Deck 15: Formation and Performance of Sales and Lease Contracts

Question 1

A court will uphold a contract for the sale or lease of goods as long as the parties intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.

Answer 1

True
Explanation: Under both the Uniform Commercial Code (UCC)and the United Nations Convention on Contracts for the International Sale of Goods (CISG),contracts for the sale or lease of goods may be made in any manner sufficient to show agreement.A court will uphold a contract for the sale or lease of goods as long as the parties intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.

Question 2

The Uniform Commercial Code does not recognize the concept of unconscionability.

Answer 2

False
Explanation: A contract or contract provision is unconscionable if it is so unfair that a court would be unreasonable if it enforced the contract.The Uniform Commercial Code outlines actions a court can take if it discovers that a contract or lease provision or the contract or lease as a whole is unconscionable.If a court finds that a contract or lease was unconscionable,in whole or in part,when it was made,the court can either refuse to enforce the contract or lease or enforce the parts that are fair.

Question 3

Under the Uniform Commercial Code,additional terms do not negate acceptance unless acceptance is made expressly conditional on assent to the additional terms.

Answer 3

True
Explanation: Under the Uniform Commercial Code,additional terms are permitted in contracts for the sale or lease of goods.Under UCC Section 2-207(1),additional terms do not negate acceptance unless acceptance is made expressly conditional on assent to the additional terms.

Question 4

When in doubt,judges will try to interpret the UCC to keep an agreement in force.

Question 5

The UCC is significant because it clarifies criminal law.

Question 6

The Uniform Commercial Information Transactions Act is federal law,binding on all states within the United States.

Question 7

The Uniform Commercial Code does not require a contract modification to be supported by new consideration.

Question 8

Under the mirror-image rule,the terms of an acceptance must be on the exact same terms as the offer.

Question 9

The Uniform Commercial Code defines a mixed sale as a contract for the sale of two or more goods.

Question 10

There are three kinds of title: conditional title,unconditional title,and implied title.

Question 11

The UCC states that a sale consists of the passing of title from the seller to the buyer,with or without consideration.

Question 12

Article 2(A)of the Uniform Commercial Code does not cover leases related to real property.

Question 13

Article 2 of the UCC governs lease contracts,while Article 2(A)governs sales contracts.

Question 14

Federal law governs the formation of sales and lease contracts.

Question 15

Trade fixtures are treated as goods under the UCC.

Question 16

A firm offer must be made in writing.

Question 17

If a farmer agrees to sell all the grain his fields will produce but is unable to determine a specific amount,then the "quantity" element has been satisfied under the Uniform Commercial Code.

Question 18

Within its scope of applicability,the CISG has eliminated the statute of frauds.

Question 19

Corporate stocks are treated as goods under the UCC.

Question 20

Someone who purchases stolen goods,knowingly or unknowingly,has implied title.

Question 21

A sale-on-approval contract occurs when the seller and buyer agree that the buyer may return the goods at a later time.

Question 22

The Uniform Commercial Code was created in ________.

A)1980
B)1964
C)1952
D)1943
E)1935

Question 23

Under the Uniform Commercial Code,items are ________ if they exist physically.

A)merchandise
B)real
C)tangible
D)intellectual property
E)serviceable

Question 24

A conditional sales contract is a type of contract that occurs when the purchased goods are in some kind of storage under the control of a third party,such as a warehouseman.

Question 25

Which of the following articles of the Uniform Commercial Code governs lease contracts?

A)2
B)2(A)
C)4
D)4(A)
E)6

Question 26

A contract is a sale-or-return contract if the seller allows the buyer to take possession of the goods before deciding whether to complete the contract by making the purchase.

Question 27

According to common law,when a seller transfers goods to a buyer,the buyer gets only voidable title if the buyer is a minor.

Question 28

In a common-carrier delivery contract,the carrier is an agent of the seller.

Question 29

As a general rule,if a person has void title,then no matter how honorable the intentions of the seller are,that good-faith seller cannot pass anything to the buyer but void title.

Question 30

Which of the following states has adopted only portions of the Uniform Commercial Code that do not conflict with its historically French-based code law?

A)Louisiana
B)Alabama
C)Massachusetts
D)Connecticut
E)Florida

Question 31

If an owner entrusts the possession of goods to a merchant who deals in goods of that kind,the merchant cannot transfer ownership rights in the good to a buyer in the ordinary course of business.

Question 32

Under Article 2 of the Uniform Commercial Code,which of the following consists of the passing of title from the seller to the buyer for a price?

A)A lease
B)An assignment
C)A delegation
D)A sale
E)A license

Question 33

If Article 2 of the Uniform Commercial Code is silent on an issue of sales contract formation or interpretation,what law applies?

