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

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 3

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 rules of a unilateral sales contract, the offeree must be notified within a reasonable time of the offeror's performance. If Gelato is not notified within a reasonable time, it may treat the offer as having lapsed. Therefore, Gelato has the right to assume that the offer is no longer available.

Question 4

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 5

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, which includes certain obligations and requirements that are not applicable to non-merchants or consumers. These standards include obligations of good faith, reasonableness, and diligence in conducting business transactions.

Question 6

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 the offer by either promising to ship or providing a prompt shipment of the goods. This is in accordance with the UCC, which allows for acceptance through shipment or a promise to ship. A material alteration of the terms within a reasonable time would be considered a counteroffer, and a shipment of nonconforming goods with a notice of accommodation would be a breach of the contract.

Question 7

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 statement is a counteroffer, which is not an acceptance. She is adding a condition - that the wheat must be Grade A quality - to the original offer. Therefore, there is no contract formed until Great Harvest Farms accepts this counteroffer.

Question 8

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 choice to satisfy the Statute of Frauds is to set out the terms in a memo, as a written contract is required for leases of over a year and worth over $10,000. Mutually agreeing not to commit fraud or shaking hands on the deal are not sufficient to satisfy the Statute of Frauds, while repeating the terms in a phone call does not provide a written agreement.

Question 9

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

In a contract that does not include a price term, the court will determine a reasonable price based on factors such as the market rate, industry standards, and any other relevant circumstances. The court's goal is to give effect to the parties' intentions at the time of formation while considering the practicalities of the situation. Therefore, the court is likely to impose a reasonable price rather than the lowest or highest market price or returning the parties to their pre-contract positions.

Question 10

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 11

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 entity who leases or rents the equipment, in this case, it is Deep Digg, Inc. Brad is the lessor who owns the equipment and leases it to Deep Digg, Inc. Construction Equipment Corporation is not directly involved in the lease agreement between Brad and Deep Digg, Inc.

Question 12

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 13

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

Paying to use a vessel for a month is considered a lease under the UCC.

Question 14

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

The definition of a merchant under the Uniform Commercial Code (UCC) includes someone who "by occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction." Therefore, the court would assess whether Ed's Hobby Shop held itself out as having knowledge or skill related to the bicycle in question for Dain's purchase.

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

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 contains a condition to the offer, therefore it is a counteroffer. Sensei has not yet accepted the original offer, but instead proposed a new one with additional terms.

Question 17

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

The lease contract between Curt and Drivers Lease Company involves a lease of goods, specifically a car, and therefore falls under the scope of Article 2A of the Uniform Commercial Code (UCC), which governs leases of goods.

Question 18

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's letter to Flynn is a merchant's firm offer, which is an offer made by a merchant in writing that gives assurances that the offer will be held open for a certain period of time. In this case, Dian is offering to sell Flynn a specific car at a specific price for a specific period of time. This constitutes a firm offer.

Question 19

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) between two companies, therefore it is a sale of goods.

Question 20

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

The lessor, or the owner of the property being leased, is Home Repair Rentals, Inc. Ferris is the lessee or the person renting the floor sander. Gena is simply making a suggestion and not directly involved in the leasing transaction.

Quiz 20: 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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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