Question 1

Josefina owns a condominium that she leases to Katrina. Josefina gives her daughter Lucia $450 on her sixteenth birthday. Josefina sells her car to her neighbor Maria for $1,500. UCC Article 2 covers
A)the lease with Katrina.
B)the gift to Lucia.
C)the sale to Maria.
D)all of the choices.

Accepted Answer

UCC Article 2 covers the sale between Josefina and Maria, as it pertains to the sale of goods. The lease with Katrina and the gift to Lucia are not covered under UCC Article 2.

Question 2

Under the United Nations Convention on Contracts for the International Sale of Goods, an international sales contract does not need to be evidenced by a writing or to be in any particular form.

Accepted Answer

According to Article 11 of the United Nations Convention on Contracts for the International Sale of Goods, a contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirement under the Convention as to form.

Question 3

A seller with voidable title has the power to transfer good title to a good faith purchaser for value.

Accepted Answer

This is a principle of the law of sales known as the "voidable title doctrine." If a seller has voidable title (meaning they obtained the goods through fraud, duress, undue influence, or mistake), they still have the power to transfer good title to a buyer who purchases the goods in good faith and for value. The rationale is that the innocent buyer should not suffer for the seller's wrongdoing.

Question 4

When a merchant keeps the goods for the buyer to pick up, the risk of loss passes when the buyer actually takes possession of the goods.

Accepted Answer

The risk of loss passes from the merchant to the buyer when the buyer takes possession of the goods, whether it is immediate or at a later time.

Question 5

When the risk of loss for goods passes from a seller to a buyer is generally determined by the contract between the parties.

Accepted Answer

The point of transfer of risk from seller to buyer is usually determined by the terms of the contract agreed upon by the parties. This could be the time of delivery or the point where the goods are loaded onto a particular transport mode.

Question 6

Bert sells his car to Conrad for $5,000 and his bike to Del for $600. Bert sells his vinyl collection to Elena for $1,000 and his stock in Altogether Now, Inc.—a firm that markets an app for organizing digital music files—to Franz for $4,000. UCC Article 2 covers all of these transactions except the sale of
A)the car.
B)the bike.
C)the vinyl.
D)the stock.

Accepted Answer

The answer of Bert sells his car to Conrad for...

Question 7

In a destination contract, the seller is required or authorized to ship goods by carrier.
​

Accepted Answer

The answer of In a destination contract, the seller is...

Question 8

In contracts involving a sale of unborn animals to be born within twelve months, identification takes place when the animals are conceived.

Accepted Answer

According to the Uniform Commercial Code (UCC), in contracts for the sale of unborn animals to be born within twelve months, identification of the animals takes place at the time of conception. This means that the seller takes the risk of loss if the animals do not survive until birth.

Question 9

Under the United Nations Convention on Contracts for the International Sale of Goods, there are no irrevocable offers.

Accepted Answer

Under the United Nations Convention on Contracts for the International Sale of Goods, there are irrevocable offers under certain circumstances such as when the offeror has promised to keep the offer open for a specified period of time or when the offeree has relied on the offer and started to perform the contract.

Question 10

If a sale involves crops that are to be harvested within twelve months, identification takes place when the crops are harvested.

Accepted Answer

According to International Financial Reporting Standards (IFRS), for crops that are expected to be harvested within twelve months, identification occurs at the point of harvest.

Question 11

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.

Accepted Answer

The UCC imposes on merchants special business standards that are higher and more stringent than those that apply to consumers. These standards include the implied warranty of merchantability and the implied warranty of fitness for a particular purpose. Merchants are expected to have specialized knowledge and expertise in their particular industry, which results in a higher standard of responsibility and accountability.

Question 12

When a buyer breaches a contract, the risk of loss immediately shifts to the buyer.

Accepted Answer

This is known as the Doctrine of Risk of Loss. When a buyer breaches a contract, they are responsible for any losses that occur, which includes the risk of loss shifting to them immediately.

Question 13

Any explicit understanding between the buyer and the seller determines when title passes.

Accepted Answer

The passing of the title is determined by the agreement between the buyer and the seller, which can be explicit or implied.

Question 14

Both the buyer and the seller can have an insurable interest in identical goods at the same time.

