Deck 10: Formation of Sales and Lease Contracts

Question 1

Article 2 of the UCC applies to real estate,because real estate generally has severable things that are goods according to Article 2 of the UCC.

Answer 1

False

Question 2

In a lease,the lessee does not acquire title to the leased goods.

Answer 2

True

Question 3

A party is considered a merchant if that party holds herself out as having special knowledge of the goods involved in the transaction,even if she does not regularly deal in the goods.

Answer 3

True

Question 4

The UCC applies to contracts for services as well as to contracts for the sale of goods.

Question 5

The UCC applies only to sales between merchants.

Question 6

Every state except Louisiana has enacted the UCC as its commercial statute.

Question 7

A finance lease is a three-party transaction comprised of the lessor,the lessee,and the offeror.

Question 8

Article 2 of the UCC applies to transactions in goods.

Question 9

In order for title to pass from a seller to a buyer,the purchase of the good must be by cash.

Question 10

Article 2A of the UCC directly addresses personal property leases.

Question 11

The common law of contracts governs if either Article 2 or Article 2A is silent on the issue.

Question 12

A sale involving both goods and services is known as a mixed sale.

Question 13

Growing crops that are severable from real estate may be classified as goods and subject to Article 2.

Question 14

If a homeowner sells a used lawn mower to his neighbor,Article 2 of the UCC does not apply.

Question 15

Sales of stocks and bonds are covered by Article 2 of the UCC.

Question 16

A party that is a merchant in one transaction is a merchant for all transactions in which he/she is involved.

Question 17

The lessee is the party who holds himself or herself out as having knowledge or skill peculiar to the goods involved in the transaction.

Question 18

A transaction that includes both a goods and a services component will be covered by the UCC so long as the goods are the predominant part of the transaction.

Question 19

The installation of a pacemaker by a hospital is a sale of goods subject to Article 2 of the UCC.

Question 20

A sporting goods dealer is a merchant with respect to golf clubs but not if he sells a wheelbarrow to a neighbor.

Question 21

Generally,under the UCC,the only term that needs to be stated in a contract is quantity,and even that is not necessary in output and requirements contracts.

Question 22

Under the UCC,a court can find that a contract exists as long as the moment of its making is determined.

Question 23

Articles 2 and 2A of the UCC cover which types of transactions:

A)Sales of goods and sales of real property.
B)Sales of goods and leases of goods or real property.
C)Sales of goods and contracts for the providing of services.
D)Sales of goods and leases of goods.

Question 24

A seller or buyer who reserves the right to fix a price must do so in good faith.

Question 25

The proper relationship between the common law and the UCC regarding sales is:

A)Common law no longer applies to sales.
B)The UCC no longer applies to sales.
C)The UCC controls sales,but where the UCC is silent,common law still controls.
D)The common law controls sales,but where the common law is silent,the UCC controls.

Question 26

If both parties to an oral sale or lease contract are merchants,the Statute of Frauds requirement can be satisfied if one of the parties sends a written confirmation and the other merchant does not object within 10 days of receiving the confirmation.

Question 27

A "firm offer" can be held open as long as 3 months.

Question 28

Under the UCC,the mirror-image rule applies in the same manner as under common law.

Question 29

The "battle of the forms" is a reference to the insistence by many merchant sellers that customers sign the seller's standard form contract without modification.

Question 30

Under Article 2 of the UCC,acceptances are effective when dispatched.

Question 31

The UCC applies to a mixed sale:

A)Whenever a sale of goods is a part of the transaction.
B)Only if there is no service involved.
C)If the sale of the goods is the predominant part of the transaction.
D)Only if the contract provides that the UCC applies.

Question 32

Under the UCC,courts will frequently enforce a contract that does not state a price.

Question 33

Under Article 2 of the UCC,there are detailed rules for the proper methods of acceptance in various situations.

Question 34

An agreement modifying a sales or lease contract needs consideration to be binding.

Question 35

The formation of sales and lease contracts requires no consideration.

Question 36

A general purpose of the UCC is to:

A)Protect the merchant who deals in goods.
B)Protect the consumer.
C)Standardize commercial law and facilitate commercial transactions.
D)Protect parties from entering into unconscionable contracts.

Question 37

Additional terms to a contract are considered proposed additions if one or both parties to a sales contract are nonmerchants.

Question 38

In a contract for the sale of goods,if the seller does not have a place of business and the contract does not mention delivery in any way,delivery is to be made at the buyer's house.

Question 39

Under the Uniform Commercial Code,it is possible for a nonmerchant to be liable on a contract for the sale of goods of $500 or more without having signed any writing.

