Question 1

Article 5 of the UCC governs ________.

Accepted Answer

Article 5 of the Uniform Commercial Code (UCC) governs letters of credit.

Question 2

________ is a rule that says that if a written contract is a complete and final statement of the parties' agreement, any prior or contemporaneous oral or written statements that alter, contradict, or are in addition to the terms of the written contract are inadmissible in court regarding a dispute over the contract.

Accepted Answer

The parol evidence rule is a legal principle that prohibits the use of extrinsic evidence (e.g. prior oral or written statements) to contradict, alter, or add to the terms of a fully integrated written agreement. The purpose of this rule is to promote certainty and prevent parties from using ambiguous or incomplete agreements to exploit each other.

Question 3

What are the provisions for contracts with services under Article 2 of the UCC?

Accepted Answer

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Question 4

Which of the following is true for terms to be expressed in a contract under the common law of contract?

Accepted Answer

Under the common law of contract, a contract must contain all the material terms of the parties' agreement. This means that all important details and obligations must be explicitly defined within the contract for it to be enforceable. Additional terms cannot be added during acceptance, and gap-filling rules are generally not permitted. Additionally, consideration is required for any additional terms added to a contract.

Question 5

Which of the following is an example of an irrevocable offer?

Accepted Answer

An option contract is an example of an irrevocable offer because it involves an agreement where the offeror cannot revoke the offer for a certain period in exchange for consideration, ensuring the offeree can decide within that time frame without the fear of the offer being withdrawn.

Question 6

Miranda Airways, a commercial air carrier, has a contract with Wurtherton Inc., an airplane manufacturer, to purchase a new plane.Due to a sudden shortage of cash, Miranda Airways goes to MetrosBank.MetrosBank issues a document to Wurtherton that if Miranda does not pay for the transaction, MetrosBank would.Wurtherton considers the offer, and then sends an acceptance with additional terms.The additional terms stipulates that Miranda Airways could have the new airplane for a period of 10 years, and then return it to Wurtherton.Miranda Airways agrees to the acceptance, and Wurtherton hands the new airplane over to them.
-What is the nature of the contract between Miranda Airways and Wurtherton?

Accepted Answer

The additional terms of the contract stipulate that Miranda Airways could have the new airplane for a period of 10 years, and then return it to Wurtherton. This indicates that the nature of the contract is a lease, rather than a sale of goods. Choice A is incorrect because there is a specific clause for returning the goods after a set period of time. Choice C is incorrect because there was no new offer made, only a change to the terms of the original offer. Choice D is incorrect because there is no mention of an option to buy or sell in the contract.

Question 7

Miranda Airways, a commercial air carrier, has a contract with Wurtherton Inc., an airplane manufacturer, to purchase a new plane.Due to a sudden shortage of cash, Miranda Airways goes to MetrosBank.MetrosBank issues a document to Wurtherton that if Miranda does not pay for the transaction, MetrosBank would.Wurtherton considers the offer, and then sends an acceptance with additional terms.The additional terms stipulates that Miranda Airways could have the new airplane for a period of 10 years, and then return it to Wurtherton.Miranda Airways agrees to the acceptance, and Wurtherton hands the new airplane over to them.
-Which of the following documents did MetrosBank issue to Wurtherton to help Miranda Airways secure the airplane?

Accepted Answer

The document issued by MetrosBank is a letter of credit, which guarantees payment to Wurtherton in case Miranda Airways cannot pay. It is a commonly used tool in international trade transactions. The other options (a bill of exchange, a proforma invoice, and a remittance advice) are not relevant to this scenario.

Question 8

Miranda Airways, a commercial air carrier, has a contract with Wurtherton Inc., an airplane manufacturer, to purchase a new plane.Due to a sudden shortage of cash, Miranda Airways goes to MetrosBank.MetrosBank issues a document to Wurtherton that if Miranda does not pay for the transaction, MetrosBank would.Wurtherton considers the offer, and then sends an acceptance with additional terms.The additional terms stipulates that Miranda Airways could have the new airplane for a period of 10 years, and then return it to Wurtherton.Miranda Airways agrees to the acceptance, and Wurtherton hands the new airplane over to them.
-What UCC rule was applied when Miranda Airways agreed to the additional terms acceptance provided by Wurtherton?

Accepted Answer

The additional terms provided by Wurtherton in their acceptance created a situation known as the battle of the forms. Both parties had conflicting terms in their initial agreements, and Wurtherton's acceptance included additional terms. Under the UCC's battle of the forms rule, these conflicting terms are considered to be proposals for additional terms and are only included in the final contract if both parties agreed to them. Therefore, the additional 10-year return term was included in the final agreement between Miranda Airways and Wurtherton.

