Deck 21: Introduction to Sales and Leases

Question 1

Article 2A of the UCC, approved by drafters of the Code in 1987 and amended in 1990, deals with leases of personal property, which exceed $100 billion annually.

Answer 1

True

Question 2

Consumer leases are treated no differently than business leases under the UCC.

Answer 2

False

Question 3

Until the early 1900s, sales transactions were completely governed by general contract law, but now sales of tangible personal property are predominantly governed by statute.

Answer 3

True

Question 4

The firm offer provision in Articles 2 and 2A of the UCC covers only merchant sellers.

Question 5

The Code provides that its remedies shall be liberally administered to place the aggrieved party in a position as good as the one she would have occupied had the defaulting party fully performed.

Question 6

"Acceptance" under the UCC always means taking possession of goods.

Question 7

Unless an auction is advertised or announced as being without reserve, the sale is with reserve, and the auctioneer may withdraw the goods at any time until he announces completion of the sale.

Question 8

If a merchant makes a written offer to buy or sell goods, this will be irrevocable only if accompanied by consideration.

Question 9

The Uniform Electronic Transactions Act, in effect in all of the states, covers contracts not governed by Articles 2 and 2A.

Question 10

Sales contracts containing unconscionable clauses are void and unenforceable.

Question 11

A finance lease is a special type of lease transaction that generally involves three parties instead of two.

Question 12

If a UCC contract does not contain all the terms necessary to carry it out, there will be no contract.

Question 13

The UCC treats merchants more leniently than others in transactions involving goods.

Question 14

Most of the Code's provisions are not mandatory but allow the parties to vary or displace them by agreement.

Question 15

The general law of contracts is displaced by the Code in all aspects of the sale of goods.

Question 16

Leslie, the owner of a shoe store, purchased 500 Model XT-50 running shoes from her supplier, but price was not stated in the contract. The contract is voidable at Leslie's option until the parties agree on a price.

Question 17

Andrew has a contract to buy 100 tables from Bartholomew at a price of $50 a table. Five days before Bartholomew is to deliver the tables, he tells Andrew that he is sorry, but $50 won't cover his costs; he will need at least $75 a table. Andrew agrees, because he needs the tables for his special sale. The modified contract is enforceable without new consideration, so long as Bartholomew is acting in good faith.

Question 18

A court faced with an unconscionable lease contract may refuse to enforce the entire contract.

Question 19

In a contract to sell goods, the sale does not take place until the seller transfers the title to the goods to the buyer.

Question 20

If a seller buries important terms of its sales agreement in fine print, this could constitute procedural unconscionability, which could result in a court's refusal to enforce the entire sales contract or at least the part the court finds unconscionable.

Question 21

Shannon orally agrees to buy 500 telephone answering machines from Thomas for $25,000. Thomas delivers 300 answering machines to Shannon, who receives and accepts them. Which of the following is correct with regard to this transaction?

A) Shannon can enforce the contract for the additional 200 machines.
B) The contract is enforceable only to the extent of the 300 machines that have been received and accepted.
C) The entire contract is in violation of the statute of frauds and cannot be enforced.
D) This is a bad deal and therefore unconscionable and unenforceable from the beginning.

Question 22

The common law "mirror image" rule has been modified by the Code.

Question 23

If the original agreement was oral, a subsequent oral modification, which brings the resulting contract within the statute of frauds, is binding on and enforceable by the parties.

Question 24

Which of the following transactions is governed by Article 2 of the UCC?

A) The sale of an apartment complex
B) The sale of oranges to be picked from a 10-acre grove
C) The sale of common stock of a soft drink company
D) A contract to receive medical services in a hospital

Question 25

The CISG does not apply to sales of goods for personal, family, or household use.

Question 26

The CISG governs contracts for the international sale of goods between parties located in different nations that have ratified the CISG.

Question 27

A prompt promise to ship or prompt shipment of goods is a valid acceptance of an offer to buy goods for prompt or current shipment.

Question 28

The CISG supersedes the UCC in any situation to which either could apply.

Question 29

"Goods" for purposes of the Code are essentially tangible, movable personal property.

Question 30

Under the Code, "good faith" for merchants is defined as "honesty in fact in the conduct or transaction concerned."

Question 31

A "sale," as defined by the UCC, takes place when:

A) the price is paid.
B) there is a manifestation of mutual assent.
C) the parties shake hands or affirmatively agree.
D) the title is transferred to the buyer.

Question 32

The Code addresses the battle of the forms problem by focusing on the intent of the parties.

Question 33

Under the Code, a contract to sell or lease personal property is recognized whenever the parties manifest such an intent, even if they cannot identify a precise moment the contract was formed.

