Deck 9: Contracts for the Sale of Goods

Question 1

If one party to a contract has reasonable grounds to believe that the other party will not or cannot perform the contract, that party has the right to demand ________ from the other party concerning performance.

Answer 1

assurances

Question 2

In a destination contract, the ________ bears risk of loss until the goods reach the destination.

Answer 2

seller

Question 3

The 2003 revisions to the UCC have been adopted by only about half of the states.

Answer 3

False
Explanation: No states have yet adopted the 2003 revisions.

Question 4

If a merchant sells goods to a buyer who is not a merchant, Article 2 of the UCC will not apply.

Question 5

A significant change or deviation from the terms of a contract is called a ________ change.

Question 6

Abbreviations published by the International Chamber of Commerce that are meant to avoid confusion in international business transactions are called ________ terms.

Question 7

If terms are left open in a sales contract, the UCC will complete the contract by inserting ________ to make the contract enforceable.

Question 8

Goods that exactly meet the specifications of a contract are called ________ goods.

Question 9

Shovels R Us sends a purchase order to Acme Snow Shovel Inc., for 500 shovels to be delivered by September 30, 2014, in time for the winter season. Acme returns an acknowledgment form indicating that the shovels will be delivered on March 1, 2015. The acknowledgment letter forms a valid contract.

Question 10

A ________ is one that is regularly engaged in the sale of a particular good.

Question 11

________ is the legal term for the right of ownership in goods.

Question 12

UCC risk of loss provisions will govern the terms of a contract even if the parties have specified risk allocation in the contract.

Question 13

An irrevocable offer made by one merchant to another is called a _______.

Question 14

Just as in common law, the UCC recognizes the concept of anticipatory repudiation, allowing a breach to be declared prior to performance being due.

Question 15

Johnson Builders is selling a newly built home to Sheila. JRK Realtors is handling the transaction. This sale is covered under Article 2 of the UCC.

Question 16

UCC gap fillers will not be used and are not applicable to contracts when the contract clearly specifies a contract term or condition.

Question 17

Some courts have determined that the inclusion of an arbitration clause in an acceptance as a means of dispute resolution constitutes a material alteration of the offer in a merchant transaction.

Question 18

If goods are to be picked up at the seller's place of business by the buyer and the seller is a merchant, the seller retains risk of loss until the buyer takes possession of the goods.

Question 19

Your cousin, who is a CPA, calls you and says that a client paid him in diamonds and he's selling them. If you purchase one of those diamonds, at the time of the sale your cousin would be considered a merchant of those diamonds.

Question 20

When a buyer rejects nonconforming goods and purchases the appropriate goods from a different seller, the buyer is said to be _______.

Question 21

The UCC was written, published, and enacted by Congress.

Question 22

The UCC permits terms to be added into a contract or filled in as gap fillers; however, the contract cannot be enforceable unless the parties have agreed to and specified a price in their agreement.

Question 23

If the seller ships conforming goods, the buyer has a duty to accept them and may not reject the goods.

Question 24

While the common law recognizes commercial impracticability as a means to terminate a contract, the UCC rejects and does not recognize commercial impracticability.

Question 25

Article 2 rules for acceptance of offers are more rigid than common law rules.

Question 26

If a seller has delivered nonconforming goods that have been rejected, upon notice of an intent to cure, the seller automatically then has 15 days to deliver conforming goods.

Question 27

If a party has been delivered nonconforming goods and has rejected them and is then forced to cover in order to maintain business operations, the party may sue the seller for the difference in price plus consequential damages.

Question 28

Wrongfully revoking an acceptance will constitute a breach of contract by the buyer.

Question 29

Betsy is moving to New Mexico and offers to sell her television to April. April isn't sure if she can afford it and asks for a week to decide. If Betsy agrees to hold the offer open for a week and makes the promise in writing, Betsy has given April a firm offer.

Question 30

If a buyer knowingly accepts nonconforming goods, the buyer may still sue the seller for monetary damages based on the nonconformity.

Question 31

If two companies enter into a sales contract and the shipping terms are omitted from the agreement, the contract will automatically become a shipping contract.

