Deck 20: The Formation of Sales and Lease Contracts

Question 1

In a contract in which goods and services are combined, the contract is al?ways considered an agreement for the sale of goods.

Answer 1

False

Question 2

The UCC imposes some different rules of conduct on merchants and consumers.

Answer 2

True

Question 3

Under the UCC, a merchant who sells one type of good will be considered a merchant for any other type of good that he or she may sell.

Answer 3

False

Question 4

If a seller is to remove a structure attached to land, the sale of the struc?ture is treated as one involving goods.

Question 5

For an item to be characterized as a "good" under the UCC, it must be intangible.

Question 6

A copyright is an example of property that does not come under Article 2.

Question 7

Under the UCC, a contract for a sale of goods that includes open terms is void.

Question 8

The UCC governs sales of services.

Question 9

A lessee is a party who transfers a right to the possession and use of goods under a lease.

Question 10

A lessor is a party who acquires a right to the possession and use of goods under a lease.

Question 11

The UCC does not impose different standards on merchants than it im?poses on consumers.

Question 12

Article 2 of the UCC governs contracts for sales of goods.

Question 13

A contract for the sale of minerals is considered to be a contract for the sale of goods if the severance is to be made by the buyer.

Question 14

Under the UCC, the validity of a contract depends on its price term.

Question 15

A consumer lease is excepted from coverage under the UCC.

Question 16

Under the UCC, a sale occurs when title passes from a seller to a buyer for a price.

Question 17

A sale of a fixture is always considered a sale of realty.

Question 18

A consumer lease is subject to Article 11 of the CISG.

Question 19

Article 2A of the UCC covers sub?leases of goods.

Question 20

Under the UCC, a sale of goods will be considered valid only if the goods are paid for with money.

Question 21

An unconscionable contract is a contract so one-sided and unfair at the time it is made that enforcing it would be unreasonable.

Question 22

The rules governing firm offers apply to certain merchants only.

Question 23

All oral contracts are enforceable under the UCC.

Question 24

Under the UCC, a contract for a sale of goods that does not include the quantity is a requirements contract.

Question 25

If a contract for a sale of goods does not include the delivery date, there is no basis for enforcing it.

Question 26

If a contract for a sale of goods omits a price term, a reasonable price for the goods can be determined by looking at the market for them.

Question 27

No oral contract is enforceable under the UCC.

Question 28

A court can refuse to enforce a contract that the court deems to have been unconscionable at the time it was made.

Question 29

Under the UCC, an oral contract for a sale of goods is enforceable unless payment has been made and accepted.

Question 30

When an offer does not specify a means of acceptance, it can be accepted by any means reasonable under the circumstances.

Question 31

Under the UCC, an agreement modifying a contract "needs new consid?eration to be binding."

Question 32

Under the UCC, an agreement modifying a contract needs no considera?tion to be binding.

Question 33

Under the UCC, an offer to buy goods can be accepted only by a prompt shipment of the goods.

Question 34

A contract between parties residing in different countries is subject to Article 2A of the UCC.

Question 35

The UCC imposes a good faith limitation on output contracts.

Question 36

Under the mirror image rule, an offer must be accepted in its entirety without modi?fication or reservation or else no contract can be formed.

Question 37

If a nonmerchant's offer expressly conditions acceptance on a nonmer?chant's agreement to the terms of the offer, a positive response may con?sti?tute an acceptance even if it contains additional terms.

Question 38

Two parties' prior dealing may be considered to resolve an ambiguity in a contract between them.

Question 39

If a sales contract is unilateral, the offeror need not be notified of the of?feree's performance.

Question 40

A contract between parties residing in different countries is subject to United Nations Convention on Contracts for the International Sale of Goods.

Question 41

Standard Office Corporation pays Tech Products $1,000 to use a Tech com?puter for a month. For purposes of the UCC, this is

A) a bailment.
B) a consignment.
C) a lease.
D) a sale.

Question 42

Cleo sells kitchen appliances, and occasionally cleaning supplies, to per?sons who come into her store, Discount Appliances. One afternoon, Cleo sells a used display shelf to Earl. Under the UCC, Cleo is a merchant of

A) cleaning supplies and kitchen appliances only.
B) cleaning supplies, display shelves, and kitchen appliances.
C) cleaning supplies only.
D) kitchen appliances only.

