Deck 15: The Formation of Sales and Lease Contracts

Question 1

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

Answer 1

False

Question 2

Under the UCC,an oral contract for a sale of goods is enforceable unless payment has been made and accepted.

Answer 2

False

Question 3

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

Answer 3

False

Question 4

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

Question 5

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 6

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

Question 7

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

Question 8

Title is one concept that the UCC has substituted for the common law concept of risk of loss.

Question 9

The UCC has replaced the common law concept of title in part with the concept of identification.

Question 10

No oral contract is enforceable under the UCC.

Question 11

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

Question 12

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

Question 13

A consumer lease is exempted from coverage under the UCC.

Question 14

The rules governing firm offers apply to all merchants.

Question 15

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

Question 16

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

Question 17

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

Question 18

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

Question 19

Identification takes place when specific goods are designated as the subject matter of a sales or lease contract.

Question 20

Fungible goods are goods that cannot be delivered by physical transport.

Question 21

If a seller is not a merchant,and the seller holds the goods,the risk of loss cannot pass to a buyer.

Question 22

A receipt issued by a warehouser for goods stored in a warehouse is a bill of lading.

Question 23

If a seller is a merchant,and the seller holds the goods,the risk of loss passes to a buyer when the buyer takes physical possession of the goods.

Question 24

A bailee is a buyer or lessee.

Question 25

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 26

"Unless otherwise explicitly agreed," title passes to the buyer at the time and place at which the seller physically delivers the goods.

Question 27

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 28

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

Question 29

A buyer has an insurable interest in identified goods.

Question 30

If a seller is a merchant,and the seller holds the goods,the risk of loss cannot pass to a buyer.

Question 31

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

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

A bill of lading serves as a con?tract for the transportation of goods.

Question 34

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 35

When a buyer breaches a contract,the risk of loss immediately shifts to the buyer.

Question 36

A seller with voidable title can transfer good title to a good faith purchaser for value.

Question 37

A seller with void title can transfer good title to a good faith purchaser for value.

Question 38

Unless a contract provides otherwise,it is assumed to be a destination contract.

Question 39

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 40

If a lessor is a merchant,the risk of loss passes to a lessee when the lessee takes physical possession of the goods.

Question 41

Alaskan salmon that fill the hold of Bill and Carla's fishing boat are fungible if the salmon are

A) alike naturally or by agreement or trade usage.
B) fundamentally different.
C) fun, good, and edible.
D) liable to deteriorate over time.

Question 42

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 43

EZ Equipment Corporation leases six forklifts to Fresco Refining Company,but as the forklifts are delivered,they are lost in an explosion.Under the UCC,the parties' rights and obligations with respect to the loss depend on the concept of

A) physical possession.
B) product liability.
C) risk of loss.
D) title.

Question 44

Ideal Gadgets,Inc.,and Jolly Outlets Corporation enter into a contract for a sale of kitchenware.The contract requires Ideal to deliver the goods to Ladle Carrier Company for transport to Jolly's warehouse in Metro City.Risk of loss passes to Jolly when

A) Ideal delivers the goods to Ladle.
B) Ideal identifies the goods to the contract.
C) Ladle transports the goods to Jolly's warehouse.
D) the goods arrive in Metro City.

Question 45

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 doc?trine of

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

Question 46

A specific grade of corn that fills BioFuel Cooperative's silo is fungible.This means that the corn is

A) alike naturally or by agreement or trade usage.
B) fundamentally different.
C) fundamentally edible.
D) perishable.

Question 47

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 par?ties 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 48

Doctors Medical 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 Medical 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 49

Office Equipment Leasing,Inc.(OEL),agrees to lease five computer work?stations to Product Promotion Corporation (PPC).Before any inter?est in the workstations can pass from OEL to PPC,they must be

A) in existence and identified as the goods in the contract.
B) in existence only.
C) identified as the specific goods designated in the contract only.
D) none of the choices.

Question 50

Tasty Pastries,Inc.,and other bakers refer to a "baker's dozen" as con?sisting 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.

Question 51

Rikki and Sid enter into a sales contract.With respect to the specific contractual provisions set out in the UCC,Rikki and Sid 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 52

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 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 requirements of Home & Business's customers.

