Deck 12: Sales, Leases, and Product Liability

Question 1

A contract for a sale of real property or services is a contract for a sale of goods.

Answer 1

False

Question 2

Under the UCC, a sales or lease contract will fail for indefiniteness if one or more terms are left open.

Answer 2

False

Question 3

Merchants are held to a higher standard of performance or duty than are nonmerchants.

Answer 3

True

Question 4

Goods associated with real estate often fall within the scope of Article 2.

Question 5

Under the UCC, a firm offer for a sale or lease of goods made by a merchant can be revoked at any time before acceptance.

Question 6

Even if a contract in which goods and services are mixed is primarily a goods contract, any dispute over the services portion will not be decided under the UCC.

Question 7

Under a shipment contract, if the seller does not make a reasonable contract for transportation or notify the buyer of the shipment, the buyer can reject the goods if a material loss results.

Question 8

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

Question 9

Once the time for performance under a contract has expired, the seller or lessor no longer has a right to cure.

Question 10

The UCC imposes special business standards on casual and inexperienced sellers and buyers.

Question 11

A warranty of good title means that a seller warrants that he or she has valid title to the goods and that transfer of the title is rightful.

Question 12

The parties to a sales or lease contract can expressly provide for remedies in addition to those provided in the UCC.

Question 13

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 14

A buyer who rightfully rejects nonconforming goods may obtain cover or cancel the contact, but may not seek damages.

Question 15

If goods in every respect conform to a contract, the buyer or lessee does not have a right to reject the goods.

Question 16

A buyer's failure to cover will bar him or her from using any other remedies available under the UCC.

Question 17

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

Question 18

Acceptance of an offer to buy, sell, or lease goods generally may be made in any reasonable manner and by any reasonable means.

Question 19

If either the goods or their tender fails to conform to the contract in any respect, the buyer or lessee must reject all of the goods.

Question 20

If, before the time for contract performance, one party clearly communicates to the other the intention not to perform, such an action is not a breach of the contract.

Question 21

Ferris is refinishing his kitchen floor and needs a floor sander to complete the job.Ferris's neighbor Gerda suggests that he call Home Repair Rentals, Inc.Home Repair leases Ferris a floor sander.In this transaction, the lessor is

A)Ferris.
B)Gerda.
C)Home Repair.
D)none of the parties.

Question 22

Generally, the implied warranties of merchantability and fitness for a particular purpose cannot be disclaimed.

Question 23

Due care must be exercised in designing a product.

Question 24

Fresh Dairy, Inc., is the offeror and Gelato Ice Cream Company is the offeree under a unilateral sales contract in which Hector's Helado Corporation is also interested.Gelato is not notified of Fresh Dairy's performance within a reasonable time.Gelato

A)may treat the offer as having lapsed.
B)must assume that Fresh Dairy has started to perform.
C)must contact Fresh Dairy.
D)must notify Hector's.

Question 25

A manufacturer's duty of care does not extend to the inspection and testing of products bought to incorporate in the final product.

Question 26

Statements of fact made during the bargaining process are express warranties.

Question 27

Canyon Creek Corporation is a Delaware-based firm that does business throughout the United States.With respect to this circumstance, the UCC has been adopted by, and applies in,

A)a few of the states.
B)all of the states, in whole or in part.
C)half of the states.
D)none of the states, to date.

Question 28

To support the imposition of strict product liability, a product must be mishandled between the time it is sold and the time an injury occurs.

Question 29

In most sales, sellers warrant that they have good and valid title to the goods sold.

Question 30

Misrepresentation on a label is not enough to show an intent to induce the reliance of anyone who may use the product.

Question 31

Merchants are not required to warrant that the goods they sell are fit for their ordinary purpose.

Question 32

The types of product defects that have traditionally been recognized in product liability law include inadequate warnings.

Question 33

An action in strict product liability requires that the product not be in a defective condition when the defendant sells it.

Question 34

Every sale or lease by a merchant who deals in goods of the kind sold or leased automatically gives rise to an implied warranty of merchantability.

Question 35

Sellers or lessors are liable only for products that are reasonably dangerous.

