Question 1

Key of G Products, Inc., offers to sell to Harmony Company one hundred MP3 players at $50 a piece, subject to certain specific delivery dates. Harmony replies with a signed purchase order that reads, "Accept your offer for 100 I-appliances at $50 each. Must be delivered to our warehouse." Key of G does not respond or deliver the goods. Harmony files a suit for breach of contract, to which Key of G answers that there is no contract because Harmony's purchase order contained additional terms and is not signed by Key of G. Can Harmony recover? Explain.

Accepted Answer

The answer of Key of G Products, Inc., offers to...

Question 2

Global Outfitters Outlet and Holly, a consumer, enter into a contract for a sale of camping gear. If the contract includes a clause that is perceived as grossly unfair to Holly, its enforcement may be challenged under
A) ​the mirror image rule.
B) ​the principle of fair trade.
C) ​the predominant-factor test.
D) ​the doctrine of unconscionability.

Accepted Answer

The doctrine of unconscionability allows a court to decline enforcement of a contract if it is found to be grossly unfair or oppressive to one of the parties involved. In this case, if Holly feels that a clause in the contract is unconscionable, she may challenge its enforcement. The other options listed (mirror image rule, principle of fair trade, predominant-factor test) are not relevant to the issue of unconscionability.

Question 3

Fact Pattern 15-1
Farmers Produce, Inc., and Growers Market enter into a contract for the delivery of locally grown fruits and vegetables. The parties use a standard Farmers Produce form that contains some of the terms the parties agree on but not others. Some of the produce spoils before it can be cooked, served, and eaten, or sold. Growers Market refuses to pay for the spoiled goods.
-Refer to Fact Pattern 15-1. Farmers Produce responds that it did not waive payment for spoiled goods in the parties' previous transaction. Farmers Produce is arguing that the court should take into account
A) ​the course of dealing.
B) ​the course of performance.
C) ​the usage of trade.
D) ​none of the choices.

Accepted Answer

Farmers Produce is arguing that the court should consider the course of dealing, which refers to the parties' previous transactions and how they have conducted business in the past in regards to spoiled produce. This could help establish whether or not they have waived payment for such goods in the past. The course of performance (B) would refer to how these specific parties have performed under this particular contract, which may not be relevant to whether or not payment should be made for the spoiled goods. The usage of trade (C) would refer to industry practices or customs, which may also not be particularly relevant in this situation.

Question 4

Jack sells a grand piano to Kyle for $5,000 and a gold ring to Lauren for $999. A writing is required to enforce the sale of
A) ​the piano only.
B) ​the piano and the gold ring.
C) ​neither the piano nor the gold ring.
D) ​the gold ring only.

Accepted Answer

Since both the piano and gold ring were sold, it is best to have a writing to enforce the sale of both items. This will ensure that both parties have a clear understanding of the terms of the sale and can hold each other accountable.

Question 5

Clean Machines Company makes washing machines. Over the phone, Clean offers to sell Dealers Appliance Outlet one hundred model EZ2000 washers at a price of $150 per unit. Clean says that it will keep the offer open for ninety days. Dealers responds that within two or three weeks it will decide whether to accept. One week later, Clean faxes, and Dealer receives, notice that the offer is withdrawn. Dealer immediately phones Clean to accept the $150-per-unit offer. When Clean refuses to deliver at that price, Dealer files a suit. Clean asserts, first, that there is no contract and, second, that if there is a contract, it is unenforceable. Discuss Clean's assertions.

Accepted Answer

The answer of Clean Machines Company makes washing machines. Over...

Question 6

Coffee Roasters, Inc., sells whole bean and ground coffee to Delicioso Deli under an existing contract. When the cost of coffee beans increases, Delicioso agrees to a price increase, but later wants to cancel the contract. Delicioso 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

Delicioso may not cancel the contract because they have already agreed to a price increase under the existing contract, indicating acceptance of the modified terms. Contracts, once agreed upon and modified by mutual consent, are binding unless provisions within the contract allow for cancellation under specific conditions, which are not indicated in this scenario.

Question 7

Swift Trucking, Inc., and Trailer Rents Corporation are parties to an oral agreement for a one-year lease of six doublewides with payments totaling more than $40,000. 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 choice to satisfy the Statute of Frauds is to set out the terms in a memo. This creates a written record of the agreement and satisfies the requirement for a written contract for agreements involving payments of more than $5000. Choices A, B, and D do not provide the necessary written evidence and would not satisfy the Statute of Frauds.

