

Pipes & Culverts Company orders six irrigation pumps from Quality Plumbing, Inc. The pumps are stored in Restorers Warehouse. Under the terms of the order, Quality must give Pipes & Culverts a warehouse receipt for the goods, which the buyer will then pick up. Title to the goods passes to Pipes & Culverts when​

A) ​Quality stores the drives.
B) ​Pipes & Culverts orders the drives.
C) ​Pipes & Culverts picks up the drives.
D) ​Quality gives Pipes & Culverts a warehouse receipt for the drives.

Question 60

Red's Roofing buys asphalt tiles from Shingles, Inc. The parties agree that the tile will be shipped "F.O.B. Shingles's warehouse" to Red's Roofing location via Tristate Trucking Corporation. The tiles are lost in transit. The loss is suffered by​

A) Tristate.
B) ​Shingles, Inc.
C) ​Red's.
D) ​Red's customers by an increase in the prices of goods and services.

Question 61

Consumers Choice store accepts a shipment of EZ2U-brand tablets from Digital Devices, Inc. Consumers Choice later discovers a defect in the tablets, revokes acceptance, and returns the tablets via GoBack, Inc. During the return, the tablets are lost. The loss is suffered by​

A) Consumers Choice.
B) ​Digital Devices.
C) ​GoBack.
D) ​Consumers Choice's customers by an increase in prices of other goods.

Question 62

Quest Outdoor Store orders RiverRun-brand kayaks from Sports Merchandise, Inc. Sports Merchandise ships kayaks of the wrong size, which Quest rejects and returns via Trans-State Shipping Company. During the return, the kayaks are lost. The loss is suffered by​

A) ​Quest.
B) ​Trans-State.
C) ​RiverRun.
D) ​Sports Merchandise.

Question 63

Roasters Corporation and Outdoor Barbecues, Inc., enter into a contract for a sale of a commercial grill. The contract requires Roasters to deliver the goods to Speedy Delivery Company for transport to Outdoor. Risk of loss passes to Outdoor when

A) ​Roasters delivers the goods to Speedy.
B) ​Roasters and Outdoor enter into their contract.
C) ​Speedy transports the goods to Outdoor.
D) ​Outdoor begins to use the grill.

Question 64

Commercial Rents Corporation agrees to lease a pressure washer to Delivery Trucks, Inc., which agrees to pick it up at E Street Warehouse. Before Delivery Trucks retrieves the washer, it is stolen. The loss is suffered by

A) ​Commercial Rents.
B) ​Delivery Trucks.
C) ​E Street Warehouse.
D) ​the thief.

Question 65

Spuds Corporation buys from Tater Farms, Inc., a potato crop that Tater plans to plant and harvest during the next growing season. Spuds plans to sell the potatoes to Tasty Foods Restaurants. After the potatoes are planted, but before they are harvested, an insurable interest in the crop exists in​

A) ​Spuds and Tater, but not Tasty Foods.
B) ​Spuds, Tater, and Tasty Foods.
C) ​Tater only.
D) ​none of the choices.

Question 66

Household Appliance Corporation sells Ideal-brand vacuum cleaners to Jolly Discount Stores and other retailers. Household Appliance will have an insurable interest in the vacuums as long as​

A) ​Household Appliance remains in business.
B) ​Household Appliance retains title to the goods.
C) ​the goods are in existence.
D) ​there is no risk of loss.

Question 67

Mountainside Coffee Company and Nature's Cuisine, Inc., enter into a contract for a sale of coffee beans. The contract includes the term "F.O.B. Ocean City," which is the location of Nature's Cuisine. This means that the contract is​

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

Question 68

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

A) ​Safety Supply.
B) ​Toxic Recovery.
C) ​US Truckline.
D) ​Toxic Recovery's clients by an increase in the price of loss control services.

Question 69

Tune Products, Inc., offers to sell to Unlimited Sales Company one hundred MP3 players at $50 a piece, subject to certain specific delivery dates. Unlimited replies with a signed purchase order that reads, "Accept your offer for 100 I-appliances at $50 each. Must be delivered to our warehouse." Tune does not respond or deliver the goods. Unlimited files a suit for breach of contract, to which Tune answers that there is no contract because Unlimited's purchase order contained additional terms and is not signed by Tune. Can Unlimited recover? Explain.

Question 70

Candy Corporation orders Delicioso-brand chocolate from Edibles Distribution Company. Edibles identifies the goods. Before they are shipped to Candy Corporation, an insurable interest in the goods exists in​

A) ​Candy Corporation and Edibles Distribution.
B) ​Delicioso and Edibles Distribution.
C) ​Candy Corporation and Delicioso.
D) ​all of the parties as tenants in common.

Question 71

Clean Machines Company makes washing machines. Over the phone, Clean offers to sell Dealers Appliance Outlet one hundred model EZ2000 washers at a price of $150 per unit. Clean says that it will keep the offer open for ninety days. Dealers responds that within two or three weeks it will decide whether to accept. One week later, Clean faxes, and Dealer receives, notice that the offer is withdrawn. Dealer immediately phones Clean to accept the $150-per-unit offer. When Clean refuses to deliver at that price, Dealer files a suit. Clean asserts, first, that there is no contract and, second, that if there is a contract, it is unenforceable. Discuss Clean's assertions.

Question 72

Ursula buys a Verismooth boat from a Watercraft store, which agrees to keep the boat for Ursula until she picks it up. Before Ursula gets the boat, an unforeseen tornado destroys the store and the boat. The loss of the boat is suffered by​

A) ​Ursula.
B) ​Verismooth.
C) ​Watercraft.
D) ​the government agency that failed to foresee the tornado.