Deck 20: Formation of Sales and Lease Contracts

Question 1

Under the UCC, a firm offer for a sale or lease of goods made by a merchant without consideration can be revoked at any time before acceptance.

Answer 1

False

Question 2

When no delivery terms are specified in a contract for a sale of goods, there is no basis for determining a remedy.

Answer 2

False

Question 3

Intangible property has conceptual existence and thus comes under Article 2.

Answer 3

False

Question 4

Under a finance lease, the lessee can stop performing and making lease payments if the leased equipment turns out to be defective.

Question 5

Under the UCC, the meaning of any agreement must be interpreted in light of commercial practices.

Question 6

The UCC applies to the formation of sales and lease contracts and observes the same degree of formality used in forming other types of contracts.

Question 7

The United Nations Convention on Contracts for the International Sale of Goods (CISG) is the uniform international sales law of countries that account for more than two-thirds of all global trade.

Question 8

The UCC applies only to the extent that it has been adopted a state.

Question 9

Under the UCC, a contract for a sale of goods that does not include the quantity will not fail for indefiniteness.

Question 10

All oral contracts are enforceable under the UCC.

Question 11

Article 2A of the UCC covers any transaction that creates a lease of goods or a sub?lease 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

Under the UCC, an offeror must be notified within a reasonable time that the offeree has accepted.

Question 14

Under the UCC, an agreement modifying a contract needs no consid?eration to be binding.

Question 15

Goods associated with real estate often fall within the scope of Article 2.

Question 16

Under the UCC, an offeree can accept an offer to buy goods by a prompt shipment of conforming goods.

Question 17

An unconscionable contract is one that is so unfair and one sided that it would be unreasonable to enforce it.

Question 18

Under the UCC, good faith means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.

Question 19

In a limited number of instances, the UCC imposes presumes that special business standards ought to be imposed on merchants because of their relatively high degree of commercial expertise.

Question 20

A contract for a sale of real property or services is a contract for a sale of goods.

Question 21

American Coffee Company and Beans Brokers, Inc., enter into a contract for the sale of a certain quality and quantity of coffee beans, with Beans Brokers to determine the price. The price must be set according to

A) the concept of good faith.
B) the principle of fair trade.
C) the predominant-factor test.
D) the doctrine of unconscionability.

Question 22

La-Z Days Motels, Inc., and Beds R Us Corporation enter into a contract that does not specify the payment terms. Payment may be made in

A) any commercially normal or acceptable means except credit card.
B) cash only.
C) any commercially normal or acceptable means.
D) cash or check only.

Question 23

Over the course of a year, Suites & Sets Corporation sells household furnishings to customers to whom it extends credit. Suites & Sets orders the furnishings from The Storage Depot's warehouse, from which the items are shipped via common carrier to Suites & Sets customers. Article 2 of the UCC governs

A) all of the parties' sales of the goods.
B) Suites & Sets' extension of credit.
C) The Storage Depot's storage of the goods.
D) each company's management of its operations.

Question 24

Fact Pattern 20-B1 (Questions B16-B18 apply)
Ripe Produce, Inc., and Southeast Asian Bistro & Market enter into a contract for the delivery of locally grown fruits and vegetables. The parties use a standard Ripe Produce form that contains some of the terms the parties agree on but not others. Some of the produce spoils before it can be cooked, served, and eaten, or sold. Southeast Asian refuses to pay for the spoiled goods.
Refer to Fact Pattern 20-B1. Southeast Asian contends that the practice in the trade with respect to payment for spoiled produce justifies its refusal to pay. Southeast Asian is arguing that the court should take into account

A) the course of dealing.
B) the course of performance.
C) the usage of trade.
D) a rule of construction.

Question 25

Toro, S.A., which is based in Mexico, enters into a contract for the purchase of portable livestock fencing from United Fencing Company, which is based in the United States. This contract is governed by

A) Mexican law.
B) the provisions in the laws of both countries that are similar.
C) the Uniform Commercial Code.
D) the United Nations Convention on Contracts for the International Sale of Goods.

Question 26

Savannah and Tim enter into a sales contract for orchids. With respect to the specific contractual provisions set out in the UCC, Savannah and Tim 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 27

Nature's Products, Inc., sends its standard order form to Omni Distribution Corporation to evidence a sale of packing materials. Omni responds with its own standard purchase order form. Additional terms in the purchase order automatically become part of the contract unless

A) the terms materially alter the original contract.
B) the original offer expressly required acceptance of its terms.
C) the offeror objects to the new terms within a reasonable time.
D) any of the choices.

Question 28

Ferris is refinishing his kitchen floor and needs a floor sander to complete the job. Ferris's neighbor Gerda suggests that he call Home Repair Rentals, Inc. Home Repair leases Ferris a floor sander. In this transaction, the lessor is

A) Ferris.
B) Gerda.
C) Home Repair.
D) none of the parties.

Question 29

Perfect Poultry Company agrees to sell chicken, turkey, and other meats to Quik Markets, Inc., to sell to its customers. Normally, their contract would not be en?forceable unless it includes

A) the duration of the deal.
B) the price of the goods.
C) the quantity of the goods.
D) the shipping arrangements.

Question 30

Great Gear, Inc., enters into a contract to sell sports clothing and equipment to Healthways Workout store, which in turn sells a pair of bike shorts to Ilene, a consumer. In comparison 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 31

iSharp, Inc., and Jenene, the owner of a Kitchen Time shop, orally agree to a sale of knives and other utensils for $12,000. Jenene gives iSharp a check for $4,000 as a partial payment. This contract is

A) enforceable to the extent of $4,000.
B) fully enforceable because it is for specially selected goods.
C) fully enforceable because it is oral.
D) not enforceable.