Question 32

Uncle Phil has lent you $10,000 to pay tuition and other school-related costs. You've now graduated, and Uncle Phil is asking about repayment terms. The loan was never evidenced in writing. This transaction falls under the UCC statute of frauds.

Question 33

The United Nations Convention on Contracts for the International Sale of Goods does not recognize a formal writing requirement similar to the UCC statute of frauds requirement.

Question 34

A party holds title to goods when the goods have come into existence and the goods are identified to the contract.

Question 35

The mirror image rule is not enforced under UCC standards.

Question 36

The UCC permits a contract to be considered formed entirely by the parties' conduct even if no definite time of formation can be determined.

Question 37

On February 1, Frank's Fedora Manufacturers sends an offer to Metropolitan Outfitters by letter with all price, quality, quantity, and delivery terms clearly stated, indicating that the offer will remain open until October 1. On September 1 Metropolitan sends an acceptance of the offer to Frank's with no material alterations to any of the stated terms in the offer. The acceptance makes the contract valid and enforceable.

Question 38

In an installment contract, the buyer may reject an installment if the nonconformity substantially impairs the value of that installment or the nonconformity cannot be cured.

Question 39

In a shipping contract, the seller is obligated to deliver the good into the "hands" of the buyer.

Question 40

Jones Corp. is set to deliver goods ordered by Smith Inc., and calls to confirm that the goods will be delivered the next day. Smith Inc., on the phone, notifies Jones Corp. that it has found the same goods available cheaper from another seller and will not accept delivery. In order for Smith Inc., to officially be in breach of contract, Jones Corp. must deliver and tender conforming goods and have Smith Inc., wrongfully reject them.

Question 41

Josh's Futbol World orders 500 U.S.A. replica soccer jerseys from Victory Apparel, a sports apparel manufacturer. The jerseys are to be delivered to Josh's place of business. When the shipment arrives, Josh's discovers that it has received 500 pairs of U.S.A. replica shorts but no jerseys. Before Josh's can notify Victory and return the shorts, a fire destroys Josh's building along with the shipment of shorts.

A) This was a destination contract, and since the shorts were tendered to the destination, Josh's bears risk of loss until they can be returned.
B) This was a destination contract, and the shorts were nonconforming goods, so Victory did not complete performance and retains risk of loss.
C) This was a shipment contract, and Josh's assumed risk of loss when Victory delivered the goods to the carrier.
D) This was a shipment contract, and Victory retained risk of loss until the goods were tendered to Josh's at Josh's establishment.

Question 42

Which of the following is not true regarding firm offers?

A) A firm offer automatically occurs when an offer or promise is made by one merchant to another.
B) Firm offers do not require consideration for the offer to remain open.
C) Firm offers occur only between merchants.
D) Firm offers must be in writing.

Question 43

Which of the following would not be considered tangible?

A) a car
B) oxygen
C) the right of ownership
D) the pen or pencil you are using

Question 44

Two merchants agree to a sale of goods to be shipped by boat from Maine to Florida. No other shipping terms are indicated. If the boat sinks during the trip and all the goods are destroyed:

A) the buyer may sue the seller, but not the carrier, for its loss.
B) the seller may sue the carrier because the seller maintained risk of loss and the right to sue for losses.
C) the buyer may sue both the seller and the carrier for its loss.
D) the buyer may sue the carrier, but not the seller, for its loss.

Question 45

Two merchant companies have entered into a contract for the sale of goods but have had no prior dealings that would establish a course of conduct between them. The UCC will allow gap fillers to apply to their contract regarding missing terms in each of the following situations except:

A) they have failed to specify when payment for the goods is to be made.
B) they have failed to specify where delivery of the goods is to be made.
C) they have failed to specify the quality or grade of the goods to be delivered.
D) they have failed to specify the price of the goods to be delivered.

Question 46

In Sons of Thunder Inc., v. Borden Inc., it was alleged that Borden breached its contract with the owners of Sons of Thunder by not purchasing the required amount of clams. The court found that:

A) because Borden urged the plaintiffs to purchase bigger boats to handle "shuck-at-sea" technology and then canceled the "shuck-at-sea" program, buying fewer clams from the plaintiff and then buying from a competitor, Borden had not acted in good faith.
B) Borden had breached an output contract by not buying all of the plaintiffs' clams and buying from competitors.
C) purchasing larger boats by the plaintiffs was a business decision that Borden could not be held responsible for.
D) Borden had breached a requirements contract by buying from competitors when the plaintiffs still had available clams to sell to Borden.

