Deck 15: Formation and Performance of Sales and Lease Contracts

Question 1

To invoke the implied warranty of merchantability, the purchaser or lessee must have purchased or leased the good from a merchant.

Answer 1

True
Explanation: To invoke this implied warranty, the buyer or lessee must have purchased or leased the good from a merchant.

Question 2

The UCC adopted the common law of warranties in total.

Answer 2

False
Explanation: The UCC changes warranty law.

Question 3

Express warranties may be found in advertisements.

Answer 3

True
Explanation: Express warranties may be found in advertisements or brochures.

Question 4

Because of the rule of privity, under the UCC warranties may not extend to third parties to a contract.

Question 5

Course of dealing is another term for course of performance.

Question 6

Sometimes language in the parties' agreement limits the rigidity of the perfect tender rule.

Question 7

An express warranty is any description of the goods' physical nature or its use, either in general or specific circumstances, that becomes part of the contract.

Question 8

The UCC does not allow a seller to cancel a contract if the buyer is in breach although a lessor may do so.

Question 9

Conforming goods are goods that conform to UCC specifications.

Question 10

A seller or lessor is allowed to resell or dispose of goods when the original buyer is in breach and the goods have not yet been delivered.

Question 11

Under the UCC a delay in delivery is not a breach of contract in circumstances in which performance has been made impracticable because a contingency has occurred that was not contemplated when the parties reached an agreement.

Question 12

The ideal tender rule requires that the seller deliver goods in conformity with the terms of the contract.

Question 13

The right to cure refers to the right to fix errors in a contractual agreement, such as typographical errors.

Question 14

A sample or model may constitute an express warranty.

Question 15

In order to disclaim the implied warranty of fitness for a particular purpose, the seller must disclaim the warranty in writing.

Question 16

The UCC assumes that the seller has the right to transfer title free and clear of intellectual property rights of which the buyer does not have knowledge.

Question 17

If goods identified to a contract are destroyed before risk passes to the buyer, the seller must obtain substitute goods.

Question 18

The Magnuson-Moss Act requires a full warranty on the sale of goods.

Question 19

A buyer who has accepted goods may later revoke the acceptance if the buyer can show that the defects substantially impair the value of the goods.

Question 20

The UCC assumes that the seller has defective title unless the seller proves otherwise.

Question 21

The UCC requires that sellers and lessors tender _____________ goods to the buyer or lessee.

A) Adequate
B) Transforming
C) Conforming
D) Reasonable
E) Superior

Question 22

Under the UCC, the term "cover" refers to substituting goods for those due under a sales or lease agreement when a seller or lessor provides nonconforming goods.

Question 23

The term "reasonable commercial standards of fair dealing" is often called _____________.

A) Commercial standards
B) Commercial reasonableness
C) Transactional reasonableness
D) Good faith standards
E) Good faith reasonableness

Question 24

Which of the following determines the obligations of sellers/lessors and buyers/lessees?

A) Terms the parties outline in agreements
B) Custom
C) Rules outlined by the UCC
D) Terms the parties outline in agreements, custom, and rules outlined by the UCC
E) Terms the parties outline in agreements and custom, but not rules outlined by the UCC

Question 25

Under the UCC which of the following is true if goods are identified at the time the parties entered into a contract and these goods are destroyed through no fault of the parties before risk passes to the buyer?

A) The parties are excused from performance.
B) The seller has 7 days in which to cure.
C) The seller has 10 days in which to cure.
D) The seller has 30 days in which to cure.
E) The seller has 45 days in which to cure.

Question 26

Liquidated damages are identified after a contract breach occurs.

Question 27

Which of the following is defined by the UCC as any practice that members of an industry expect to be part of their dealings?

A) Trade norm
B) Course of dealing
C) Anticipated trade dealing
D) Usage of trade
E) Course of performance

Question 28

When parties are merchants, the UCC requires _____________.