A)State statutory law or state common law.
B)Federal statutory or federal common law.
C)Article 2 of the United States Constitution.
D)State statutory law or federal common law.
E)State common law or federal statutory law.

Question 34

Under Article 2 of the Uniform Commercial Code,which of the following is defined as tangible things which are movable at the time of identification to the contract for sale?

A)Articles
B)Easements
C)Goods
D)Attachments
E)Real property

Question 35

What are the three sources of law that interpret sales contracts?

A)State common law,federal common law,and the Uniform Contracts Code
B)State common law,federal common law,and the Uniform Commercial Code
C)State common law,state statutory law,and the Uniform Contracts Code
D)State common law,state statutory law,and the Uniform Commercial Code
E)State statutory law,federal statutory law,and the Uniform Contracts Code

Question 36

With an "ex-ship" shipping term,the risk of loss passes to the buyer when the seller delivers the goods alongside the ship at the place of shipment.

Question 37

The Uniform Commercial Code is divided into sections known as ________.

A)units
B)articles
C)chapters
D)clauses
E)addenda

Question 38

Which of the following articles of the Uniform Commercial Code governs sales contracts?

A)2
B)2(A)
C)4
D)4(A)
E)6

Question 39

Which of the following do not meet the Uniform Commercial Code definition of a good?

A)Real estate
B)Corporate stocks
C)Copyrights
D)Real estate,corporate stocks,and copyrights do not meet the definition of a good
E)Real estate and corporate stocks do not meet the definition of a good,but copyrights do meet the definition of a good as a type of intellectual property.

Question 40

An insurable interest is the right to insure the goods against any risk of loss such as damage or destruction.

Question 41

Under the Uniform Commercial Code,if a contract or a contract provision is so unfair that a court would be unreasonable if it enforced the agreement,the contract is deemed ________.

A)unconscionable
B)illusory
C)implied-in-law
D)conscionable
E)ancillary

Question 42

Under the Uniform Commercial Code,contracts for the sale of goods must be in writing in order to be enforceable if they are priced at ________.

A)$100 or more
B)$500 or more
C)$1,000 or more
D)$1,000 or less
E)$500 or less

Question 43

Under Article 2(A)of the Uniform Commercial Code,a person who transfers the right to possession and use of goods under a lease is a(n)________.

A)delegator
B)seller
C)lessee
D)lessor
E)assignor

Question 44

When a seller transfers goods to a buyer,and if the buyer wrote a bad check for the goods,it would be considered ________ title.

A)void ab initio
B)voidable
C)executory
D)ex post facto
E)null

Question 45

Which of the following is true if an owner entrusts the possession of goods to a merchant who deals in goods of that kind?

A)The merchant can transfer all rights in the goods to a buyer in the ordinary course of business.
B)The merchant can only transfer voidable title until any funds in the possession of the merchant are transferred to the owner.
C)The merchant can only transfer void title until the owner approves the sale.
D)The merchant can only transfer temporary title until any funds in the possession of the merchant are transferred to the owner.
E)The merchant must have any purchaser sign a document acknowledging that the purchaser will return the goods upon the request of the owner.

Question 46

Under the Uniform Commercial Code,when is an acceptance effective?

A)When dispatched
B)When received
C)When received,if acceptance is sent by electronic means; otherwise,on dispatch
D)When dispatched,if the United States Postal Service is used; otherwise,on receipt
E)When dispatched,if the telephone is used; otherwise,on receipt

Question 47

Under the Uniform Commercial Code,lease contracts that require payments of ________ must be in writing in order to be enforceable.

A)$100 or more
B)$500 or more
C)$1,000 or more
D)$1,000 or less
E)$500 or less

Question 48

Under the Uniform Commercial Code,how may an acceptance be made?

A)Only in person
B)Only in writing
C)Only by traditional mail
D)Only by electronic communication or traditional mail
E)By any reasonable means of communication

Question 49

Which of the following are considered goods under the Uniform Commercial Code?

A)Minerals taken from real estate and sold by the owner.
B)Soil taken from real estate and sold by the owner.
C)The right,sold by the owner to another party,to remove soil from real estate.
D)Minerals taken from real estate and sold by the owner; soil taken from real estate and sold by the owner; and the right,sold by the owner to another party,to remove soil from real estate.
E)Minerals taken from real estate and sold by the owner and soil taken from real estate and sold by the owner; but not the right,sold by the owner to another party,to remove soil from the real estate.

Question 50

Items attached to real estate that are used for business activities are known as trade ________ and ________ treated as goods under the Uniform Commercial Code.

A)fixtures; are
B)fixtures; are not
C)surplus; are
D)surplus; are not
E)carriage; are

Question 51

A firm offer must be ________.

