Deck 17: The Formation of Sales and Lease Contracts

Question 1

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

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

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

Answer 3

True

Question 4

Under the UCC, a sales or lease contract will fail for indefiniteness if one or more terms are left open.

Question 5

A merchant is a person who deals in goods of the kind involved in the sales contract or who holds herself or himself out as having skill or knowledge peculiar to the practices or goods being purchased or sold.

Question 6

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

Question 7

A firm offer by a merchant may be oral.

Question 8

Requirements contracts are common in the business world and normally are enforceable.

Question 9

The UCC imposes some different rules on merchants.

Question 10

Article 2 of the UCC sets forth the requirements for sales contracts and Article 2A covers similar issues for lease contracts.

Question 11

If the parties to a contract for a sale of goods have not agreed on a price, a court will determine a reasonable price at the time for delivery.

Question 12

Real estate transactions are always governed by Article 2 of the UCC.

Question 13

Even if a contract in which goods and services are mixed is primarily a goods contract, any dispute over the services portion will not be decided under the UCC.

Question 14

Article 2 of the UCC covers any transaction that creates a lease of goods.

Question 15

The UCC views the entire commercial transaction for the sale and payment for goods as a single legal occurrence.

Question 16

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

Question 17

Under the UCC, a sale is the passing of title from a seller to a buyer for a price.

Question 18

A contract for the sale of minerals is considered to be a contract for the sale of goods if the severance is to be made by the seller.

Question 19

Under the UCC, parties to sales and lease contracts are not free to establish whatever terms they wish.

Question 20

Certain provisions of UCC Article 2A apply only to consumer leases.

Question 21

Orange Manufacturing Corporation (OMC) orders twelve job-training and on-the-job safety DVDs from Plum Productions, Inc., which delivers the disks to OMC's plant. This is most likely

A) a gift.
B) a lease of goods.
C) a sale of goods.
D) a service contract.

Question 22

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

Question 23

Over the course of a year, Discount Market Company sells goods from its inventory and also sells one of its warehouses. In exchange, Discount receives checks, which Discount uses to repay a loan from Evermore Credit Inc. 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 24

If there is no definite period stated, a firm offer by a merchant is irrevocable without the necessity of consideration for up to six months.

Question 25

A court can refuse to enforce a contract that the court deems to have been unconscionable at the time it was made.

Question 26

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

Question 27

Under the UCC, prompt shipment of goods is considered an acceptance of an offer to buy the goods.

Question 28

All oral contracts are enforceable under the UCC.

Question 29

A course of performance is the conduct that occurs under the terms of a particular agreement.

Question 30

Under the UCC, if a contract is unilateral, the offeror must be notified of the of?feree's performance.

Question 31

Precise Engineering, P.C., is a California-based firm that does business with clients throughout North America. Precise Engineering plans and executes construction projects, and buys and sells developed and undeveloped land, and related equipment and supplies. Precise Engineering has had to confront 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 32

The UCC requires that the mirror image rule be followed for all acceptances.

Question 33

The terms of a fully integrated contract can be contradicted by evidence of any prior agreements.

Question 34

Dan, a computer programmer, holds a garage sale to sell a lawnmower, some clothes, some CDs and some old clothes. Will, a lawyer, sells Thelma his collection of seashells. Philip, a CEO of a successful company, sells George his pet parakeet. Judy, an expert horse trainer, sells Bob a horse. Which person would be considered a merchant under the UCC?

A) Dan
B) Will
C) Judy
D) Philip

Question 35

In interpreting a commercial agreement, a court will assume that the usage of trade was taken into account when the agreement was phrased.

Question 36

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

Question 37

If a nonmerchant-seller's offer expressly conditions acceptance on a nonmerchant-buyer's agreement to the terms of the offer, the buyer's positive response is an acceptance even if it contains additional terms.

Question 38

Canyon Creek Corporation is a Delaware-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 39

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.

Question 40

Generally, acceptance of an offer to lease goods may be made in any reasonable manner and by any reasonable means.