A) Reasonableness
B) Honesty in law
C) Honesty in fact and also reasonable commercial standards of fair dealing
D) Honesty in law and also reasonable commercial standards of fair dealing
E) Honesty in fact and honesty in law

Question 29

If a buyer accepts nonconforming goods, the buyer may not also seek damages.

Question 30

The UCC requires that buyers are obligated to accept and pay for _____________ in accordance with the contract.

A) Reasonably conforming goods
B) Select conforming goods
C) Materially conforming goods
D) Significantly conforming goods
E) Conforming goods

Question 31

A common law rule known as the _____________ required that the seller deliver goods in conformity with the terms of the contract, down to the last detail.

A) Tender of offer regulation
B) Superior delivery rule
C) Certain tender rule
D) Regulatory rule
E) Perfect tender rule

Question 32

The UCC defines ______________ as previous commercial transactions between the same parties.

A) Trade norm
B) Course of dealing
C) Anticipated trade dealing
D) Usage of trade
E) Course of performance

Question 33

Good faith as applied to non-merchants under the UCC means _____________.

A) Honesty in fact
B) Honesty in law
C) Honesty in fact and also reasonable commercial standards of fair dealing
D) Honesty in law and also reasonable commercial standards of fair dealing
E) Honesty in fact and honesty in law

Question 34

What was the result in the case in the text Alaska Pacific Trading Co. v. Eagon Forest Products Inc. in which the defendant rejected a shipment of logs?

A) That by not shipping the logs in a timely manner according to the contract, the seller failed to satisfy the perfect tender rule thereby releasing the defendant buyer from its duty to accept the logs.
B) That the seller satisfied the perfect tender rule although the logs were late and that the defendant buyer breached the contract by refusing to accept the logs.
C) That the seller was entitled to rely on the common law doctrine of material breach but that the seller did not substantially perform thereby releasing the buyer from contractual duties.
D) That the seller was entitled to rely on the common law doctrine of material breach, that the seller substantially performed, and that the buyer was in breach.
E) That the seller was entitled to rely on the perfect tender rule and that the buyer materially breached the contract by refusing to accept the logs.

Question 35

Specific performance usually requires that the seller or lessor cover.

Question 36

A buyer may revoke acceptance of nonconforming goods under any circumstances.

Question 37

What do UCC sections 2-601 and 2A-509 indicate in reference to the perfect tender rule?

A) That if goods or tender of delivery fail in any respect to conform to the contract, the buyer/lessee has the right to accept the goods, reject the entire shipment, or accept part and reject part.
B) That if goods or tender of delivery fail in any material respect to conform to the contract, the buyer/lessee has the right to accept the goods, reject the entire shipment, or accept part and reject part.
C) That if goods or tender of delivery fail in any respect to conform to the contract, the buyer/lessee has the right to accept the goods or reject the entire shipment, but not the right to accept part and reject part.
D) That if goods or tender of delivery fail in any material respect to conform to the contract, the buyer/lessee has the right to accept the goods or reject the entire shipment, but not the right to accept part and reject part.
E) That if goods or tender of delivery fail in any respect to conform to the contract, the buyer/lessee only has the right to accept the entire shipment and sue for damages.

Question 38

Under the UCC __________ requires that the seller/lessor have and hold conforming goods at the disposal of the buyer/lessee and give the buyer/lessee reasonable notification to enable him or her to take delivery.

A) Tender of delivery
B) Offer of availability
C) Tender of offer
D) Offer of delivery
E) Offer of notification

Question 39

Under the UCC which of the following refers to the history of dealings between the parties in the particular contract at issue?

A) Trade norm
B) Course of dealing
C) Anticipated trade dealing
D) Usage of trade
E) Course of performance

Question 40

In transit as used in the UCC means that the seller or lessor has delivered the goods to a carrier or bailee, but the carrier or bailee has not yet turned them over to the buyer.

Question 41

Which of the following choices do states have regarding liability of third-party beneficiaries of warranties?