Question 40

A "firm offer" may be made by a nonmerchant seller.

Question 41

For the written confirmation rule to apply,who must be a merchant?

A)The offeror.
B)The offeree.
C)Both the offeror and the offeree.
D)Neither the offeror nor the offeree.

Question 42

Under the UCC,if an offer is received by mail,the acceptance:

A)Must also be made by mail.
B)Can be made by other means,but only if the offer so states.
C)Is effective only once it is received by the offeror.
D)Can be canceled by the offeree at any time during the period of a firm offer.
E)Can be made in any commercially reasonable manner.

Question 43

Under the UCC,firm offers can be made:

A)Orally or in writing by either merchants or nonmerchants.
B)Orally or in writing by merchants.
C)Orally or in writing by merchants,but only in writing by nonmerchants.
D)In writing by either merchants or nonmerchants.
E)In writing by merchants.

Question 44

What is "course of performance?"

A)The previous conduct of the parties regarding the contract in question.
B)The conduct of the parties in prior transactions and contracts.
C)Any practice or method of dealing that is regularly observed or adhered to in a place,a vocation,a trade,or an industry.
D)An exception to the Statute of Frauds.

Question 45

Under the UCC,between merchants,if a purported acceptance contains additional terms,there is an acceptance,and:

A)The additional terms are not part of the contract.
B)The additional terms are part of the contract.
C)The additional terms do not become part of the contract if they materially alter the contract.
D)There is no contract.

Question 46

Under the UCC Article 2,unless otherwise agreed,an acceptance of an offer is effective:

A)When dispatched.
B)When dispatched,but only if the acceptance reaches its destination within a reasonable time.
C)When the acceptance is received.
D)When the goods are received.
E)When the offeree acknowledges receipt of the acceptance.

Question 47

Which of the following statements is true regarding sales contract terms left open under the UCC?

A)Leaving terms open makes the contract unenforceable.
B)If not stated,the price is a "reasonable" price at the time of delivery.
C)The price may be fixed by a market,a third person,or another standard,if so provided in the contract.
D)A and C only.
E)B and C only.

Question 48

Under Article 2 of the UCC,when a court finds a clause in a contract to be unconscionable,the court will:

A)Determine the penalty to be paid by the party who placed the unconscionable clause in the contract.
B)Not enforce any aspects of the contract.
C)Order specific performance in such a way that the contract is not unconscionable.
D)Enforce the contract,but limit the application of the unconscionable clause.
E)Either B or D.

Question 49

Where a contract for the sale of goods does not mention the place of delivery for the goods,which of the following is true?

A)The seller is obligated to deliver the goods to the buyer's place of business.
B)The contract fails for failure to state a material term.
C)The seller is obligated to deliver the goods at the seller's place of business.
D)Sellers without a place of business are obligated to deliver the goods at the seller's home.
E)Both C and D are true.

Question 50

Under the UCC,if a purported acceptance to an offer contains additional terms:

A)It is treated as a rejection and counteroffer.
B)If both parties are merchants,there is a contract and the additional terms may or may not become part of the contract.
C)If neither party is a merchant,there is no contract.
D)It is treated as a counteroffer,but it does not reject the original offer.

Question 51

Which of the following is true relating to a "firm offer" under the UCC?

A)It can be made only by a merchant.
B)It must be in writing and signed by the merchant.
C)It may provide that the offer remain open for any period of time up to 4 months.
D)A,B,and C.
E)A and B only.

Question 52

An order or other offer to buy goods which requires prompt or current shipment may be accepted by:

A)A prompt shipment of conforming goods.
B)A prompt shipment of nonconforming goods.
C)A prompt promise to ship the goods.
D)A,B,or C.
E)A or B only.

Question 53

For the firm offer rule to apply,who must be a merchant?

A)The offeror.
B)The offeree.
C)Both the offeror and the offeree.
D)Neither the offeror nor the offeree.

Question 54

Under Article 2A of the UCC,a consumer lease is defined as:

A)Any lease involving goods leased to a consumer primarily for personal,family,or household purposes.
B)A lease involving goods leased to a consumer primarily for personal,family,or household purposes where the amount of the lease is $25,000 or less.
C)Any lease where a consumer is either the lessee or the lessor and the amount of the lease is $500 or more.
D)Any lease,whether or not the parties are consumers,where the goods being leased are consumer goods.
E)Any lease,3 years or less in duration,involving goods leased to a consumer primarily for personal,family,or household purposes.

Question 55

If the time,place,and manner of delivery of goods is not mentioned in a contract:

A)The place of delivery is the buyer's place of business.
B)The contract is void for lack of definiteness.
C)The place of delivery is the seller's place of business.
D)The seller is obligated to pay for shipping to the buyer's place of business.