Question 36

Danko sells new and used sports equipment to per-sons who come into his store, Eyes on the Prize.One afternoon, Danko sells a used display shelf to Felipe.At a garage sale at his home, Danko sells a used flat-screen TV to Faye.Under the UCC, Danko is a merchant of

A)sports equipment only.
B)sports equipment and display shelves only.
C)sports equipment, display shelves, and flat-screen TVs.
D)anything that he chooses to sell.

Question 37

An expression of opinion will usually create a warranty.

Question 38

A seller must take steps to guard against the foreseeable misuse of a product.

Question 39

Over the course of a year, Discount Market Company sells goods from its inventory and also sells one of its warehouses.In exchange, Discount receives checks, which Discount uses to repay a loan from Evermore Credit Inc.Article 2 of the UCC governs

A)the checks.
B)the payment of the loan.
C)the sale of the buildings.
D)the sale of the goods.

Question 40

Goods must be of the highest quality possible to be merchantable.

Question 41

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 42

Fact Pattern 12-1
Daily Bread Bakeries, Inc., contracts to buy all of its ingredient requirements forbread making, at a certain minimum per year, from Enriched Flour & Grain Corporation for six years.After three years, Daily Bread tells Enriched that it plans to sell its assets to Flat Bread Shops, Inc.Flat Bread refuses to assure Enriched that it will continue Daily Bread's contract.
Refer to Fact Pattern 12-1.Enriched can

A)assign its rights under the contract but cannot terminate it.
B)terminate the contract and seek damages.
C)suspend performance under the contract until Enriched is fully paid.
D)do nothing.

Question 43

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

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

Question 44

Livestock Feedlot orders one hundred sacks of cattle feed from MegaNutrient Feed, Inc.Each sack is stamped with the phrase "Twenty percent protein." This is

A)an express warranty.
B)an implied warranty.
C)a warranty of title.
D)puffery.

Question 45

Sweet Fruits contracts with Fruits to You, Inc.for a delivery of two hundred pounds of strawberries to be delivered by Keep Kool Trucking, a trucking company with refrigerated trucks.On the day of delivery, the refrigeration units on Keep Kool's trucks are not working.Fruits to You

A)may ship the goods to Sweet Fruits using another trucking company with refrigerated trucks.
B)must refund Sweet Fruits' money and cancel the contract.
C)must wait to ship the strawberries until Keep Kool has fixed its trucks.
D)must ship the goods through a different carrier and pay Sweet Fruits incidental damages.

Question 46

On July 10, Pet Supply Store orders fifty small dog collars from Quality Collars, Inc.to be delivered by July 15.On July 13, Quality Collars tenders fifty large dog collars.Pet Supply rejects the shipment.Quality Collars has

A)no right to cure.
B)until July 15 to cure.
C)until the end of the business day on July 13 to cure.
D)unlimited time to cure.

Question 47

Arnold buys a backhoe from Big Dig Equipment Inc.Arnold is unaware that Credit Collection Company holds a lien against the backhoe when he buys it.If Credit Collection repossesses the backhoe, Arnold can

A)recover from Big Dig for breach of warranty.
B)do nothing.
C)file criminal charges against Big Dig and Credit Collection.
D)recover damages from Credit Collection for breach of warranty.

Question 48

Nature's Products, Inc., sends its standard order form to Omni Distribution Corporation to evidence a sale of packing materials. Omni 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 49

Fact Pattern 12-1
Daily Bread Bakeries, Inc., contracts to buy all of its ingredient requirements forbread making, at a certain minimum per year, from Enriched Flour & Grain Corporation for six years.After three years, Daily Bread tells Enriched that it plans to sell its assets to Flat Bread Shops, Inc.Flat Bread refuses to assure Enriched that it will continue Daily Bread's contract.
Refer to Fact Pattern 12-1.Flat Bread's refusal is

A)a justified response based on Flat Bread's relation to the contract.
B)an assignment of Daily Bread's rights under the contract.
C)a reasonable suspension of performance under the contract.
D)a repudiation of the contract.