A) That seller's warranties extend to the buyer's household members and guests only.
B) That seller's warranties extend to any reasonable and foreseeable user only.
C) That seller's warranties extend to anyone injured by the good only.
D) That seller's warranties extend to the buyer's household members and guests, that seller's warranties extend to any reasonable and foreseeable user, and that seller's warranties extend to anyone injured by the good.
E) That seller's warranties extend to the buyer's household members and guests and that seller's warranties extend to any reasonable and foreseeable user, but not that seller's warranties extend to anyone injured by the good.

Question 42

If it is generally accepted in the trade that a certain product is always preassembled and shrink-wrapped, the failure of the seller to deliver the goods in that condition would be a breach of the _____________.

A) Implied warranty of merchantability
B) Implied warranty of fitness for a particular purpose
C) Implied warranty of trade usage
D) Implied warranty of merchantability, implied warranty of fitness for a particular purpose, and implied warranty of trade usage
E) Implied warranty of merchantability and implied warranty of trade usage, but not the implied warranty of fitness for a particular purpose

Question 43

Which of the following is needed in order for the implied warranty of fitness for a particular purpose to be applied?

A) Both parties must be merchants and a sale must be involved.
B) Both parties must be merchants, and either a sale or lease may be involved.
C) The seller must be a merchant and a sale must be involved.
D) The seller or lessor must be a merchant, and either a sale or lease may be involved.
E) None of these.

Question 44

A buyer who has accepted goods may later revoke the acceptance if the buyer can show that the defects _____________ the value of the goods and the buyer had a legitimate reason for the initial acceptance.

A) Reduced in any manner
B) Reduced by 10%
C) Reduced by 5%
D) Substantially impaired
E) A buyer who has accepted may later revoke so long as the buyer does so within 24 hours of the acceptance.

Question 45

Which of the following is true regarding a buyer's acceptance of goods?

A) Goods may be accepted in total even if nonconforming.
B) The seller may presume acceptance if the buyer fails to reject goods within a reasonable period of time.
C) The buyer may make a partial acceptance of nonconforming goods when the seller has failed to cure defects.
D) Goods may be accepted in total even if nonconforming, the seller may presume acceptance if the buyer fails to reject goods within a reasonable period of time, and the buyer may make a partial acceptance of nonconforming goods when the seller has failed to cure defects.
E) Goods may be accepted in total even if nonconforming, and the seller may presume acceptance if the buyer fails to reject goods within a reasonable period of time; but the buyer may not make a partial acceptance of nonconforming goods when the seller has failed to cure defects.

Question 46

Under the UCC which of the following is true if goods are identified at the time the parties entered into a contract and these goods are partially destroyed through no fault of the parties before risk passes to the buyer?

A) The contract is void.
B) The buyer may inspect the goods and decide whether to (1) treat the contract as void or (2) ask the seller for a reduction of the contract price and then accept the damaged goods.
C) The buyer has five days in order to determine whether to void the contract or proceed under it.
D) Unless the parties can agree on a price, the matter must be submitted to arbitration for a determination as to an appropriate price.
E) Unless the parties can agree on a price, the contract is voidable at the option of the seller who does not wish to remedy any problems.

Question 47

Which of the following is true regarding the implied warranty of fitness for a particular purpose?

A) It applies in every case in which an express warranty is found.
B) It applies in every case in which an implied warranty of merchantability is found.
C) It applies in every case in which either an express warranty or an implied warranty of merchantability is found.
D) It applies in every sales transaction involving a merchant.
E) None of these.

Question 48

UCC Section ________________ requires good faith in the performance and enforcement of every contract.

A) 1-204
B) 2-205
C) 3-301
D) 3-302
E) None of these

Question 49

Which of the following is true regarding express warranties?

A) They may be part of a brochure.
B) They may arise from a salesperson's oral promise.
C) A sample or model may provide an express warranty.
D) They may be part of a brochure, they may arise from a salesperson's oral promise, and a sample or model may provide an express warranty.
E) They may be part of a brochure and they may arise from a salesperson's oral promise, but a sample or model may not provide an express warranty.