Question 34

Karen has agreed to buy May's car, but the two have not agreed on the price. When there is no agreement in a sales contract as to price, what effect does it have on the contract?

A) There is a contract, with the price being whatever the seller decides.
B) There is a contract, with the price being a reasonable price at the time the agreement was made.
C) There is no contract, because the agreement is not definite and certain enough.
D) There is a contract, with the price being a reasonable price at the time of delivery.

Question 35

If a contract does not comply with the statute of frauds, it is void.

Question 36

The doctrine of unconscionability deals only with whether the actual terms of the contract are grossly unfair or oppressive.

Question 37

The UCC provides rules, where the parties do not set forth terms in their contract, to cover:

A) terms of payment.
B) place of delivery.
C) particulars of performance.
D) All of these.

Question 38

Richard owns and operates a small business at an outdoor market where he sells fruits and vegetables. What does the UCC specifically require of Richard with respect to his customers?

A) Observance of reasonable commercial standards of fair dealing
B) That he treat them all alike.
C) A clearly stated return policy.
D) No specific standards of behavior apply to Richard.

Question 39

Under Article 2 of the UCC, which of the following would be considered a sale?

A) Bill trades his car for a motorcycle.
B) Bill lends his car to his friend.
C) Bill puts up his car as security for a $500 loan.
D) Bill gives his car to his sister.

Question 40

Which of the following is correct with respect to Article 2A of the UCC?

A) It is an analogue of Article 2 that adopts many of the same rules.
B) No states have as yet adopted 2A.
C) Article 2A specifically includes security interests in its scope.
D) All of these.

Question 41

A sequence of previous conduct between a buyer and a seller, which may be regarded as establishing an understanding for interpreting an agreement between the two parties, is known as:

A) good faith.
B) a course of dealing.
C) a course of performance.
D) usage of trade.

Question 42

Ari makes a written offer to Linville, who replies with a conditional acceptance. Ari ships the goods, which Linville accepts. A contract:

A) was formed when Linville conditionally accepted.
B) consists of the written terms to which Ari and Linville agreed, along with supplementary provisions of the UCC.
C) consists only of the written terms to which Ari and Linville agreed.
D) was never formed.

Question 43

For $100 each, Helen agrees with Troy Tech to knit 14 sweaters for the soccer team in their school colors with their names on the front and "Go Tech" on the back. After Helen has almost finished the last sweater, Troy Tech decides it should spend the money on repairs to the locker room instead of on the sweaters. Does Helen's contract have to be in writing for her to enforce it?

A) No, because each sweater only cost $100
B) No, because they are specially manufactured sweaters
C) Yes, because the total cost is $1,400
D) Yes, because they are specially manufactured sweaters

Question 44

The Code defines as "honesty in fact in the conduct or transaction concerned."

A) good faith
B) unconscionability
C) merchantability
D) entrusting

Question 45

A contract which does not satisfy the writing requirement of the Article 2 statute of frauds, but which is otherwise valid, is enforceable in which of the following situations?

A) Where the goods have been delivered and accepted
B) Where payment has been accepted
C) Where the goods have been specially manufactured and are not suitable for resale in the ordinary course of business
D) All of these are situations where the contract would be enforceable.

Question 46

In dealing with unconscionability:

A) most cases have involved low-income consumers.
B) courts have demonstrated an unwillingness to limit freedom of contract.
C) courts have applied the doctrine to the negotiation process, which involves substantive unconscionability.
D) courts have not considered inequality in the bargaining positions of the parties.

Question 47

Mary and Renaldi Co. have dealt with each other for many, many years. Mary's Boutique orders 100 assorted lipsticks at $3.00 each from Renaldi Co. Renaldi sends back a confirmation letter stating that the shipment will be made by UPS rather than by U.S. mail as usual. There is:

A) no contract, but a counteroffer.
B) a contract for shipment by UPS unless Mary objects.
C) a contract for shipment by UPS only if Mary agrees.
D) a contract for shipment by U.S. mail.

Question 48

A(n) is a type of transaction generally involving three parties instead of two.

A) finance lease
B) consumer lease
C) sale
D) None of these.

Question 49

Which of the following is not considered "goods" within the meaning of Article 2?

A) An unborn calf
B) A field of corn still in the field
C) Timber which is still standing
D) All of these are goods under Article 2.

Question 50

Which of the following is not a requirement of the statute of frauds provision of Article 2 of the UCC?

