Deck 8: Contracts for the Sale of Goods

Question 1

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

Answer 1

True
Explanation: With appropriate evidence, the UCC recognizes the concept of anticipatory repudiation.

Question 2

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

Answer 2

False
Explanation: Article 2 will apply and provide certain safeguards to the purchaser.

Question 3

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

Answer 3

Merchant

Question 4

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 5

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

Question 6

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

Question 7

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

Question 8

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

Question 9

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

Question 10

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 11

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

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

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

Question 14

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 15

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

Question 16

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

Question 17

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 18

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

Question 19

Shovels R Us sends a purchase order to Acme Snow Shovel,Inc.for 500 shovels to be delivered by September 30,2010,in time for the winter season.Acme returns an acknowledgment form indicating that the shovels would be delivered on March 1,2011.The acknowledgement letter forms a valid contract.

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

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 22

The UCC was written,published and enacted by Congress.

Question 23

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 they have found the same goods 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 24

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

Question 25

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

Question 26

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

Question 27

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 28

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 29

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 30

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

Question 31

The mirror image rule is not enforced under UCC standards.

Question 32

On February 1^st,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^st.On September 1^st 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 33

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 34

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

Question 35

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 36

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 37

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

Question 38

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 39

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

Question 40

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

Question 41

The only state that has not adopted the UCC is:

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

Question 42

Josh's Futbol World orders 500 USA 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 they have received 500 pairs of USA replica shorts but no jerseys.Before they can notify Victory and return the shorts,a fire destroys the 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 are 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 retains risk of loss until the goods were tendered to Josh's at Josh's establishment

Question 43

In the absence of a specific contract provision regarding the details of payment the UCC provides that:

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

Question 44

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 upon 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 45

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 46

Which of the following is not true regarding a firm offer?

A) firm offers automatically occur 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 only occur between merchants
D) firm offer must be in writing

Question 47

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

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) the UNCISG does not recognize industry practices and past dealings between parties

Question 48

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 in route and at least half way to the buyer

Question 49

(p.Reflective Thinking)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 their 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 their loss.
D) the buyer may sue the carrier, but not the seller for their loss

Question 50

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 51

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 52

UCC rules regarding acceptance of goods and payment regarding 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, however, 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 upon delivery of that shipment

Question 53

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 54

In Sons of Thunder,Inc.v.Borden,Inc.,it was alleged that Borden breached their 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 cancelled the "shuck-at-sea" program, buying less 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 plaintiff's 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 them

Question 55

Two merchant companies have entered into a contract for the sale of goods but have had no prior dealings which 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 56

In the case of Rosenfeld v.Basquiat,Basquiat sold several paintings to Rosenfeld and provided him with a written receipt.Unfortunately Basquait died before delivery and Basquait'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 was signed by Basquait, 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 57

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,colors and states that delivery is to be made to Bob's in New York at Sam's cost.When Sam's sends an acknowledgement 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 1000 purple sweaters and allocates the color of those 1000 sweaters equally amongst the other colors ordered
D) Sam's changes the place of delivery to their factory in California and allocates the cost of shipping to Bob's in New York

Question 58

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

Question 59

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 60

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 61

Cathy's Coaster Company uses cork in all of the protective drink coasters that they manufacture.If they enter into an agreement with a cork exporter from Portugal to purchase all of the cork they need to produce their products,this would be:

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

Question 62

Which of the following contracts 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 63

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 64

Lon's GPS,Inc.orders 500 Class A widgets to be installed in GPS units they are 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 the Class B widgets 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 they forfeit 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 done within a reasonable time.

Question 65

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 66

Which of the following is true of open priced 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 applying a reasonable price at whatever time the court deems appropriate to fairness

Question 67

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

Question 68

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

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

Question 69

Acme Rocket Company is shipping 500 toy rockets 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 70

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 71

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 72

Mackey Pharmacy Corp.orders 5000 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 quantity and quality of the aspirin,none of the aspirin are in child proof bottles.The contract was silent regarding the issue of child proof bottles.Mackey rejects the delivery and MAK sues them for breach of contract.How should the courts analyze and resolve this matter?

Question 73

Veggy Time,Inc.is a distributor of canned vegetables.They have 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 their corn from Fred alone.Once again they have entered into a contract with Fred to purchase his entire 2011 crop and have no other corn sellers under contract.For the entire ten years,Fred has delivered 100,000 bushels of corn to Veggy Time.Unfortunately,due to an extraordinary amount of rain,Fred's fields are flooded and his crop is destroyed.In 2011,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 their losses? What could Veggy Time do to mitigate their damages?

Question 74

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

Question 75

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 76

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

Question 77

Home Gardening Corp.,a hardware and gardening chain has ordered 1000 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 had delivered 1000 bags of black licorice mulch.What option or options does Home Gardening have?

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 is sued.

A) Jamison must pay because it was her post office box and 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

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 them 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 they 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 80

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

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