Question 50

Under the UCC a delay in delivery or nondelivery, in whole or in part, is not a breach in circumstances in which performance has been made _____________ because a contingency has occurred that was not contemplated when the parties reached the agreement.

A) Unreasonable
B) Unprofitable
C) Less profitable
D) Impracticable
E) More difficult

Question 51

Which of the following are examples of what is needed in order for goods to be merchantable?

A) That goods pass without objection in the trade or market for similar goods.
B) That goods be fit for the ordinary purposes for which such goods are used.
C) That goods be adequately contained, packaged, and labeled as the agreement may require.
D) That goods conform to the promises or affirmations made on the container or label, if any.
E) All of these.

Question 52

Which of the following is true regarding warranties under common law?

A) No warranties automatically arise under the common law.
B) Only the implied warranty of assignability automatically arises under common law.
C) Only implied warranties of merchantability automatically arise under common law.
D) Only warranties of title automatically arise under common law.
E) Express warranties, implied warranties of assignability, and warranties of title all automatically arise under common law.

Question 53

Which of the following are referred to as an implied warranty of quality?

A) Implied warranty of fitness for a particular purpose.
B) Implied warranty of merchantability.
C) Implied warranty of trade usage.
D) Implied warranty of fitness for a particular purpose, implied warranty of merchantability, and the implied warranty of trade usage.
E) Implied warranty of fitness for a particular purpose and the implied warranty of merchantability, but not the implied warranty of trade usage.

Question 54

Which of the following is needed in order for the implied warranty of merchantability to be applied?

A) Both parties must be merchants and a sale must be involved.
B) Both parties must be merchants, and either a sale or lease may be involved.
C) The seller must be a merchant and a sale must be involved.
D) A seller or lessor must be a merchant, and either a sale or lease may be involved.
E) The seller must be a merchant, goods valued at over $500 must be involved, and either a sale or lease may be involved.

Question 55

Which of the following are types of warranties?

A) Express
B) Implied
C) Acknowledged
D) Express, implied, and acknowledged
E) Express and implied, but not acknowledged

Question 56

A[n] _________ is any description of the good's physical nature or its use, either in general or specific circumstances, that becomes part of the contract.

A) Express warranty
B) Implied warranty
C) Acknowledged warranty
D) Claimed warranty
E) Consequential warranty

Question 57

To use common law language a[n] _____________ is a material term of the sale or lease contract.

A) Express warranty
B) Implied warranty
C) Acknowledged warranty
D) Claimed warranty
E) Consequential warranty

Question 58

Which of the following was the result on appeal in the case of Webster v. Blue Ship Tea Room, Inc., the case in which the plaintiff sued after getting a bone caught in her throat while eating clam chowder?

A) That the plaintiff could recover based upon the implied warranty of merchantability.
B) That the plaintiff could recover based upon the implied warranty of fitness for a particular purpose.
C) That the plaintiff could recover based on an express warranty.
D) That the plaintiff could not recover because she waited too long in which to sue and also because she was not the direct purchaser of the fish.
E) That the plaintiff could not recover for reasons including that the bone should not have been unexpected.

Question 59

Which of the following types of warranties may be automatically, as a matter of law, injected into a contract?

A) Express
B) Implied
C) Acknowledged
D) Express, implied, and acknowledged
E) Express and implied, but not acknowledged

Question 60

Belinda orders a certain type of hybrid rose for her wedding. A disease sweeps through that type of rose, and the florist could only obtain the roses at great cost if at all. Which of the following is the appropriate term for the florist's best defense?

A) Commercial unreasonableness
B) Commercial impracticability
C) Substantial hardship
D) Unforeseen circumstances
E) Unreasonable bride

Question 61

Which of the following is required by the Magnuson-Moss Act when the seller issues a written warranty for a consumer good?

