Question 1

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 2

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
A) a price term.
B) a payment term.
C) a quantity term.
D) shipping arrangements.

Accepted Answer

Without a quantity term specified in the agreement, it is unclear how much paint Car n' Truck ordered and therefore whether Diverse Hues fulfilled the order or not.

Question 3

Nature's Products, Inc., sends its standard order form to Interbusiness Distribution Corporation (IDC) to evidence a sale of packing materials. IDC responds with its own standard purchase order form. Additional terms in the purchase order automatically become part of the contract unless
A) the terms materially alter the original contract.
B) the original offer expressly required acceptance of its terms.
C) the offeror objects to the new terms within a reasonable time.
D) any of the choices.

Accepted Answer

The answer of Nature's Products, Inc., sends its standard order...

Question 4

Peter, an agent for Zippy Cars, Inc., writes a letter to Cassandra on March 1 stating that he will sell her a 2011 Suburu Outback for $20,000 between March 1 and April 30. Peter's letter to Cassandra is
A) a firm offer.
B) an acceptance.
C) a bilateral contract.
D) a breach.

Accepted Answer

Peter's letter constitutes a firm offer because he has made a definite promise to sell the car to Cassandra for a specific price within a set period of time. This offer can be accepted by Cassandra, creating a binding contract between them.

Question 5

Quinn enters into a series of agreements with Reba involving a sale of a Suite Dreams Motel, including the land, building, furnishings, shares of stock in Suite Dreams Company, and a contract with Trudy to create an ad campaign. Reba suspects that Quinn may be misrepresenting the facts. The UCC Statute of Frauds governs
A) the sale of any of the property evidenced by a writing.
B) the entire deal, including the marketer's services.
C) the sale of the furnishings priced at $500 or more.
D) the sale of the land and the building.

Accepted Answer

The UCC Statute of Frauds specifically applies to the sale of goods, and furnishings priced at $500 or more would fall under this category as goods. The UCC does not apply to real estate transactions or services, such as the sale of land, buildings, or marketing services.

Question 6

Perfect Potato Chip Company makes an offer that Snack Foods Corporation would like to accept. Under the "mirror image rule" relating to offer and acceptance, an acceptance
A) may include additional terms not contained in the offer so long as they do not materially alter the agreement.
B) may include additional terms not contained in the offer that will be?come part of the agreement if the offeror does not object within a reasonable period of time.
C) must include only those terms and conditions contained in the offer.
D) may contain additional terms as long as all parties agree to the additional terms.

Accepted Answer

The mirror image rule requires that an acceptance must only include those terms and conditions contained in the offer. Any attempt to add or modify terms would be considered a counteroffer, which would require acceptance from the original offeror to form a binding agreement. Therefore, choices A, B, and D are incorrect.

Question 7

Trend-Rite Clothiers, Inc., sells t-shirts to Brand Name Stores, Inc., under an existing con?tract. When textile costs increase, Brand agrees to a price increase, but later wants to cancel the con?tract. Brand may
A) cancel the contract immediately.
B) cancel the contract only after accepting a final shipment.
C) cancel the contract only on reasonable notice.
D) not cancel the contract.

Accepted Answer

The answer of Trend-Rite Clothiers, Inc., sells t-shirts to Brand...

Question 8

Refined Grains, Inc., agrees to sell to Sunny Breakfast 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
A) a neutral place of business halfway between the parties' locations.
B) a "reasonable" place of delivery.
C) Refined's place of business.
D) Sunny's place of business.

Accepted Answer

Under the UCC, if the place of delivery is not specified in the contract, the default rule is that delivery is to occur at the seller's place of business.

Question 9

Danko sells new and used sports equipment to per?sons who come into his store, Eyes on the Prize. One afternoon, Danko sells a used display shelf to Felipe. At a garage sale at his home, Danko sells a used flat-screen TV to Faye. Under the UCC, Danko is a merchant of
A) sports equipment only.
B) sports equipment and display shelves only.
C) sports equipment, display shelves, and flat-screen TVs.
D) anything that he chooses to sell.

Accepted Answer

Danko is a merchant of sports equipment only because he regularly deals in goods of that kind, whereas the display shelf and flat-screen TV are incidental sales not related to his business.

