Deck 12: Sales and Lease Law

Question 1

A contract for a sale of natural gas is a contract for a sale for goods.

Answer 1

True

Question 2

In response to an order for a hundred baseballs,the shipment of a hundred basketballs is both an acceptance of the offer and a breach of the contract.

Answer 2

True

Question 3

If the acceptance to a sales contract between non-merchants includes terms different from those in the offer,no contract is formed under the UCC.

Answer 3

False

Question 4

If a court determines that a contract involving both goods and services is primarily a goods contract,any dispute over the deal will be decided under the UCC.

Question 5

The UCC imposes certain special business standards on merchants because of their commercial expertise.

Question 6

An auto dealer is a merchant when selling or leasing a new car but not when selling or leasing a pre-owned vehicle.

Question 7

Except for an option contract,a firm offer by a merchant is irrevocable once it has been made.

Question 8

The obligation of commercial reasonableness underlies every sales and lease contract.

Question 9

When the time for performance under a contract expires,the right to cure also expires.

Question 10

If a contract for a sale of goods leaves the quantity term open,there is a basis for determining a remedy.

Question 11

The UCC provides that a sale or lease contract will fail for indefiniteness if more than one of its terms is left open.

Question 12

Article 2 sets forth the requirements for sales and lease contracts,and Article 2A covers warranties.

Question 13

A seller who tenders nonconforming goods has reasonable grounds to believe that the buyer will accept the tender if it includes a price allowance.

Question 14

To satisfy the UCC's Statute of Frauds,a writing indicating an intent to form a sales contract must signed by both parties

Question 15

An excessive price for the goods and unequal bargaining power can indicate to a court that a sales contract is unconscionable.

Question 16

Acceptance of an offer to lease goods can be made by any means reasonable under the circumstances,including a prompt shipment of the goods.

Question 17

Parties to sales and lease contracts are not free to agree to terms different from those stated in the UCC.

Question 18

Under the perfect tender rule,a buyer or lessee has the right to insist on goods that conform to their contract in every detail.

Question 19

Under the UCC,good faith can never be disclaimed.

Question 20

Generally,when an acceptance to a sales contract between merchants includes terms additional to those in the offer,the terms automatically become part of the deal.

Question 21

When the goods delivered are not as promised,the measure of recovery in the buyer's suit for damages is the difference between the value of the goods as accepted and the value if they had been delivered as warranted.

Question 22

A buyer will be deemed to have accepted delivered goods if,after a reasonable opportunity to inspect the goods,the buyer does not reject them.

Question 23

Interstate Transport Company pays Trucks & Trailers Inc.a stated price for the use of seven tractor-trailer rigs for a year.Under Article 2A of the UCC,this is

A) a contract for services.
B) a warranty.
C) a lease.
D) a sale.

Question 24

A merchant who is in the business of selling certain goods makes an implied warranty of merchantability every time she sells any type of merchandise.

Question 25

If a buyer wrongfully refuses to pay for goods,the seller can reclaim them and resell them,without crediting the sale proceeds to the buyer.

Question 26

Miko owns a lake house that she rents to vacationers.Miko gives her son Ninh a trip to Omaha on his graduation from community college.Miko sells her car to her neighbor Pye for $4,500.UCC Article 2 covers

A) the lake house rentals.
B) the gift to Ninh.
C) the sale to Pye.
D) none of the choices.

Question 27

Brooke is an art collector and hires a broker to buy and sell artworks on her behalf.Under the UCC,in those transactions,Brooke has the status of

A) a consumer.
B) an agent or other intermediary.
C) a merchant.
D) an employer and manager.

Question 28

If,before the time for contract performance,one party communicates an intent not to perform,the other party can only wait to see if the repudiating party will decide to perform.

Question 29

Express and implied warranties do not displace each other-more than one warranty can cover the same goods in the same transaction.

Question 30

Warranties of title arise automatically in most sales contracts-a thief breaches the warranty by selling stolen goods.

Question 31

In an action based on breach of implied warranty,a buyer must show that the warranty existed and its breach proximately caused the damage sustained.

Question 32

Mining Corporation purchases the business assets of Open Pit Inc. ,including its equipment and supplies,for an agreed-to price,payable in installments.Under Article 2 of the UCC,this transaction is

A) a contract for services.
B) a sublease.
C) a lease.
D) a sale.