Question 50

Hydro Source Company contracts to sell pumps, tanks, and water storage systems to Inflo Irrigation, Inc.Before the goods are delivered, Inflo indicates that it will not be able to pay.Hydro Source can

A)force Inflo to accept and pay for the goods.
B)require Inflo to find a buyer for the goods.
C)resell the goods and recover any damages from Inflo.
D)do nothing.

Question 51

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 payment term.
C)a quantity term.
D)shipping arrangements.

Question 52

Mantas Moderno Company, which is based in New York, agrees to sell fifty woven carpets, imported from Mexico and currently stored in New Jersey, to NuDecor, Inc., which is based in Connecticut.If the contract does not indicate where the goods will be delivered, the place of deliv-ery is

A)New York.
B)Mexico.
C)New Jersey.
D)Connecticut.

Question 53

Fuel Connector Products, Inc., agrees to sell Go-Flo, Inc., a certain quantity of hose couplings and fittings, but the contract does not specify a place of delivery.Go-Flo is expected to pick up the goods.The place of delivery is

A)Fuel Connector's place of business.
B)Go-Flo's place of business.
C)the current location of the hose couplings and fittings.
D)the U.S.Postal Service office nearest to Go-Flo's place of business.

Question 54

Shane's Auto Parts orders twenty tires from Tough Tires, Inc.The truck delivering the tires to Shane's is in an accident and ten of the tires are damaged.Shane's Auto Parts

A)cannot reject the entire shipment.
B)must still pay for all twenty tires at the original contract price.
C)may inspect the tires and accept the shipment with a reduction in price.
D)must reject the entire shipment.

Question 55

Precious Stones, Inc., and Sparkling Jewelry stores enter into a contract for a sale of gemstones.Precious Stones does not deliver.The buyer can normally recover as damages the difference between

A)any loss avoided and any profit gained.
B)the actual price and the hoped-for price.
C)the contract price and the market price.
D)the current prices in the parties' locations.

Question 56

Beef Burgers, Inc.contracts to buy five hundred steers from Fattening Feedlots.Before Fattening Feedlots can deliver the steers, there is an outbreak of disease in the feedlot, and all the cattle are quarantined.In this case the perfect tender rule

A)applies to both parties.
B)does not apply.
C)applies only to Beef Burgers.
D)applies only to Fattening Feedlots.

Question 57

Riverside Ranch is a horse breeding facility.Steed Stables is a customer looking for a new stallion for its breeding program.Riverside's representative Tomas shows Steed a stallion that he says is very fertile and can easily breed twenty mares per year.This statement is

A)an express warranty.
B)an implied warranty.
C)a warranty of title.
D)puffery.

Question 58

Commercial Leasing Corporation and Quarry Construction Company enter into a contract for a lease of three excavators.Under the perfect tender rule, Commercial Leasing must ship or tender goods to the lessee that

A)approximately conform to the contract description.
B)entirely conform to the contract description in most ways.
C)conform to the contract description in every way.
D)substantially conform to the contract description.

Question 59

Fruit of the Plant, Inc., agrees to sell a certain quantity of a high-quality grain seed to Grange Co-op.Fruit of the Plant can obtain only half of the quantity ordered, so the seller also ships a lesser quality seed in twice the amount of the remainder of the order for the same price.Grange Co-op rejects the lesser quality seed.With time for performance not yet expired, Fruit of the Plant can

A)attempt to cure the defect.
B)cancel the contract.
C)recover the purchase price plus incidental damages.
D)resell or dispose of the goods and hold Grange Co-op liable for any loss.

Question 60

Coffee Roasters, Inc., sells whole bean and ground coffee to Delicioso Deli under an existing con-tract.When the cost of coffee beans increases, Delicioso agrees to a price increase, but later wants to cancel the con-tract.Delicioso 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)notcancel the contract.

Question 61

The brakes on Dirk's Tour de Valle bicycle malfunction, but he continues to ride it because he likes the thrill of the unstoppable acceleration.One night, enjoying a fast downhill pace, he speeds through a stop sign and is struck by a truck.In Dirk's suit against Tour de Valle, the bike maker can raise the defense of

A)comparative negligence.
B)assumption of risk.
C)commonly known dangers.
D)product misuse.

