Deck 14: The Formation of Sales and Lease Contracts

Question 1

Generally,acceptance of an offer to lease goods may be made in any reasonable manner and by any reasonable means.

Answer 1

True

Question 2

Article 2 of the UCC covers any transaction that creates a lease of goods.

Answer 2

False

Question 3

Real estate transactions are always governed by Article 2 of the UCC.

Answer 3

False

Question 4

If a nonmerchant-seller's offer expressly conditions acceptance on a nonmerchant-buyer's agreement to the terms of the offer,the buyer's positive response is an acceptance even if it contains additional terms.

Question 5

A contract for the sale of minerals is considered to be a contract for the sale of goods if the severance is to be made by the seller.

Question 6

Under the UCC,if a contract is unilateral,the offeror must be notified of the of-feree's performance.

Question 7

Under the UCC,an agreement modifying a contract needs no considera-tion to be binding.

Question 8

For an item to be characterized as a "good" under the UCC,it must be intangible.

Question 9

Identification,risk of loss,and insurable interest are all concepts that are involved in determining the rights and liabilities of parties to a contract.

Question 10

The UCC requires that the mirror image rule be followed for all acceptances.

Question 11

The UCC imposes some different rules on merchants.

Question 12

A merchant is a person who deals in goods of the kind involved in the sales contract or who holds herself or himself out as having skill or knowledge peculiar to the practices or goods being purchased or sold.

Question 13

Under the UCC,prompt shipment of goods is considered an acceptance of an offer to buy the goods.

Question 14

A firm offer by a merchant may be oral.

Question 15

All oral contracts are enforceable under the UCC.

Question 16

A court can refuse to enforce a contract that the court deems to have been unconscionable at the time it was made.

Question 17

A course of performance is the conduct that occurs under the terms of a particular agreement.

Question 18

If there is no definite period stated,a firm offer by a merchant is irrevocable without the necessity of consideration for up to six months.

Question 19

In most situations involving sales,rights and liabilities are determined by who has the title to the goods.

Question 20

Under the UCC,parties to sales and lease contracts are not free to establish whatever terms they wish.

Question 21

The right to cure is the right of a party who tenders nonconforming performance to correct his or her performance within the contract period.

Question 22

A buyer and a seller cannot normally have an insurable interest in iden-tical goods at the same time.

Question 23

The contract term "delivery ex-ship" means that the risk of loss does not pass to the buyer until the goods are properly unloaded from the ship or other carrier.

Question 24

Dan,a computer programmer,holds a garage sale to sell a lawnmower,some clothes,some CDs and some old clothes.Will,a lawyer,sells Thelma his collection of seashells.Philip,a CEO of a successful company,sells George his pet parakeet.Judy,an expert horse trainer,sells Bob a horse.Which person would be considered a merchant under the UCC?

A)Dan
B)Will
C)Judy
D)Philip

Question 25

Under a destination contract,the risk of loss passes to the buyer when the goods are duly delivered to the carrier.

Question 26

Before a seller can have an insurable interest in goods,the goods must be identified to a contract.

Question 27

If a seller is not a merchant,and the goods are not to be moved,the risk of loss passes to a buyer on tender of delivery.

Question 28

In a destination contract,the seller is required to deliver the goods to a particular destination.

Question 29

Future goods are goods that are not both existing and identified to the contract.

Question 30

Orange Manufacturing Corporation (OMC) orders twelve job-training and on-the-job safety DVDs from Plum Productions,Inc.,which delivers the disks to OMC's plant.This is most likely

A)a gift.
B)a lease of goods.
C)a sale of goods.
D)a service contract.

Question 31

FlavorBean Coffee Company agrees to buy an unspecified quantity of coffee beans from Global AgriCorp.Global breaches the contract.In FlavorBean's suit to obtain relief,the court will most likely

A)award a reasonable quantity of beans to FlavorBean.
B)award FlavorBean all the beans that it requires.
C)award Global's output of coffee beans to FlavorBean.
D)have no basis for determining a remedy.

Question 32

If a sale involves crops that are to be harvested within twelve months,iden-tification takes place when the seeds for the crops are purchased.

Question 33

Jamie is redoing his kitchen and decides he needs a floor sander to complete the job.Jamie tells Rachel,his neighbor,that he needs a floor sander.Rachel tells Jamie to call Home Repair Rentals,Inc.Home Repair Rentals leases Jamie a floor sander.In this transaction the lessor is

A)Jamie.
B)Rachel.
C)Home Repair Rentals.
D)both Jamie and Rachel.