Question 33

Life Products Inc.enters into a contract to sell medical supplies to Med Clinic,which later sells some of the items to Nina,a patient and consumer.Article 2 of the UCC applies to

A) both transactions.
B) the sale from Life Products to Med Clinic only.
C) the sale from Med Clinic to Nina only.
D) none of the transactions.

Question 34

A buyer can revoke his or her acceptance if it was predicated on a reasonable assumption that the goods' nonconformity would be cured,and the nonconformity was not cured.

Question 35

If a breach occurs when the seller still possesses identified goods,the seller must nevertheless deliver the goods to pursue a remedy.

Question 36

Any use of delivered goods by the buyer-even for the limited purpose of testing them-constitutes acceptance.

Question 37

A bar of soap is unmerchantable if stepping on it would cause its user to slip and fall.

Question 38

An implied warranty can arise as a result of a well-recognized trade custom that a court could infer the parties intended to apply to their contract.

Question 39

If a buyer rightfully rejects nonconforming goods,he or she can resell them and retain the proceeds,without crediting the amount to the seller.

Question 40

To create an express warranty,a reasonable buyer must regard a seller's representation of fact-for example,on a product label-as part of the basis of the bargain.

Question 41

Rancho Stables orders ten saddles from Saddles,Inc.The sales contract states that if the tack is defective,Rancho will allow Saddles to repair or replace it instead of rejecting the shipment.When the gear arrives,it is defective.In this case,the perfect tender rule

A) does not apply.
B) applies to both parties.
C) applies only to Saddles.
D) applies only to Rancho.

Question 42

Text & Talk Corporation sells phones.Under most circumstances,Text & Talk will be presumed to have warranted that its title to the goods is

A) the same as the manufacturer's.
B) none of the choices-a warranty of title is not presumed.
C) good and valid.
D) the best that money can buy.

Question 43

Fresh Dairy Mart is the offeror and Gelato Company is the offeree under a unilateral sales contract in which Helado Corporation is also interested.Fresh is not notified of Gelato's beginning performance within a reasonable time.Fresh

A) may treat the offer as having lapsed.
B) must assume that Gelato has started to perform.
C) must contact Gelato.
D) must notify Helado.

Question 44

Precise Parts,Inc. ,and Quality Auto stores enter into a contract for a sale of auto parts that meet certain specifications.Precise Parts ships goods that do not comply.Quality Auto

A) cannot reject the entire shipment.
B) can reject the entire shipment.
C) must accept the entire shipment.
D) must reject the entire shipment.

Question 45

Dona offers to sell her used sofa,chair,coffee table,end table,and lamp to Erma for $700.Erma responds that she will pay that price if Dona's TV set is included.Neither party is a merchant.Their contract is formed according to

A) the new terms of the acceptance.
B) whatever is reasonable.
C) the terms of the original offer.
D) none of the terms.

Question 46

Grass Farm LLC offers to sell fifty bales of hay at a certain price to Horse Stable Inc.The owner of the stable responds,"We agree if you agree to make it sixty bales for the price." Their contract is formed according to

A) the new terms of the acceptance.
B) whatever is reasonable.
C) the terms of the original offer.
D) none of the terms.

Question 47

Builders Inc.and Concrete Supply Company enter into a contract for a sale of cement.Concrete delivers,but Builders does not pay.Concrete can recover as damages

A) any profit lost minus any loss avoided.
B) whatever amount Concrete wishes to claim.
C) the purchase price plus incidental damages.
D) the market price at the place at which Concrete delivered the goods.

Question 48

Rice Corporation offers to sell Sushi Restaurants,Inc. ,five hundred bushels of rice.Sushi responds,"We agree to buy five hundred bushels only if the rice is Grade A quality." Without more,their contract is formed according to

A) the new terms of the acceptance.
B) whatever is reasonable.
C) the terms of the original offer.
D) none of the terms.

Question 49

Containers Inc.sends its standard order form to Distribution Corporation to evidence a sale of packing materials.Distribution responds with its own standard purchase order form.Additional terms in Distribution's form 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) Containers objects to the new terms within a reasonable time.
D) any of the choices.

