Question 1

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
A) ​agree to different terms only to a reasonable extent.
B) ​agree to different terms unless they "get caught."
C) ​agree to whatever terms they wish.
D) ​not agree to different terms.

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 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
A) ​it has sold any bikes within the last year.
B) ​it holds itself out by occupation as having knowledge or skill unique to the bike in the transaction.
C) ​its owner enjoys biking.
D) ​it subscribes to Bike, a biweekly trade magazine.

Accepted Answer

According to the Uniform Commercial Code (UCC), a merchant is defined as a person who deals in goods of the kind or holds themselves out by occupation as having knowledge or skill unique to the transaction. Therefore, the most relevant factor in determining whether Ed's Hobby Shop is a merchant in the sale of the bicycle is whether they hold themselves out as having knowledge or skill unique to bikes, which is described in choice B. The other options presented are irrelevant in determining whether Ed's Hobby Shop is a merchant or not.

Question 3

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
A) ​a contract is formed.
B) ​a contract is formed only if Great Harvest can deliver the wheat fast.
C) ​Ilene's statement is not an acceptance.
D) ​Ilene's statement is an acceptance.

Accepted Answer

Ilene's response is a counteroffer, not an acceptance. She has added a condition to the offer, making it a new offer altogether. Until Great Harvest Farms accepts or rejects the new offer, there is no binding contract between the parties.

Question 4

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 merchant's firm offer.
B) ​an option contract.
C) ​a lease.
D) ​a sale.

Accepted Answer

The transaction between Marine Expeditions, Inc. and Nate's Boats involves the rental of an oceangoing vessel for a month, which falls under the category of a lease agreement, as opposed to a sale or a merchant's firm offer. The UCC defines a lease as a transfer of the right to possession and use of goods for a term in return for consideration, while a sale refers to a transfer of ownership of goods for consideration.

Question 5

Curt enters into a contract with Drivers Lease Company for a three-year lease of a car. This contract is subject to
A) ​none of the choices.
B) ​Article 2A of the UCC.
C) ​Article 11 of the CISG.
D) ​the common law only.

Accepted Answer

Article 2A of the Uniform Commercial Code (UCC) governs leases of personal property, including motor vehicles. Therefore, Curt's lease contract with Drivers Lease Company is subject to this article.

Question 6

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 constitutes a counteroffer because it puts an additional condition on the original offer. The counteroffer terminates the original offer, and the seller must now decide whether to accept the new terms or propose further negotiations.

Question 7

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
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

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 8

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
A) ​a merchant's firm offer.
B) ​an acceptance.
C) ​an option contract.
D) ​none of the choices.

Accepted Answer

Dian, as an agent of Expo Motors, Inc., is making a definite offer to sell a specific car, the 2017 Subaru Outback, for a specific price, $25,000, within a specific timeframe, between November 1 and December 31. This is known as a merchant's firm offer, which creates a binding contract if accepted by Flynn. Therefore, choice A is the best answer. Choices B and C do not accurately describe the nature of Dian's letter to Flynn. Choice D is incorrect because there is a definite offer being made in the letter.

Question 9

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 delivery date.
C) ​a quantity term.
D) ​shipping arrangements.

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 10

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
A) ​a material alteration of the terms within a reasonable time.
B) ​a promise to ship or a prompt shipment of the goods.
C) ​a prompt shipment of the goods only.
D) ​a shipment of nonconforming goods with a notice of accommodation.

Accepted Answer

Dental Supplies Company can accept Clean Mouth Clinic's offer by either promising to ship or promptly shipping the goods. This is because the UCC allows for acceptance through performance or a promise to perform. Option A is incorrect because it suggests altering the terms, which is not considered acceptance but rather a counteroffer. Option C is incorrect because a shipment alone is not considered an acceptance unless it is accompanied by a promise to ship or perform. Option D is incorrect because a shipment of nonconforming goods with a notice of accommodation is not an acceptance, but is considered a counteroffer.

Question 11

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
A) ​less strict legal standards.
B) ​special business standards.
C) ​stricter ethical standards.
D) ​the same overall standards.

Accepted Answer

The UCC imposes special business standards on merchants. These standards are different from the standards that apply to consumers.

Question 12

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
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

Since the contract does not include a price term, the court will determine a reasonable price based on the circumstances at the time of the contract. This is known as an implied term of the contract, and courts will consider factors such as market prices, comparable transactions, and any course of dealing between the parties. The court will not impose the lowest or highest market price, as this would not necessarily reflect what is reasonable in the circumstances. Similarly, returning the parties to their positions before the contract would not be appropriate, as they have already entered into a contract and have some obligations to each other. Therefore, option A is the correct choice.

Question 13

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
A) ​may treat the offer as having lapsed.
B) ​must assume that Fresh Dairy has started to perform.
C) ​must contact Fresh Dairy.
D) must notify Hector's.​

Accepted Answer

According to the case, Gelato Ice Cream Company has not been notified of Fresh Dairy's performance within a reasonable time. Therefore, Gelato may treat the offer as having lapsed, as they have no knowledge of Fresh Dairy's intention to perform.

Question 14

Manufacturing Corporation orders twelve safety videos from Productions, Inc., which delivers the videos. 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 involves the exchange of goods (safety videos) for a price, indicating a sale of goods.

Question 15

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
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 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 16

Brad buys a bulldozer from Construction Equipment Corporation, which he leases to Deep Digg, Inc. In this situation, the lessee is
A) ​Brad.
B) ​Construction Equipment Corporation.
C) ​Deep Digg, Inc.
D) ​none of the choices.

Accepted Answer

The lessee is the person or company who is renting or leasing the equipment, in this case Deep Digg, Inc. Brad is the lessor, who owns the equipment and is leasing it to Deep Digg, Inc.

Question 17

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
A) ​mutually agreeing not to commit fraud.
B) ​repeating the terms in a phone call.
C) ​setting out the terms in a memo.
D) ​shaking hands on the deal.

Accepted Answer

The best option to satisfy the Statute of Frauds in this scenario is to set out the terms of the lease in a writing, such as a memo, signed by both parties. This satisfies the requirement that contracts for the lease of goods with payments totaling more than $10,000 must be in writing. The other options, such as mutually agreeing not to commit fraud or shaking hands on the deal, do not satisfy the writing requirement. While repeating the terms in a phone call may serve as evidence, it is not considered a sufficient writing under the Statute of Frauds.

Question 18

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
A) ​a breach.
B) ​an accommodation.
C) ​complete performance.
D) ​a counteroffer.

Accepted Answer

Ultra's shipment of phones of a different quality without notification is not in line with the terms of the offer made by Talk, thus it constitutes a breach of contract.

Question 19

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
A) ​Ferris.
B) ​Gena.
C) ​Home Repair.
D) ​none of the parties.

Accepted Answer

Home Repair Rentals, Inc. is the lessor because they are the ones who are leasing out the floor sander to Ferris. Ferris is the lessee, and Gena is simply someone who provided a suggestion but is not involved in the actual lease transaction.

Question 20

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.

Quiz 15: The Formation of Sales and Lease Contracts

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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