Question 43

Variety Goods, Inc., and World Sales Corporation enter into a contract that does not specify the payment terms. Payment may be made in

A) any commercially acceptable means except cash.
B) cash only.
C) cash or any commercially acceptable substitute.
D) cash or check only.

Question 44

NuTech Company agrees to sell computer equipment to Office Stores, Inc. (OSI) for OSI to market to its customers. Their contract will not be en?forceable unless it includes

A) the duration of the deal.
B) the price of the goods.
C) the quantity of the goods.
D) the requirements of OSI's customers.

Question 45

Cathy and Dave sign a contract for a sale of goods. Cathy is to set the price for the goods at the time of delivery, but on delivery, refuses to do so. Dave may only

A) fix a reasonable price.
B) fix a reasonable price or treat the contract as canceled.
C) treat the contract as canceled.
D) wait for Cathy to set the price.

Question 46

In a dispute over a sale involving a bicycle, Dain argues that as to this deal Elle's Hobby Shop, where Dain bought the bike, is a merchant. A court may determine whether Elle's is a merchant by assessing whether

A) it has sold any bikes within the last year.
B) it holds itself out by occupation as having knowledge or skill unique to the bike in the transaction.
C) its owner enjoys biking.
D) it subscribes to Bike, a biweekly trade magazine.

Question 47

American Products Company and Best Manufacturing, Inc. (BMI), enter into a contract for the sale of a certain quantity of machine parts, with BMI to determine the price. The price must be fixed according to the con?cept of

A) good faith.
B) square dealing.
C) the mere image rule.
D) unconscionability.

Question 48

Omni Corporation is a Pennsylvania-based firm that does business throughout the United States. With respect to this circumstance, the UCC has been adopted by, and applies in,

A) a few of the states.
B) all of the states, in whole or in part.
C) half of the states.
D) none of the states, to date.

Question 49

Over the course of a year, Retail Marketers, Inc., sells goods from its inventory and one of its warehouses. In exchange, Retail receives checks and other items that substitute for cash, which Retail uses to repay a loan from Savings Bank. Article 2 of the UCC governs

A) the checks.
B) the payment of the loan.
C) the sale of the buildings.
D) the sale of the goods.

Question 50

High n' Mighty Mart, Inc., is an Illinois-based firm that does business throughout the United States. With respect to this circumstance, the UCC has been adopted by, and applies in,

A) all of the states, in whole or in part.
B) most of the states on the Atlantic and Pacific coasts.
C) none of the states, to date.
D) only the states on the Mississippi, Missouri, and Ohio Rivers.

Question 51

Excel Autos & Trucks, Inc., contracts to sell five trucks to First Leasing Corporation, which contracts to lease the trucks to General Delivery Company. Article 2A of the UCC applies to

A) neither the lease nor the sale.
B) the lease and the sale.
C) the lease only.
D) the sale only.

Question 52

Over the course of a year, Real Deal Corporation sells appliances to customers to whom it extends credit. Real Deal orders the appliances from Superior Appliance Company's warehouse, from which the items are shipped via common carrier to Real Deal's customers. Article 2 of the UCC governs

A) all of the parties' sales of the goods.
B) Real Deal's extension of credit.
C) Superior's storage of the goods.
D) the common carrier's delivery of the goods.

Question 53

Stardust Coffee Company is a Texas-based firm that does business throughout the world. Stardust manages retail and wholesale operations, buys and sells commercial venues, undeveloped land, and coffee beans, and other goods. Stardust has had to deal with employee and customer theft. With respect to these circumstances, the Uniform Commercial Code (UCC) provides a framework for

A) commercial transactions for the sale of and payment for goods.
B) international distribution agreements.
C) domestic and foreign transactions in real estate.
D) prosecuting crimes against business interests.

Question 54

Bild-Rite, Inc., is a Colorado-based firm that does business with clients throughout North America. Bild-Rite oversees construction projects, and buys and sells commercial buildings, undeveloped land, and construction supplies and other goods. Bild-Rite has had to deal with work-site theft and vandalism. With respect to these circumstances, the Uniform Commercial Code (UCC) provides a framework for

A) commercial transactions for the sale of and payment for goods.
B) international construction contracts.
C) domestic and foreign transactions in real estate.
D) prosecuting crimes against business interests.

Question 55

Rikki and Sid enter into a sales contract. With respect to the specific contractual provisions set out in the UCC, Rikki and Sid may

A) agree to different terms only to a reasonable extent.
B) agree to different terms unless they "get caught."
C) agree to whatever terms they wish.
D) not agree to different terms.