Question 10

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
A) all buyers and sellers.
B) Medico and New Hospital only.
C) New Hospital and Physicians Clinic only.
D) Physicians Clinic and Oscar only.

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 11

In a dispute over a sale involving a restored 1937 Ford Roadster, Garth argues that for the purpose of the sale, Hoyt's Pawn Shop, where Garth bought the auto, is a merchant. A court may determine whether Hoyt's is a merchant by assessing whether
A) it has sold any restored autos within the last year.
B) it holds itself out by occupation as having knowledge or skill unique to the auto in the transaction.
C) its owner enjoys motoring.
D) it subscribes to Restoration, a biweekly trade magazine.

Accepted Answer

According to the Uniform Commercial Code (UCC), a merchant is defined as having knowledge or skill unique to the goods involved in the sale due to their occupation. In this case, if Hoyt's Pawn Shop held itself out as being knowledgeable or skilled in restoring and selling vintage automobiles, it could be considered a merchant under the UCC. The other options, such as whether it has sold restored autos in the past year, whether the owner enjoys motoring, or subscribes to a trade magazine, do not necessarily indicate whether Hoyt's is a merchant for the specific sale of the 1937 Ford Roadster.

Question 12

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 parties did not specify a quantity term, there is no clear obligation to deliver a certain amount of chicken, and therefore Roy's Chick'n Shack cannot enforce the agreement. The other options may affect the enforceability of the agreement, but without a clear quantity term, there is no clear obligation for Standard Food Supplier to deliver any chicken at all.

Question 13

Mountaineer Sales, Inc., is the offeror and Camping Goods Corporation is the offeree under a unilateral sales contract in which Forest Recreation Products Company is also interested. Mountaineer is not notified of Camping's performance within a rea?son?able time. Mountaineer
A) may treat the offer as having lapsed.
B) must assume that Camping has started to perform.
C) must contact Camping.
D) must contract with Forest.

Accepted Answer

If the offeree (Camping Goods Corporation) fails to notify the offeror (Mountaineer Sales, Inc.) within a reasonable time, the offer lapses. Therefore, Mountaineer may treat the offer as having lapsed. The fact that Forest Recreation Products Company is also interested does not affect Mountaineer's right to treat the offer as lapsed.

Question 14

Cam enters into a contract with Tractors & Lifts Lease Company for a two-year lease of a backhoe. This contract is subject to
A) Article 2 of UCC.
B) Article 2A of the UCC.
C) Article 11 of the CISG.
D) the common law only.

Accepted Answer

Article 2A of the UCC, also known as the Uniform Commercial Code, specifically governs leases of goods. Since Cam is leasing a backhoe, this contract would fall under Article 2A of the UCC. Therefore, option B is the correct answer. Option A, Article 2 of the UCC, applies to contracts for the sale of goods. Option C, Article 11 of the CISG, is related to the international sale of goods and would not apply to this scenario. Finally, option D, the common law, may apply depending on the specific provisions of the lease agreement. However, the UCC will generally preempt the common law in cases where there are conflicting provisions.

Question 15

Quality Metals Company and Superior Fabrication, Inc., enter into a contract under which Quality Metals agrees to deliver a certain quantity of sheet metal to Superior Fabrication each month. The contract does not include a price term. In a suit between the par?ties over the price, a court will
A) determine a reasonable price.
B) impose the lowest market price.
C) impose the highest market price.
D) return the parties to the positions they held before the contract.

Accepted Answer

In the absence of a price term, a court will typically determine a reasonable price based on factors such as industry standards, past prices, and other relevant circumstances. The court will look to the intent of the parties and try to give effect to their agreement, even if it is not fully spelled out in the contract. Imposing the lowest or highest market price would be unlikely unless there is evidence that the parties intended this outcome. Returning the parties to their pre-contract positions would not be practical or desirable in most cases.

Question 16

Community Construction Corporation offers to buy from Solid Cement Company a certain quantity of cement for a certain price. Solid can ac?cept the offer by
A) doing nothing.
B) promising to ship or promptly shipping the cement.
C) promising to ship the cement only.
D) promptly shipping the cement only.

