Question 1

Omni Metals Company and Piecework Fabrication, Inc., enter into a contract under which Omni agrees to deliver a certain quantity of sheet metal to Piecework 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 lowestmarket price.
C) ​impose the highest market price.
D) ​return the parties to the positions they held before the contract.

Accepted Answer

When a contract does not include a price term, a court will determine a reasonable price based on the circumstances surrounding the contract, such as market prices, industry standards, and prior dealings between the parties. Therefore, choice A is the best option as it reflects the typical approach taken by courts in such cases. Choices B and C are incorrect as they do not reflect a reasonable price determination based on the circumstances, and choice D is incorrect as it would not provide a resolution to the dispute over the price term.

Question 2

TalkTalk, Inc., offers to buy from Voice Media Corporation (VMC) 1,000 smartphones. Without notifying TalkTalk, VMC 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

The shipment of phones of a different quality than those offered by TalkTalk constitutes a breach of the contract. While VMC may have intended to accept the offer, they materially changed the terms of the contract by shipping different phones than those specified in the offer, which constitutes a breach.

Question 3

Olivia contracts to buy a refrigerator from a Prairie State Appliance store with the price to be paid in monthly installments. Later, Olivia files a suit against Prairie State, claiming that their contract is so unfair and one-sided that it would be unreasonable to enforce it. Olivia is asserting​
A) ​the concept of good faith.
B) ​the entrustment rule.
C) ​the mirror image rule.
D) ​the doctrine of unconscionability.

Accepted Answer

Olivia is asserting the doctrine of unconscionability, which is a defense to the enforcement of a contract because the terms are so unfair and one-sided that it "shocks the conscience of the court." In this case, Olivia is claiming that the monthly payments are too high or the terms are too oppressive, which may render the contract unenforceable.

Question 4

Brian, an agent for Clarion Motors, Inc., writes a letter to Dina on November 1 stating that he will sell her a 2016 Subaru Outback for $20,000 between November 1 and December 31. Brian's letter to Dina is​
A) ​a merchant's firm offer.
B) ​an acceptance.
C) ​an option contract.
D) ​none of the choices.

Accepted Answer

Brian's letter to Dina is a merchant's firm offer because it is a specific and definite offer made by a merchant (Brian) in the course of their business. The offer explicitly states the price, product, and time period within which Dina can accept the offer.

Question 5

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 6

Equipment Rentals Corporation (ERC) agrees to lease two backhoes to Dig & Fill Construction, Inc. Before any interest in the backhoes can pass from ERC to Dig & Fill, they must be
A) ​in existence and identified as the goods in the contract.
B) ​in ERC's physical possession.
C) ​in Dig & Fill's physical possession.
D) ​listed in a document of title and filed in the appropriate state office.

Accepted Answer

According to the UCC, for a lease agreement to be enforceable, the leased goods must exist and be identified in the contract. Physical possession and listing in a document of title are not necessary for the transfer of interest in the leased goods.

Question 7

County Dentists Clinic offers to buy from Dental & Medical Supplies Company a certain quantity of floss and other items for a certain price. Dental & Medical 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 & Medical Supplies Company can accept the offer by either promising to ship the goods or actually shipping them promptly. This is because the offer does not require acceptance in any particular form and the Uniform Commercial Code allows for acceptance by any reasonable means. A material alteration of the terms by Dental & Medical Supplies Company within a reasonable time would be considered a counteroffer and thus terminate the original offer. A shipment of nonconforming goods with a notice of accommodation would also be considered a counteroffer.

Question 8

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 not an acceptance because it includes a condition. It is a counteroffer that requires Great Harvest to agree to the Grade A quality condition before a contract can be formed. Therefore, there is no contract unless Great Harvest accepts Ilene's counteroffer.

Question 9

iSharp, Inc., and Jenene, the owner of a Kitchen Time shop, orally agree to a sale of knives and other utensils for $12,000. Jenene gives iSharp a check for $4,000 as a partial payment. This contract is​
A) ​enforceable to the extent of $4,000.
B) ​fully enforceable because it is for specially selected goods.
C) fully enforceable because it is oral.
D) ​not enforceable.

Accepted Answer

The contract is only enforceable to the extent of the partial payment made by Jenene, which is $4,000. This is because the Statute of Frauds requires contracts for the sale of goods over $500 to be in writing, and since this agreement is for $12,000 and is only oral, it is not fully enforceable. However, the partial payment made by Jenene could create a valid contract for that amount.

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

Bert's Bagels & Nosh, Inc., and other bakeries refer to a "baker's dozen" as consisting of a collection of thirteen baked goods. This is​
A) ​a course of dealing.
B) ​a course of performance.
C) ​none of the choices.
D) ​a usage of trade.

Accepted Answer

A "baker's dozen" as consisting of thirteen baked goods is a usage of trade, which is a standard practice or method within a particular industry.