A)oral and indefinitely revocable
B)oral and irrevocable for up to one year
C)in writing and indefinitely revocable
D)in writing and irrevocable for up to three months
E)in writing and irrevocable for up to one year

Question 52

The United Nations Convention on Contracts for the International Sale of Goods (CISG)governs ________.

A)international business-to-consumer sales contracts
B)international business-to-business sales contracts
C)interstate mixed sale contracts
D)interstate lease contracts
E)all international sales transactions involving the application of equitable,but not legal,principles

Question 53

________ title is not true title.

A)Void
B)Voidable
C)Good
D)Voidable or good
E)Void or voidable

Question 54

Which of the following is true regarding the mirror-image rule and the Uniform Commercial Code?

A)The mirror-image rule applies under the UCC the same as it applies under common law.
B)The mirror-image rule that applies under common law does not apply under the UCC.
C)The mirror-image rule that applies under the common law applies under the UCC only if a lease is involved.
D)The mirror-image rule that applies under the common law applies under the UCC only if a sale of goods is involved.
E)The mirror-image rule does not apply under the UCC.

Question 55

Under Article 2(A)of the Uniform Commercial Code,a person who acquires the right to possession and use of goods under a lease is a(n)________.

A)buyer
B)delegatee
C)lessee
D)lessor
E)assignee

Question 56

What did the court rule on appeal in Alfonso Candela v.Port Motors,Inc.,the case in the textbook in which the plaintiff sued the defendant for breach of warranty of title,claiming that he was sold a stolen car?

A)That the defendant passed good title as long as the defendant did not know that the car was stolen.
B)That the defendant passed voidable title as long as the defendant did not know that the car was stolen.
C)That a defendant selling stolen goods,regardless of good faith,can never pass a voidable or good title to the buyer.
D)That a defendant selling stolen goods can pass good title to a buyer as long as the buyer and seller were innocent and not in collusion.
E)That a defendant selling stolen goods does not pass good title,but the risk of loss is on the buyer.

Question 57

A sales contract that combines goods with services is a(n)________.

A)severable sale
B)mixed sale
C)implied-in-law sale
D)contract for the sale of goods
E)service contract

Question 58

What actions does the Uniform Commercial Code allow a court to take if it discovers that a contract or lease provision is unconscionable?

A)The court must refer the matter to mediation.
B)The court must refer the matter to arbitration.
C)The court must refuse to enforce the entire contract or lease.
D)The court can either refuse to enforce the contract or lease,or it can enforce the parts of that are fair.
E)The court has no power to enforce the contract or lease,and it must award the innocent party punitive damages.

Question 59

Which of the following is a treaty that provides a legal structure for international sales?

A)The International Convention on Contracts for the Sale of Goods
B)The World Confederation for the Application and Enforcement of the International Commercial Code
C)The Global Federation for the Sale of Goods
D)The United Nations Convention on Contracts for the International Sale of Goods
E)The League of Nations Pact for Uniformity in the International Sale of Goods

Question 60

Under Article 2(A)of the Uniform Commercial Code,"a transfer of the right to possession and use of goods for a term in return for consideration" is a(n)________.

A)sale of goods
B)lease
C)assignment
D)delegation
E)consignment

Question 61

Which of the following is true regarding transportation costs when the shipping term "FOB" is used in a contract for the sale of goods requiring delivery?

A)The selling price includes transportation costs.
B)The selling price does not include transportation costs.
C)Both the buyer and seller bear transportation costs,with the costs being apportioned 50% to the buyer and 50% to the seller.
D)Both the buyer and seller bear transportation costs,with the costs being apportioned 75% to the buyer and 25% to the seller.
E)Both the buyer and seller bear transportation costs,with the costs being apportioned 25% to the buyer and 75% to the seller.

Question 62

In a destination contract,who bears the risk of loss while the goods are in transit?

A)The seller
B)The buyer
C)Both the buyer and seller,with the loss being apportioned 50% to the buyer and 50% to the seller
D)Both the buyer and seller,with the loss being apportioned 75% to the buyer and 25% to the seller
E)Both the buyer and seller,with the loss being apportioned 25% to the buyer and 75% to the seller

Question 63

Which of the following require that the seller make proper shipping arrangements and deliver goods to the buyer via a common carrier,but does not require a guarantee of the safety of goods to their destination?

A)Origin contracts
B)Destination contracts
C)Transfer contracts
D)Origin contracts,destination contracts,and transfer contracts
E)Shipment and destination contracts,but not transfer contracts

Question 64

What does the shipping term "FOB" indicate?

A)Fee on board
B)Fee on basis
C)Freedom of board
D)Free on board
E)Free of bailment

Question 65

In an origin contract,when does title pass to the buyer?

