Deck 19: Formation and Terms of Sales Contracts

Question 1

Parties to a sales contract act in good faith but the contract as a whole is unconscionable.In this case,courts do not have the right to refuse to enforce the contract.

Answer 1

False

Question 2

Under the UCC,when parties to a sales contract omit a price term,the contract is void because there is no "meeting of the minds."

Answer 2

False

Question 3

Which of the following statements is true about leases?

A)It is a transfer of the ownership of goods from one merchant to another.
B)It is a transfer of the rights to possess and use the goods belonging to another.
C)Article 2 of the UCC deals exclusively with leases of goods.
D)It is governed by the same principles of common law that predominantly govern service contracts.

Answer 3

B
Explanation: A lease of goods is a transfer of the right to possess and use goods belonging to another.

Question 4

When a sales contract obligates a buyer to purchase a seller's output of a certain item and the good faith outputs are grossly disproportionate to prior normal outputs,the UCC requires that the buyer purchase the disproportionate amount.

Question 5

In exclusive dealing contracts,the UCC says that sellers have a duty to use their best efforts to supply their buyers,who in turn have a duty to use their best efforts to sell the goods.

Question 6

Marking of goods by the seller is a way of identification of goods.

Question 7

Adam offered to buy automobile batteries from Ben.Adam's purchase order was complete with respect to all material terms except price,which was omitted.If Ben accepts Adam's offer,and the price of automobile batteries is well established in the industry,does a contract exist between Adam and Ben?

A)No contract was formed between Adam and Ben.
B)A contract was formed between Adam and Ben only if it can be proved that the parties intended to enter a contract and orally discussed the price.
C)A contract was formed between Adam and Ben,but the price will be treated as a proposed addition to the contract which must be accepted by both parties.
D)A contract was formed between Adam and Ben even though the price term was omitted.

Question 8

Under Article 2 of the UCC,in which of the following cases is the seller a "merchant"?

A)Barbara,an accountant,sells her car to her nephew.
B)Ted,a veterinarian,sells his tractor to his neighbor.
C)Tec-E,a software company,contracts to sell a database program to a local NPO.
D)Tom,a used-car dealer,sells his microwave to Gary.

Question 9

Angela went to "Hairs R Us" to have her hair colored flame red and to get a permanent wave.Unfortunately,the hair color contained a chemical that reacted with the permanent wave solution resulting in Angela's hair turning a bright green and falling out.Under these circumstances,would a court be likely to apply the Code provisions in determining the rights and responsibilities of the parties?

A)Code provisions would not apply because Angela entered into a contract which was predominantly a service contract.
B)Code provisions would not apply because Angela is not a merchant.
C)Code provisions would probably apply because any contract involving the sale of goods is governed by the Code.
D)Code provisions would probably apply because Angela's hair is tangible personal property.

Question 10

Article 2 of the UCC does not apply to the sale of real estate.

Question 11

Ex-ship not only specifies the particular ship on which the goods are to be placed but also places the expense and risk on the buyer.

Question 12

Anyone who entrusts goods to a merchant who regularly deals in such goods gives that merchant the power to give good title to a buyer in the ordinary course of business.

Question 13

A seller may entrust goods to a potential buyer to give him/her a chance to decide whether or not to buy the goods.

Question 14

If a contract is for the sale of goods,the principles of common law are exclusively applicable.

Question 15

Article 2A of the UCC deals exclusively with leases of goods.

Question 16

The UCC distinguishes between merchants and nonmerchants by holding merchants to a higher standard in all cases.

Question 17

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

A)Lee contracted to build Sal's house.
B)Chris leased 1,500 square feet of retail space from Anne.
C)Sue contracted to sell 500 pairs of shoes to a department store.
D)Kim contracted to dress Sally for her wedding.

Question 18

If a contract requires the seller to ship the goods,title passes to the buyer when the seller delivers the goods to him.

Question 19

Article 2 of the UCC applies to transactions involving real and personal property.

Question 20

The Code requires both the original owners as well as the good faith purchasers of goods to bear the burden of collecting from their fraudulent buyers.

Question 21

A buyer who rejects tender of goods:

A)still retains title.
B)can retain title if the contract is a predominantly service one.
C)vests the title back in the seller.
D)retains title only for a limited period of time.