Accepted Answer

Solid can accept the offer by either promising to ship or promptly shipping the cement. Doing nothing or promising to ship only is not a clear indication of acceptance, while promptly shipping only may be seen as a counteroffer. Therefore, the best choice for Solid is to either promise to ship or promptly ship the cement to indicate their acceptance of the offer.

Question 17

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
A) a breach.
B) a counteroffer.
C) a confirmation.
D) an acceptance.

Accepted Answer

Sensei's response is a counteroffer because they are adding a condition (Grade A quality) to the original offer. This means that Rice River Farms must decide whether or not to accept the new terms proposed by Sensei.

Question 18

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
A) a service contract.
B) a gift.
C) a lease.
D) a sale.

Accepted Answer

A lease is defined by the UCC as a transfer of the right to possession and use of goods for a term in return for consideration, while ownership remains with the lessor. In this scenario, Marine Expeditions, Inc., is paying Nate's Boats for the right to use their oceangoing vessel for a month, which fits the definition of a lease. A service contract would involve the performance of a service rather than the transfer of goods, while a gift and a sale do not accurately describe the transaction in question.

Question 19

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 in this transaction is Home Repair Rentals, as they are the ones leasing the floor sander to Jamie. Jamie is the lessee, and Rachel is simply providing a referral to Home Repair Rentals.

Question 20

TalkTalk, Inc., offers to buy from Voice Media Corporation (VMC) 100,000 smartphones. Without notifying TalkTalk, VMC timely ships phones of a different quality. With respect to the offer and a possible contract, this shipment is
A) an acceptance and a breach.
B) an acceptance and an accommodation.
C) an acceptance and complete performance.
D) a rejection and a counteroffer.

Accepted Answer

The shipment is an acceptance because VMC shipped the smartphones without notifying TalkTalk. However, it is also a breach because they shipped phones of a different quality than what was required under the offer.

Quiz 17: The Formation of Sales and Lease Contracts

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

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

Nature's Products, Inc., sends its standard order form to Interbusiness Distribution Corporation (IDC) to evidence a sale of packing materials. IDC responds with its own standard purchase order form. Additional terms in the purchase order automatically become part of the contract unless

Peter, an agent for Zippy Cars, Inc., writes a letter to Cassandra on March 1 stating that he will sell her a 2011 Suburu Outback for $20,000 between March 1 and April 30. Peter's letter to Cassandra is

Perfect Potato Chip Company makes an offer that Snack Foods Corporation would like to accept. Under the "mirror image rule" relating to offer and acceptance, an acceptance

Trend-Rite Clothiers, Inc., sells t-shirts to Brand Name Stores, Inc., under an existing con?tract. When textile costs increase, Brand agrees to a price increase, but later wants to cancel the con?tract. Brand may

Refined Grains, Inc., agrees to sell to Sunny Breakfast 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

Danko sells new and used sports equipment to per?sons who come into his store, Eyes on the Prize. One afternoon, Danko sells a used display shelf to Felipe. At a garage sale at his home, Danko sells a used flat-screen TV to Faye. Under the UCC, Danko is a merchant of

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

In a dispute over a sale involving a restored 1937 Ford Roadster, Garth argues that for the purpose of the sale, Hoyt's Pawn Shop, where Garth bought the auto, is a merchant. A court may determine whether Hoyt's is a merchant by assessing whether

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

Mountaineer Sales, Inc., is the offeror and Camping Goods Corporation is the offeree under a unilateral sales contract in which Forest Recreation Products Company is also interested. Mountaineer is not notified of Camping's performance within a rea?son?able time. Mountaineer

Cam enters into a contract with Tractors & Lifts Lease Company for a two-year lease of a backhoe. This contract is subject to

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

Community Construction Corporation offers to buy from Solid Cement Company a certain quantity of cement for a certain price. Solid can ac?cept the offer by

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

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

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

TalkTalk, Inc., offers to buy from Voice Media Corporation (VMC) 100,000 smartphones. Without notifying TalkTalk, VMC timely ships phones of a different quality. With respect to the offer and a possible contract, this shipment is