Question 1

American Coffee Company and Beans Brokers, Inc., enter into a contract for the sale of a certain quality and quantity of coffee beans, with Beans Brokers to determine the price. The price must be set according to
A) the concept of good faith.
B) the principle of fair trade.
C) the predominant-factor test.
D) the doctrine of unconscionability.

Accepted Answer

The answer of American Coffee Company and Beans Brokers, Inc.,...

Question 2

La-Z Days Motels, Inc., and Beds R Us Corporation enter into a contract that does not specify the payment terms. Payment may be made in
A) any commercially normal or acceptable means except credit card.
B) cash only.
C) any commercially normal or acceptable means.
D) cash or check only.

Accepted Answer

The contract allows for payment to be made in any commercially normal or acceptable means, providing flexibility for both parties. Restrictions on payment methods (such as cash-only or check-only) could limit options and cause inconvenience. The restriction on credit card payment in option A is not mentioned in the contract and therefore cannot be a valid choice.

Question 3

Over the course of a year, Suites & Sets Corporation sells household furnishings to customers to whom it extends credit. Suites & Sets orders the furnishings from The Storage Depot's warehouse, from which the items are shipped via common carrier to Suites & Sets customers. Article 2 of the UCC governs
A) all of the parties' sales of the goods.
B) Suites & Sets' extension of credit.
C) The Storage Depot's storage of the goods.
D) each company's management of its operations.

Accepted Answer

Article 2 of the UCC covers the sale of goods. In this scenario, Suites & Sets Corporation and The Storage Depot are engaging in the sale and purchase of household furnishings, so the transactions are covered by Article 2. The extension of credit by Suites & Sets and the storage of the goods by The Storage Depot are not the focus of Article 2. The management of operations by both companies is not governed by the UCC.

Question 4

Fact Pattern 20-B1 (Questions B16-B18 apply)
Ripe Produce, Inc., and Southeast Asian Bistro & Market enter into a contract for the delivery of locally grown fruits and vegetables. The parties use a standard Ripe 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. Southeast Asian refuses to pay for the spoiled goods.
-Refer to Fact Pattern 20-B1. Southeast Asian contends that the practice in the trade with respect to payment for spoiled produce justifies its refusal to pay. Southeast Asian 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) a rule of construction.

Accepted Answer

Southeast Asian is arguing that the court should take into account the usage of trade, which refers to the regular practices and customs within a particular industry. In this case, Southeast Asian is suggesting that it is common practice within the produce industry to not pay for spoiled goods. The usage of trade is a factor that courts can consider in determining the parties' intent and understanding of the terms of the contract.

Question 5

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) applies to contracts for the sale of goods between parties from different countries, including Mexico and the United States. The CISG provides a set of uniform rules that govern the rights and obligations of the parties and is widely accepted as the international standard for such contracts. Therefore, the CISG governs the contract between Toro, S.A. and United Fencing Company.

Question 6

Savannah and Tim enter into a sales contract for orchids. With respect to the specific contractual provisions set out in the UCC, Savannah and Tim 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 answer of Savannah and Tim enter into a sales...

Question 7

Nature's Products, Inc., sends its standard order form to Omni Distribution Corporation to evidence a sale of packing materials. Omni 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

Additional terms in a contract between merchants become part of the contract unless they materially alter it, the original offer required acceptance of its terms, or the offeror objects within a reasonable time.

Question 8

Ferris is refinishing his kitchen floor and needs a floor sander to complete the job. Ferris's neighbor Gerda suggests that he call Home Repair Rentals, Inc. Home Repair leases Ferris a floor sander. In this transaction, the lessor is
A) Ferris.
B) Gerda.
C) Home Repair.
D) none of the parties.

Accepted Answer

Home Repair Rentals, Inc. is the lessor, or the entity leasing the floor sander to Ferris. Ferris is the lessee or the entity renting the floor sander. Gerda is not a party to the transaction and is merely suggesting a business for Ferris to use.

Question 9

Perfect Poultry Company agrees to sell chicken, turkey, and other meats to Quik Markets, Inc., to sell to its customers. Normally, their contract would not be en?forceable unless it includes
A) the duration of the deal.
B) the price of the goods.
C) the quantity of the goods.
D) the shipping arrangements.

Accepted Answer

Under the UCC, a contract for the sale of goods for $500 or more is only enforceable if it includes the quantity of goods being sold. The duration, price, and shipping arrangements can be determined later or implied by past practices.