Question 22

If Lily takes her diamond ring to Steve's Jewelers for routine cleaning,and Steve sells the ring to Evan who is unaware that the ring is Lily's:

A)Lily can recover the ring from Evan.
B)Lily can sue Steve for conversion,but cannot recover the ring from Evan because he was a buyer in the ordinary course of business.
C)Lily can recover the ring under the UCC's ownership principles.
D)Lily cannot get the ring as Evan has good title to it.

Question 23

Under the UCC,a buyer in the ordinary course of business:

A)is one who buys goods from a merchant,knowing that the sale violates the ownership rights of a third party.
B)does not know that a sale violates the ownership rights of the original party.
C)takes goods free of any security interest in the goods that their seller may have given a third party.
D)is a person who transacts only with nonmerchants.

Question 24

A buyer owned a retail store in Baltimore,and the seller was a manufacturer in Los Angeles.If the buyer orders goods from the seller to be shipped "FOB Baltimore," which of the following statements is true?

A)The seller bears the expense and risk of delivering the goods to Baltimore.
B)Both equally share the risk of loss.
C)The seller bears the expense and risk of delivering the goods only to the carrier in Los Angeles.
D)The buyer bears the risk of loss as he has the power to take possession of the goods.

Question 25

_____ means "honesty in fact in the transaction concerned".

A)Good value
B)Good faith
C)Fair title
D)Good title

Question 26

Eloise took her prized poodle,Tiny,to Pam's Pet Store & Grooming to prepare Tiny for an upcoming dog show.Unknowingly,one of Pam's new employees sold the dog to Jas.Under these circumstances,which of the following statements is correct?

A)Eloise cannot recover Tiny from Jas because under the UCC,Pam's could give good title to a buyer in the ordinary course of business.
B)Eloise can recover Tiny from Jas because Pam's did not have ownership to Tiny when it sold Tiny to Jas.
C)Eloise can recover the value of Tiny from Jas or from Pam's because neither Pam's nor Jas had title to Tiny.
D)Eloise has no remedy against either Pam's or Jas.

Question 27

A seller who has voidable title:

A)can pass good title to a good faith purchaser for value.
B)cannot pass good title to a good faith purchaser for value.
C)cannot obtain voidable title by impersonating another person.
D)can pass good title if the purchaser gives specific consideration to support the contract.

Question 28

Which of the following is a part of destination contracts?

A)CIF
B)FOB
C)Ex-ship
D)C&F

Question 29

Under the UCC,which of the following statements is true for the identification of goods to the contract?

A)It is applicable if delivery is to be made without moving the goods.
B)It occurs when the seller makes it verbally clear that the goods are those to which the contract refers.
C)It does not include actions of the seller,such as setting aside or marking the goods.
D)It occurs when the seller gives samples of the goods to the buyer.

Question 30

When a contract merely requires the seller to ship the goods,title passes to the buyer when:

A)the contract is signed by both parties.
B)the seller delivers the goods to the carrier.
C)the buyer pays the seller.
D)the goods are delivered by the carrier.

Question 31

Which of the following is a basic purpose for making exceptions to the UCC's general rules on titles and third parties?

A)To protect the rights of sellers.
B)To place the burden of loss on the good faith purchasers.
C)To promote commerce by giving buyers the knowledge that they will get good value for goods they will purchase.
D)To protect those who innocently buy from merchants,thereby promoting confidence in such commercial transactions.

Question 32

According to the UCC,title to goods may pass to the buyer:

A)only when the seller hands the buyer a certificate of title.
B)upon identification of the goods by the buyer.
C)when the document of title is delivered by the seller.
D)only after the seller delivers the goods at the buyer's residence.

Question 33

In a shipment contract,"FOB" stands for ____.

A)Free on Board
B)Fee on Board
C)Freight on Board
D)Forbidden on board

Question 34

In an FAS contract,the seller:

A)must deliver the goods alongside the vessel at his own risk and expense.
B)must deliver the goods alongside the vessel at the buyer's risk and expense.
C)must deliver the goods alongside the vessel at his own expense but at the buyer's risk.
D)has title to goods till they are delivered alongside a vessel.

Question 35

Which of the following statements is true for a negotiable document of title?

A)It serves as the contract between the seller and the shipper.
B)It is given to the buyer even before he/she makes the payment for the goods.
C)It shows that title cannot be surrendered to the buyer until the seller explicitly instructs.
D)It shows that the buyer cannot reject the goods delivered.

Question 36

Under the UCC,if the contract is silent about the place of delivery,the goods are to be delivered:

A)at the site of the goods.
B)at the seller's place of business.
C)at the seller's residence,if it is not his place of business.
D)at any place the seller deems convenient.