Question 47

The UCC will permit an incomplete or slightly ambiguous contract to be enforced using each of the following criteria except:

A) past commercial conduct.
B) industry standards or norms.
C) judicial input of any terms necessary to maintain fairness.
D) correspondence or verbal exchanges between the parties.

Question 48

Absent specific agreements between the parties, the reasonableness requirement of the UCC governing delivery of goods requires each of the following except:

A) the goods must be delivered in one shipment.
B) the goods must be delivered at a reasonable hour.
C) the goods must be delivered on a weekday.
D) the goods must be delivered in a reasonable manner.

Question 49

In a shipping contract, the risk of loss passes to the buyer when:

A) the contract is signed or finalized.
B) the goods are delivered to the carrier.
C) the goods are delivered to the buyer.
D) the goods are en route and at least halfway to the buyer.

Question 50

Commercially reasonable means:

A) getting the highest price possible for goods without violating the law.
B) charging a fair price for goods and not taking advantage of others in the industry.
C) observing industry standards and practices that may be unique to the particular industry.
D) observing industry standards and practices that are generally accepted throughout various industries as proper business practices.

Question 51

In the case of Rosenfeld v. Basquiat, Basquiat sold several paintings to Rosenfeld and provided him with a written receipt. Unfortunately Basquiat died before delivery, and Basquiat's heirs challenged the enforceability of the agreement. The court determined that:

A) because the written agreement was completed in crayon on a scrap of brown packing paper, the writing did not meet the formality of a proper contract.
B) because the written agreement did not contain the terms of delivery, the writing was too vague to form a contract.
C) because the writing contained the names of the paintings, the price paid, and Basquiat's signature, the paper was sufficient to evidence a contract.
D) because the writing was not signed by Rosenfeld, the paper was not sufficient to evidence a contract.

Question 52

With regard to consideration in a sales contract, the UCC differs from the common law in that:

A) consideration in a sales contract may be modified without additional consideration.
B) consideration exchanged must be equal or very closely equal in sales contracts.
C) consideration is not required in sales contracts.
D) consideration in a sales contract may be modified as long as additional consideration is provided.

Question 53

In the absence of a specific contract provision regarding the details of payment, the UCC provides that payment be made in full:

A) at the time and place that delivery occurs.
B) within 10 days of the time and place that delivery occurs.
C) within 20 days of the time and place that delivery occurs.
D) within 30 days of the time and place that delivery occurs.

Question 54

The United Nations Convention on Contracts for the International Sale of Goods (UNCISG) differs from the UCC in that under UNCISG:

A) acceptances are effective when mailed.
B) acceptances are effective when received.
C) written contracts are required for sales contracts of $1,000 or more rather than $500 or more.
D) industry practices and past dealings between parties are not recognized.

Question 55

The only state that has not adopted the UCC is:

A) California.
B) Louisiana.
C) Texas.
D) Arizona.

Question 56

UCC rules on acceptance of goods and payment in regard to installment contracts mandate that:

A) acceptance is not made until all shipments are received and then payment is made.
B) acceptance is made separately for each shipment but payment is not due until the final shipment is received.
C) payment must be made in advance and acceptance occurs after all shipments are received.
D) acceptance is made separately for each shipment and payment for each shipment is due on delivery of that shipment.

Question 57

If Continental Tires agreed to purchase all of the rubber that a particular Brazilian rubber plantation could produce, this would be:

A) an output contract.
B) an input contract.
C) a requirements contract.
D) a necessities contract.

Question 58

Bob's Department Store in New York sends a purchase order to Sam's Sweaters in California, ordering 10,000 sweaters. The purchase order includes a breakdown of sizes, styles, and colors, and it states that delivery is to be made to Bob's in New York at Sam's cost. When Sam's sends an acknowledgment form accepting the offer, certain terms are changed. Which of the following would likely not automatically become part of the contract?