Question 50

Nature's Eggs,Inc.agrees to supply Omelet Express with five hundred eggs.Nature's Eggs can reasonably ask Omelet Express to pick up the eggs at

A) no specific time-only a buyer can set the time.
B) any reasonable hour.
C) no time-as a seller,Nature's Eggs must deliver the goods.
D) any hour.

Question 51

On July 10,Bob's Pet Supply Store orders fifty small dog collars from Canine Collars,Inc.to be delivered by July 15.On July 13,Canine Collars tenders fifty large dog collars.Bob's rejects the shipment.Canine Collars has

A) no right to cure.
B) until July 15 to cure.
C) until the end of the business day on July 13 to cure.
D) unlimited time to cure.

Question 52

Steel Buildings,Inc. ,agrees to sell four portable garages to Truck Service Center.Five days later,Truck Service refuses delivery and cancels the contract.Steel is entitled to

A) force Truck Service to accept the garages.
B) recover any damages from Truck Service but not resell the garages.
C) resell the garages and recover any damages from Truck Service.
D) resell the garages but not recover any damages from Truck Service.

Question 53

Sara and Tim enter into a contract for a sale of orchids that requires payment within thirty days of delivery.The UCC provides that when parties do not specify payment terms,payment is due at the time and place of delivery.Under the UCC,the specific payment term in the parties' contract

A) removes the entire transaction from the UCC.
B) is enforceable to the extent it mirrors the rule in the UCC.
C) is fully enforceable.
D) is not enforceable.

Question 54

Real Stones,Inc. ,and Sparkling Jewelry Stores enter into a contract for a sale of gemstones.Real Stones does not deliver.Sparkling can recover as damages the difference between

A) any loss avoided and any profit gained.
B) the actual price and the hoped-for price.
C) the contract price and the market price.
D) the current prices in the contracting parties' places of business.

Question 55

Minerals Ltd.contracts to provide several manufacturers with tin.When a cartel of tin-producing countries suddenly embargoes future shipments of tin to Minerals so that it cannot fulfill its contracts,the distributor

A) can substitute some other material for the tin.
B) is excused from the performance of its contracts.
C) is liable for breach of contract.
D) must obtain tin in any way to meet the needs of its customers.

Question 56

ABC Hardware Store orders one hundred power hand-drills from Best Tools Inc.When the hand-drills are delivered,they are all missing pieces.ABC rejects the shipment.To exercise a right to cure,Best Tools must

A) promptly notify ABC of the intent to cure.
B) pay a cure fee.
C) pick up the nonconforming tools before the end of the business day.
D) enter into a new contract with ABC.

Question 57

Bean Processor Inc.agrees to ship a certain quantity of coffee beans to Coffee Café LLC.Bean sends to Coffee an e-mail indicating that the parties intended to form a contract.Against Bean,as a contract,the e-mail will be sufficient

A) if it is signed by Bean.
B) if it is signed by Coffee.
C) if Coffee responds with an acknowledgment of the deal.
D) under no circumstances.

Question 58

Bon,an agent for City Motors Inc. ,e-mails Dale on May 1 that the dealer will sell to her a 2018 Ford pick-up truck for $25,000 between May 1 and July 1.Bon's offer to Dale is

A) irrevocable for the stated period.
B) irrevocable until Dale responds.
C) revocable at any time.
D) revocable on the payment of consideration to Dale.

Question 59

Chair Company contracts to deliver a dozen suites of dining room tables and chairs to Furniture Store on May 1.On April 15,Chair tells Furniture that delivery will be delayed until June 1.Furniture may

A) await performance,sue Chair,or suspend its own performance.
B) only await Chair's performance for a commercially reasonable time.
C) only sue Chair for breach of contract.
D) only suspend its own performance.

Question 60

Fiesta LLC contracts to buy 1,000 balloons from Gas Bags Inc.for $1 per item.When the market price decreases to 50 cents per balloon,Fiesta refuses to go through with the deal.Gas Bags can recover

A) $1,500.
B) $1,000.
C) $500.
D) $0.

Question 61

Trucks & Trailers,Inc.(T&T),and United Express Service enter into a contract for a lease of trucks.T&T is a merchant who deals in goods of the kind leased.Under the UCC,an implied warranty of merchantability arises

A) automatically.
B) only if the lessee asks for it.
C) only if the lessor expresses such a warranty.
D) only in conjunction with sales,not lease,contracts.

