Deck 18: Introduction to Sales

Question 1

Under the UCC,a merchant is frequently held to a higher standard of conduct than a non-merchant.

Answer 1

True

Question 2

Under the UCC,an agreement modifying a contract needs no consideration to be binding.

Answer 2

True

Question 3

Frank buys his friend Andy's jet-ski for $2,300.There agreement is governed by the UCC as a jet-ski is within the definition of "goods."

Answer 3

False

Question 4

Leasing goods is an insignificant part of business,so its rules are governed by extensions of the UCC Article related to sales rather than having a separate article of the Code to cover leasing.

Question 5

In the case Jannusch v.Naffziger,the Court held that,under the predominant purpose test,the common law applied to the contract for the sale of a business,not the UCC.

Question 6

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

Question 7

The UCC is federal legislation enacted by Congress.

Question 8

Stanziano Construction needs a backhoe to complete a project.If it pays Hofmann Rentals for temporary use of the equipment,the transaction will be governed by:

A)Article 2 of UCC.
B)Article 2A of the UCC.
C)Article 3 of the UCC.
D)common law

Question 9

Zubair,Inc.leased the 34ᵗʰ floor in an office building in downtown Pittsburgh.This contract is governed by Article 2A of the UCC.

Question 10

In a mixed contract involving goods and services,Article 2 of the UCC will govern if the predominant purpose is the sale of goods.

Question 11

Lorene,an artist,orally agrees to sell Sabrina a painting for $600.While Lorene is busy talking on the phone,Sabrina writes her a note on the back of an envelope she finds in her purse.The signed note states that she will stop by the studio to pick up the painting within the week.Sabrina changes her mind about the painting,and when Lorene sues to enforce the contract,Sabrina defends on the basis of the statute of frauds.Sabrina will succeed with this defense.

Question 12

Which of the following types of property would be classified as "goods" under Article 2 of the UCC?

A)A patent
B)A computer.
C)A piece of land.
D)All of the above

Question 13

In which of the following situations is the seller NOT a merchant under Article 2 of the UCC?

A)Paul, a full-time college student, sold his textbooks to State Bookstore.
B)Randall, a dentist sold his car to a friend.
C)Dan sells toys and silverware at a garage sale.
D)The seller is a merchant in none of the above situations.

Question 14

The UCC imposes a duty of good faith in the performance of all contracts.

Question 15

If the seller has made a substantial beginning in manufacturing custom-ordered goods,then an oral contract may be enforceable regardless of the amount of money involved in the contract.

Question 16

Office Plus,an office supply store,ordered 600 blank CDs from Curtis Co.,a manufacturer of computer products.Office Plus placed the order using a preprinted purchase order form; Curtis acknowledged the order by sending a preprinted acceptance form back to Office Plus.Unlike Office Plus' form which says nothing about packaging,Curtis's form specifies that the CDs will be packaged in cases of 10 CDs per box,10 boxes per case.Which statement is correct?

A)The UCC does not cover computer CDs.
B)Curtis's packaging term is a different term which materially changes the offer.There is no contract.
C)Curtis's packaging term is an additional term and therefore a part of the contract unless Office Plus promptly objects to the term.
D)The UCC does not cover the contract because both parties are merchants.

Question 17

Luke,the owner of a hardware store,sends a preprinted purchase order offering to buy goods from Benton,Inc.,a supplier.Benton acknowledges Luke's offer with a preprinted acceptance form.The terms of the two forms do not mirror each other.Under the UCC,no contract may be formed if the terms of the acceptance are not the mirror image of those of the offer.

Question 18

The UCC does not apply to contracts for the sale of goods if the value of the goods is less than $500.

Question 19

Lily bought 150 Orton,Inc.'s stock.This contract is governed by Article 2 of the UCC.

Question 20

Tri,a full-time college student,sold his car to Don,another student.In the performance of this contract,Tri:

A)has a duty of good faith which means honesty in fact and the exercise of good judgment.
B)has a duty of good faith which means honesty in fact.
C)has a duty of good faith which means honesty in fact and the exercise of reasonable commercial standards of fair dealing.
D)does not have a duty of good faith.

Question 21

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

A)Jeremy, a full-time student, sold his snow blower to a friend for $450.
B)Jeremy, 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 22

Under the UCC statute of frauds,the writing for a sale of goods must:

A)state quantity.
B)state price.
C)be signed by both parties.
D)be notarized.