Question 12

Quaff n' Quench Café buys twenty-five crates of oranges from Reynaldo Produce, Inc. Reynaldo ships the oranges "F.O.B. Quaff n' Quench" via Sham Shipping Company. The oranges rot in transit. The loss is suffered by​
A) ​Quaff n' Quench.
B) Sham.
C) ​F.O.B.
D) ​Reynaldo.

Accepted Answer

"F.O.B. Quaff n' Quench" means that Reynaldo Produce, Inc. retains the risk of loss until the oranges reach Quaff n' Quench Café. Since the oranges rotted in transit, Reynaldo bears the loss.

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

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 14

Pam buys from Midtown Motors a used sport utility vehicle (SUV). The SUV was manufactured by GEM Vehicles, Inc., and previously owned by Ron. Regarding title to the SUV, Pam acquires​
A) ​whatever title Midtown had.
B) ​whatever title Gem had.
C) ​whatever title Ron had.
D) ​no title.

Accepted Answer

When Pam purchases the SUV from Midtown Motors, she acquires whatever title Midtown had. In most cases, the seller of a vehicle has the legal authority to transfer title to the buyer, and as long as the seller has clear title, the buyer will also have clear title. Therefore, Pam has a legal right to the SUV and can use it as her own. The previous owner (Ron) is no longer involved in the transaction and has no legal right to the SUV once he sells it to Midtown Motors. Similarly, the manufacturer (GEM Vehicles, Inc.) is not involved in this transaction and has no legal interest in the ownership of the SUV.

Question 15

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 grand piano and the gold ring were sold by Jack, the writing should enforce the sale of both items.

Question 16

Swiftline 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 way to satisfy the Statute of Frauds in this scenario would be to set out the terms of the lease agreement in a memo or written document. This would provide clear evidence of the agreement and help to avoid any misunderstandings or disputes. The other options may be helpful, but they would not definitively satisfy the requirements of the Statute of Frauds.

Question 17

Brad leaves an iPod at Computer Sales & Repair (CSR) to have the battery replaced. CSR sells the iPod to Doris, who does not know that it belongs to Brad. Brad can recover from​
A) ​no one.
B) ​CSR.
C) ​Doris.
D) ​Apple, Inc., the maker of the iPod.

Accepted Answer

CSR is responsible for returning the iPod to its rightful owner (Brad) since they sold it without his consent. Doris, who purchased the iPod in good faith, is not responsible for returning it as she did not know it was stolen property. Apple, Inc. is also not responsible as they did not have any involvement in the sale of the iPod.

Question 18

Fits Like A Glove Shoes, Inc., and Retail Footwear Stores enter into a contract for a sale of shoes. The contract indicates that the price includes transportation costs to a specific destination by including the term​
A) ​C.I.F.
B) ​delivery ex-ship.
C) ​F.A.S.
D) ​F.O.B.

Accepted Answer

F.O.B. (Free on Board) indicates that the price includes transportation costs to a specific destination, but the risk of loss or damage transfers from the seller to the buyer once the goods are loaded onto the shipping vessel.

Question 19

Pipes & Culverts Company orders six irrigation pumps from Quality Plumbing, Inc. The pumps are stored in Restorers Warehouse. Under the terms of the order, Quality must give Pipes & Culverts a warehouse receipt for the goods, which the buyer will then pick up. Title to the goods passes to Pipes & Culverts when​
A) ​Quality stores the drives.
B) ​Pipes & Culverts orders the drives.
C) ​Pipes & Culverts picks up the drives.
D) ​Quality gives Pipes & Culverts a warehouse receipt for the drives.

Accepted Answer

Title to the goods passes to Pipes & Culverts when Quality gives Pipes & Culverts a warehouse receipt for the drives, as per the terms of the order mentioned in the question. Therefore, option D is the correct choice.

Question 20

Red's Roofing buys asphalt tiles from Shingles, Inc. The parties agree that the tile will be shipped "F.O.B. Shingles's warehouse" to Red's Roofing location via Tristate Trucking Corporation. The tiles are lost in transit. The loss is suffered by​
A) Tristate.
B) ​Shingles, Inc.
C) ​Red's.
D) ​Red's customers by an increase in the prices of goods and services.

Accepted Answer

Since the agreement was that the tile would be shipped F.O.B. Shingles's warehouse, the ownership of the goods would transfer from Shingles to Red's as soon as the goods were loaded onto the truck. Therefore, Red's would be the one to suffer the loss.