Question 9

Stelwire LLC, a vintage car dealer, advertises the sale of a 1964 Ford Thunderbolt.Ralph responds to the advertisement with an offer of $80, 000 for the car.Stelwire signs a written assurance to keep that offer open to Ralph for a fortnight.Five days before the fortnight is up, Stelwire sells the car to another buyer.At the end of the fortnight period, Ralph tenders $80, 000 for the car, but the car has already been sold.Ralph then buys the same model car from another dealer for $90, 000 and sues Stelwire for breach of contract.The court rules that Stelwire is liable to Ralph for breach of contract, and orders Stelwire to pay Ralph the difference of $10, 000 he paid extra to the second dealer for the car.
-What was the nature of the contract between Ralph and Stelwire?

Accepted Answer

The answer of Stelwire LLC, a vintage car dealer, advertises...

Question 10

A computer program or an electronic or other automated means used independently to initiate an action or respond to electronic records or performances in whole or in part, without review or action by an individual, is known as ________.

Accepted Answer

The definition given in the question matches the definition of an electronic agent, which is a software program or other automated means that acts on behalf of a user or another program. Options B, C, and D are not accurate descriptions of the given definition.

Question 11

A ________ is a document that is issued by a bank on behalf of a buyer who purchases goods on credit from a seller that guarantees that if the buyer does not pay for the goods, then the bank will pay the seller.

Accepted Answer

This type of document is known as a letter of credit. A remittance advice is a document sent by a buyer to a seller indicating that a payment has been made, while a certified check and cashier's check are types of payment methods, but do not involve credit guarantees.

Question 12

When is the parol rule evidence used in contracts?

Accepted Answer

The parol rule evidence is used when the party against whom enforcement of an oral contract is sought has not admitted in pleadings of such a contract. This means that if one party denies the existence of an oral contract, the other party may use parol evidence to prove the contract's existence.

Question 13

Explain the 'open delivery' term.

Accepted Answer

The answer of Explain the 'open delivery' term....

Question 14

When is the course of performance considered in a written contract?

Accepted Answer

The course of performance is considered when the express terms of a written contract are not clear. The course of performance refers to how the parties have performed under the contract over time and can be used as evidence of the parties' intent when interpreting the contract. If the written terms of the contract are unclear, the course of performance can help clarify the parties' intent.

Question 15

What is "course of dealing" when interpreting the express terms of a written statement?

Accepted Answer

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Question 16

Which of the following acceptances is allowed for an offer under common law?

Accepted Answer

Under common law, the mirror image rule applies, which means that the acceptance must mirror the terms of the offer. Any deviation from the offer would be considered a counteroffer, which would terminate the original offer. Therefore, the mirror image rule acceptance is the only one that is allowed under common law.

Question 17

In which of the following situations involving oral contracts can the Statute of Frauds be raised?

Accepted Answer

The Statute of Frauds can be raised in situations where a contract that requires written confirmation has been agreed upon orally. All other options listed are exceptions to the requirement of written evidence under the Statute of Frauds.

Question 18

In which of the following can the Statute of Frauds be raised under common law of contract?

Accepted Answer

The Statute of Frauds requires certain contracts to be in writing and signed by the party against whom enforcement is sought to be enforceable.

Question 19

How does the UCC define the term 'merchant'?

Accepted Answer

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Question 20

Stelwire LLC, a vintage car dealer, advertises the sale of a 1964 Ford Thunderbolt.Ralph responds to the advertisement with an offer of $80, 000 for the car.Stelwire signs a written assurance to keep that offer open to Ralph for a fortnight.Five days before the fortnight is up, Stelwire sells the car to another buyer.At the end of the fortnight period, Ralph tenders $80, 000 for the car, but the car has already been sold.Ralph then buys the same model car from another dealer for $90, 000 and sues Stelwire for breach of contract.The court rules that Stelwire is liable to Ralph for breach of contract, and orders Stelwire to pay Ralph the difference of $10, 000 he paid extra to the second dealer for the car.
-Which of the following rules governs the execution of this contract?

Accepted Answer

The firm offer rule governs the execution of this contract. Stelwire made a written assurance to keep the offer open to Ralph for a specific period of time, creating a firm offer. By selling the car to another buyer before the expiration of the stipulated time period, Stelwire breached the firm offer agreement and is liable for damages incurred by Ralph as a result of the breach of contract.

Quiz 18: Formation of Sales and Lease Contracts