Question 23

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,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?

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 $1000.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 24

Section 2-207 of the UCC:

A)provides for a strict application of the mirror image rule.
B)allows for additional or different terms to become part of a contract for the sale of goods.
C)prohibits merchants from leaving the price term open.
D)defines the obligations of the merchant buyer.

Question 25

In a "mixed contract," one involving a sale of both goods and services,the court will:

A)apply the UCC to the provisions of the contract involving the sale of goods and the common law to the provisions involving the sale of services.
B)apply the lex mercatoria to the contract.
C)first determine the dominant purpose of the contract.If the sale of goods dominates the contract, then the court will apply the law of the UCC, Article 2.If the sale of services dominates the contract, the court will apply the common law.
D)apply UCC Article 2A.

Question 26

During the development of commercial law centuries ago,businessmen throughout England and Europe:

A)settled disputes in trade organizations rather than in civil courts.
B)relied on a body of rules which became known as the lex mercatoria.
C)began to treat their own customs as law.
D)All of the above.

Question 27

Price's Department Store contracted to buy 1,000 drop-waist velour dresses in heather gray from TriColor.Subsequently,TriColor called and asked to ship mink-colored dresses instead of heather gray.Price agreed,in writing,to the change.Which statement is correct?

A)The modification is not enforceable since there was no consideration for the change.
B)The modification is not enforceable since the parties are merchants.
C)The modification is enforceable.
D)Whether the modification is enforceable depends on the gap-filler rule.

Question 28

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:

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 29

Dean Builders agrees to purchase all of its sump pump requirements for the new houses it builds from Satisfactory Sump Pump,Inc.These two business have had similar agreements the last three years and Dean's requirements have averaged 100 sump pumps per year.This year there was an unusually wet spring and Dean's requirements doubled to 200 sump pumps.Because of the high demand of sump pumps,the market price of the pumps tripled.Satisfactory Sump Pump,Inc.delivers 100 pumps at $75,the contract price.Satisfactory has exhausted its inventory and cannot deliver any more,so Dean buys the other 100 pumps from other suppliers at $225 each.Dean sues Satisfactory Sump Pump,Inc.for the additional expense.What is the most likely result?

A)Satisfactory Sump Pump, Inc.wins; output and requirements contracts are not enforceable since no quantity is stated.
B)Dean wins; Satisfactory Sump Pump, Inc.agreed to meet the needs of Dean and did not do so, which is a breach.
C)Satisfactory Sump Pump, Inc.wins; requirements contracts are governed by a good faith standard, and it was unreasonable for Dean to demand so many additional pumps.
D)Dean wins; the requirement of good faith applies only between merchants, and Dean is not a merchant.

Question 30

Which of the following is true regarding an open price term?

A)It makes the contract unenforceable.
B)The price may be fixed by the seller.
C)The price is the "reasonable" price at the time of delivery.
D)The price is set by the buyer.

Question 31

In the case Mathis v.Exxon Corporation,the Federal Court of Appeals held that:

A)Exxon fixed the price of gasoline in bad faith.
B)the UCC did not apply to the sale of gasoline as it is not a "good".
C)the decision of the District court had to be reversed.
D)it did not have jurisdiction as the UCC is not a Federal statute.

Question 32

Harriett raises and sells hippos.In order to keep her hippos happy and healthy,she feeds them Hippo Chow,which she buys from the local pet store.Under the UCC,Harriett is:

A)a merchant of both hippos and Hippo Chow.
B)a merchant of hippos, but not of Hippo Chow.
C)a merchant of Hippo Chow, but not of hippos.
D)not a merchant of either hippos or Hippo Chow.

Question 33

Newt,a gun dealer,offers to sell a rare civil war musket to Rush,another dealer,for "$15,000,insurance and shipping paid by buyer." Rush responds,"I accept.Insurance and shipping costs divided equally between seller and buyer." The parties:

A)do not have a contract since the acceptance violated the mirror image rule.
B)do not have a contract since Rush's response was a counteroffer.
C)have a contact and, in the majority of states, the terms of the offeree control.
D)have a contract and, in the majority of states, the different terms will cancel each other out.

Question 34

The stated purpose(s)of Article 2 of the UCC is/are:

A)to simplify the law governing sales.
B)to permit the continued development of business practices through custom and usage.
C)to make the laws governing sales uniform among the various states.
D)All of the above are correct.

