Deck 12: UCC Sales Contracts, Leases, and Warranties

Question 1

The Uniform Commercial Code is a model act passed in ________ that includes comprehensive laws that cover most aspects of commercial transactions.

A) 1969
B) 1989
C) 2009
D) 1949

Answer 1

1949

Question 2

What two groups drafted the UCC?

A) The American Bar Association and the American Institute of Certified Public Accountants
B) The American Law Institute and the National Conference of Commissioners on Uniform State Laws
C) The U.S. House of Representatives and the U.S. Senate
D) The Department of Commerce and the Interstate Commerce Commission

Answer 2

The American Law Institute and the National Conference of Commissioners on Uniform State Laws

Question 3

Which state has adopted only parts of the UCC?

A) Louisiana
B) Delaware
C) Wisconsin
D) Alaska

Answer 3

Louisiana

Question 4

The UCC defines "goods" as things that are both ________ and ________ at the time of their identification to a contract.

A) merchantable; valuable
B) visible; affixed
C) real; monetarized
D) tangible; movable

Question 5

Whistle Cabs, a taxi service company, has been ordered by the traffic department to upgrade its taxi meters to digital ones. Whistle Cabs contemplates a sales contract with Running Electricals, a company that manufactures digital taxi meters. Due to short notice from the city and a lack of funding, however, Whistle Cabs instead approaches Goldmint Bank, which purchases the digital taxi meters from Running Electricals and delivers them to Whistle Cabs. The contract between Whistle Cabs and Goldmint Bank allows the taxi service company to use the taxi meters for a set period of time by providing monthly rentals. What is the nature of the contract made between Whistle Cabs and Goldmint Bank?

A) a counteroffer
B) a lease
C) a sale of goods
D) an option contract

Question 6

What is a lease? Briefly compare UCC Article 2A with UCC Article 2.

Question 7

Kimberley, a merchant seller in Kansas, had an oral contract to sell goods to Jane, a merchant buyer in Memphis, for $100,000. Two days after contracting, Kimberley sends a sufficient written confirmation to Jane of the agreed-upon transaction. Jane, who has reason to know the contents of the written confirmation, fails to immediately object to the contents of the confirmation. Two weeks after receiving the written confirmation, Jane receives delivery of the goods from Kimberley, and Jane then sends an objection to the written confirmation to Kimberley. Which of the following is true of the contract between Kimberley and Jane?

A) The Statute of Frauds can be raised against the contract because a letter of objection was sent to the offeror.
B) The offer is valid as the offeree knew the contents of the confirmation and did not object within 10 days.
C) The contract is void as the offeror did not receive a letter of confirmation from the offeree for delivery.
D) The Statute of Frauds can be raised because the offeree did not sign the contract.

Question 8

The ________ rule permits certain open terms to be "read into" a sales or lease contract.

A) firm offer
B) mirror-image
C) parol evidence
D) gap-filling

Question 9

If the parties to a sales contract do not agree to the time, place, and manner of delivery of the goods, the place for delivery is ________.

A) the buyer's place of business
B) the seller's place of business
C) the buyer's home
D) the buyer's delivery truck

Question 10

What is meant by "identification of goods,"and how is this a factor in the sale or lease of goods?

Question 11

Electronic sales contracts (e-sales contracts) and electronic lease contracts (e-lease contracts) are recognized under the laws of ________.

A) every state
B) most states
C) very few states
D) no states to date

Question 12

A(n) ________ is the signature of a person that appears on an electronic record and is recognized as a lawful signature.

A) facsimile signature
B) forged signature
C) electronic signature
D) third-party signature

Question 13

Larry, a merchant seller, had contracted with Simon to buy welding equipment. The contract stipulated that Larry would pick up the equipment from Simon's warehouse on the 14^th day from the date of the contract. Larry could not make the pick-up on the stipulated date and before he could do so on the 15^th day, the warehouse and its contents were destroyed by arsonists. In this situation, who bears the risk of loss for the goods that were to be received by Larry?

A) The risk of loss lies with Larry for delaying the pick-up.
B) The risk of loss lies with Simon for not protecting the goods from the arsonists.
C) The risk of loss is equally shared by Larry and Simon.
D) The risk of loss is shifted to the persons responsible for the fire.

Question 14

In a destination contract, the ________ bears the risk of loss of the goods during their transportation.

A) buyer
B) trucking company
C) the owner of the ship
D) seller

Question 15

In a shipment contract the risk of loss passes to the buyer when ________.

A) the seller mails a copy of the bill of lading
B) the goods are received and accepted by the buyer
C) the seller delivers the conforming goods to the carrier
D) the packing container is sealed

Question 16

Explain these commonly used shipping terms: F.O.B., F.A.S., C.I.F., and C.&F.

Question 17

A seller or lessor has ________ if he obtained the goods through fraud, if his check for the payment of the goods or lease is dishonored, or if he impersonated another person.