Accepted Answer

It is possible for both the buyer and the seller to have an insurable interest in identical goods at the same time. For example, the seller may have an insurable interest until the goods are delivered to the buyer, and the buyer may have an insurable interest once they take possession of the goods.

Question 15

The risk of loss in a shipment contract passes to the buyer when the goods are delivered to the buyer at the specified destination.

Accepted Answer

The answer of The risk of loss in a shipment...

Question 16

Lexi pays Mobile Edge Electronics $600 and receives a new phone. Under the UCC, this is
A)a merchant's firm offer.
B)a lease.
C)a sale.
D)a requirements contract.

Accepted Answer

The transaction involves payment for a phone, which constitutes a sale under the UCC. A merchant's firm offer refers to a promise by a merchant to keep an offer open for a specified time, and a lease involves renting an item for a period rather than buying it outright. A requirements contract involves a promise by a buyer to purchase goods as they are needed, rather than committing to a specific purchase at the outset.

Question 17

When goods are held by a bailee, risk of loss cannot pass to a buyer.

Accepted Answer

The risk of loss can pass to the buyer when goods are held by a bailee if the buyer receives a negotiable document of title, the bailee acknowledges the buyer's right to possession, or the buyer receives a non-negotiable document of title and has had a reasonable time to present it to the bailee.

Question 18

If the goods are so nonconforming that the buyer has the right to reject them, the risk of loss does not pass to the buyer.
​

Accepted Answer

This is in accordance with the Uniform Commercial Code (UCC) Section 2-509, which states that if the goods fail in any respect to conform to the contract, the buyer may reject them, and the risk of loss remains with the seller until cure or acceptance.

Question 19

Under the UCC, the risk of loss necessarily passes with title.

Accepted Answer

The UCC allows the parties to determine when the risk of loss passes, and it may not necessarily coincide with the passing of title.

Question 20

Bram buys a bulldozer from Construction Equipment Corporation, which he leases to Earth Movers, Inc. In this situation, the lessee is
A)Bram.
B)Construction Equipment Corporation.
C)Earth Movers. Inc.
D)none of the choices.

Accepted Answer

The lessee is the party who is leasing the equipment, in this case Earth Movers, Inc. Bram is the lessor, the party who owns the equipment and leases it to someone else. Construction Equipment Corporation is not relevant to the question as they are the party Bram purchased the bulldozer from.

Quiz 17: The Formation of Sales and Lease Contracts

Josefina owns a condominium that she leases to Katrina. Josefina gives her daughter Lucia $450 on her sixteenth birthday. Josefina sells her car to her neighbor Maria for $1,500. UCC Article 2 covers

Under the United Nations Convention on Contracts for the International Sale of Goods, an international sales contract does not need to be evidenced by a writing or to be in any particular form.

A seller with voidable title has the power to transfer good title to a good faith purchaser for value.

When a merchant keeps the goods for the buyer to pick up, the risk of loss passes when the buyer actually takes possession of the goods.

When the risk of loss for goods passes from a seller to a buyer is generally determined by the contract between the parties.

In a destination contract, the seller is required or authorized to ship goods by carrier. ​

In contracts involving a sale of unborn animals to be born within twelve months, identification takes place when the animals are conceived.

Under the United Nations Convention on Contracts for the International Sale of Goods, there are no irrevocable offers.

If a sale involves crops that are to be harvested within twelve months, identification takes place when the crops are harvested.

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​

When a buyer breaches a contract, the risk of loss immediately shifts to the buyer.

Any explicit understanding between the buyer and the seller determines when title passes.

Both the buyer and the seller can have an insurable interest in identical goods at the same time.

The risk of loss in a shipment contract passes to the buyer when the goods are delivered to the buyer at the specified destination.

Lexi pays Mobile Edge Electronics $600 and receives a new phone. Under the UCC, this is

When goods are held by a bailee, risk of loss cannot pass to a buyer.

If the goods are so nonconforming that the buyer has the right to reject them, the risk of loss does not pass to the buyer. ​

Under the UCC, the risk of loss necessarily passes with title.

Bram buys a bulldozer from Construction Equipment Corporation, which he leases to Earth Movers, Inc. In this situation, the lessee is

In a destination contract, the seller is required or authorized to ship goods by carrier.

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

If the goods are so nonconforming that the buyer has the right to reject them, the risk of loss does not pass to the buyer.