Question 1

The __________, the party who owns the leased goods and is making them available for lease.

Accepted Answer

The lessor is the party who owns the leased goods and makes them available for lease to another party, known as the lessee.

Question 2

What most likely happens at the end of the lease term?

Accepted Answer

At the end of the lease term, the equipment is typically returned to the lessor, as the lease agreement usually stipulates the return of the asset upon expiration of the lease period.

Question 3

Who must sign the lease agreement in order to be valid?

Accepted Answer

The answer of Who must sign the lease agreement in...

Question 4

Jane makes payments to a company for office equipment she intends to keep at the end of the lease by renewing the lease for the remaining useful life of the equipment. What type of transaction does Jane intend to pursue?

Accepted Answer

The answer of Jane makes payments to a company for...

Question 5

A secured transaction occurs when the seller retains a security __________ in the goods being sold.

Accepted Answer

In a secured transaction, the seller retains a "security interest" in the goods being sold, which gives the seller a legal right or interest in the collateral (the goods) until the buyer fully pays off the debt.

Question 6

What type of title does a secured transaction pass to the buyer?

Accepted Answer

In a secured transaction, the title passed to the buyer is conditional, depending on the fulfillment of certain conditions, such as the payment of the purchase price.

Question 7

Which of the following statements best describes what a secured transaction is?

Accepted Answer

The answer of Which of the following statements best describes...

Question 8

What legal recourse does a secured party have upon default?

Accepted Answer

Upon default, a secured party typically has the legal recourse of repossession of the collateral that was used to secure the loan or credit agreement. This allows the secured party to recover the value of the loan by taking possession of the secured property.

Question 9

According to the UCC, the true lease of goods involves the payment for __________ possession with an expectation that the goods will be returned to the owner at the end of the lease term.

Accepted Answer

A true lease under the Uniform Commercial Code (UCC) involves the payment for temporary possession of goods with the expectation that the goods will be returned to the owner at the end of the lease term.

Question 10

When does a lease for goods create a security interest in the goods?

Accepted Answer

A lease for goods creates a security interest in the goods when there is an obligation to make payments for the entire term of the lease without a right to early termination. This effectively means the lessee is committed to paying for the goods in full over time, similar to a secured loan where the goods serve as collateral.

Question 11

What document is necessary for a lessor to file when acquiring a security interest in collateral?

Accepted Answer

A UCC financing statement is necessary for a lessor to file when acquiring a security interest in collateral, as it publicly records the lessor's interest in the property.

Question 12

A business signs a three-year "lease" for a very old copier that only has an additional two-year useful life. What does the business maintain?

Accepted Answer

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Question 13

What type of warranty conveys that the goods shall be merchantable via the contract where the seller is a merchant with respect to goods of that kind?

Accepted Answer

The implied warranty of merchantability is a legal doctrine in commercial law that ensures that goods sold by a merchant meet certain quality standards, including that they are fit for the ordinary purposes for which such goods are used. This warranty applies automatically when the seller is a merchant with respect to goods of that kind.

Question 14

For goods to be merchantable, they must be:

Accepted Answer

For goods to be considered merchantable, they must pass without objection in the trade under the contract description. This means they are of average or fair quality, fit for the ordinary purposes for which such goods are used, and are adequately packaged and labeled as the agreement may require.

Question 15

What types of warranties are offered when goods are leased?

Accepted Answer

The answer of What types of warranties are offered when...

Question 16

How many parties are there in a finance lease?

Accepted Answer

In a finance lease, there are two parties involved: the lessor, who owns the asset, and the lessee, who uses the asset in exchange for regular payments to the lessor.

Question 17

What must be included in a finance lease?

Accepted Answer

A finance lease typically includes details about the parties involved, the goods being leased, and the time for performance, among other terms. These elements are essential to define the responsibilities and expectations of both the lessor and the lessee.

Question 18

What is the threshold amount in the lease which requires a writing?

Accepted Answer

The threshold amount in a lease which requires a writing is $1,000.00, according to the Statute of Frauds. This legal principle requires certain contracts, including leases over a certain value, to be in writing to be enforceable.

Question 19

What situation would allow for an exception the writing requirement for leases?

Accepted Answer

Specially manufactured goods can be an exception to the writing requirement for leases under the Uniform Commercial Code (UCC) because these goods would not be suitable for sale to others in the ordinary course of the seller's business, making enforcement of the verbal agreement equitable.

Question 20

What law states that if the total payments to be made under the lease, excluding payments for options to renew or buy, are $1,000 or more, the lease must be in writing?

Accepted Answer

The Statute of Frauds requires certain types of contracts, including leases involving payments of $1,000 or more, to be in writing to be enforceable. This law is designed to prevent fraud and misunderstandings in significant transactions.

Quiz 17: UCC Article 2A: Lease Contracts