Deck 18: The Formation of Sales and Lease Contracts

Question 1

Under the UCC,a sale occurs when title passes from a seller to a buyer for a price.

Answer 1

True

Question 2

Under the UCC,a merchant who sells one type of good will be considered a merchant for any other type of good that he or she may sell.

Answer 2

False

Question 3

A lessor is a party who acquires a right to the possession and use of goods under a lease.

Answer 3

False

Question 4

If a contract for a sale of goods does not include a price term,a reasonable price can be determined by looking at the market for the goods.

Question 5

Article 2 of the UCC governs contracts for sales of goods.

Question 6

A contract for the sale of a copyright is subject to Article 2.

Question 7

The UCC imposes the same rules of conduct on all parties in all circumstances.

Question 8

Article 2 of the UCC governs contracts for sales of services.

Question 9

Under the UCC,the validity of a contract depends on its price term.

Question 10

A consumer lease is exempted from coverage under the UCC.

Question 11

In a contract in which goods and services are combined,the contract is always considered an agreement for the sale of goods.

Question 12

A lessee is a party who transfers a right to the possession and use of goods under a lease.

Question 13

Stocks are an example of property that does not come under UCC Article 2.

Question 14

Under the UCC,a sale of goods will be considered valid only if the goods are paid for with money.

Question 15

If a seller is to remove a structure attached to land,the sale of the structure is treated as one involving goods as opposed to realty.

Question 16

For an item to be characterized as a "good" under the UCC,it must be intangible.

Question 17

Article 2A covers leases,but not subleases,of goods.

Question 18

Under the UCC,a contract for a sale of goods that includes open terms is void.

Question 19

A sale of "things attached" to realty is always considered a sale of goods.

Question 20

A sale of growing crops is a sale of goods.

Question 21

Rally Corporation enters into a contract to sell ski gear to SnoSportz Company,which sells a pair of the skis to Tyra,a consumer,who later sells them to Uli,another consumer.Article 2 of the UCC applies to the sales transactions between

A)all of the buyers and sellers.
B)Rally and SnoSportz only.
C)SnoSportz and Tyra only.
D)Tyra and Uli only.

Question 22

A contract between parties residing in different countries is subject to United Nations Convention on Contracts for the International Sale of Goods.

Question 23

Under the mirror image rule,an offer must be accepted in its entirety without modification or reservation,or no contract is formed.

Question 24

No oral contract is enforceable under the UCC.

Question 25

Under the UCC,an offer to buy goods can be accepted only by a prompt shipment of the goods.

Question 26

If a contract for a sale of goods does not include the delivery date,there is no basis for enforcing it.

Question 27

If a sales contract is unilateral,the offeror need not be notified of the offeree's performance.

Question 28

When an offer does not specify a means of acceptance,it can be accepted by any means reasonable under the circumstances.

Question 29

If a contract for a sale of goods does not include a quantity term,it is a requirements contract.

Question 30

Two parties' course of dealing may be considered to resolve an ambiguity in a contract between them.

Question 31

A contract between parties residing in different countries is subject to Article 2A of the UCC.

Question 32

Over the course of a year,Real Deal Corporation sells appliances to customers to whom it extends credit.Real Deal orders the appliances from Superior Appliance Company's warehouse,from which the items are shipped via common carrier to Real Deal's customers.Article 2 of the UCC governs

A)all of the parties' sales of the goods.
B)Real Deal's extension of credit.
C)Superior's storage of the goods.
D)the common carrier's delivery of the goods.

Question 33

Under the UCC,an oral contract for a sale of goods is enforceable if the goods are marked down $500 or more from their suggested retail price.

Question 34

The UCC imposes a good faith limitation on output contracts.

Question 35

Under the UCC,an agreement modifying a contract needs new consideration to be binding.