Question 41

FlavorBean Coffee Company agrees to buy an unspecified quantity of coffee beans from Global AgriCorp. Global breaches the contract. In FlavorBean's suit to obtain relief, the court will most likely

A) award a reasonable quantity of beans to FlavorBean.
B) award FlavorBean all the beans that it requires.
C) award Global's output of coffee beans to FlavorBean.
D) have no basis for determining a remedy.

Question 42

Car n' Truck Body & Paint Company orders custom paint from Diverse Hues Inc., but Diverse does not deliver. Car n' Truck will probably be unable to enforce the agreement if the parties omitted

A) a price term.
B) a payment term.
C) a quantity term.
D) shipping arrangements.

Question 43

Nature's Products, Inc., sends its standard order form to Interbusiness Distribution Corporation (IDC) to evidence a sale of packing materials. IDC 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 44

Peter, an agent for Zippy Cars, Inc., writes a letter to Cassandra on March 1 stating that he will sell her a 2011 Suburu Outback for $20,000 between March 1 and April 30. Peter's letter to Cassandra is

A) a firm offer.
B) an acceptance.
C) a bilateral contract.
D) a breach.

Question 45

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 46

Perfect Potato Chip Company makes an offer that Snack Foods Corporation would like to accept. Under the "mirror image rule" relating to offer and acceptance, an acceptance

A) may include additional terms not contained in the offer so long as they do not materially alter the agreement.
B) may include additional terms not contained in the offer that will be?come part of the agreement if the offeror does not object within a reasonable period of time.
C) must include only those terms and conditions contained in the offer.
D) may contain additional terms as long as all parties agree to the additional terms.

Question 47

Trend-Rite Clothiers, Inc., sells t-shirts to Brand Name Stores, Inc., under an existing con?tract. When textile costs increase, Brand agrees to a price increase, but later wants to cancel the con?tract. Brand 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 48

Refined Grains, Inc., agrees to sell to Sunny Breakfast Cereal Company a certain quantity of refined oats each week 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 "reasonable" place of delivery.
C) Refined's place of business.
D) Sunny's place of business.

Question 49

Danko sells new and used sports equipment to per?sons who come into his store, Eyes on the Prize. One afternoon, Danko sells a used display shelf to Felipe. At a garage sale at his home, Danko sells a used flat-screen TV to Faye. Under the UCC, Danko is a merchant of

A) sports equipment only.
B) sports equipment and display shelves only.
C) sports equipment, display shelves, and flat-screen TVs.
D) anything that he chooses to sell.

Question 50

Medico Inc. enters into a contract to sell medical supplies to New Hospital Corporation, which sells some of the items to Physicians Clinic, which later sells them to Oscar, a patient and consumer. Article 2 of the UCC applies to the sales transactions between

A) all buyers and sellers.
B) Medico and New Hospital only.
C) New Hospital and Physicians Clinic only.
D) Physicians Clinic and Oscar only.

Question 51

In a dispute over a sale involving a restored 1937 Ford Roadster, Garth argues that for the purpose of the sale, Hoyt's Pawn Shop, where Garth bought the auto, is a merchant. A court may determine whether Hoyt's is a merchant by assessing whether

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

Question 52

Roy's Chick'n Shack orders chicken from Standard Food Supplier, but Standard does not deliver. Roy'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 53

Mountaineer Sales, Inc., is the offeror and Camping Goods Corporation is the offeree under a unilateral sales contract in which Forest Recreation Products Company is also interested. Mountaineer is not notified of Camping's performance within a rea?son?able time. Mountaineer

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

Question 54

Cam enters into a contract with Tractors & Lifts Lease Company for a two-year lease of a backhoe. 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 55

Quality Metals Company and Superior Fabrication, Inc., enter into a contract under which Quality Metals agrees to deliver a certain quantity of sheet metal to Superior Fabrication each month. 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) impose the highest market price.
D) return the parties to the positions they held before the contract.

Question 56

Community Construction Corporation offers to buy from Solid Cement Company a certain quantity of cement for a certain price. Solid can ac?cept 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 57

Rice River Farms offers to sell Sensei Sushi Restaurants, Inc., five hundred bushels of rice. Sensei responds, "We agree to buy five hundred bushels only if the rice is Grade A quality." This statement is

A) a breach.
B) a counteroffer.
C) a confirmation.
D) an acceptance.