Question 56

Nemo pays Office Supply Company $1,500 for a laptop com?puter. Under the UCC, this is

A) a gift.
B) a lease.
C) a sale.
D) not a gift, a lease, or a sale.

Question 57

Expert Stitching Corporation enters into a contract to sell denim clothing to Fine Fashion Company, which in turn sells a pair of jeans to Grady, a consumer. In contrast to standards that apply to consumers, the UCC imposes on merchants

A) less strict legal standards.
B) special business standards.
C) stricter ethical standards.
D) the same overall standards.

Question 58

Curtis enters into a contract with Drive-Away Lease Company for a three-year lease of a car. This contract is subject to

A) Article 2 of UCC.
B) Article 2A of the UCC.
C) Article 11 of the CISG.
D) the common law only.

Question 59

Metro Daily and New City Newsstand enter into a contract under which Metro agrees to deliver a certain quantity of newspapers to New City each day. The contract does not include a price term. In a suit between the par?ties over the price, a court will

A) determine a reasonable price.
B) impose the lowest market price.
C) refuse to enforce the agreement.
D) return the parties to the positions they held before the contract.

Question 60

Rally Corporation enters into a contract to sell ski gear to SnoSportz Company, which sells a pair of the skis to Tyra, a consumer, who later sells them to Uli, another consumer. Article 2 of the UCC applies to the sales transactions between

A) all of the buyers and sellers.
B) Rally and SnoSportz only.
C) SnoSportz and Tyra only.
D) Tyra and Uli only.

Question 61

Contractors Construction Corporation offers to buy from Dandy Cement Company a certain quantity of cement for a certain price. Dandy can ac?cept the offer by

A) doing nothing.
B) promising to ship or promptly shipping the cement.
C) promising to ship the cement only.
D) promptly shipping the cement only.

Question 62

Rite Clothiers, Inc., sells t-shirts to Brand Name Stores, Inc., under an existing con?tract. When textile costs increase, Brand agrees to a price increase, but later wants to cancel the con?tract. Brand may

A) cancel the contract immediately.
B) cancel the contract only after accepting a final shipment.
C) cancel the contract only on reasonable notice.
D) not cancel the contract.

Question 63

Tasty Pastries, Inc., and other bakers refer to a "baker's dozen" as con?sisting of a collection of thirteen baked goods. This is an example of

A) course of dealing.
B) course of performance.
C) square dealing.
D) usage of trade.

Question 64

Kelly offers to buy cooking oil from Jim. Jim believes Kelly asks for 10,000 gallons and orally agrees to the sale. When the parties later dispute the deal in court, Jim's claim of 10,000 gallons and Kelly's testimony that she ordered only 1,000 gallons

A) prevents the enforcement of any contract between these parties.
B) supports an enforceable contract for 10,000 gallons.
C) supports an enforceable contract for 5,500 gallons.
D) supports an enforceable contract for 1,000 gallons.

Question 65

Rodeo, S.A., which is based in Spain, enters into a contract for the sale of seven hydraulic lifts to Tonnage Shipping Company, which is based in the United States. This contract is governed by

A) Spanish law.
B) the provisions in the laws of both countries that are similar.
C) the UCC.
D) the United Nations Convention on Contracts for the International Sale of Goods.

Question 66

Desktop Company offers to sell eRetail, Inc., 1,000 computers for a $500,000, states that the offer will be open for six days, and asks for a response by fax. On the fourth day, eRetail sends an acceptance to Desktop via the mail, which is received on the sixth day. In this deal

A) a contract is formed.
B) no contract is formed, because Desktop asked for a response by fax.
C) no contract is formed, because Desktop received the acceptance late.
D) no contract is formed, because eRetail sent the acceptance late.

Question 67

Quinn enters into a series of agreements with Reba involving a sale of a Suite Dreams Motel, including the land, building, furnishings, shares of stock in Suite Dreams Company, and a contract with Trudy to create an ad campaign. Reba suspects that Quinn may be misrepresenting the facts. The UCC Statute of Frauds governs the sale of

A) any of the property evidenced by a writing.
B) any of the property that may involve fraud.
C) the furnishings priced at $500 or more.
D) the land and the building.

Question 68

Timber Products, Inc., and Walt, a consumer, enter into a contract for a sale of plywood. If the contract includes a clause that is perceived as grossly unfair to Walt, its enforcement may be challenged under the doc?trine of

A) good faith.
B) square dealing.
C) the mere image rule.
D) unconscionability.