Question 36

Over the course of a year,Retail Marketers,Inc.,sells goods from its inventory and one of its warehouses.In exchange,Retail receives checks and other items that substitute for cash,which Retail uses to repay a loan from Savings Bank.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 37

Bild-Rite,Inc.,is a Colorado-based firm that does business with clients throughout North America.Bild-Rite oversees construction projects,and buys and sells commercial buildings,undeveloped land,and construction supplies and other goods.Bild-Rite has had to deal with work-site theft and vandalism.With respect to these circumstances,the Uniform Commercial Code (UCC)provides a framework for

A)commercial transactions for the sale of and payment for goods.
B)international construction contracts.
C)domestic and foreign transactions in real estate.
D)prosecuting crimes against business interests.

Question 38

The rules governing firm offers apply to all merchants.

Question 39

Omni Corporation is a Pennsylvania-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 40

An unconscionable contract is a contract so one-sided and unfair at the time it is made that enforcing it would be unreasonable.

Question 41

VuTech Company agrees to sell digital video equipment to Home & Business Stores,Inc.,for Home & Business to market to its customers.Their contract will not be enforceable unless it includes

A)the duration of the deal.
B)the price of the goods.
C)the quantity of the goods.
D)the requirements of OSI's customers.

Question 42

Trendee Clothiers,Inc.,sells t-shirts to U-Pik-It Stores,Inc.,under an existing contract.When textile costs increase,U-Pik-It agrees to a price increase,but later wants to cancel the contract.U-Pik-It 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)not cancel the contract.

Question 43

Nugget's Chick'n Shack orders chicken from Outlet Food Supplier,but Outlet does not deliver.Nugget's will probably be unable to enforce the agreement if the parties

A)did not limit the duration of the deal.
B)did not specify a payment term.
C)did not specify a quantity term.
D)have not begun to perform.

Question 44

USA Farms offers to sell Valu Bakeries,Inc.,fifty bushels of wheat.Valu's representative Wendy responds,"We agree to buy fifty bushels only if the wheat is Grade A quality." Wendy's statement is

A)a breach of the parties' contract.
B)a counteroffer.
C)a fulfillment of the parties' contract.
D)an acceptance.

Question 45

Chas and Dodie sign a contract for a sale of goods.Chas is to set the price for the goods at the time of delivery,but on delivery,refuses to do so.Dody may only

A)fix a reasonable price.
B)fix a reasonable price or treat the contract as canceled.
C)treat the contract as canceled.
D)wait for Chas to set the price.

Question 46

Expert Stitching Corporation enters into a contract to sell denim clothing to Fine Fashion Company,which in turn sells a pair of jeans to Grady,a consumer.In contrast to standards that apply to consumers,the UCC imposes on merchants

A)less strict legal standards.
B)special business standards.
C)stricter ethical standards.
D)the same overall standards.

Question 47

Doctors Clinic orders 1,000 bandages from Emergency Supplies Company but fails to specify the sizes.The bandages are delivered in an assortment of sizes.Doctors Clinic may

A)accept the bandages "as is" only.
B)accept the bandages "as is" or reject the entire shipment only.
C)accept only the bandages that it wants and reject the rest.
D)reject the entire shipment only.

Question 48

Centrex Computer Company offers to sell Deluxe Vehicle Sales Corporation 1,000 computers for a $500,000,states that the offer will be open for six days,and asks for a response by fax.On the fourth day,Deluxe sends an acceptance to Centrex via the mail,which is received on the sixth day.In this deal

A)a contract is formed.
B)no contract is formed,because Centrex asked for a response by fax.
C)no contract is formed,because Centrex received the acceptance late.
D)no contract is formed,because Deluxe sent the acceptance late.

Question 49

Grade-A Construction Corporation offers to buy from Harden Cement Company a certain quantity of cement for a certain price.Harden can accept the offer by

A)doing nothing.
B)promising to ship or promptly shipping the cement.
C)promising to ship the cement only.
D)promptly shipping the cement only.