A) The seller must indicate whether that warranty is a full warranty or a limited warranty.
B) The seller must provide a full warranty and must indicate as such.
C) The seller must provide a warranty of merchantability and an express warranty, and must indicate as such.
D) The seller must provide an implied warranty of trade usage and must indicate as such.
E) The seller must provide an implied warranty of trade usage and an implied warranty of merchantability, and must indicate as such.

Question 62

Under the UCC, the seller must bring a lawsuit on a breached contract within _____________ years of when the breach occurred or when the seller became aware of it.

A) One
B) Two
C) Three
D) Four
E) Six

Question 63

Under the UCC, the buyer must bring a lawsuit on a breached contract within _____________ years of when the breach occurred or when the buyer became aware of it.

A) One
B) Two
C) Three
D) Four
E) Six

Question 64

Which of the following are damages identified before the breach occurs?

A) Nominal damages
B) Compensatory damages
C) Reliance damages
D) Liquidated damages
E) Consequential damages

Question 65

Which of the following damages may a seller receive who resells goods to another buyer when the original buyer is in breach?

A) The difference between the resale price and the contract price, plus incidental damages and minus expenses saved.
B) The difference between the resale price and the contract price only.
C) The difference between the resale price and the contract price minus expenses without any allowance for incidental damages.
D) The difference between the resale price and the contract price, plus incidental damages, with no deduction for expenses saved.
E) Nominal damages only.

Question 66

Which of the following is generally true regarding a liquidated damages provision?

A) A provision for liquidated damages is illegal.
B) A provision for liquidated damages is void because of public policy.
C) A provision for liquidated damages is voidable because of public policy.
D) A provision for liquidated damages is enforceable so long as it is not punitive in nature.
E) A provision for liquidated damages will be enforced regardless of whether it is punitive in nature.

Question 67

Assuming adoption of the UCC, which of the following is true regarding whether the buyer and seller may negotiate a shorter time for the statute of limitations than that allowed by the UCC?

A) The buyer and seller may not negotiate a shorter time for the statute of limitations than that allowed by the UCC so long as the time period is not less than two years.
B) The buyer and seller may negotiate a shorter time for the statute of limitations than that allowed by the UCC without any limits.
C) The buyer and seller may negotiate a shorter time for the statute of limitations than that allowed by the UCC so long as the time period is not less than one year.
D) The buyer and seller may negotiate a shorter time for the statute of limitations than that allowed by the UCC so long as the time period is not less than six months.
E) The buyer and seller may negotiate a shorter time for the statute of limitations than that allowed by the UCC so long as the time period is not less than two years.

Question 68

The obligations of sellers/lessors and buyers/lessees are determined by which of the following?

A) Terms the parties outline in agreements only
B) Custom only
C) Rules outlined by the Uniform Commercial Code only
D) Terms the parties outline in agreements, custom, and rules outlined by the Uniform Commercial Code
E) Terms the parties outline in agreements and custom, but not rules outlined by the Uniform Commercial Code

Question 69

What does the UCC provide regarding liquidated damages if the parties do not agree to them?

A) That the nonbreaching seller may claim against a breaching buyer 20 percent of the purchase price or $500, whichever is less, as liquidated damages.
B) That the nonbreaching seller may claim against a breaching buyer 20 percent of the purchase price or $500, whichever is more, as liquidated damages.
C) That the nonbreaching seller may claim against a breaching buyer 30 percent of the purchase price or $1,000, whichever is less, as liquidated damages.
D) That the nonbreaching seller may claim against a breaching buyer 30 percent of the purchase price or $1,000, whichever is more, as liquidated damages.
E) Nothing

Question 70

Under the Magnuson-Moss Act, what is the effect of a full warranty?

A) It means that if the good fails or is defective, the good or its defective part will be replaced; and if replacement cannot be timely effected, the buyer has the right to a refund or a full replacement.
B) It means only that the good or its defective part will be repaired. The buyer has no other remedy.
C) It means that if the good fails or is defective, the good or its defective part will be replaced; and if replacement cannot be timely effected, the buyer has the right to a refund or a full replacement; and also that the buyer will receive extra funds to account for expenses.
D) It means that the buyer must be immediately refunded the full purchase price.
E) It means that the buyer has the option of an immediate refund of the full purchase price or repair of the good.

