Question 1

Dieter is a debtor to Maxwell, the secured party. Dieter lives in Ohio and works in Kentucky. Maxwell lives in Indiana and works in Iowa. Where must the secured party file the financing statement?

Accepted Answer

A)  Ohio
B)  Kentucky
C)  Indiana
D)  Iowa A

Question 2

Lian contracted for financial services from E-wise. This contract is governed by Article 2 of the UCC.

Accepted Answer

A) True 
 B)False  False

Question 3

Masterview, Inc. purchased a new computer system, which included some computer programs. When Masterview developed financial troubles, two competing creditors of Masterview claimed the right to repossess the computer system and the programs. The UCC distinguishes "software" from "goods" and treats them differently for some purposes, which would be important in this situation.

Accepted Answer

A) True 
 B)False  True

Question 4

Hiram is a debtor to Central Credit Union, a secured party. If Hiram fails to maintain insurance on the collateral, he has likely

Accepted Answer

A)  attached the security agreement.
B)  defaulted on the security agreement.
C)  terminated the security agreement.
D)  perfected the security agreement.

Question 5

If Edmund and Kaylin have a writing mistakenly showing a sale and purchase of goods for $10,000 when the price should have been $1,000, a court will most likely

Accepted Answer

A)  enforce the agreement, relying on oral testimony to determine the correct price.
B)  only enforce the agreement as written.
C)  not hear the case unless both parties are merchants.
D)  not enforce the agreement since the writing did not reflect a meeting of the minds of the parties.

Question 6

Meister Bros. shipped 250 radiator belts to fill Braybon's order. Quality control measures had been in place in Meister's factory when the belts were manufactured. When Braybon received the order one day before it was due, it notified Meister that it rejected the belts because of a variation from the contract specifications. Meister, although it believed the original belts met the contract specifications, notified Braybon that it would supply conforming goods within one week. When the conforming goods arrive in one week,

Accepted Answer

A)  Braybon must accept them, but does not have to pay the full price because the contract deadline has passed.
B)  Braybon does not have to accept them because Meister Bros. only has one chance to fill the order correctly.
C)  Braybon should accept them because Meister Bros. has a right to cure even after the contract deadline under these circumstances.
D)  Braybon does not have to accept them because Meister Bros. failed to meet its UCC requirement to deal in good faith.

Question 7

A court is much more likely to find a contract unconscionable when one party is a consumer than if the two parties are businesses.

Accepted Answer

A) True 
 B)False

Question 8

Elizabeth worked as a salesperson in a carpet store. She was in the midst of divorce proceedings and needed some money. Elizabeth sold her wedding ring. Elizabeth is considered a merchant with regard to the sale of the ring.

Accepted Answer

A) True 
 B)False

Question 9

A seller may not make repairs or adjustments after the goods have been tendered, even if that action will bring the goods into conformity in order to "cure" nonconforming goods.

Accepted Answer

A) True 
 B)False

Question 10

Betty's BBQ orally contracts with Denny's Design House for 10,000 matchbooks at the price of 10 cents per matchbook. The matchbooks are to be embossed with a logo to be designed by Denny's Design promoting Betty's BBQ. Price, payment terms, and delivery terms are agreed upon between the parties. Denny's Design creates the logo, gets Betty's BBQ's approval of the design, and begins applying the logo on the matchbook covers. Denny's Design has almost finished the order when Betty's BBQ calls to say it has decided to make the eatery a smoke-free restaurant and cancels the order. Denny's Design sues, but Betty's BBQ states that the agreement is unenforceable under the Statute of Frauds. Who wins?

Accepted Answer

A)  Denny's Design House wins. This situation falls under an exception to the Statute of Frauds.
B)  Denny's Design House wins. This is a service contract for design of a logo. Therefore, the UCC, including the Statute of Frauds provisions of Article 2, does not apply.
C)  Betty's BBQ wins. This is a contract for $1,000. The Statute of Frauds requires all sales contracts in excess of $500 be in writing.
D)  Betty's BBQ wins. The Statute of Frauds only applies to merchants. Betty's BBQ is not a merchant in this instance because it intended to give the matchbooks away and not sell them.

Question 11

Wedney, Inc. sold a meat processing machine to Yoro Chickens, taking a security interest in the machine. Yoro Chickens defaulted on the loan. Wedney repossessed the machine. Wedney would like to retain the machine to use as a model. Which of the following statements is correct?

Accepted Answer

A)  Wedney must notify the debtor that it intends to retain the machine and give Yoro 20 days to object.
B)  By taking possession, Wedney automatically foreclosed on the collateral. Wedney has valid title and need do nothing else.
C)  Since the machine is equipment, Wedney cannot retain the machine. Wedney must dispose of the collateral in a commercially reasonable manner.
D)  Wedney can retain the machine but must pay Yoro the surplus, the difference between the fair market value of the machine and the amount of the debt.