Question 32

Fact Pattern 20-B1 (Questions B16-B18 apply)
Ripe Produce, Inc., and Southeast Asian Bistro & Market enter into a contract for the delivery of locally grown fruits and vegetables. The parties use a standard Ripe Produce form that contains some of the terms the parties agree on but not others. Some of the produce spoils before it can be cooked, served, and eaten, or sold. Southeast Asian refuses to pay for the spoiled goods.
Refer to Fact Pattern 20-B1. Ripe Produce responds that it did not waive payment for spoiled goods in the parties' previous transaction. Ripe Produce is arguing that the court should take into account

A) the course of dealing.
B) the course of performance.
C) the usage of trade.
D) a rule of construction.

Question 33

Stop n' Gas Convenience Stores, Inc., is an East Coast-based firm that does business throughout the United States. With respect to this circumstance, the UCC has been adopted by, and applies in,

A) all of the states, in whole or in part.
B) only the states on the Atlantic and Pacific coasts.
C) none of the states, to date.
D) only the lower forty-eight states-not Alaska or Hawaii.

Question 34

County Dentists Clinic offers to buy from Dental & Medical Supplies Company a certain quantity of floss and other items for a certain price. Dental & Medical can ac?cept the offer by

A) a material alteration of the terms within a reasonable time.
B) a promise to ship or a prompt shipment of the goods.
C) a prompt shipment of the goods only.
D) a shipment of nonconforming goods with a notice of accommodation.

Question 35

Downtown Contractors and Equipment Rental Corporation are parties to an oral agreement for a one-year lease of a crane with payments totaling more than $10,000. They may satisfy the Statute of Frauds by

A) mutually agreeing not to commit fraud.
B) repeating the terms in a phone call.
C) setting out the terms in a memo.
D) shaking hands on the deal.

Question 36

Fresh Dairy, Inc., is the offeror and Gelato Ice Cream Company is the offeree under a unilateral sales contract in which Hector's Helado Corporation is also interested. Gelato is not notified of Fresh Dairy's performance within a rea?son?able time. Gelato

A) may treat the offer as having lapsed.
B) must assume that Fresh Dairy has started to perform.
C) must contact Fresh Dairy.
D) must notify Hector's.

Question 37

Diet & Health Food stores orders 1,000 boxes of granola bars from Energy Products, Inc., but fails to specify the varieties. The granola bars are delivered in an assortment of varieties. Diet & Health may

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

Question 38

Global Outfitters Outlet and Hyacinth, a consumer, enter into a contract for a sale of ultra-weather camping gear. If the contract includes a clause that is perceived as grossly unfair to Hyacinth, its enforcement may be challenged under

A) the mirror image rule.
B) the principle of fair trade.
C) the predominant-factor test.
D) the doctrine of unconscionability.

Question 39

Fact Pattern 20-B1 (Questions B16-B18 apply)
Ripe Produce, Inc., and Southeast Asian Bistro & Market enter into a contract for the delivery of locally grown fruits and vegetables. The parties use a standard Ripe Produce form that contains some of the terms the parties agree on but not others. Some of the produce spoils before it can be cooked, served, and eaten, or sold. Southeast Asian refuses to pay for the spoiled goods.
Refer to Fact Pattern 20-B1. Ripe Produce files a suit against Southeast Asian, claiming that the buyer assumed the risk of the spoilage of the unsold goods. The court may allow evidence of this term if it finds that the parties' contract is

A) fully integrated.
B) not fully integrated.
C) not supported by consideration.
D) a complete and final statement of their agreement.

Question 40

Refined Grains, Inc., is a Kansas-based firm that does business throughout the world. Refined Grains manages retail and wholesale operations, buys and sells commercial venues, undeveloped land, and agricultural products, and other goods. Refined Grains has had to deal with employee and customer theft. 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 distribution agreements.
C) domestic and foreign transactions in real estate.
D) prosecuting crimes against business interests.

Question 41

On May 1, Newtown Motors, a used-car dealer, wrote a letter to O'Reilly, which stated, "We have a 1969 Pontiac Firebird in mint condition that we will sell you for $12,500 at any time before June 1. [Signed] Newtown Motors." By May 15, having heard nothing from O'Reilly, Newtown Motors sold the Firebird to another party. On May 25, O'Reilly told Newtown Motors that he accepted the offer and tendered $12,500. When Newtown Motors told O'Reilly it had sold the car to another party, O'Reilly claimed Newtown Motors had breached their contract. Is Newtown Motors in breach? Explain.

Question 42

NationPoints Trucking, Inc., has a requirements contract with Oil & Gas Corporation that obligates Oil & Gas to supply NationPoints with all the gasoline it needs for its vehicles for one year at $2.30 per gallon. A clause inserted in small print in the contract by NationPoints, and not noticed by Oil & Gas, states, "The buyer reserves the right to reject any shipment for any reason without liability." For six months, NationPoints orders and Oil & Gas delivers under the contract without any controversy. Then, because of a war in the Middle East, the price of gasoline to Oil & Gas increases substantially. Oil & Gas tells NationPoints it cannot possibly fulfill their contract unless NationPoints agrees to pay $2.50 per gallon. NationPoints, in need of the gasoline, agrees in writing to modify the contract. Later that month, NationPoints learns it can buy gasoline at $2.40 per gallon from Purified Fuel Company. NationPoints refuses delivery of its most recent order from Oil & Gas, claiming, first that the contract allows it to do so without liability, and second, that it is required to pay only $2.30 per gallon if it accepts the delivery. Discuss NationPoints's contentions.