Question 53

On behalf of Premier Shipbuilding Corporation (PSC),Rita orders 1,000 cases of 1/4-inch nuts from Steel Parts Company's 10,000-case lot.Steel Parts separates 1,000 cases from the lot.Title and risk of loss

A) remain with Steel Parts until PSC acknowledges tender of delivery.
B) remain with Steel Parts until PSC accepts 1,000 cases.
C) shift to PSC after it accepts the nuts and inspects them for defects.
D) shift to PSC when Steel Parts separates the cases.

Question 54

Raw Material,Inc.,and Sewn Fabric Corporation enter into a contract for a sale of muslin.The terms do not clearly indicate whether it is a destination or shipment contract.A court would most likely presume that it is

A) a bailment contract.
B) a destination contract.
C) a shipment contract.
D) a transportation contract.

Question 55

Uri sells 100 cases of vitamins to Wanda,but before she takes physical possession,the cases are lost.Under the UCC,the parties' rights and obligations with respect to the loss depend on the concept of

A) physical possession.
B) product liability.
C) risk of loss.
D) title.

Question 56

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 57

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 58

Kip,a representative for Lite-Weight Shipping Company,delivers a bill of lading to Meg,the owner of Capacity Storage Warehouse.A bill of lading is

A) an invoice for payment for loading and carting.
B) an order to ship goods by carrier to a certain destination.
C) a receipt for goods signed by a carrier.
D) a receipt issued by a warehouser for goods in a warehouse.

Question 59

Lewey's Bicycle Store contracts to buy fifty bicycles from Mountain Bikes,Inc.Unless the contract states otherwise,this is

A) a bill of lading.
B) a destination contract.
C) a shipment contract.
D) a warehouse receipt.

Question 60

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 61

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 62

Quik Sales Corporation orders goods from Re Stock Company.Re plans to market the goods to consumers generally.Re identifies the goods.Before they are shipped to Quik,an insurable interest in the goods exists in

A) Quik and Re, but not consumers generally.
B) Quik only.
C) Quik, Re, and consumers generally.
D) Re only.

Question 63

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 of?fer for 100 I-appliances at $50 each. Must be delivered to our ware?house." 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 64

Diners Café orders five gallons of transfat-free cooking oil from Restaurant Supply,Inc.The seller mistakenly ships the wrong oil,which the buyer keeps,despite the nonconform?ity.The oil is destroyed in a kitchen fire.The loss is suffered by

A) Diners and Restaurant Supply, but not Diners's customers.
B) Diners, Restaurant Supply, and Diners's customers.
C) Diners only.
D) Restaurant Supply only.

Question 65

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 66

With a bill of lading,Cartage Common Carrier Company acknowledges possession of certain goods and contracts to deliver them.Cartage is

A) a bailee.
B) a buyer in the ordinary course of business.
C) a good faith purchaser for value.
D) an F.O.B.

Question 67

Fits Like A Glove Shoes,Inc.,and Retail Footwear Stores enter into a contract for a sale of shoes.The contract indicates that the price includes transportation costs to a specific destination by including the term

A) C.I.F.
B) delivery ex-ship.
C) F.A.S.
D) F.O.B.

Question 68

Aromatic Tea Company contracts to sell tea to Savory Stores,Inc.The contract includes the term "F.O.B.Upriver City," which is Savory's location.This means that the contract is

A) a bailment contract.
B) a destination contract.
C) a shipment contract.
D) a transportation contract.

Question 69

Home Products Store buys furniture from Relax Furniture,Inc.The parties agree that the furniture will be shipped "F.O.B.Relax's ware?house" to Home Products via Swifty Shipping Corporation.The furniture is lost in transit.The loss is suffered by

A) Home Products and Relax Furniture, but not Swifty Shipping.
B) Home Products, Relax Furniture, and Swifty Shipping.
C) Home Products only.
D) Relax Furniture only.

Question 70

Silky Material Corporation in New Jersey sells fifty tons of fabric to Tattered Clothing,Inc.,in Ohio,"F.O.B.New Jersey." The cost of transport?ing the fab?ric to Ohio will be paid by

A) Silky Material.
B) Tattered Clothing.
C) New Jersey.
D) Ohio.

Question 71

Twyla buys a bicycle from U-Pik-It Bike Store,which agrees to keep the bike for Twyla until she picks it up.Before Twyla gets the bike,a fire destroys the store and the bike.The loss is suffered by

A) neither Twyla nor U-Pik-It
B) Twyla and U-Pik-It.
C) Twyla only.
D) U-Pik-It only.

Question 72

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.