Question 8

Toro, S.A., which is based in Mexico, enters into a contract for the purchase of portable livestock fencing from United Fencing Company, which is based in the United States. This contract is governed by
A) ​Mexican law.
B) ​the provisions in the laws of both countries that are similar.
C) ​the Uniform Commercial Code.
D) ​the United Nations Convention on Contracts for the International Sale of Goods.

Accepted Answer

The United Nations Convention on Contracts for the International Sale of Goods (CISG) is a set of rules that governs contracts for the sale of goods between parties located in different countries. Both Mexico and the United States are parties to the CISG, and therefore the contract between Toro, S.A. and United Fencing Company would be governed by the CISG.

Question 9

Fact Pattern 15-1
Farmers Produce, Inc., and Growers Market enter into a contract for the delivery of locally grown fruits and vegetables. The parties use a standard Farmers Produce form that contains some of the terms the parties agree on but not others. Some of the produce spoils before it can be cooked, served, and eaten, or sold. Growers Market refuses to pay for the spoiled goods.
-Refer to Fact Pattern 15-1. Farmers Produce files a suit against Growers Market, claiming that the buyer assumed the risk of the spoilage of the unsold goods. The court may allow evidence of this term if it finds that the parties' contract is
A) ​fully integrated.
B) ​not fully integrated.
C) ​none of the choices.
D) ​a complete and final statement of their agreement.

Accepted Answer

If the contract is not fully integrated, meaning that it does not contain all the terms agreed upon by the parties, then evidence of additional or different terms can be considered by the court. In this case, since the form used by Farmers Produce did not contain all the terms of the agreement, evidence of the buyer assuming the risk of spoilage could be considered by the court.

Question 10

Raul agrees to ship to Ben one hundred ceiling fans for $5,000. Raul initials his notes of the deal, which include the terms, and files the notes in his office. Ben initials his own notes of the deal, which include the terms, and files the notes in his office. Raul fails to ship the fans. Against Raul, as a contract, the deal is​
A) ​enforceable, because under the UCC a contract need not written.
B) ​enforceable, because Raul's initialed notes are a sufficient writing.
C) ​enforceable, because Ben's initialed notes are a sufficient writing.
D) ​not enforceable.

Accepted Answer

Under the UCC's statute of frauds, contracts for the sale of goods priced at $500 or more require a writing that is signed by the party to be charged (in this case, Raul). Raul's initialed notes serve as a sufficient writing to satisfy the statute of frauds, making the contract enforceable against him. Ben's notes, while helpful as additional evidence, are not necessary for enforceability.

Question 11

Fact Pattern 15-1
Farmers Produce, Inc., and Growers Market enter into a contract for the delivery of locally grown fruits and vegetables. The parties use a standard Farmers Produce form that contains some of the terms the parties agree on but not others. Some of the produce spoils before it can be cooked, served, and eaten, or sold. Growers Market refuses to pay for the spoiled goods.
-Refer to Fact Pattern 15-1. Growers Market contends that the practice in the trade with respect to payment for spoiled produce justifies its refusal to pay. Growers Market is arguing that the court should take into account
A) ​the course of dealing.
B) ​the course of performance.
C) ​the usage of trade.
D) ​none of the choices.

Accepted Answer

Growers Market is arguing that the court should take into account the usage of trade, which refers to the customary practices and understandings in a particular industry or market. It is a factor that courts can consider when interpreting contracts and resolving disputes.

Question 12

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.

Quiz 15: The Formation of Sales and Lease Contracts

Global Outfitters Outlet and Holly, a consumer, enter into a contract for a sale of camping gear. If the contract includes a clause that is perceived as grossly unfair to Holly, its enforcement may be challenged under

Jack sells a grand piano to Kyle for $5,000 and a gold ring to Lauren for $999. A writing is required to enforce the sale of

Coffee Roasters, Inc., sells whole bean and ground coffee to Delicioso Deli under an existing contract. When the cost of coffee beans increases, Delicioso agrees to a price increase, but later wants to cancel the contract. Delicioso may

Swift Trucking, Inc., and Trailer Rents Corporation are parties to an oral agreement for a one-year lease of six doublewides with payments totaling more than $40,000. They may satisfy the Statute of Frauds by

Toro, S.A., which is based in Mexico, enters into a contract for the purchase of portable livestock fencing from United Fencing Company, which is based in the United States. This contract is governed by