Question 62

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

Question 63

Country Style, Inc., makes landscaping tools.Country could be liable for a warning defect if there is a foreseeable risk of harm posed by a product and

A)the omission of a warning renders the product not reasonably safe.
B)there is a reasonable alternative design.
C)there is a lack of care in making of the product.
D)there is insufficient insurance coverage.

Question 64

Toyoda Company buys gas pedals and other parts from subcontractors and puts them in its vehicles without changing their composition.If the pedals or other parts are defective, strictly liable for any damage caused by the defects are

A)neither Toyoda nor the subcontractors.
B)Toyoda and the subcontractors.
C)the subcontractors only.
D)Toyoda only.

Question 65

Furious Toyz Corporation makes skateboards, which it sells to consumers, including Gitana.Gitana is injured due to a defect in the board that causes an accident in which Haley, a bystander, is also injured.In a product liability suit based on strict product liability, Furious Toyz may be liable to

A)Gitana and Haley.
B)Gitana only.
C)Haley only.
D)no one.

Question 66

Green Glass Corporation makes glass bottles for food and beverage makers to package their products for wholesale distribution and retail sale.Liability may be imposed on Green Glass based on

A)the "reasonableness" of the manufacturer's quality control efforts.
B)the type of the manufacturer's insurance coverage.
C)a manufacturing defect.
D)the opinion and testimony of non-experts.

Question 67

VuPlay Company contracts to deliver one hundred 60-inch 3D HD television sets to a new retail customer, Watchbox Store, on May 1, with payment to be made on delivery.VuPlay tenders delivery in its own truck.Watchbox's manager notices that some of the cartons have scrape marks.Watchbox's owner phones VuPlay's office and asks whether the sets might have been damaged as they were being loaded.VuPlay assures Watchbox that the sets are in perfect condition.Watchbox tenders VuPlay a check, which VuPlay refuses, claiming that the first delivery to new customers is always for cash.Watchbox promises to pay the cash within two days.VuPlay leaves the sets with Watchbox, which stores them in its warehouse pending its "Grand Opening Sale" on May 15.Two days later, Watchbox's stocker opens some of the cartons and discovers that a number of the sets are damaged beyond ordinary repair.VuPlay claims Watchbox has accepted the sets and is in breach by not paying on delivery.Will VuPlay succeed on these claims? Explain.

Question 68

Welding Systems, Inc.(WSI), makes welding torches, masks, and related products.A WSI product may be unreasonably dangerous due to

A)a defect in its design.
B)the expectations of its seller.
C)the intentions of its distributor.
D)the method of accounting of its maker.

Question 69

Construction Products Company and Dante enter into a contract for a sale of bricks and stones.Construction Products knows the purpose for which Dante will use the goods.Under the UCC, an implied warranty of fitness of a particular purpose arises

A)if the buyer is relying on the seller to select suitable goods.
B)if the buyer asks for it.
C)if the seller is a merchant who deals in goods of the kind sold.
D)in conjunction with lease contracts, not sales contracts.

Question 70

Horizon Corporation makes cell phones.Gina files a product liability suit against Horizon, alleging a design defect.In deciding whether to hold Horizon liable, the court may consider the "reasonableness" of

A)the manufacturer's intentions.
B)the seller's method of accounting.
C)the manufacturer's quality control efforts.
D)an available alternative design.

Question 71

Chord Guitars Inc.sells guitars and other stringed instruments to consumers.A Chord salesperson says to a potential customer, "This Chord is the best guitar you'll find anywhere, even online." This statement is

A)an implied warranty of fitness for a particular purpose.
B)an implied warranty of merchantability.
C)an express warranty.
D)none of the choices.

Question 72

Trucks & Trailers, Inc.(T&T), and United Delivery Service enter into a contract for a lease of trucks.T&T is a merchant who deals in goods of the kind leased.Under the UCC, an implied warranty of merchantability arises

A)automatically.
B)only if the lessee asks for such a warranty.
C)only if the lessor expresses such a warranty.
D)only in conjunction with sales contracts, not lease contracts.