A) Sam's changes the quantity to 9,500 sweaters.
B) Sam's changes the price, raising the per-item cost by $.50 each.
C) Sam's omits the order for 1,000 purple sweaters and allocates those 1,000 sweaters equally among the other-color sweaters ordered.
D) Sam's changes the place of delivery to its factory in California and allocates the cost of shipping to Bob's in New York.

Question 59

For a writing to satisfy statute of frauds requirements under the UCC, it must include each of the following except:

A) price.
B) quantity.
C) the signature of the party against whom enforcement is sought.
D) language that a reasonable person would believe constitutes an intent to form a contract.

Question 60

Your department secretary has called a local office supply company and ordered 100 reams of copy paper. The agreement is that the paper will be delivered to the department office and a check for payment will be given on delivery. On the way to make the delivery the truck is in a crash, and the paper is destroyed in a fire resulting from the accident.

A) This is a shipment contract, and the office supply company bears risk of loss.
B) This is a shipment contract, and your school bears risk of loss because the paper had been set aside and tendered.
C) This is a destination contract, and because delivery had been initiated, the school bears the risk of loss.
D) This is a destination contract, and since the goods were never properly tendered, the office supply company bears the risk of loss.

Question 61

Mackey Pharmacy Corp. orders 5,000 cases of regular-strength aspirin from MAK Pharmaceuticals. When they are delivered, an inspection shows that while the delivery is conforming to the contract with regard to the quantity and quality of the aspirin, none of the aspirin are in childproof bottles. The contract was silent regarding the issue of childproof bottles. Mackey rejects the delivery, and MAK sues for breach of contract. How should the courts analyze and resolve this matter?

Question 62

What is the underlying goal and function of the UCC, and why is it crucial to business?

Question 63

Normally, the buyer's offer in a commercial transaction takes the form of:

A) a personal letter.
B) a purchase order.
C) an acknowledgment form.
D) a phone call with the parties directly speaking with each other.

Question 64

Cathy's Coaster Company uses cork in all of the protective drink coasters that it manufactures. If Cathy's enters into an agreement with a cork exporter from Portugal to purchase all of the cork it needs to produce its products, this would be:

A) an output contract.
B) an input contract.
C) a requirements contract.
D) a necessities contract.

Question 65

Plastic Enterprises sends a purchase order to Felt Industries to buy recycled soda bottles for delivery at Steven's Point. Felt sends an acknowledgment form confirming all of the terms in the purchase order but designating delivery to be at Johnson's Point, 2 miles down the coast from Steven's Point. Do the parties have a contract, and where will the delivery be?

Question 66

The statute of frauds provides that certain sales contracts be evidenced by a written agreement. What type of sales contract does this requirement apply to, and what constitutes a writing sufficient to evidence an enforceable contract?

Question 67

Which of the following is true of open-price-term contracts?

A) The contract is void due to the failure to specify a required term of the contract.
B) The price becomes the reasonable price at the time the contract was entered into.
C) The price becomes the reasonable price at the time the goods are delivered.
D) The price is determined by the court's applying a reasonable price at whatever time the court deems appropriate to fairness.

Question 68

Lon's GPS Inc., orders 500 Class A widgets to be installed in GPS units it is manufacturing. When delivery is made on Monday, the widgets delivered are Class
B. Lon's signs a receipt accepting the nonconforming shipment. The next day, Lon's installs some of the Class B widgets and finds that they perform with half the accuracy of the Class A widgets. What, if any, options does Lon's have?
In most cases when a shipment of nonconforming goods is accepted, the buyer may seek to adjust the price, if applicable, but forfeits the right to subsequently reject the goods. In this situation, however, the UCC provides that if nonconforming goods are accepted and the nonconformity is found to substantially impair the value of the goods, the buyer may in fact revoke acceptance if the buyer does so within a reasonable time.

Question 69

The International Chamber of Commerce abbreviation indicating that goods are to be picked up by the buyer and not delivered is:

A) EXW.
B) FAS.
C) FOB.
D) FCA.