Question 56

Under Article 2 of the UCC,a contract is usually enforceable even if which of the following terms is omitted:

A)Price.
B)Quantity.
C)Price or quantity.
D)Neither price nor quantity may be omitted.

Question 57

Regarding differences under the UCC in the treatment of merchants and nonmerchants,which is true?

A)The UCC applies to merchants,but not to nonmerchants.
B)The UCC requires merchants' contracts to be in writing,but not those of nonmerchants.
C)The requirements for a merchant to form a contract are less stringent than those for nonmerchants,and merchants receive fewer protections than nonmerchants.
D)The consideration requirement has been eliminated for contracts between merchants,but is still present in contracts involving at least one nonmerchant.

Question 58

Under UCC 2-206(1)(b),an accommodation:

A)Neither applies to merchants nor nonmerchants.
B)Applies to nonmerchants only.
C)Is a shipment that is offered to the buyer as a replacement for the original shipment when the original shipment cannot be filled.
D)Is a bonus shipment when items are temporarily out of stock.

Question 59

Where the offeror is a merchant and the offeree is a nonmerchant,what is the effect of minor different terms contained in an acceptance?

A)A contract will be formed incorporating the different terms of the acceptance.
B)No contract is formed,and the purported acceptance is treated as a counteroffer.
C)A contract is formed,but only if the parties resolve the differences in the offer and the acceptance.
D)A contract is formed according to the terms of the offer,and the additional terms are treated as proposed additions to the contract.
E)The purported acceptance is treated as a rejection,except that the original offer remains open under the firm offer rule.

Question 60

A merchant is a person who:

A)Deals in goods of the kind involved in the transaction.
B)By his or her skill or occupation,holds himself or herself out as having special skill or knowledge regarding the goods in the transaction.
C)Employs a merchant as his or her agent.
D)Any of the above would qualify a person as a merchant.
E)A,B,or C are all required to qualify a person as a merchant.

Question 61

Bob is a biology teacher whose hobby is refinishing antique furniture.Bob shops yard sales and estate auctions looking for nice antiques to refinish.The problem is that Bob can never pass up a bargain and purchases items at garage sales that he later realizes he doesn't have room for or doesn't want.Sometimes among these purchases are pieces of furniture that do not need refinishing.Thus,Bob has a problem accumulating too many things and has a garage full of items he plans to refinish and other "bargains" he could not pass up.To solve this problem,Bob has a yard sale at his home two or three times a year.He is careful never to have four sales in 1 year because his city requires a business license for four or more sales in 1 year.At one of his yard sales,he has a nice antique dining room table and chairs for sale for $600.Mike,a garage sale shopper,sees the table and is very interested in it.Mike says,"I'll give you full asking price,but I can't know for sure until my wife sees it and likes it also.Can you hold it until 3 p.m.? I know my wife and I can be back by then." Bob gives Mike a small piece of paper on which he has written,"I will give Mike Smith until 3 p.m.to decide whether to purchase the dining room table and chairs for $600." When Mike returns at 2 p.m.with his wife,he sees the table and chairs in the back of a truck as the truck pulls away.Mike wants to know whether he has a case against Bob.Discuss.

Question 62

A buyer agrees to purchase "two cars" from an elevator company.All material terms are contained in a written contract,but "two cars" is not further defined.Which of the following evidence can be admitted if there is a dispute over what "two cars" refers to?

A)Oral evidence that before the signing of the contract the parties intended the contract to be for the purchase of three cars.
B)Oral evidence that before the signing of the written agreement the elevator company said it would extend its normal 1-year warranty (which is stated in the written contract)to 2 years.
C)Oral evidence that the word "car" refers to an elevator,since that is normal in the elevator industry,and that it does not refer to any of the company's automobiles.
D)Written evidence from prior to the signing of the written contract that the parties intended the contract to be for the purchase of three cars.

Question 63

A homeowner orally contracted to buy some custom-made parts that the homeowner will use to build a retaining wall in the homeowner's back yard.The contract price for these materials was $2,000.The buyer refused to take delivery even though the materials were conforming.The seller is unable to sell these parts to anyone else because they were individually designed for the homeowner.In a lawsuit against the homeowner by the seller of the parts:

A)The UCC would not apply because these goods will become real property when installed by the homeowner.
B)This contract is not enforceable because the price is $500 or more.
C)This contract is not enforceable,assuming that the homeowner is not a merchant in the materials purchased.
D)This contract is fully enforceable even though it is not in writing.