Question 37

When,at the time of contracting,the goods are in the hands of a third-party bailee and are covered by a document of title,the risk passes to the buyer when he/she:

A)takes possession of the goods.
B)receives the document of title.
C)acknowledges the right to possession.
D)indulges in a breach of contract.

Question 38

Patty buys a Persian rug from James,a plumber,in an online auction.James called Patty on Wednesday to inform her that she submitted the winning bid and that he would ship the rug to her on Friday.On Thursday,the rug was destroyed in a garage fire at James' house.Who bears the loss?

A)James,as he has not delivered the goods.
B)James,as he has tendered delivery of goods.
C)Patty,as James is not a merchant.
D)Patty,as James was only providing a service.

Question 39

When a contract is silent about the time for performance:

A)the UCC takes the same position as the common law.
B)performance must be tendered within what the buyer considers to be a reasonable time.
C)payment for the goods is due at the time and place which the seller accepts.
D)the contract can be terminated by either party without giving any notice.

Question 40

Jelly Manufacturer,a food processor in Chicago,placed a phone order with Grape Grower,a grower in California,for a quantity of perishable product.The shipping term was "CIF" with payment to be made on delivery.Grower delivered the goods called for in the contract to a carrier and contracted for their shipment.However,it neglected to have the goods shipped under refrigeration.The goods were loaded on a non-refrigerated boxcar and as a result the product was spoiled when it reached Chicago.Under these circumstances:

A)Grape Grower bears risk of loss as he did not insure the goods.
B)Jelly bears the risk of loss because under CIF shipment the buyer has to bear all risks.
C)Jelly bears the risk as the contract did not mention that Grape Grower guarantee their delivery.
D)Grape Grower bears the risk of loss because under a CIF shipment,the seller bears the expense and the risk of loading the goods.

Question 41

What happens if a buyer rejects the tender of goods?

Question 42

If a buyer repudiates a contract for identified,conforming goods before risk of loss has passed to him/her:

A)the buyer is liable for a commercially reasonable time for any damage to the goods that is not covered by the seller's insurance.
B)the seller is liable for a commercially reasonable time for any loss or damage to the goods.
C)the buyer and the seller must share the loss equally.
D)the buyer is liable for a commercially reasonable time for any loss or damage to the goods that is not covered by the buyer's insurance.

Question 43

Which of the following statements is true for a sale on approval?

A)Goods are delivered to the buyer primarily for exchange purposes.
B)Goods are delivered to the buyer primarily for the buyer's use.
C)The risk of loss and title automatically pass to the buyer.
D)The trial of goods is regarded as an acceptance by the buyer.

Question 44

In a return contract,goods are delivered to buyers:

A)primarily for personal use.
B)primarily for resale.
C)primarily for trial.
D)primarily to assign the risk of loss to the buyer.

Question 45

Which of the following applies to an insurable interest in goods?

A)Buyers have an insurable interest in goods the moment they pay for the goods.
B)Buyers have an insurable interest in goods the moment they get the title to the goods.
C)Sellers have an insurable interest in goods till the risk of loss is with them.
D)Sellers have an insurable interest in their goods as long as they have title to the goods or a security interest in them.

Question 46

In June,Ed entered into a contract to buy a motorcycle from Hot Rod Sports.He paid the purchase price of $1,200 and was given the papers necessary to register the motorcycle and get insurance on it.Ed registered the motorcycle but had not attached the license plates to it.He left on vacation and told the Hot Rod salesperson that he would pick up the motorcycle on his return.While Ed was on vacation,there was an electric power blackout in New York City and the motorcycle was stolen by looters.Ed sued Hot Rod to get back his money.Did Hot Rod bear the risk of loss of the motorcycle?

Question 47

Myron bought a valuable painting from Williams and paid for it with a bad check.Myron then sold the painting to Olive,who paid a large sum of money for it and who did not know that Myron had bought it with a bad check.Can Williams recover the painting from Olive? Why or why not?

Question 48

Sales on approval are primarily _____ transactions.

A)seller
B)merchant
C)consumer
D)nonmerchant

Question 49

Weddings R Us,an event management company,brought suit against Smith to recover the contracted price for the performance of a full wedding,including the providing of a three-layer wedding cake.Should the court apply Article 2 of the UCC to this contract?

Question 50

Why does the UCC distinguish between merchants and nonmerchants by holding merchants to a higher standard in some instances?