Question 1

A sale-on-approval contract occurs when the seller and buyer agree that the buyer may return the goods at a later time.

Accepted Answer

A sale-or-return contract occurs when the seller and buyer agree that the buyer may return the goods at a later time.Such contracts usually occur when the buyer is taking inventory to resell.A contract is a sale-on-approval contract if the seller allows the buyer to take possession of the goods before deciding whether to complete the contract by making the purchase.

Question 2

The Uniform Commercial Code was created in ________.

Accepted Answer

The Uniform Commercial Code (UCC)was created in 1952 and has been adopted in part by all 50 states,the District of Columbia,and the Virgin Islands.

Question 3

Under the Uniform Commercial Code,items are ________ if they exist physically.

Accepted Answer

Section 2-105 of the Uniform Commercial Code defines goods as "all [tangible] things ...which are movable at the time of identification to the contract for sale." Items are tangible if they exist physically.

Question 4

A conditional sales contract is a type of contract that occurs when the purchased goods are in some kind of storage under the control of a third party,such as a warehouseman.

Accepted Answer

A goods-in-bailment contract is a type of contract that occurs when the purchased goods are in some kind of storage under the control of a third party,such as a warehouseman.

Question 5

Which of the following articles of the Uniform Commercial Code governs lease contracts?

Accepted Answer

Article 2(A)of the Uniform Commercial Code governs lease contracts.

Question 6

A contract is a sale-or-return contract if the seller allows the buyer to take possession of the goods before deciding whether to complete the contract by making the purchase.

Accepted Answer

A contract is a sale-on-approval contract if the seller allows the buyer to take possession of the goods before deciding whether to complete the contract by making the purchase.In a sale-or-return contract,title and risk of loss remain with the seller until the buyer notifies the seller about the approval of the contract.

Question 7

According to common law,when a seller transfers goods to a buyer,the buyer gets only voidable title if the buyer is a minor.

Accepted Answer

When a seller transfers goods to a buyer,the buyer normally gets good title.However,according to common law,if the buyer is a minor,he or she only receives voidable title.

Question 8

In a common-carrier delivery contract,the carrier is an agent of the seller.

Accepted Answer

A common carrier is an independent contractor and not an agent of the seller.What makes the common carrier an independent contractor,rather than an agent,is that the carrier controls the primary aspects of performance,such as how the goods are actually delivered.

Question 9

As a general rule,if a person has void title,then no matter how honorable the intentions of the seller are,that good-faith seller cannot pass anything to the buyer but void title.

Accepted Answer

As a general rule,good faith is irrelevant when passing a void title.If a person has void title (for example,if a person has possession of stolen goods),then no matter how honorable the intentions of the seller are,that good-faith seller cannot pass anything to the buyer but void title.

Question 10

Which of the following states has adopted only portions of the Uniform Commercial Code that do not conflict with its historically French-based code law?

Accepted Answer

Louisiana,not having the English common law heritage,has adopted only portions of the Uniform Commercial Code that do not conflict with its historically French-based code law.

Question 11

If an owner entrusts the possession of goods to a merchant who deals in goods of that kind,the merchant cannot transfer ownership rights in the good to a buyer in the ordinary course of business.

Accepted Answer

If an owner entrusts the possession of goods to a merchant who deals in goods of that kind,the merchant can either fraudulently or accidentally transfer all rights in the good to a buyer in the ordinary course of business.If the purchaser is a good-faith purchaser,then that purchaser gets good title.The original owner's only recourse is to bring suit against the merchant.The rationale behind this concept is the facilitation of commercial activity regarding good-faith purchasers in the marketplace.

Question 12

Under Article 2 of the Uniform Commercial Code,which of the following consists of the passing of title from the seller to the buyer for a price?

Accepted Answer

Section 2-106(1)of the Uniform Commercial Code states that a sale "consists of the passing of title from the seller to the buyer for a price."

Question 13

If Article 2 of the Uniform Commercial Code is silent on an issue of sales contract formation or interpretation,what law applies?

Accepted Answer

When Article 2 of the Uniform Commercial Code is silent on an issue of sales contract formation or interpretation,the common law rules apply.Of course,if a state has passed statutory law regarding contracts,that law always supersedes the common law.

Question 14

Under Article 2 of the Uniform Commercial Code,which of the following is defined as tangible things which are movable at the time of identification to the contract for sale?

Accepted Answer

Section 2-105 of the UCC defines goods as "all [tangible] things ...which are movable at the time of identification to the contract for sale."

Question 15

What are the three sources of law that interpret sales contracts?

Accepted Answer

Three sources of laws that interpret sales contracts exist: state common law,the Uniform Commercial Code,and state statutory law.Little,if any,federal law governs contracts for the buying and selling of items,and when such law does exist,it is highly specialized (for example,the buying and selling of stock under laws created by the Securities and Exchange Commission).

Question 16

With an "ex-ship" shipping term,the risk of loss passes to the buyer when the seller delivers the goods alongside the ship at the place of shipment.

Accepted Answer

With an "ex-ship" (delivery from the carrying vessel)shipping term,the risk of loss passes to the buyer when the goods leave the ship.

Question 17

The Uniform Commercial Code is divided into sections known as ________.

Accepted Answer

The Uniform Commercial Code (UCC)is divided into sections known as articles.These articles cover a wide range of topics,from sales contracts to secured transactions.

Question 18

Which of the following articles of the Uniform Commercial Code governs sales contracts?

Accepted Answer

Under UCC Article 2,the Uniform Commercial Code explains the creation and interpretation of sales contracts.

Question 19

Which of the following do not meet the Uniform Commercial Code definition of a good?

Accepted Answer

Section 2-105 of the Uniform Commercial Code defines goods as "all [tangible] things ...which are movable at the time of identification to the contract for sale." Items are tangible if they exist physically.Corporate stocks and copyrights are not tangible,so they are not goods,and real estate cannot be moved,so it is not a good.

Question 20

An insurable interest is the right to insure the goods against any risk of loss such as damage or destruction.

Accepted Answer

An insurable interest is the right to insure the goods against any risk of loss such as damage or destruction.When an insurable interest is created in the goods is important.Both the buyer and the seller can insure themselves for potential loss in the event the goods are damaged or destroyed at some point in the transaction.A key point is identifying the earliest time in the transaction that the buyer can claim an insurable interest.

Quiz 15: Formation and Performance of Sales and Lease Contracts