A) void title/void leasehold interest to goods
B) dishonorable title/dishonorable leasehold interest to goods
C) voidable title/voidable leasehold interest to goods
D) criminal title/criminal leasehold interest to goods

Question 18

Anna dropped off her engagement ring with Byron McKenna at B+B McKenna Jewelers to have the ring polished for her upcoming wedding. While Byron was at lunch, Betty McKenna, not knowing that the ring was there for polishing, placed the ring in a display case. Shortly thereafter, Harold entered the store, saw the ring in the display case and bought the engagement ring. What type of title does Harold have to the ring?

A) void title
B) voidable title
C) good title
D) fraudulent title

Question 19

In a case where the real owner of stolen goods locates the goods in the possession of a buyer who purchased the goods from the thief who stole them, the real owner ________.

A) can reclaim the goods from the purchaser
B) must relinquish the good to the purchaser
C) can only sue the thief for money damages
D) can only sue the thief for specific performance

Question 20

Klint Microsystems, a microprocessor manufacturer, was contracted by Zeitar Studios to manufacture specially designed microchips to be used in an audio engineering process. Zeitar was to pay Klint $300,000 as per the contract. Klint decided to redesign its existing microchips and make them suitable for Zeitar. While the finished microchips were being shipped via a carrier, Klint was informed of Zeitar's insolvency. Klint cancelled the shipment before it was delivered. Klint then resold the chips to another studio where it had to settle for $150,000, as the chips were now suitable for specific audio engineering processes only. What remedy did Klint exercise when it stopped shipment to Zeitar?

A) remedy to dispose of goods
B) remedy to stop goods in transit
C) remedy to obtain specific performance
D) remedy to recover purchase rent

Question 21

Which of these is NOT a factor to be considered in determining whether liquidated damages are valid?

A) if the liquidated damages are reasonable in light of the anticipated or actual harm caused by the breach
B) the difficulties of proof of loss
C) the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy
D) the offensiveness of the conduct of the breaching party

Question 22

On March 1, Bob Byer entered into a contract with Sam Cellar to purchase goods on credit extended by Sam. On April 1 Sam shipped the goods to Bob. The goods were received by Bob on April 15. Sam mailed an invoice to Bob on May 1. Unless the parties agreed to other terms, the credit period for this purchase began to run on ________.

A) March 1
B) April 1
C) April 15
D) May 1

Question 23

What are liquidated damages? Does the UCC permit them? When are they valid?

Question 24

The doctrine of ________ governed the law of sales and leases for centuries before the UCC was adopted.

A) cogito ergo sum
B) caveat emptor
C) res ipsa loquitur
D) carpe diem

Question 25

If a seller or lessor fails to meet a warranty, the buyer or lessee can ________.

A) sue for breach of warranty
B) file a police report
C) report the seller or lessor to the Better Business Bureau
D) file a complaint with the state attorney general

Question 26

Warranties which are based on contract law may be either ________ or ________.

A) expressed by law; impliedly stated
B) oral; verbal
C) in English; in Latin
D) expressly stated; implied by law

Question 27

Sam expressed interest in buying a painting from Jasper, whose asking price was $15,000. Sam was only willing to offer $13,000. Jasper told him that it was a very old painting worth a fortune and that others would gladly pay $20,000 for it. Sam decided to buy the painting for $15,000 on the condition that if he found that the painting was worth less than $15,000, Jasper would have to take the painting back and refund Sam. Which of the following warranties did this sales contract have?

A) an implied warranty of merchantability
B) an express warranty
C) a statement of opinion
D) an implied warranty of fitness

Question 28

Buddy's Diner advertises that it sells "The World's Best Cup of Coffee." This statement constitutes ________.

A) an express warranty
B) an opinion and mere puffing
C) an implied warranty
D) a statutory warranty

Question 29

In order to create an express warranty, the formal words "warrant" and "guarantee"________.

A) do not necessarily have to be used
B) must both be used
C) must be used, but not necessarily both of them
D) must both be printed in ALL CAPS and BOLD

Question 30

Which of these is NOT needed in order for a sales contract or lease contract to contain an implied warranty of merchantability?

A) The seller or lessor is a merchant.
B) The seller or lessor is a merchant in goods of the kind involved in the contract or lease.
C) The goods involved in the contract or lease are valued for more than $1,000.
D) The implied warranty of merchantability was not properly disclaimed.

Question 31

The implied warranty that food and drink served by restaurants, grocery stores, fast-food outlets, coffee shops, bars, vending machines, and other purveyors of food and drink be safe for human consumption is called the ________.

A) implied warranty of fitness for a particular purpose
B) implied warranty of fitness for human consumption
C) implied warranty of merchantability
D) implied warranty of food and drug safety

Question 32

When does the implied warranty of merchantability arise in a sale or lease contract for a good? What is required under this warranty?

Question 33

Written warranty disclaimers must be conspicuously displayed to be valid. Which of these printing techniques would NOT make a warranty disclaimer conspicuous?

A) a heading printed in all uppercase letters
B) a heading printed in a typeface that is larger than the rest of the body of a sales or lease contract
C) a heading printed in the same style as the rest of the body of a sales or lease contract
D) a heading printed in a different color type