A)When money is transferred to the seller
B)When the goods are delivered to the buyer
C)At the time and place of shipment
D)Two days (forty-eight hours)after goods are identified to the contract
E)When the goods are identified to the contract

Question 66

Which of the following is true when the shipping term "FAS" is used?

A)The buyer,at the buyer's expense,delivers the goods alongside the ship before the risk passes to the buyer.
B)The buyer,at the seller's expense,delivers the goods alongside the ship before the risk passes to the buyer.
C)The seller,at the seller's expense,delivers the goods alongside the ship before the risk passes to the buyer.
D)The seller,at the buyer's expense,delivers the goods alongside the ship before the risk passes to the buyer.
E)The common carrier,at the carrier's expense,delivers the goods alongside the ship before the risk passes to the buyer.

Question 67

With a simple delivery contract in which the seller is a merchant,which party sustains the loss if,through no fault of either party,the goods are destroyed through fire prior to delivery to the buyer?

A)The seller
B)The buyer
C)Both the buyer and seller,with the loss being apportioned 50% to the buyer and 50% to the seller
D)Both the buyer and seller,with the loss being apportioned 75% to the buyer and 25% to the seller
E)Both the buyer and seller,with the loss being apportioned 25% to the buyer and 75% to the seller

Question 68

In a common-carrier delivery contract,the common carrier is:

A)An independent contractor
B)An agent of the seller
C)An employee of the seller
D)An independent contractor and an agent of the seller
E)An agent and an employee of the seller

Question 69

A goods-in-________ contract involves goods that are in some kind of storage,so the seller cannot transfer physical possession of them.

A)consignment
B)abeyance
C)equity
D)subrogation
E)bailment

Question 70

When does title transfer to the buyer in a simple delivery contract?

A)When money is transferred from the buyer to the seller
B)When the goods are delivered to the buyer
C)When the buyer takes possession of the goods
D)Three days (seventy-two hours)after the goods are identified to the contract
E)When the goods are identified to the contract

Question 71

What type of agreement do contracting parties have when the goods are delivered to a buyer via a common carrier,such as a trucking line?

A)A simple delivery contract
B)A common-carrier delivery contract
C)A goods-in-bailment contract
D)A consignment contract
E)A subrogation contract

Question 72

With a simple delivery contract involving goods sold by a merchant that are to be delivered to the buyer,when does risk of loss transfer to the buyer?

A)When money is transferred from the buyer to the seller
B)When the items are tendered to the buyer
C)When the goods are delivered to the buyer
D)Three days (seventy-two hours)after the goods are identified to the contract
E)When the goods are identified to the contract

Question 73

When is an insurable interest in the buyer created in a simple delivery contract?

A)When money is transferred from the buyer to the seller
B)When the items are delivered to the buyer
C)When the buyer takes possession
D)When the goods are identified to the contract
E)When the seller tenders delivery of the goods to the buyer

Question 74

What type of interest occurs when there is a right to insure goods against any risk exposure such as damage or destruction?

A)An insurable interest
B)A subrogation interest
C)A non-pecuniary interest
D)An accord and satisfaction
E)An abeyance

Question 75

With a simple delivery contract in which the seller is not a merchant,which party sustains the loss if,through no fault of either party,the goods are destroyed through fire prior to delivery to the buyer?

A)The seller,if tender of delivery has occurred
B)The buyer,if tender of delivery has occurred
C)Both the buyer and seller,with the loss being apportioned 50% to the buyer and 50% to the seller
D)Both the buyer and seller,with the loss being apportioned 75% to the buyer and 25% to the seller
E)Both the buyer and seller,with the loss being apportioned 25% to the buyer and 75% to the seller

Question 76

What does the shipping term "FAS" indicate?

A)Fee at ship
B)Fee along shore
C)First at shipment
D)Free alongside
E)Foundering at sea

Question 77

With a ________ contract,the buyer and seller typically execute an agreement,and the buyer leaves with the goods.

A)sale-or-return
B)sale-on-approval
C)simple delivery
D)FAS
E)CIF

Question 78

Which of the following are types of common-carrier delivery contracts?

A)Original and intermediary contracts
B)Destination and transfer contracts
C)Transfer and intermediary contracts
D)Original,intermediary,and destination contracts
E)Origin and destination contracts

Question 79

In an origin contract,who bears the risk of loss while the goods are in transit?

A)The seller
B)The buyer
C)Both the buyer and seller,with the loss being apportioned 50% to the buyer and 50% to the seller
D)Both the buyer and seller,with the loss being apportioned 75% to the buyer and 25% to the seller
E)Both the buyer and seller,with the loss being apportioned 25% to the buyer and 75% to the seller

Question 80

What type of agreement do contracting parties have when the sale itself is contingent on approval?

A)A transferable contract
B)An executed contract
C)An implied-in-law contract
D)A conditional sales contract
E)A consignment contract