Question 58

Marine Expeditions, Inc., pays Nate's Boats $4,000 to use an oceangoing vessel for a month. For the purposes of the UCC, this is

A) a service contract.
B) a gift.
C) a lease.
D) a sale.

Question 59

Jamie is redoing his kitchen and decides he needs a floor sander to complete the job. Jamie tells Rachel, his neighbor, that he needs a floor sander. Rachel tells Jamie to call Home Repair Rentals, Inc. Home Repair Rentals leases Jamie a floor sander. In this transaction the lessor is

A) Jamie.
B) Rachel.
C) Home Repair Rentals.
D) both Jamie and Rachel.

Question 60

TalkTalk, Inc., offers to buy from Voice Media Corporation (VMC) 100,000 smartphones. Without notifying TalkTalk, VMC timely ships phones of a different quality. With respect to the offer and a possible contract, this shipment is

A) an acceptance and a breach.
B) an acceptance and an accommodation.
C) an acceptance and complete performance.
D) a rejection and a counteroffer.

Question 61

Rita, the manager of the State University (SU) soccer team, orally agrees to lease a certain number of specially made SU banners from Top Banners, Inc. This lease is enforceable only if Top has made a substan?tial start on making the banners and

A) Rita agreed to the lease on behalf of the SU soccer team.
B) SU does not have other, similar banners available.
C) the banners are not suitable for others in the course of Top's business.
D) the soccer season has not ended and SU goes to the finals.

Question 62

Fact Pattern 17-1
Olga enters into a contract to buy a refrigerator from a Prairie States Appliance store with the price to be paid in monthly installments. After thirty-six months of payments, Olga has paid more than twice the price of a similar stove. Eighteen payments remain due under the contract.
Refer to Fact Pattern 17-1. Olga files a suit against Prairie States, claiming that their contract is so unfair and one sided that it would be unreasonable to enforce it. Olga is asserting

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

Question 63

Fact Pattern 17-1
Olga enters into a contract to buy a refrigerator from a Prairie States Appliance store with the price to be paid in monthly installments. After thirty-six months of payments, Olga has paid more than twice the price of a similar stove. Eighteen payments remain due under the contract.
Refer to Fact Pattern 17-1. Under the UCC, the court can evaluate the contract to determine whether it was unreasonably unfair and one sided

A) at the time it was made.
B) at the end of its term.
C) in the middle of its performance.
D) at the time of Olga's suit.

Question 64

Equipment Rental Corporation and Floodlights, 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

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 66

Jackson owns an antiques store. He sells a grand piano to Fred for $5,000, a old jukebox to Sam for $499, an antebellum chest of drawers to Josephine for $659 and a gold ring to Wendy for $999. Which of Jackson's sales must be in writing to be enforceable?

A) The grand piano only
B) The grand piano and the gold ring only
C) The grand piano, the chest of drawers and the gold ring only
D) The grand piano, the chest of drawers, the jukebox and the gold ring

Question 67

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

Question 68

Fresh Produce, Inc., and Great Grocery Stores dispute the interpretation of an ambiguous phrase in their contract. In a suit between the parties to con?strue 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 69

Bert's Bagels & Nosh, Inc., and other bakeries 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) none of the choices.
D) usage of trade.

Question 70

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

A) enforce, limit, or refuse to enforce the contract or 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 71

Key of G Products, Inc., offers to sell to Harmony Company one hundred MP3 players at $50 a piece, subject to certain specific delivery dates. Harmony 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." Key of G does not respond or deliver the goods. Harmony files a suit for breach of contract, to which Key of G answers that there is no contract because Harmony's purchase order contained additional terms and is not signed by Key of G. Can Harmony recover? Explain.

Question 72

Raul agrees to ship to Ben one hundred ceil?ing fans for $5,000. Raul ini?tials his notes of the deal, which in?clude the terms, and files the notes in his office. Ben initials his own notes of the deal, which include the terms, and files the notes in his office. Raul fails to ship the fans. Against Raul, as a contract, the deal is

A) enforceable, because under the UCC a contract need not written.
B) enforceable, because Raul's initialed notes are a sufficient writing.
C) enforceable, because Ben's initialed notes are a sufficient writing.
D) not enforceable.