Question 1

Rice River Farms offers to sell Sensei Sushi Restaurants, Inc., five hundred bushels of rice. Sensei responds, "We agree to buy five hundred bushels only if the rice is Grade A quality." This statement is

Accepted Answer

Sensei's response is a counteroffer because it signals a willingness to buy the rice, but with a condition (Grade A quality). It does not constitute an acceptance of Rice River Farms' original offer, nor does it breach any terms.

Question 2

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

Accepted Answer

According to the Uniform Commercial Code (UCC), a merchant is defined as a person who deals in goods of the kind or has knowledge or skill unique to the practices or goods involved in the transaction. Option B corresponds to this definition, as it describes a situation where the seller holds themselves out by occupation as having knowledge or skill unique to the bike involved in the transaction. The other options are not relevant to determining whether Ed's Hobby Shop is a merchant for the purposes of this bike sale.

Question 3

Car n' Truck Body & Paint Company orders custom paint from Diverse Hues Inc., but Diverse does not deliver. Car n' Truck will probably be unable to enforce the agreement if the parties omitted

Accepted Answer

Under the Uniform Commercial Code (UCC), a contract for the sale of goods can be valid even if it leaves some terms open. However, the contract must specify the quantity of goods to be sold to be enforceable. Without a quantity term, it's impossible to determine the scope of the agreement, making enforcement difficult. Price, delivery date, and shipping arrangements can be determined based on reasonable terms or industry standards if not explicitly mentioned, but the quantity cannot be assumed or implied.

Question 4

Sara and Tim enter into a contract for a sale of orchids. With respect to the specific contractual provisions set out in the UCC, these parties may

Accepted Answer

The Uniform Commercial Code (UCC) allows parties to a contract for the sale of goods to agree to the terms of their contract freely. This flexibility is designed to accommodate the vast array of needs and expectations in commercial transactions.

Question 5

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

Accepted Answer

Gelato may treat the offer as having lapsed since Fresh Dairy did not notify them within a reasonable time.

Question 6

Manufacturing Corporation orders twelve safety videos from Productions, Inc., which delivers the videos. This is most likely

Accepted Answer

This is a sale of goods, as Manufacturing Corporation is purchasing twelve safety videos from Productions, Inc.

Question 7

Refined Metals Company and Superior Fabrication, Inc., enter into a contract under which Refined agrees to deliver a certain quantity of sheet metal to Superior each month. The contract does not include a price term. In a suit between the parties over the price, a court will

Accepted Answer

Because the contract does not include a price term, the court will determine a reasonable price based on factors such as industry standards, previous dealings between the parties, and other relevant market factors. This is known as a "reasonable price" or "reasonable value" standard.

Question 8

Downtown Contractors LLC and Equipment Rental Corporation are parties to an oral agreement for a one-year lease of a crane with payments totaling more than $10,000. They may satisfy the Statute of Frauds by

Accepted Answer

The best way to satisfy the Statute of Frauds in this scenario is to set out the terms in a memo. Since the agreement is for a lease of more than a year with payments totaling more than $10,000, it falls under the Statute of Frauds and must be in writing. A memo or written agreement signed by both parties would satisfy this requirement. Mutually agreeing not to commit fraud, repeating the terms in a phone call, and shaking hands on the deal do not constitute a written agreement and therefore would not satisfy the Statute of Frauds.

Question 9

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 the purchase order automatically become part of the contract unless

Accepted Answer

Under the Uniform Commercial Code (UCC), when both parties are merchants, additional terms in the acceptance or confirmation become part of the contract unless the offer expressly limits acceptance to the terms of the offer, the new terms materially alter the contract, or notification of objection to the new terms has already been given or is given within a reasonable time.

Question 10

Marine Expeditions, Inc., pays Nate's Boats $4,000 to use an oceangoing vessel for a month. For the purposes of the UCC, this is

Accepted Answer

The payment made by Marine Expeditions, Inc. to Nate's Boats is for the use of the vessel, which falls under the definition of a lease according to the UCC. Therefore, option A (merchant's firm offer) and option D (sale) are not appropriate choices for this scenario. Option B (option contract) is also not appropriate because there is no mention of any option to buy the vessel at the end of the month.