Question 50

Packaging Products,Inc.,sends its standard purchase-order form to Quality Box Company to evidence a sale of packaging material.Quality responds with its own standard order form.Additional terms in Quality's form automatically become part of the contract unless

A)Packaging objects to the new terms within a reasonable time.
B)Packaging's form expressly required acceptance of its terms.
C)the additional terms materially alter the original contract.
D)any of the choices.

Question 51

Variety Goods,Inc.,and Worldly Sales Corporation enter into a contract that does not specify the payment terms.Payment may be made in

A)any commercially acceptable means except cash.
B)cash only.
C)cash or any commercially acceptable substitute.
D)cash or check only.

Question 52

Regional Products,Inc.,agrees to sell to Quantity Dealers Corporation a certain amount of goods but no mention is made of where the goods are to be delivered.In general,the UCC requires that the delivery take place at

A)a neutral place of business halfway between the parties' locations..
B)a UCC-designated warehouse.
C)Regional's place of business.
D)Quantity's place of business.

Question 53

Better Sales,Inc.,is the offeror and City Goods Corporation is the offeree under a unilateral sales contract in which Design Products Company is also interested.Better is not notified of City's performance within a reasonable time.Better

A)may treat the offer as having lapsed.
B)must assume that City has started to perform.
C)must contact City.
D)must contract with Design.

Question 54

Metro Daily and New City Newsstand enter into a contract under which Metro agrees to deliver a certain quantity of newspapers to New City each day.The contract does not include a price term.In a suit between the parties over the price,a court will

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

Question 55

Curtis enters into a contract with Drive-Away Lease Company for a three-year lease of a car.This contract is subject to

A)Article 2 of UCC.
B)Article 2A of the UCC.
C)Article 11 of the CISG.
D)the common law only.

Question 56

Fiesta Coffee Company agrees to buy an unspecified quantity of coffee beans from Global AgriCorp.Global breaches the contract.Fiesta can most likely

A)enforce the agreement to the extent of a reasonable quantity.
B)enforce the agreement to the extent of Fiesta's requirements.
C)enforce the agreement to the extent of Global's output of coffee beans.
D)not enforce the agreement.

Question 57

US Products Company and Vital Manufacturing,Inc.,enter into a contract for the sale of a certain quantity of machine parts.The UCC reads into this contract is the concept of

A)good faith.
B)square dealing.
C)the mirror image rule.
D)unconscionability.

Question 58

Retail Music,Inc.,offers to buy from Super Products Corporation (SPC)1,000 blank CDs of a certain brand.Without notifying Retail,SPC timely ships CDs of a different brand.This shipment is

A)an acceptance of the offer and a breach of the parties' contract.
B)an acceptance of the offer and a fulfillment of the parties' contract.
C)a refusal of the offer and a breach of the parties' contract.
D)a refusal of the offer and a fulfillment of the parties' contract.

Question 59

In a dispute over a sale involving a bicycle,Dain argues that as to this deal Elle's Hobby Shop,where Dain bought the bike,is a merchant.A court may determine whether Elle's is a merchant by assessing whether

A)it has sold any bikes within the last year.
B)it holds itself out by occupation as having knowledge or skill unique to the bike in the transaction.
C)its owner enjoys biking.
D)it subscribes to Bike,a biweekly trade magazine.

Question 60

Giles and Hubie enter into a sales contract.With respect to the specific contractual provisions set out in the UCC,Giles and Hubie may

A)agree to different terms only to a reasonable extent.
B)agree to different terms unless they "get caught."
C)agree to whatever terms they wish.
D)not agree to different terms.

Question 61

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

Question 62

Recreation Supplies,Inc.(RSI),and Sam,the owner of Tourist Time Shop,orally agree to a sale of beach balls and seashells for $1,000.Sam gives RSI a check for $400 as a partial payment.This contract is

A)enforceable to the extent of $400.
B)fully enforceable because it is for specially made goods.
C)fully enforceable because it is oral.
D)not enforceable.