Question 62

Ski Shop sells a pair of skis to Tami.When Tami uses the skis,they snap in two.The cause is something that Ski Shop did not know about and could not have discovered.This is a breach of

A) the implied duty of inspection.
B) the implied warranty of merchantability.
C) an express warranty.
D) none of the choices.

Question 63

Eliza buys a new motorcycle from Fast Bikes,Inc.The most important factor in determining whether an express warranty is created is whether

A) Eliza expresses to Fast Bikes what she wants warranted.
B) Eliza's desire for the cycle becomes part of her motivation to deal.
C) Fast Bikes expresses to Eliza what it expects of its customers.
D) Fast Bikes' promise becomes part of the basis of the bargain.

Question 64

Riverside Mill and Standard Contractors enter into a contract for a sale of lumber.The mill knows the purpose for which the buyer will use the goods.Under the UCC,an implied warranty of fitness of a particular purpose arises if

A) the buyer is relying on the seller to select suitable goods.
B) the buyer asks for it.
C) the seller is a merchant who deals in goods of the kind sold.
D) the seller knows that the product is fit for any purpose.

Question 65

Home Redo,Inc. ,and Ivy enter into a contract for a sale of cabinets and countertops.Home Redo,a merchant who deals in goods of the kind sold,notes that its goods come with an implied warranty of merchantability.Under the UCC,this means that the goods are reasonably

A) fit for the buyer's particular purpose.
B) fit for the ordinary purpose for which such goods are used.
C) suitable for resale at an acceptable price.
D) the best quality that money can buy.

Question 66

Tune Products,Inc. ,offers to sell to Unlimited Sales Company one hundred MP3 players at $50 a piece,subject to certain specific delivery dates.Unlimited replies with a signed purchase order that reads,"Accept your offer for 100 I-appliances at $50 each.Must be delivered to our warehouse." Tune does not respond or deliver the goods.Unlimited files a suit for breach of contract,to which Tune answers that there is no contract because Unlimited's purchase order contained additional terms and is not signed by Tune.Can Unlimited recover? Explain.

Question 67

Cruisin' Autos,Inc. ,sells cars to consumers.To avoid liability for oral express warranties,each sales agreement should note that a car is sold

A) as is.
B) in perfect condition.
C) subject to warranties included in the written contract only.
D) with no known defects.

Question 68

Coal Mine Company buys an excavator from Dig Equipment Inc.Coal Mine is unaware that Equity Credit Company holds a lien against the excavator.If Equity repossesses the goods,Coal Mine can recover for breach of warranty from

A) Dig.
B) none of the parties.
C) the maker of the excavator.
D) Equity.

Question 69

Brass Instruments,Inc. ,sells seventy-six trombones to Community Band.To avoid liability for most implied warranties,Brass should state in writing that the trombones are sold

A) as is.
B) by a merchant.
C) in perfect condition.
D) with no known defects.

Question 70

Pipe Company includes in its contracts a provision that reads,in large red letters,"There are no warranties that extend beyond the description on the face hereof." This disclaimer negates

A) the implied warranty of fitness for a particular purpose.
B) the implied warranty of merchantability.
C) the implied warranty of title.
D) none of the choices.

Question 71

Colby contracts in writing to sell his Dodge-brand pick-up truck to Efrem for $10,500.Colby agrees to deliver the truck on Friday,and Efrem promises to pay the $10,500 on the following Monday.On Thursday,Efrem tells Colby that he changed his mind and will not buy the truck.Over the weekend,Efrem changes his mind again and tenders $10,500 to Colby on Monday.Colby has not sold the truck to another party but refuses the tender and refuses to deliver.Efrem claims that Colby has breached their contract.Colby contends that Efrem's repudiation released him from his duty to perform under the contract.Who is correct,and why?

Question 72

Blake,a salesperson for Custom Commercial Kitchens Inc. ,shows Dylan,a buyer for Eatery Inc. ,display items in Custom's showroom,stating that any purchased equipment will match the display.This statement is

A) an express warranty.
B) an implied warranty.
C) none of the choices.
D) puffery.