Question 71

By which of the following may a buyer waive implied and express warranties?

A) By failing to examine goods for which an express warranty was created by a sample or model.
B) By failing to comply with the seller's request to inspect the goods.
C) By failing to examine goods for which an express warranty was created by a sample or model, and also by failing to comply with the seller's request to inspect the goods.
D) By failing to require that warranties be given in writing and also by failing to comply with the seller's request to inspect the goods.
E) None of these. A buyer may not waive both implied and express warranties.

Question 72

Which of the following means that the seller or lessor has delivered the goods to a carrier or bailee, but the carrier or bailee has not yet turned them over to the buyer?

A) In process
B) In transit
C) In carrier
D) Carrier ready
E) Transport ready

Question 73

When was the Magnuson-Moss Act passed?

A) 1950
B) 1955
C) 1970
D) 1975
E) 2000

Question 74

What is the effect of a failure to comply with the statute of limitations?

A) It operates as a waiver of warranty rights under the contract.
B) There is no effect so long as the plaintiff can establish that he or she was not aware of the statute of limitations.
C) It operates as a waiver of warranty rights only if the defendant can establish that the plaintiff had actual knowledge of the statute of limitations.
D) It results in the plaintiff only having the right to sue for injunctive relief, not damages.
E) It results in the plaintiff only having the right to sue for damages, not injunctive relief.

Question 75

Between buyers and sellers in the U.S., which of the following is true regarding disclaiming the warranty of merchantability?

A) The disclaimer must be in writing.
B) Some states require that the term merchantability be used in the disclaimer.
C) The disclaimer may be made orally or in writing.
D) The disclaimer must be in writing, and some states require that the term merchantability be used in the disclaimer.
E) The disclaimer may be made orally or in writing, and some states require that the term merchantability be used in the disclaimer.

Question 76

Which is true regarding a buyer's right to waive warranties?

A) A buyer may not waive warranties.
B) A buyer may waive implied warranties but not express warranties.
C) A buyer may waive express warranties but not implied warranties.
D) A buyer may waive both express warranties and implied warranties.
E) A buyer may waive express warranties and the implied warranty of fitness for a particular purpose, but not the implied warranty of merchantability.

Question 77

Which of the following is true under the Magnuson-Moss Act if a written warranty is silent as to whether or not it is a full warranty?

A) It is presumed to be a limited warranty.
B) It is presumed to be an express, limited warranty.
C) It is presumed to be a limited warranty of merchantability.
D) It is presumed to be a limited usage of trade warranty.
E) It is presumed to be a full warranty.

Question 78

Assuming a buyer that is insolvent has breached a contract by not paying for goods that are in transit, which of the following may occur?

A) The carrier may stop delivery on the entire shipment.
B) The carrier may stop delivery only if the quantity shipped is a large shipment.
C) The carrier may stop delivery only if a signed writing exists by which the buyer agreed to the remedy of stopping shipment.
D) The carrier may stop delivery only if ordered to do so by the bankruptcy judge.
E) The carrier may not stop delivery under any circumstances.

Question 79

Which option have most states adopted regarding the rights of third-party beneficiaries of warranties?

A) That seller's warranties extend to the buyer's household members and guests.
B) That seller's warranties extend to any reasonable and foreseeable user.
C) That seller's warranties extend to anyone injured by the good.
D) That seller's warranties do not extend beyond the buyer and the buyer's immediate family.
E) That seller's warranties do not extend beyond the buyer and the buyer's immediate family living in the same household.

Question 80

Which of the following is true regarding whether a seller must provide a warranty under the Magnuson-Moss Act?

A) A seller must provide an express, full warranty.
B) A seller must provide an implied, full warranty.
C) A seller must provide at least an express, limited warranty.
D) A seller must provide at least an implied, limited warranty.
E) The act does not require that the seller provide any warranties.