Question 64

Is the purpose of the UCC undermined by allowing nearly every one of its provisions to be made nonapplicable to a particular contract if the parties agree? Doesn't this interfere with the goal of the standardization of contract law? Why do you think that the UCC allows this?

Question 65

If a buyer and seller agree to a contract for the sale of goods amounting to $400,which modifications must be in writing in order to be enforceable?

A)All modifications.
B)Any modification increasing the price by $500 or more.
C)Any modification increasing the price by $100 or more.
D)No modification to such a contract needs to be in writing because the original contract did not need to be in writing.

Question 66

A small consulting firm entered into a contract with an office machine retailer to purchase a photocopier for $3,000.The contract included a service agreement.The consultants inquired into dropping the service agreement,but because that would lower the price by only $250,they decided to pay the $3,000.After using the copier for several months,it began to need a few service calls.The copier generally worked well,and the problems were minor,but there were problems with the service.Many times it would take a couple of days for a technician to arrive and take care of the problem.More frustrating was the fact that many of the problems required only minor adjustments.Other times parts were not available.The consultants read the provisions of the agreement relating to the servicing and concluded that there had been numerous breaches.In a dispute over the service,what laws would apply and why?

Question 67

A seller and a buyer orally agree to the following two transactions: The buyer wants to purchase 500 plain white tablecloths at $10 each.In addition,the buyer wants to purchase 500 tablecloths with it's very distinctive logo imprinted on them at $20 each.The seller delivers 250 of the plain white tablecloths,which the buyer accepts.Later,according to the contract,the seller attempts to deliver all the rest of the tablecloths;but the buyer refuses to accept or pay for any of them,claiming that the Statute of Frauds prohibits the enforcing of these contracts.Discuss in detail whether these contracts are enforceable and how much,if any,the seller can collect.

Question 68

Is it reasonable for certain provisions of the UCC to apply to merchants only or to apply differently to merchants than to nonmerchants? Shouldn't anyone who chooses to enter into a commercial transaction be held to the same standard? Is it unfair to have the two standards?

Question 69

Seller offers to sell to Buyer 1,000 widgets at $5 each.Buyer responds in writing,stating that Buyer accepts the offer,but at a reduced price of $4.95.Seller refuses to deliver at this price.Buyer sues.Both parties are merchants.In this situation:

A)There is no contract.
B)There is a contract;the $4.95 price is an additional term,which becomes part of the contract because it is not material.
C)There is a contract;the $4.95 price is an additional term,which does not become part of the contract because it is material.
D)This is a firm offer.

Question 70

Which terms will be implied in a contract under the UCC if they are omitted in the express contract? Why does the UCC so freely imply these omitted terms? What are the risks of such a liberal policy of implying omitted terms?

Question 71

Why did contract law develop for hundreds of years and function well without a Uniform Commercial Code? Why did any need for standardized laws from one jurisdiction to another not get addressed until the beginning of the twentieth century?

Question 72

Melissa purchased a compact satellite dish as part of a contract to obtain satellite television service.Melissa owns a small bar and plans to use the dish and cable service in her bar.The contract provided that she pay $200 for the dish,after which she would receive 12 months of television service through the satellite dish at no charge.After 12 months,in order to receive continued service,she would have to pay the company's regular monthly charge of $21,or her dish would be disabled.The dish is specially manufactured such that it can receive only the signals provided by the company that provided her with the dish.The company installed the dish in Melissa's bar as provided in the contract.For the first couple of months,Melissa was happy with the service.It was less expensive than regular cable television and the quality of the picture was superior.In the fourth month of the contract,Melissa began having problems.First,the dish became slightly warped.Second,the signals received by the dish began to fail frequently,at least once every week when bar patrons wanted to watch television.Melissa assumes the signal fails at other times when patrons are not watching.The warping of the dish appears to have affected the quality of the picture.Melissa had a friend hold the dish and push it into its original shape while Melissa watched the television,and the picture improved as long as the friend held the dish.The company refuses to address Melissa's complaints.Discuss whether the Uniform Commercial Code or common law would apply in resolving each of Melissa's problems.Also,discuss whether Melissa would be considered a merchant under the UCC.