A) Some writing or record that indicates a contract has been made
B) Signature of the party against whom enforcement is sought
C) A term specifying quantity
D) A term specifying price

Question 51

Which of the following is true regarding unconscionability under the Code?

A) It is defined in Article 2 as "monstrously extortionately harsh, showing no regard for conscience."
B) The Code denies or limits enforcement of an unconscionable contract for the sale of goods.
C) Unconscionability may be substantive, but it cannot be procedural.
D) All of the above.

Question 52

The Article 2 battle of the forms provision is found in

Question 53

To accommodate electronic commerce, which of the following was enacted or promulgated?

A) The UCC
B) The CISG
C) The UETA
D) GATT

Question 54

Edie telephoned the office supply store and agreed to buy a dozen boxes of CDs at $23 each. She then realized what a good buy this was and called the store with a request to modify the contract to read two dozen boxes. What is the consequence?

A) The modified contract is unenforceable.
B) The modified contract is void.
C) The modified contract is valid and enforceable.
D) There is no consideration, so the contract is void.

Question 55

With regard to uncertainty in a contract that falls within the scope of Article 2, which of the following is true?

A) Uncertainty will usually make the contract unenforceable.
B) Missing terms cannot be supplied at a later date.
C) Uncertainty as to incidental matters will seldom be fatal as long as the parties intend to form a contract.
D) Missing terms will cause the contract to be voidable, but the parties will have a chance to fill them in later.

Question 56

The most important element in determining whether a sales contract has been made is the:

A) language of the contract.
B) fact that the terms of the offer and acceptance are exactly alike.
C) number of open terms.
D) intention of the parties to make a contract.

Question 57

Gary, a partner in G & R Enterprises, went to a trade show and discussed with a manufacturer's representative of Foods 4 U, Inc. the purchase of three dozen food processors. A week after the trade show Gary received a signed letter from the representative thanking Gary for visiting his booth and saying Gary's order for three dozen Style 418B food processors at $90 each would be shipped to his business address within 30 days. Can Gary be contractually bound to accept and pay for the food processors?

A) If, after he returns from the trade show, Gary decides he only wants to purchase twelve food processors, he would not have to pay for three dozen if they are shipped to him as long as he notifies Foods 4 U of the change in quantity before it ships the goods.
B) Gary did not sign an order form, and an order this large would have to be in writing and signed by Gary to be enforceable.
C) If Gary does not object in writing within ten days after receiving the letter, he can be bound to accept and pay for the three dozen food processors.
D) The letter is not sufficient to bind either Gary or Foods 4 U, Inc. to the purchase and sale of the food processors.

Question 58

Who among the following is most likely not considered a merchant according to Article 2 of the UCC?
a. Jim who owns a wholesale auto parts business.
b. Tom who, as a hobby, builds and sells birdhouses on the weekends.
c. Kay who sells her 3-year-old fishing boat to her neighbor.
d. Jan who is not knowledgeable about selling sailboats, but employs an experienced person in the trade.

Question 59

In determining whether a contract containing both a sale of goods and a service is a UCC or general contract, the majority of states follow the:

A) CISG.
B) predominant purpose test.
C) parol evidence test.
D) procedural or bargaining scrutiny.

Question 60

Where there is no course of performance, usage of trade, or course of dealing, and where a contract is silent as to the place of delivery, the place for delivery is:
a. the seller's place of business.
b. wherever the goods were manufactured.
c. wherever the goods are located.
d. the buyer's place of business.

Question 61

What is a "merchant"? Identify four provisions in Article 2 which apply a different standard of conduct to merchants
and nonmerchants.

Question 62

List four areas of contract law where the common law of contracts and the law of sales differ. Give both the common law rule and the rule under Article 2.

Question 63

Which of the following is correct with respect to finance leases?

A) A finance lease generally involves three parties instead of two.
B) A finance lessor supplies the goods.
C) The finance lessor typically has special expertise as to the goods.
D) All of these are correct.

Question 64

Discuss the similarities or possible differences between the parol evidence rule under the common law of contracts and the parol evidence rule found in Article 2.

Question 65

What does Article 2 say with regard to the following?
a. Good faith.
b. Unconscionability.
c. Expansion of commercial practices.
All parties who enter into a contract or duty within the scope of the Code must perform their obligations in good faith. The Code defines good faith as "honesty in

Question 66

Which of the following is true about the CISG?

A) The full title is The United States Convention on Contracts for the International Sale of Goods.
B) It does not apply to contracts in which the primary obligation of the party furnishing the goods consists of supplying labor or services.
C) The CISG governs the formation of the contract, the rights and obligations of the seller and buyer arising from such contract, and the validity of the contract provisions.
D) All of these.