Question 34

Roy's Chick'n Shack orders chicken from Standard Food Supplier,but Standard does not deliver.Roy's will probably be unable to enforce the agreement if the parties

A)did not limit the duration of the deal.
B)did not specify a payment term.
C)did not specify a quantity term.
D)have not begun to perform.

Question 35

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

Question 36

Before any interest in specific goods can pass from the seller to the buyer,the goods must exist and be identified to the contract.

Question 37

Entrusting goods to a merchant who deals in goods of the kind gives the merchant the power to transfer all rights to a buyer in the ordinary course of business.

Question 38

The contract term "free on board" indicates that the selling price of goods includes transportation costs to the specific F.O.B.place named in the contract.

Question 39

Even if goods are not identified to the contract,the title and risk of loss can still pass from the seller to the buyer.

Question 40

When a document of title is required,title passes to a buyer when and where the document is delivered.

Question 41

Big Red Drinks,Inc.contracts to buy two tons of cranberries from Super Fruits,Inc.The contract states that Super Fruits is required to ship the cranberries to Big Red Drinks by Speedy Wind Air Freight.The contract is

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

Question 42

Grace purchases three tons of fine merino wool on behalf of Woolen Creations.Woolen Creations wants the wool to remain in the warehouse where it is being stored until it is needed.Grace makes an offer for the wool on Monday.The offer is accepted on Tuesday.The warehouser gives Woolen Creations a warehouse receipt on Wednesday.Woolen Creations picks up the wool from the warehouse three months after the sale.Title for the wool passed to Woolen creations

A)on Monday.
B)on Tuesday.
C)on Wednesday.
D)three months after the sale.

Question 43

Fresh Produce,Inc.,and Great Grocery Stores dispute the interpretation of an ambiguous phrase in their contract.In a suit between the parties to con-strue the contract,a court may accept evidence of

A)consistent additional terms only.
B)consistent additional terms and contradictory terms only.
C)contradictory terms only.
D)anything extrinsic to the contract.

Question 44

Quinn enters into a series of agreements with Reba involving a sale of a Suite Dreams Motel,including the land,building,furnishings,shares of stock in Suite Dreams Company,and a contract with Trudy to create an ad campaign.Reba suspects that Quinn may be misrepresenting the facts.The UCC Statute of Frauds governs

A)the sale of any of the property evidenced by a writing.
B)the entire deal,including the marketer's services.
C)the sale of the furnishings priced at $500 or more.
D)the sale of the land and the building.

Question 45

Megan,an agent for a department store,orders one hundred dresses from Sal's Clothing Shop for the Spring Blossom Sale.There is no specific agreement in the sale contract indicating when title will pass to the department store.The title will pass to the department store when

A)Megan signs the contract.
B)Megan and the Sal's Clothing Shop agent sign the contract.
C)Sal's Clothing Shop physically delivers the dresses to the department store.
D)Megan pays Sal's Clothing Shop for the dresses.

Question 46

Community Construction Corporation offers to buy from Solid Cement Company a certain quantity of cement for a certain price.Solid can ac-cept the offer by

A)doing nothing.
B)promising to ship or promptly shipping the cement.
C)promising to ship the cement only.
D)promptly shipping the cement only.

Question 47

Peter,an agent for Zippy Cars,Inc.,writes a letter to Cassandra on March 1 stating that he will sell her a 2011 Suburu Outback for $20,000 between March 1 and April 30.Peter's letter to Cassandra is

A)a firm offer.
B)an acceptance.
C)a bilateral contract.
D)a breach.

Question 48

A contract between Fresh Fruit Corporation and Green Grocer,Inc.,re-quires Fresh Fruit to deliver goods to Green Grocer's place of business.This is

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

Question 49

Gail enters into a contract with Hi-Price Appliances,Inc.In a suit be-tween the parties over payment under the contract,Gail claims that a certain clause is unconscionable.If the court agrees,it may

A)enforce,limit,or refuse to enforce the contract or the disputed clause.
B)enforce the contract without the disputed clause only.
C)limit the application of the disputed clause only.
D)refuse to enforce the entire contract only.

Question 50

Perfect Potato Chip Company makes an offer that Snack Foods Corporation would like to accept.Under the "mirror image rule" relating to offer and acceptance,an acceptance

A)may include additional terms not contained in the offer so long as they do not materially alter the agreement.
B)may include additional terms not contained in the offer that will be-come part of the agreement if the offeror does not object within a reasonable period of time.
C)must include only those terms and conditions contained in the offer.
D)may contain additional terms as long as all parties agree to the additional terms.