Question 73

Mary runs a clothing store near a college campus.In the winter,Mary was preparing to order some T-shirts and shorts for the upcoming summer.She prepared an order on her stationery for "1,000 T-shirts of assorted sizes;S,M,L,and XL;800 in royal blue,the other 200 in assorted colors." For the shorts her order read,"1,000 pairs of shorts,assorted sizes;approximately equal quantities of white,black,khaki,and olive." She sent the order to the clothing maker and about a week later received an order confirmation on their sales order form.She glanced at it and the wording for her order was the exact same as she had sent in.When she received the merchandise a month later,there were only 150 royal blue shirts,and the others were various assorted colors.There were only 50 pairs of white shorts,with the other 950 approximately equal quantities of the other three colors.Mary looked back at the sales order and noticed a provision in the fine print that the clothing maker could substitute different colors for what was ordered.Mary claims that the clothing maker has breached the agreement.The different colors shouldn't affect the sales of the shorts,but she ordered the royal blue shirts because that is the local university's predominant school color.Discuss Mary's situation.

Question 74

A buyer who is not a merchant in boats is at a boat store and orally agrees to purchase a sailboat for $2,000.The buyer sends a written confirmation to the boat dealer the next day describing all relevant terms of their agreement.When the buyer goes to the store a week later to pick up the boat,the store refuses to sell the boat for $2,000.Which is true?

A)This contract is not enforceable because it is not in writing.
B)This contract is enforceable because the boat dealer did not object to the written confirmation.
C)This contract is enforceable if $2,000 is a reasonable price for the boat.
D)This contract is enforceable because the boat dealer is a merchant.
E)The firm offer rule would require the boat to be sold at the offered price of $2,000.

Question 75

A newly opened retailer contracted with a computer component manufacturer for the purchase of some accessory keyboards.The contract was very detailed,specifying all aspects of the contract except for the quantity.Under these circumstances,a court would most likely:

A)Enforce the contract,filling in the gap with a reasonable quantity.
B)Order the parties to reach agreement regarding the number of keyboards to be purchased.
C)Not enforce the contract because it would be impossible to determine the number of keyboards that would be a reasonable quantity.
D)Set the quantity based on the seller's average sale quantity to similar retailers.

Question 76

Seller orally contracts to sell goods to Buyer for a total price of $450.Several days later,both parties orally agree to raise the price to $550 because of a shortage of these goods.When the goods are delivered,Buyer refuses to accept them.Seller sues.Both parties are merchants.In this situation:

A)Buyer wins;this contract must be in writing to be enforceable.
B)Seller wins;the contract is enforceable without a writing and Seller can collect $550.
C)Seller wins;the contract is enforceable without a writing,but Seller can collect only $450.
D)Buyer wins;both the original contract and the modification needed to be in writing.

Question 77

A buyer purchases some equipment that costs $20,000.As part of the contract,the seller agrees to install this equipment for an additional $2,000.After the buyer begins using the equipment,problems develop.Some of the problems relate to how the equipment was installed,while others relate to the equipment itself.Which of the following is true?

A)The sales portion of the contract is covered by the UCC,but the installation services are covered under common law.
B)The entire contract is covered under the UCC.
C)The entire contract is covered under common law.
D)Either the entire contract is covered under the UCC or the entire contract is covered under common law;which one covers it depends on whether more of the problems relate to the equipment itself or to the installation.

Question 78

A buyer and seller enter into a written contract for the sale of some specialty steel to be used by the buyer in the manufacture of some appliances.The contract specified all the terms of the contract except the price.Which of the following is true?

A)There is no contract because there is no meeting of the minds as to a material term.
B)There would be a contract except that the price cannot be implied in this contract because it is not a contract for the sale of a commodity with an easily determined market price.
C)A price will be implied only if the contract called for the price to be determined at a later date.
D)A reasonable price will be implied.

Question 79

A retailer ordered some inventory by phone from a manufacturer.The order was for 1,000 machines from the manufacturer's inventory at $300 each.The manufacturer sent the retailer a fax moments later detailing the order.The retailer looked at the fax and was satisfied that it stated the terms of the contract,but never responded in any way.When the goods were delivered on time a month later,the retailer refused to accept them,asserting that the contract was unenforceable.Which is true?

A)No writing is needed because of one of the exceptions to the Statute of Frauds.
B)The contract is unenforceable because the retailer has not signed a writing.
C)The contract is enforceable because it would be unconscionable to not enforce it.
D)The contract is enforceable under the written confirmation rule.
E)Because the fax was not responded to,this was an accommodation shipment.

Question 80

A grocery store mails an offer to purchase 50,000 pounds of bananas to a produce importer.The importer immediately ships the 50,000 pounds of bananas by truck to the buyer but does not send notification to the buyer that it is making the shipment.Which of the following is true?

A)There has been an effective acceptance merely by shipping the bananas.
B)There would be an acceptance only if the seller sends a written acceptance by mail because the offer was received by mail.
C)The seller must send an acceptance to the buyer by any commercially reasonable method.
D)When the bananas arrive at the grocery store,their arrival will be treated as an offer.