Question 11

Dian, an agent for Expo Motors, Inc., writes a letter to Flynn on November 1 stating that she will sell him a 2017 Subaru Outback for $25,000 between November 1 and December 31. Dian's letter to Flynn is

Accepted Answer

Dian's letter to Flynn is a merchant's firm offer because it is a definite offer made by a merchant in the business of selling cars, and it includes a specific time period for acceptance.

Question 12

Ferris is refinishing his kitchen floor and needs a floor sander to complete the job. Ferris's neighbor Gena suggests that he call Home Repair Rentals, Inc. Home Repair leases Ferris a floor sander. In this transaction, the lessor is

Accepted Answer

The lessor, or the person leasing the floor sander, is Home Repair Rentals, Inc.

Question 13

Great Harvest Farms offers to sell Hearty Bakeries, Inc., fifty bushels of wheat. Hearty's representative Ilene responds, "We agree to buy fifty bushels only if the wheat is Grade A quality." Between Great Harvest and Hearty Bakeries

Accepted Answer

Ilene's statement is not an acceptance as it contains a condition (Grade A quality) that modifies the original offer made by Great Harvest Farms. This means that Ilene's response is a counteroffer and not an acceptance.

Question 14

Curt enters into a contract with Drivers Lease Company for a three-year lease of a car. This contract is subject to

Accepted Answer

Article 2A of the Uniform Commercial Code (UCC) deals with leasing transactions of personal property, including vehicles. Therefore, the contract between Curt and Drivers Lease Company for a car lease is subject to Article 2A of the UCC.

Question 15

Medico Inc. enters into a contract to sell medical supplies to New Hospital Corporation, which sells some of the items to Physicians Clinic, which later sells them to Oscar, a patient and consumer. Article 2 of the UCC applies to the sales transactions between

Accepted Answer

Article 2 of the Uniform Commercial Code (UCC) applies to transactions in goods. Since all the entities mentioned (Medico Inc., New Hospital Corporation, Physicians Clinic, and Oscar) are involved in transactions that concern the sale of goods (medical supplies), Article 2 applies to all buyers and sellers in this scenario.

Question 16

Stitches Corporation enters into a contract to sell denim clothing to Trend Fashion Company, which in turn sells the clothing to consumers. In contrast to standards that apply to consumers, the UCC imposes on merchants

Accepted Answer

The UCC imposes special business standards on merchants, which reflect the fact that they engage in commercial activity on a regular basis and are typically more knowledgeable and experienced than consumers. These standards include the duty of good faith, the obligation to meet reasonable commercial standards, and the requirement to act ethically and honestly in all transactions. Therefore, merchants are held to higher standards of conduct than consumers under UCC law.

Question 17

Refined Grains, Inc., agrees to sell to Sunny Cereal Company a certain quantity of refined oats each week but no mention is made of where the goods are to be delivered. In general, the UCC requires that the delivery take place at

Accepted Answer

Under the Uniform Commercial Code (UCC), when a contract for the sale of goods does not specify a place of delivery, the default location is the seller's place of business.

Question 18

Brad buys a bulldozer from Construction Equipment Corporation, which he leases to Deep Digg, Inc. In this situation, the lessee is

Accepted Answer

The lessee is the person or company that is leasing or renting the equipment, in this case, Deep Digg, Inc. Therefore, the correct answer is C. Brad is the lessor, as he owns the bulldozer and leases it to Deep Digg, Inc. Construction Equipment Corporation is not involved in the leasing agreement between Brad and Deep Digg, Inc.

Question 19

Clean Mouth Clinic offers to buy from Dental Supplies Company a certain quantity of floss and other items for a certain price. Dental can accept the offer by

Accepted Answer

According to the UCC, a seller can accept an offer by either promising to ship the goods or making a prompt shipment of the goods. Option A is incorrect as material alteration of terms would be considered a counteroffer, not an acceptance. Option C is incorrect as prompt shipment alone is not sufficient to constitute acceptance. Option D is incorrect as shipment of nonconforming goods with a notice of accommodation is a counteroffer, not an acceptance.

Question 20

Talk, Inc., offers to buy from Ultra Corporation 1,000 smartphones. Without notifying Talk, Ultra timely ships phones of a different quality. With respect to the offer and a possible contract, this shipment is an acceptance and

Accepted Answer

The shipment of a different quality of smartphones amounts to an implied acceptance, as it shows that Ultra is willing to enter into a contract on the terms offered by Talk. However, since the shipment does not conform to the offer, it is also a breach of the contract.

Quiz 13: The Formation of Sales and Lease Contracts