Question 1

Before a seller can have an insurable interest in goods, the goods must be identified to a contract.

Accepted Answer

The answer of Before a seller can have an insurable...

Question 2

Orange Manufacturing Corporation (OMC) orders twelve job-training and on-the-job safety DVDs from Plum Productions, Inc., which delivers the disks to OMC's plant. This is most likely
A) a gift.
B) a lease of goods.
C) a sale of goods.
D) a service contract.

Accepted Answer

The transaction between OMC and Plum Productions involves the delivery of DVDs, which are a type of tangible personal property. Therefore, this is most likely a sale of goods.

Question 3

In a destination contract, the seller is required to deliver the goods to a particular destination.

Accepted Answer

In a destination contract, the seller is responsible for delivering the goods to a specific destination. The risk of loss or damage to the goods remains with the seller until they are delivered to the specified destination.

Question 4

Entrusting goods to a merchant who deals in goods of the kind gives the merchant the power to transfer all rights to a buyer in the ordinary course of business.

Accepted Answer

This is known as the "entrustment rule" and is recognized by the Uniform Commercial Code in the United States. It applies when a merchant who deals in goods of a particular kind (such as jewelry or electronics) is entrusted with those goods by their owner. If the merchant sells the goods to a buyer in the ordinary course of business, the buyer acquires good title to the goods even if the merchant had no right to sell them in the first place.

Question 5

Jamie is redoing his kitchen and decides he needs a floor sander to complete the job. Jamie tells Rachel, his neighbor, that he needs a floor sander. Rachel tells Jamie to call Home Repair Rentals, Inc. Home Repair Rentals leases Jamie a floor sander. In this transaction the lessor is
A) Jamie.
B) Rachel.
C) Home Repair Rentals.
D) both Jamie and Rachel.

Accepted Answer

The lessor is the party who leases or lends the item, in this case, the floor sander. Home Repair Rentals is the one leasing the floor sander to Jamie, so they are the lessor. Jamie is the lessee or the one renting the item. Rachel, as a neighbor who provided information, is not involved in the actual leasing transaction, so she is not the lessor.

Question 6

FlavorBean Coffee Company agrees to buy an unspecified quantity of coffee beans from Global AgriCorp. Global breaches the contract. In FlavorBean's suit to obtain relief, the court will most likely
A) award a reasonable quantity of beans to FlavorBean.
B) award FlavorBean all the beans that it requires.
C) award Global's output of coffee beans to FlavorBean.
D) have no basis for determining a remedy.

Accepted Answer

The answer of FlavorBean Coffee Company agrees to buy an...

Question 7

If a seller is not a merchant, and the goods are not to be moved, the risk of loss passes to a buyer on tender of delivery.

Accepted Answer

This is the general rule under the common law for non-merchant sellers and non-movable goods. Once the seller tenders delivery and the buyer accepts it, the risk of loss passes to the buyer. However, parties may agree to a different arrangement in their contract.

Question 8

Before any interest in specific goods can pass from the seller to the buyer, the goods must exist and be identified to the contract.

Accepted Answer

This is a fundamental principle of contract law known as the doctrine of "identification." In order for a valid contract of sale to exist, the goods must be in existence and identified to the contract. Without identification, there can be no transfer of ownership or interest in the goods.

Question 9

The right to cure is the right of a party who tenders nonconforming performance to correct his or her performance within the contract period.

Accepted Answer

The right to cure allows the party who has provided nonconforming performance to correct the situation within the contract period. This enables the performing party to fulfill his or her obligations and avoid any negative consequences, such as termination or legal action, that may result from a breach of contract.

Question 10

The contract term "free on board" indicates that the selling price of goods includes transportation costs to the specific F.O.B. place named in the contract.

Accepted Answer

"Free on board" (F.O.B.) means that the seller is responsible for the cost of transporting the goods to a specific location, which is typically named in the contract. Therefore, the selling price of the goods would include these transportation costs.

Question 11

A buyer and a seller cannot normally have an insurable interest in identical goods at the same time.

Accepted Answer

The answer of A buyer and a seller cannot normally...

Question 12

Even if goods are not identified to the contract, the title and risk of loss can still pass from the seller to the buyer.

Accepted Answer

The answer of Even if goods are not identified to...

Question 13

Dan, a computer programmer, holds a garage sale to sell a lawnmower, some clothes, some CDs and some old clothes. Will, a lawyer, sells Thelma his collection of seashells. Philip, a CEO of a successful company, sells George his pet parakeet. Judy, an expert horse trainer, sells Bob a horse. Which person would be considered a merchant under the UCC?
A) Dan
B) Will
C) Judy
D) Philip

Accepted Answer

According to the Uniform Commercial Code (UCC), a merchant is defined as someone who regularly deals in goods of the type being sold. Judy is an expert horse trainer, which suggests that she regularly deals with horses and could be considered a merchant under the UCC. While the other individuals are selling goods, there is no indication that they regularly deal with those specific types of goods, making them not merchants under the UCC.

Question 14

Under a destination contract, the risk of loss passes to the buyer when the goods are duly delivered to the carrier.

Accepted Answer

The answer of Under a destination contract, the risk of...

Question 15

When a document of title is required, title passes to a buyer when and where the document is delivered.

Accepted Answer

When a document of title is required, title passes to a buyer when and where the document is delivered. This means that the buyer must have possession of the document in order to assert ownership or transfer the goods to another party. Therefore, delivery of the document is a critical element in the transfer of title.

Question 16

Future goods are goods that are not both existing and identified to the contract.

Accepted Answer

Future goods are goods that are not both existing and identified to the contract. This means that the goods do not yet exist or have not yet been determined, but they are expected to come into existence in the future. Examples of future goods may include crops that have yet to be harvested or custom-made items that have yet to be produced.

Question 17

The contract term "delivery ex-ship" means that the risk of loss does not pass to the buyer until the goods are properly unloaded from the ship or other carrier.

Accepted Answer

"Delivery ex-ship" indicates that the seller is responsible for delivering the goods to the agreed-upon port or destination, but the risk of loss remains with the seller until the goods are unloaded from the ship or other transportation carrier.

Question 18

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

Accepted Answer

The answer of If a sale involves crops that are...

Question 19

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.

Accepted Answer

If the agreement did not specify a quantity term, it may be considered too vague to be enforceable. Since Standard does not deliver, Roy's may have difficulty determining how much chicken to order and how often to order it. Without a clear quantity term, there may not be a clear understanding of the obligations of the parties, making the agreement unenforceable. The other options listed may impact the clarity of the agreement but are not as central to the issue of enforceability in this scenario.

Question 20

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

Accepted Answer

This is because the animals are not yet in existence at the time of the contract, so identification cannot occur until they are born. Once they are born, they become identified and can be delivered to the buyer.

Quiz 15: The Formation of Sales and Lease Contracts