Question 69

In Case 20.3, Jones v. Star Credit Corp., which of the following factors was not considered by the court when it declared a contract for the pur?chase of a freezer unconscionable

A) The price the plaintiffs were charged was more than four times the freezer's retail value.
B) The credit charges alone exceeded the freezer's retail value.
C) The seller knew of the buyers' limited resources.
D) The freezer was not merchantable.

Question 70

United Farms offers to sell Valu Bakeries, Inc., fifty bushels of wheat. Valu's representative Wendy responds, "We agree to buy fifty bushels only if the wheat is Grade A quality." Wendy's statement is

A) a breach of the parties' contract.
B) a counteroffer.
C) a fulfillment of the parties' contract.
D) an acceptance.

Question 71

Equipment Rental Corporation and Family Farm, Inc., are parties to an oral agreement for a lease of goods with payments in excess of $10,000. They may satisfy the Statute of Frauds by

A) mutually agreeing not to commit fraud.
B) restating the terms in a phone call.
C) setting out the terms in an e-mail.
D) shaking hands on the deal.

Question 72

Overseas Corporation (OC), a U.S. firm, orally agrees to sell six freezers to Pisa Pizza, Ltd., in Italy. OC fails to deliver. Under the CISG, Pisa Pizza can

A) enforce the agreement.
B) not enforce the agreement because it is not in writing.
C) not enforce the agreement because the price term is not specified.
D) not enforce the agreement because there is no consideration.

Question 73

Gail enters into a contract with Hi-Price Appliances, Inc. In a suit be?tween the parties over payment under the contract, Gail claims that a certain clause is unconscionable. If the court agrees, it may

A) enforce, limit, or refuse to enforce the contract or the disputed clause.
B) enforce the contract without the disputed clause only.
C) limit the application of the disputed clause only.
D) refuse to enforce the entire contract only.

Question 74

Retail Music, Inc., offers to buy from Super Products Corporation (SPC) 1,000 blank CDs of a certain brand. Without notifying Retail, SPC timely ships CDs of a different brand. This shipment is

A) an acceptance of the offer and a breach of the parties' contract.
B) an acceptance of the offer and a fulfillment of the parties' contract.
C) a refusal of the offer and a breach of the parties' contract.
D) a refusal of the offer and a fulfillment of the parties' contract.

Question 75

Regional Products, Inc., agrees to sell to Quantity Dealers Corporation a certain amount of goods but no mention is made of where the goods are to be delivered. In general, the UCC requires that the delivery take place at

A) a neutral place of business halfway between the parties' locations.
B) a UCC-designated warehouse.
C) Regional's place of business.
D) Quantity's place of business.

Question 76

Roy's Chick'n Shack orders chicken from Standard Food Supplier, but Standard does not deliver. Roy's will probably be unable to enforce the agreement if the parties

A) did not limit the duration of the deal.
B) did not specify a payment term.
C) did not specify a quantity term.
D) have not begun to perform.

Question 77

Fruits & Vegetables, Inc., and Great Grocery Stores dispute the interpretation of an ambiguous phrase in their contract. In a suit between the parties to con?strue the contract, a court may accept evidence of

A) consistent additional terms only.
B) consistent additional terms and contradictory terms only.
C) contradictory terms only.
D) anything extrinsic to the contract.

Question 78

Best Sales, Inc., is the offeror and City Goods Corporation is the offeree under a unilateral sales contract in which Delta Products Company is also interested. Best is not notified of City's performance within a rea?son?able time. Best

A) may treat the offer as having lapsed.
B) must assume that City has started to perform.
C) must contact City.
D) must contract with Delta.

Question 79

Doctors Medical Clinic orders 1,000 bandages from Emergency Supplies Company but fails to specify the sizes. The bandages are delivered in an assortment of sizes. Doctors Medical Clinic may

A) accept the bandages "as is" only.
B) accept the bandages "as is" or reject the entire shipment only.
C) accept only the bandages that it wants and reject the rest.
D) reject the entire shipment only.

Question 80

Recreation Supplies, Inc. (RSI), and Sam, the owner of a Tourist Time shop, orally agree to a sale of beach balls and seashells for $1,000. Sam gives RSI a check for $400 as a partial payment. This contract is

A) enforceable to the extent of $400.
B) fully enforceable because it is for specially made goods.
C) fully enforceable because it is oral.
D) not enforceable.