Question 70

Home Gardening Corp., a hardware and gardening chain, has ordered 1,000 bags of red cedar mulch from Mulch Masters Inc., Delivery is to be made at the Home Gardening warehouse in Sioux City, Iowa. When the goods arrive in Sioux City, Home Gardening discovers that Mulch Masters has delivered 1,000 bags of black licorice mulch. What option or options does Home Gardening have?

Question 71

In what ways does the United Nations Convention on Contracts for the International Sale of Goods differ from the UCC in terms of coverage and application?

Question 72

Annie agrees to purchase a television from Huge Buy, a merchant electronics seller. Her agreement is that she will pick the television up on Friday at Huge Buy. On Friday morning Huge Buy calls to verify that the television is marked with her name and is available for pickup. Annie tells Huge Buy that she can't come until Saturday. Friday evening a huge storm damages the Huge Buy facility, caving in the roof and destroying her television. Huge Buy demands payment from Annie, claiming that it tendered the goods and if she had picked up the television on Friday as originally agreed, there would not have been a loss. Does Annie have to pay? Why or why not.

Question 73

The United Nations Convention on Contracts for the International Sale of Goods, with regard to cure:

A) does not recognize cover as a seller's remedy.
B) follows the same cure rules as stated in the UCC.
C) allows an absolute right and obligation for a seller to cure, and the buyer must allow the seller to cure even if the time for performance is past due.
D) requires that the seller apply to the International Court of Justice for the right to cure, and the court will evaluate each case individually.

Question 74

Which of the following items would be properly subject to a UCC sales contract?

A) a house
B) a Christmas tree sold in a parking lot
C) rights to a patent
D) an employment contract

Question 75

In a destination contract, risk of loss passes to the buyer when the goods:

A) are tendered at the specific destination.
B) are delivered by the seller to the carrier.
C) begin the journey to the destination point.
D) have passed the halfway point to the destination.

Question 76

Which of the following requires a written contract to be enforceable?

A) Jon rents a luxury yacht for a month at a cost of $10,000.
B) Lindsay borrows $5,000 from Robert to buy a car.
C) Stanley's pit bull has just had a litter, and he agrees to sell you a puppy for $500 when the pups are weaned from their mother.
D) Philip agrees to paint your house for $500.

Question 77

Veggy Time Inc., is a distributor of canned vegetables. It has been dealing with Fred Farmer for 10 years, purchasing Fred's entire corn crop. Fred's farm is so large and productive that Veggy Time has exclusively bought all of its corn from Fred alone. Once again it has entered into a contract with Fred to purchase his entire 2015 crop and has no other corn sellers under contract. For the past 10 years, Fred has delivered 100,000 bushels of corn to Veggy Time. Unfortunately, due to an extraordinary amount of rain, Fred's fields are now flooded and most of his crop is destroyed. In 2015, Fred can deliver only 10,000 bushels, and Veggy Time is about to suffer a huge loss. Does Veggy Time have any rights against Fred to recover for its losses? What could Veggy Time do to mitigate its damages?

Question 78

In Merchants Acceptance Inc., v. Jamison, Jamison ordered encyclopedias and the contract specified that delivery was to be made to Jamison's home. Instead, the encyclopedias were delivered to her post office box and she never received them. She refuses to pay for them and issued.

A) Jamison must pay because it was her post office box, delivery was close enough to be substantial performance, and risk of loss passed to her.
B) Jamison must pay because she easily could have mitigated damages by going to her post office box to pick up the encyclopedias.
C) Jamison does not have to pay because the goods were never tendered to her properly, so risk of loss never passed.
D) Jamison does not have to pay because the UCC permits a nonmerchant to cancel contracts with merchants at any time as a consumer protection.

Question 79

Acme Rocket Company is shipping 500 toy rockets by boat to Rockets R Us. Acme is located in Miami, and Rockets R Us is located in Boston. If goods are shipped FOB Miami:

A) Rockets R Us bears the risk of loss if the boat sinks on its way to Boston.
B) Rockets R Us bears the risk of loss once the shipment arrives in Boston.
C) Acme bears the risk of loss if the boat sinks on its way to Boston.
D) Acme bears the risk of loss until the goods are accepted by Rockets R Us.

Question 80

Explain how the UCC "battle of the forms" is resolved in nonmerchant and in merchant transactions.