Question 51

Rita,the manager of the State University (SU) soccer team,orally agrees to lease a certain number of specially made SU banners from Top Banners,Inc.This lease is enforceable only if Top has made a substan-tial start on making the banners and

A)Rita agreed to the lease on behalf of the SU soccer team.
B)SU does not have other,similar banners available.
C)the banners are not suitable for others in the course of Top's business.
D)the soccer season has not ended and SU goes to the finals.

Question 52

Mountaineer Sales,Inc.,is the offeror and Camping Goods Corporation is the offeree under a unilateral sales contract in which Forest Recreation Products Company is also interested.Mountaineer is not notified of Camping's performance within a rea-son-able time.Mountaineer

A)may treat the offer as having lapsed.
B)must assume that Camping has started to perform.
C)must contact Camping.
D)must contract with Forest.

Question 53

Jason contracts with Golf Carts Unlimited,Inc.to buy five golf carts.The contract lists the five carts as GC001,GC002,GC003,GC004,GC005.Identification

A)requires that Jason verify his identity to take possession of the carts.
B)has taken place.
C)cannot take place until the contract is reviewed by a court.
D)will take place only when Jason pays for the golf carts.

Question 54

Bill orders 1,000 nails from Super Hardware,Inc.Super Hardware keeps its nails in packages of 100,000.Bill and the agent for Super Hardware both sign the contract for the sale of the nails on Monday.The agent separates 1,000 nails on Wednesday.The agent delivers the nails to Bill on Thursday morning,and Bill pays for the nails on Friday.Identification of the nails took place on

A)Monday.
B)Wednesday.
C)Thursday.
D)Friday.

Question 55

Trend-Rite Clothiers,Inc.,sells t-shirts to Brand Name Stores,Inc.,under an existing con-tract.When textile costs increase,Brand agrees to a price increase,but later wants to cancel the con-tract.Brand may

A)cancel the contract immediately.
B)cancel the contract only after accepting a final shipment.
C)cancel the contract only on reasonable notice.
D)not cancel the contract.

Question 56

Big Beef,Inc.raises calves to sell.Big Beef breeds its cows in April,and the cows calve in February of the following year.In January Andrea contracts with Big Beef to buy fifty calves.Identification takes place in

A)January,when the contract is signed.
B)April,when the calves are conceived.
C)February,when the calves are born.
D)a reasonable period of time.

Question 57

Raul agrees to ship to Ben one hundred ceil-ing fans for $5,000.Raul ini-tials his notes of the deal,which in-clude the terms,and files the notes in his office. Ben initials his own notes of the deal,which include the terms,and files the notes in his office.Raul fails to ship the fans. Against Raul,as a contract,the deal is

A)enforceable,because under the UCC a contract need not written.
B)enforceable,because Raul's initialed notes are a sufficient writing.
C)enforceable,because Ben's initialed notes are a sufficient writing.
D)not enforceable.

Question 58

Equipment Rental Corporation and Floodlights,Inc.,are parties to an oral agreement for a lease of goods with payments in excess of $10,000.They may satisfy the Statute of Frauds by

A)mutually agreeing not to commit fraud.
B)restating the terms in a phone call.
C)setting out the terms in an e-mail.
D)shaking hands on the deal.

Question 59

Nature's Products,Inc.,sends its standard order form to Interbusiness Distribution Corporation (IDC) to evidence a sale of packing materials. IDC responds with its own standard purchase order form. Additional terms in the purchase order automatically become part of the contract unless

A)the terms materially alter the original contract.
B)the original offer expressly required acceptance of its terms.
C)the offeror objects to the new terms within a reasonable time.
D)any of the choices.

Question 60

Jackson owns an antiques store.He sells a grand piano to Fred for $5,000,a old jukebox to Sam for $499,an antebellum chest of drawers to Josephine for $659 and a gold ring to Wendy for $999.Which of Jackson's sales must be in writing to be enforceable?

A)The grand piano only
B)The grand piano and the gold ring only
C)The grand piano,the chest of drawers and the gold ring only
D)The grand piano,the chest of drawers,the jukebox and the gold ring

Question 61

Southern Distribution,Inc.,signs a receipt for goods that will also serve as a contract for the goods' transport. This is

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

Question 62

Levi,a well-known lumber dealer with a good reputation,buys a load of lumber and pays for it with a check that is later dishonored.Sam,who is unaware of the bad check,buys the lumber from Levi.Sam is

A)agood faith purchaser.
B)abad faith purchaser.
C)aninsolvent purchaser.
D)abailee.