Question 63

Rodeo,S.A.,which is based in Spain,enters into a contract for the sale of seven hydraulic lifts to Tonnage Shipping Company,which is based in the United States.This contract is governed by

A)Spanish law.
B)the provisions in the laws of both countries that are similar.
C)Article 2 of the UCC.
D)the United Nations Convention on Contracts for the International Sale of Goods.

Question 64

Equipt Rental Corporation and Family Custodial Service,Inc.,are parties to an oral agreement for a lease of goods with payments in excess of $10,000.They may satisfy the Statute of Frauds by

A)mutually agreeing not to commit fraud.
B)restating the terms in a phone call.
C)setting out the terms in an e-mail.
D)shaking hands on the deal.

Question 65

Timber Products,Inc.,and Walt,a consumer,enter into a contract for a sale of plywood.If the contract includes a clause that is perceived as grossly unfair to Walt,its enforcement may be challenged under the doctrine of

A)good faith.
B)square dealing.
C)the mirror image rule.
D)unconscionability.

Question 66

Quinn enters into a series of agreements with Reba involving a sale of a Suite Dreams Motel,including the land,building,furnishings,shares of stock in Suite Dreams Company,and a contract with Trudy to create an ad campaign.Reba suspects that Quinn may be misrepresenting the facts.The UCC Statute of Frauds governs

A)the sale of any of the property evidenced by a writing.
B)the entire deal,including the marketer's services.
C)the sale of the furnishings priced at $500 or more.
D)the sale of the land and the building.

Question 67

Gail enters into a contract with Hi-Price Appliances,Inc.In a suit between the parties over payment under the contract,Gail claims that a certain clause is unconscionable.If the court agrees,it may

A)refuse to enforce the contract,enforce the contract without the disputed clause,or limit the application of the disputed clause.
B)enforce the contract without the disputed clause only.
C)limit the application of the disputed clause only.
D)refuse to enforce the entire contract only.

Question 68

Thermal Appliances Corporation,a U.S.firm,orally agrees to sell six freezers to Pisa Pizza,Ltd.,in Italy.Thermal fails to deliver.Under the United Nations Convention on Contracts for the International Sale of Goods (CISG),Pisa Pizza can

A)enforce the agreement.
B)not enforce the agreement because it is not in writing.
C)not enforce the agreement because the CISG does not apply.
D)not enforce the agreement because Thermal is a U.S.firm.

Question 69

Kelly offers to buy 1,000 gallons of oil from Jim for fifty cents per gallon.Jim believes Kelly offers $1 per gallon and orally agrees to the sale.When the parties later dispute the price in court,Jim's claim of $1 and Kelly's testimony that she offered fifty cents

A)supports an enforceable contract for a price of $1 per gallon.
B)supports an enforceable contract for a price of seventy-five cents per gallon.
C)supports an enforceable contract for a price of fifty cents per gallon.
D)prevents the enforcement of any contract between these parties.

Question 70

Fresh Produce,Inc.,and Great Grocery Stores dispute the interpretation of an ambiguous phrase in their contract.In a suit between the parties to construe the contract,a court may accept evidence of

A)consistent additional terms only.
B)consistent additional terms and contradictory terms only.
C)contradictory terms only.
D)anything extrinsic to the contract.

Question 71

Clean Machines Company makes washing machines.Over the phone,Clean offers to sell Dealers Appliance Outlet one hundred model EZ2000 washers at a price of $150 per unit.Clean says that it will keep the offer open for ninety days.Dealers responds that within two or three weeks it will decide whether to accept.One week later,Clean faxes,and Dealer receives,notice that the offer is withdrawn.Dealer immediately phones Clean to accept the $150-per-unit offer.When Clean refuses to deliver at that price,Dealer files a suit.Clean asserts,first,that there is no contract and,second,that if there is a contract,it is unenforceable.Discuss Clean's assertions.

Question 72

Tasty Pastries,Inc.,and other bakers refer to a "baker's dozen" as consisting of a collection of thirteen baked goods.This is an example of

A)course of dealing.
B)course of performance.
C)square dealing.
D)usage of trade.