Question 12

Mason bought a rotisserie in preparation for a party he was planning. When he put a chicken on the rotisserie, it would not rotate, but stayed in one position where it burned the chicken on one side and left it raw on the other. When he returned the rotisserie to the store, the salesperson disclaimed any responsibility because he had never told Mason the rotisserie would rotate the food as it cooked. Does Mason have any recourse?

Accepted Answer

A)  No, the salesperson did not make any express warranties.
B)  Yes, the salesperson made an express warranty just by selling the goods.
C)  Yes, although the salesperson did not make any express warranties, the UCC imposes an express warranty on the sale.
D)  Yes, although the salesperson did not make any express warranties, the UCC imposes an implied warranty of merchantability under which the rotisserie is guaranteed to be fit for the ordinary purposes for which it is used.

Question 13

Which of the following contracts requires a writing under the UCC, Article 2?

Accepted Answer

A)  Jeremy, a full-time student, sold his snow blower to a friend for $450.
B)  Kayla, a full-time student, purchased a used computer from Office Plus for $300.
C)  A toy manufacturer contracted to sell dolls valued at $10,000 to a department store.
D)  Tobias Department Store contracted to sell Jenny a $400 doll.

Question 14

A buyer who accepts goods but notifies the seller the goods are non-conforming

Accepted Answer

A)  cannot recover any damages.
B)  can recover the difference between the goods as promised and as delivered, plus incidental and consequential damages.
C)  cannot recover incidental damages.
D)  cannot recover consequential damages.

Question 15

For a security interest to attach, there must be an agreement.

Accepted Answer

A) True 
 B)False

Question 16

Under the UCC, a buyer's right to reasonably obtain substitute goods because another party has not honored a contract is called

Accepted Answer

A)  breach.
B)  cure.
C)  cover.
D)  consideration.

Question 17

The initial term for which a financing statement will be effective is

Accepted Answer

A)  one year.
B)  five years.
C)  ten years.
D)  two years.

Question 18

Identify the possible remedies for a seller when the buyer breaches a contract.

Accepted Answer

The answer of Identify the possible remedies for a seller...

Question 19

Discuss the importance of the UCC to the law of sales. Include who created the UCC and how it became law.

Accepted Answer

The answer of Discuss the importance of the UCC to...

Question 20

Wedney, Inc. has a purchase money security interest in one of Yoro Chicken's meat processing machines. Wedney filed a financing statement on the day the machine was delivered, perfecting its interest. Great State Bank already had a security interest in the machine. Which party has superior priority rights in the meat processing machine?

Accepted Answer

A)  Wedney. A PMSI in collateral other than inventory takes priority over a conflicting security interest if the PMSI is perfected at the time the debtor receives the collateral or within 20 days after he receives it.
B)  Great State Bank, since it had an earlier security interest.
C)  The party who is first to repossess the collateral has priority rights.
D)  The creditors have equal priority.

Exam 14: The UCC: Sales and Secured Transactions

Dieter is a debtor to Maxwell, the secured party. Dieter lives in Ohio and works in Kentucky. Maxwell lives in Indiana and works in Iowa. Where must the secured party file the financing statement?

Lian contracted for financial services from E-wise. This contract is governed by Article 2 of the UCC.

Hiram is a debtor to Central Credit Union, a secured party. If Hiram fails to maintain insurance on the collateral, he has likely

If Edmund and Kaylin have a writing mistakenly showing a sale and purchase of goods for $10,000 when the price should have been $1,000, a court will most likely

A court is much more likely to find a contract unconscionable when one party is a consumer than if the two parties are businesses.

Elizabeth worked as a salesperson in a carpet store. She was in the midst of divorce proceedings and needed some money. Elizabeth sold her wedding ring. Elizabeth is considered a merchant with regard to the sale of the ring.

A seller may not make repairs or adjustments after the goods have been tendered, even if that action will bring the goods into conformity in order to "cure" nonconforming goods.

Wedney, Inc. sold a meat processing machine to Yoro Chickens, taking a security interest in the machine. Yoro Chickens defaulted on the loan. Wedney repossessed the machine. Wedney would like to retain the machine to use as a model. Which of the following statements is correct?

Which of the following contracts requires a writing under the UCC, Article 2?

A buyer who accepts goods but notifies the seller the goods are non-conforming

For a security interest to attach, there must be an agreement.

Under the UCC, a buyer's right to reasonably obtain substitute goods because another party has not honored a contract is called

The initial term for which a financing statement will be effective is

Identify the possible remedies for a seller when the buyer breaches a contract.

Discuss the importance of the UCC to the law of sales. Include who created the UCC and how it became law.