Question 63

Motor Coach Corporation,a U.S.firm,orally agrees to sell six vehicles to National Tours,Ltd.,a Canadian firm.Motor Coach fails to deliver and National Tours sues to enforce the agreement.Under the CISG,National Tourscan prove the terms by

A)any means.
B)a writing or electronic record only.
C)witnesses only.
D)a writing,electronic record,or witnesses,but no other means.

Question 64

Sweets Store buys chocolate from Tasty Candies,Inc.The parties agree that the chocolate will be shipped "F.O.B.Sweets" via United Railroad Corporation.The chocolate is lost in transit.The loss is suffered by

A)Sweets and Tasty,but not United.
B)Sweets only.
C)Sweets,Tasty,and United.
D)Tasty only.

Question 65

Secure Courier,Inc.,has a requirements contract with Petro Distribution Corporation that obligates Petro to supply Secure with all the gasoline it needs for its delivery vehicles for one year at $2.30 per gallon.A clause inserted in small print in the contract by Secure,and not noticed by Petro,states,"The buyer reserves the right to reject any shipment for any reason without liability." For six months,Secure orders and Petro delivers under the contract without any controversy.Then,because of a war in the Middle East,the price of gasoline to Petro increases substantially.Petro tells Secure it cannot possibly fulfill their contract unless Secure agrees to pay $2.50 per gallon.Secure,in need of the gasoline,agrees in writing to modify the contract.Later that month,Secure learns it can buy gasoline at $2.40 per gallon from Refined Oil Company.Secure refuses delivery of its most recent order from Petro,claiming,first that the contract allows it to do so without liability,and second,that it is required to pay only $2.30 per gallon if it accepts the delivery.Discuss Secure's contentions.

Question 66

Elizabeth buys a car from Silas,who is sixteen years old.Elizabeth then wants to sell the car to her neighbor,John.Elizabeth's title to the car is

A)valid.
B)voidable.
C)void.
D)good.

Question 67

In the following situations,two parties claim the same goods.Who is most likely to prevail in each circumstance? Explain.(a) Olan steals Phil's television set and sells it to Quincy,an innocent purchaser,for value.Phil learns Quincy has the set and demands its return.(b) Riley takes his television set for repair to Slick,a merchant who sells new and used television sets.By accident,one of Slick's employees sells the set to Tuna,an innocent purchaser-customer,who takes possession.Riley wants his set back from Tuna.

Question 68

Sweetwater Café orders five gallons of transfat-free cooking oil from Restaurant Supply,Inc.The seller mistakenly ships the wrong oil,which the buyer keeps,despite the nonconform-ity.The oil is destroyed in a kitchen fire.The loss is suffered by

A)Sweetwater and Restaurant Supply,but not Sweetwater customers.
B)Sweetwater,Restaurant Supply,and Sweetwater customers.
C)Sweetwater only.
D)Restaurant Supply only.

Question 69

Good Food Corporation buys from Home Farms,Inc.,a rice crop that Home Farms plans to plant and harvest during the next growing season.Good Food plans to sell the rice to Interstate Grocery Stores.After the rice is planted,but before it is harvested,an insurable interest in the rice ex-ists in

A)Good Food and Home Farms,but not Interstate Grocery.
B)Good Food,Home Farms,and Interstate Grocery.
C)Good Food only.
D)Home Farms only.

Question 70

Thorpe buys an HD TV from Viewpoint Electronics store,which agrees to keep the TV for Thorpe until he picks it up.Before Thorpe gets the TV,a fire destroys the store and the set.The loss is suffered by

A)neither Thorpe nor Viewpoint
B)Thorpe and Viewpoint.
C)Thorpe only.
D)Viewpoint only.

Question 71

Fay pays $800 for a new iPad to Global Goods,Inc.Global holds the iPad until Fay picks it up.Global is

A)a bailee.
B)a consignee.
C)a lessee.
D)a seller.

Question 72

A-1 Furnishings,Inc.,agrees to lease a desk to Business Resources,Inc.(BRI),which requests that the desk be left outside City Warehouse for BRI to pick up.Before BRI retrieves the desk,it is stolen.The loss is suf-fered by

A)A-1 Furnishings and BRI,but not City Warehouse.
B)A-1 Furnishings,BRI,and City Warehouse.
C)A-1 Furnishings only.
D)BRI only.