Question 35

By definition,a sale under Article 2 of the UCC requires:

A)that the parties involved be merchants.
B)that the product involved be goods, services, or a mixture; that the sale be between or among merchants; and that the sale take place in the normal course of business for that industry.
C)that title to the goods pass between the seller and the buyer and that a price be paid for the goods.
D)that the service being sold cannot be a gift or a bailment.

Question 36

To simplify,clarify,and modernize the law governing commercial transactions,the UCC permits the use of "open terms" in sales contracts.In the use of "open terms," which of the following is true?

A)The court will use market value and other comparable sales to determine what a reasonable price would have been at the time of delivery if the parties have not settled the price in the contract.
B)If time of payment is not mentioned in the contract, payment within a commercially reasonable time is presumed.
C)If the contract permits the buyer or seller to determine the price during contract performance, the UCC requires the party to do so in good faith.
D)All of the above are true.

Question 37

ABC Siding,Inc.manufactures aluminum siding.ABC enters into a contract to deliver siding to Slippery Siding,Ltd.,a retailer of aluminum siding.The written agreement insists that all modifications to the agreement be in writing and signed by both parties.This prohibition against oral modifications is:

A)valid regardless of whether the clause is signed separately.
B)invalid unless the clause is signed separately by Slippery Siding, Ltd.
C)invalid unless the clause is signed separately by ABC Siding, Inc.
D)invalid unless new consideration is supplied by the parties when the modification agreement is made.

Question 38

In the case Superior Boiler Works,Inc.v.R.J.Sanders,Inc.the Supreme Court of Rhode Island held that:

A)No contract had been formed as the parties disagreed on time of delivery.
B)Superior did not breach the contract as its performance was reasonable.
C)Superior breached the contract under UCC Section 2-207 (2).
D)Sanders breached the contract under UCC Section 1-204 (2).

Question 39

Which of the following contracts is most likely to be declared unconscionable?

A)A contract between wholesaler and retailer which adds delivery charges at 15% of the costs of the goods.
B)A consumer sales contract which limits the consumer's remedies to repair or replacement.
C)A consumer sales contract which charges 300 times the fair market value of the goods.
D)All of the above

Question 40

UCC Section 2-204 provides three important rules that enable parties to make a contract quickly and informally.These include all but which of the following?

A)The parties may make a contract in any manner sufficient to show that they reached an agreement.
B)A writing sufficient under the statute of frauds may be a simple memo, a letter, or informal note, but need not itself be a contract.
C)The UCC will enforce a deal even though it is difficult to say exactly when it was formed.
D)A court may enforce a bargain even though one or more terms were left open.

Question 41

Sean of Sean's Shrimp House was enjoying a cup of cappuccino while visiting with Ollie at Ollie's Ocean Front Bar & Grill.During the course of their conversation,Sean agreed to supply 100 pounds of shrimp per month for the next year to Ollie's restaurant at the price of $2.50 per pound.When Sean got back to his office,he sent a written confirmation of the agreement to Ollie.Six weeks after receiving the confirmation Ollie wrote back,stating that he had not agreed to the price of $2.50 per pound.Is Ollie bound to the confirmation?

Question 42

Discuss the UCC good faith requirement.Does it apply differently depending on whether the parties are merchants or not?

Question 43

Discuss the importance of the UCC to the law of sales.Include who created the UCC,how it becomes law,and the stated purposes of the statute.

Question 44

Jones contracts to buy a computer from Martin for $1500.The contract calls for Martin to service the computer quarterly for the first year and to tutor Jones on how to use the software.Is this contract covered by the UCC or common law?

Question 45

Discuss open price under the UCC.

Question 46

Oxtren,Inc.is a tools wholesaler.Oxtren sent M&E Tools a purchase order offering to buy 200 Model 308 milling & drilling machines with R-8 spindles.The purchase order stated the credit term to be 2% discount if payment was made in 10 days,with the full amount due in 30 days.It did not include a forum selection clause.M&E responded with an acceptance form accepting the offer.The acceptance form,however,stated that full payment was due on delivery and that disputes under the contract would be settled by arbitration.
(A)Do the parties have an agreement?
(B)What is the payment term?
(C)Is the arbitration clause part of the agreement?