Quiz 17: The Formation of Sales and Lease Contracts

Omni Metals Company and Piecework Fabrication, Inc., enter into a contract under which Omni agrees to deliver a certain quantity of sheet metal to Piecework each month. The contract does not include a price term. In a suit between the parties over the price, a court will

TalkTalk, Inc., offers to buy from Voice Media Corporation (VMC) 1,000 smartphones. Without notifying TalkTalk, VMC timely ships phones of a different quality. With respect to the offer and a possible contract, this shipment is an acceptance and

Olivia contracts to buy a refrigerator from a Prairie State Appliance store with the price to be paid in monthly installments. Later, Olivia files a suit against Prairie State, claiming that their contract is so unfair and one-sided that it would be unreasonable to enforce it. Olivia is asserting

Brian, an agent for Clarion Motors, Inc., writes a letter to Dina on November 1 stating that he will sell her a 2016 Subaru Outback for $20,000 between November 1 and December 31. Brian's letter to Dina is

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

Equipment Rentals Corporation (ERC) agrees to lease two backhoes to Dig & Fill Construction, Inc. Before any interest in the backhoes can pass from ERC to Dig & Fill, they must be

County Dentists Clinic offers to buy from Dental & Medical Supplies Company a certain quantity of floss and other items for a certain price. Dental & Medical 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

iSharp, Inc., and Jenene, the owner of a Kitchen Time shop, orally agree to a sale of knives and other utensils for $12,000. Jenene gives iSharp a check for $4,000 as a partial payment. This contract 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

Bert's Bagels & Nosh, Inc., and other bakeries refer to a "baker's dozen" as consisting of a collection of thirteen baked goods. This is

Quaff n' Quench Café buys twenty-five crates of oranges from Reynaldo Produce, Inc. Reynaldo ships the oranges "F.O.B. Quaff n' Quench" via Sham Shipping Company. The oranges rot in transit. The loss is suffered by

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

Pam buys from Midtown Motors a used sport utility vehicle (SUV) . The SUV was manufactured by GEM Vehicles, Inc., and previously owned by Ron. Regarding title to the SUV, Pam acquires

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

Swiftline 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

Brad leaves an iPod at Computer Sales & Repair (CSR) to have the battery replaced. CSR sells the iPod to Doris, who does not know that it belongs to Brad. Brad can recover from

Fits Like A Glove Shoes, Inc., and Retail Footwear Stores enter into a contract for a sale of shoes. The contract indicates that the price includes transportation costs to a specific destination by including the term

Red's Roofing buys asphalt tiles from Shingles, Inc. The parties agree that the tile will be shipped "F.O.B. Shingles's warehouse" to Red's Roofing location via Tristate Trucking Corporation. The tiles are lost in transit. The loss is suffered by

Quiz 17: The Formation of Sales and Lease Contracts

Omni Metals Company and Piecework Fabrication, Inc., enter into a contract under which Omni agrees to deliver a certain quantity of sheet metal to Piecework each month. The contract does not include a price term. In a suit between the parties over the price, a court will​

TalkTalk, Inc., offers to buy from Voice Media Corporation (VMC) 1,000 smartphones. Without notifying TalkTalk, VMC timely ships phones of a different quality. With respect to the offer and a possible contract, this shipment is an acceptance and​

Brian, an agent for Clarion Motors, Inc., writes a letter to Dina on November 1 stating that he will sell her a 2016 Subaru Outback for $20,000 between November 1 and December 31. Brian's letter to Dina is​

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​

Equipment Rentals Corporation (ERC) agrees to lease two backhoes to Dig & Fill Construction, Inc. Before any interest in the backhoes can pass from ERC to Dig & Fill, they must be

County Dentists Clinic offers to buy from Dental & Medical Supplies Company a certain quantity of floss and other items for a certain price. Dental & Medical 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​

iSharp, Inc., and Jenene, the owner of a Kitchen Time shop, orally agree to a sale of knives and other utensils for $12,000. Jenene gives iSharp a check for $4,000 as a partial payment. This contract 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​

Bert's Bagels & Nosh, Inc., and other bakeries refer to a "baker's dozen" as consisting of a collection of thirteen baked goods. This is​

Quaff n' Quench Café buys twenty-five crates of oranges from Reynaldo Produce, Inc. Reynaldo ships the oranges "F.O.B. Quaff n' Quench" via Sham Shipping Company. The oranges rot in transit. The loss is suffered by​

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

Pam buys from Midtown Motors a used sport utility vehicle (SUV) . The SUV was manufactured by GEM Vehicles, Inc., and previously owned by Ron. Regarding title to the SUV, Pam acquires​

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​

Swiftline 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​

Brad leaves an iPod at Computer Sales & Repair (CSR) to have the battery replaced. CSR sells the iPod to Doris, who does not know that it belongs to Brad. Brad can recover from​

Fits Like A Glove Shoes, Inc., and Retail Footwear Stores enter into a contract for a sale of shoes. The contract indicates that the price includes transportation costs to a specific destination by including the term​

Red's Roofing buys asphalt tiles from Shingles, Inc. The parties agree that the tile will be shipped "F.O.B. Shingles's warehouse" to Red's Roofing location via Tristate Trucking Corporation. The tiles are lost in transit. The loss is suffered by​