Deck 19: Introduction to Sales and Leases

Question 1

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

Answer 1

False

Question 2

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

Answer 2

True

Question 3

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.

Answer 3

True

Question 4

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 5

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 6

Under the Code, a contract for the lease of goods for $500 or more is unenforceable without a writing sufficient to evidence a contract.

Question 7

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

Question 8

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

Question 9

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; he will 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, as long as Bartholomew is acting in good faith and the agreement to the new price is put in writing.

Question 10

Contracts containing unconscionable clauses are void and unenforceable.

Question 11

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

Question 12

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

Question 13

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

Question 14

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 15

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

Question 16

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

Question 17

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

Question 18

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

Question 19

UCC Articles 2 and 2A have been amended to accommodate electronic commerce.

Question 20

Leslie, the owner of a shoe store, purchased 500 Model XT-50 running shoes from her supplier, but a price was not stated in the contract.The contract is voidable at Leslie's option until the parties agree on a price.

Question 21

Which of the following is not true about auctions?

A)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.
B)Unless an auction is advertised as being without reserve, the sale is with reserve.
C)Whether an auction is with or without reserve, a bidder may retract his bid at any time prior to acceptance by the auctioneer.
D)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.

Question 22

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

Question 23

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

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

Question 24

The Code addresses the "battle of the forms" problem by focusing on intent of the parties.

Question 25

The Code defines __________ as "honesty in fact in the conduct or transaction concerned."

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

Question 26

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 governed by UCC Article 9.
C)be for an initial term of five years, which ARC had an option to renew for nominal consideration.
D)be a true finance lease.

Question 27

A "merchant" is defined as a person who:

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

Question 28

The definition of "usage of trade" includes:

A)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.
B)a practice regularly observed and followed in a place, vocation, or trade.
C)separate rules that apply to transactions between merchants.
D)All of the above.

Question 29

A "sale" of goods happens when:

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

Question 30

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 they are valued much higher than either Mike or Pat anticipated, Pat:

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

Question 31

Shannon orally agrees to buy 500 telephone answering machines from Thomas for $25,000.Thomas delivers 300 answering machines to Shannon, who receives and accepts them.Which of the following is correct with regard to this transaction?

A)Shannon can enforce the contract for the additional 200 machines.
B)The contract is enforceable to the extent of the 300 machines that have been received and accepted.
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 unenforceable.

Question 32

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 the above.
E)None of the above.

Question 33

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

A)consumer lease
B)sale
C)finance lease
D)None of the above.

Question 34

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

A)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.
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)Bob sees an ad in the local paper for heritage poppy 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.
D)None of the above.

Question 35

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 36

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

Question 37

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)Davis Co.is not bound by the terms of the letter unless Ruby responds in writing to verify the agreement.
B)Ruby Creations and Davis Co.were bound in an enforceable contract at the time they entered the oral agreement.
C)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.
D)The parties cannot be bound by the contract because the price term was missing from the written confirmation.

Question 38

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

Question 39

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

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

Question 40

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

Question 41

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 42

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 the above are situations where the contract would be enforceable.

Question 43

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

Question 44

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

Question 45

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 46

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

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

Question 47

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

A)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 nongoods part of the contract.
B)held that the "predominant factor" test contravened the UCC's declared purpose.
C)applied the "predominant factor" test.
D)found the CISG governed the contract in question.

Question 48

Which of the following nonsales transactions would likely be covered by an extension of Article 2 principles?

A)Bailments involving goods.
B)Leases involving goods.
C)Sales involving real estate.
D)Two of the above, (a) and (b).

Question 49

Marvin offers to sell his lawnmower to Cheryl for $75 if she pays cash and picks the mower up at his house the following week.Cheryl replies that she would like to buy the mower and thinks $75 is a fair price, but she has no way to transport the mower, so she will buy it for cash if Marvin will have it delivered to her house.In this situation:

A)Cheryl has provided an additional term, which will be construed as a proposal which Marvin can accept or reject.
B)Marvin and Cheryl are considered merchants in relation to the mower, so the delivery of the mower is an additional term which will become part of the contract unless Marvin objects within a reasonable time.
C)the delivery of the mower is a different term from that in the offer, and it generally will not become part of the contract unless Marvin specifically agrees to it.
D)courts would all agree that the different delivery terms cancel each other out and the Code would provide the missing term.

Question 50

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

Question 51

Which of the following is considered "goods" within the meaning of Article 2?

A)An unborn calf.
B)A field of corn still in the field.
C)Timber which has been removed by the seller.
D)All of the above are goods under Article 2.

Question 52

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 merely as a source of credit.
D)All of the above are correct.

Question 53

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

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

Question 54

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

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

Question 55

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

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

Question 56

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

Question 57

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

Question 58

Which of the following is correct with regard to Article 2(a) of the Code?

A)Article 2(a) affords special treatment for consumer leases.
B)Article 2(a) covers minerals prior to their extraction.
C)All states have now adopted Article 2(a).
D)All of the above are correct.

Question 59

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

A)It is defined in Article 2 as "monstrously 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 may be substantive, but it cannot be procedural.
D)All of the above.

Question 60

The CISG specifically excludes sales of:

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

Question 61

Identify what law would govern: (a) a sale of a computer between a U.S.company and a U.S.consumer; (b) an insurance policy sale between a U.S.company and a U.S.consumer; and (c) a sale of manufactured goods between a U.S.manufacturer and a buyer in another country.

Question 62

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.