Question 10

Great Gear, Inc., enters into a contract to sell sports clothing and equipment to Healthways Workout store, which in turn sells a pair of bike shorts to Ilene, a consumer. In comparison 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 as they are considered experts in the transactions they engage in and are expected to have a higher level of knowledge and experience in their field. This includes standards such as implied warranties, the duty to act in good faith, and the obligation to fulfill contractual obligations promptly.

Question 11

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. Without a written contract, it may be difficult to enforce the agreement for the remaining $8,000.

Question 12

Fact Pattern 20-B1 (Questions B16-B18 apply)
Ripe Produce, Inc., and Southeast Asian Bistro & Market enter into a contract for the delivery of locally grown fruits and vegetables. The parties use a standard Ripe 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. Southeast Asian refuses to pay for the spoiled goods.
-Refer to Fact Pattern 20-B1. Ripe Produce responds that it did not waive payment for spoiled goods in the parties' previous transaction. Ripe 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) a rule of construction.

Accepted Answer

Ripe Produce is arguing that the court should consider the course of dealing between the parties, which refers to their past conduct and business practices in similar transactions. This can help establish whether a particular term, such as payment for spoiled goods, was implicitly agreed upon by the parties.

Question 13

Stop n' Gas Convenience Stores, Inc., is an East Coast-based firm that does business throughout the United States. With respect to this circumstance, the UCC has been adopted by, and applies in,
A) all of the states, in whole or in part.
B) only the states on the Atlantic and Pacific coasts.
C) none of the states, to date.
D) only the lower forty-eight states-not Alaska or Hawaii.

Accepted Answer

The UCC (Uniform Commercial Code) has been adopted by all 50 states in the US, although some states have made modifications to certain provisions of the UCC. Therefore, Stop n' Gas Convenience Stores, Inc. would be subject to the provisions of the UCC regardless of the state in which it does business.

Question 14

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 ac?cept 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 by promptly shipping them. Both actions constitute acceptance under the Uniform Commercial Code. A material alteration of the terms within a reasonable time would be considered a counteroffer and not an acceptance. A shipment of nonconforming goods with a notice of accommodation would be considered a partial acceptance and would require County Dentists Clinic's agreement to become a binding contract.

Question 15

Downtown Contractors 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

To satisfy the Statute of Frauds, contracts for the lease of equipment with payments totaling more than $10,000 must be in writing. While the statute does not require a formal contract, a memo or written agreement is necessary. Mutually agreeing not to commit fraud, repeating the terms in a phone call, or shaking hands on the deal does not satisfy the requirement for a written agreement. Therefore, setting out the terms in a memo is the only acceptable option to satisfy the Statute of Frauds.

Question 16

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 rea?son?able 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

Gelato may treat the offer as having lapsed because Fresh Dairy did not notify Gelato of its performance within a reasonable time. This means that Fresh Dairy did not properly communicate its intent to sell the goods, and therefore Gelato is not obligated to comply with the terms of the contract.

Question 17

Diet & Health Food stores orders 1,000 boxes of granola bars from Energy Products, Inc., but fails to specify the varieties. The granola bars are delivered in an assortment of varieties. Diet & Health may
A) accept all of the granola bars "as is" only.
B) accept all of the granola bars "as is" or reject the entire shipment only.
C) accept only the granola bars that it wants and reject the rest.
D) reject the entire shipment only.

Accepted Answer

Diet & Health Food stores can only accept the granola bars that they want and reject the rest. This is because they did not specify the varieties they wanted at the time of ordering, so they cannot expect to receive only the varieties they prefer. As such, they have the option to accept the granola bars they want and reject the rest.

Question 18

Global Outfitters Outlet and Hyacinth, a consumer, enter into a contract for a sale of ultra-weather camping gear. If the contract includes a clause that is perceived as grossly unfair to Hyacinth, 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 refuse enforcement of a contract that is perceived as grossly unfair or oppressive to one party. In this case, if the contract contains a clause that is perceived as grossly unfair to Hyacinth, she may challenge its enforcement under the doctrine of unconscionability.

Question 19

Fact Pattern 20-B1 (Questions B16-B18 apply)
Ripe Produce, Inc., and Southeast Asian Bistro & Market enter into a contract for the delivery of locally grown fruits and vegetables. The parties use a standard Ripe 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. Southeast Asian refuses to pay for the spoiled goods.
-Refer to Fact Pattern 20-B1. Ripe Produce files a suit against Southeast Asian, 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) not supported by consideration.
D) a complete and final statement of their agreement.

Accepted Answer

Since the standard form used by the parties contained only some of the terms they agreed on, it is likely that the contract was not fully integrated. In such a case, evidence of additional terms (such as the assumption of risk by the buyer) may be allowed if they are consistent with the written agreement and do not contradict its express terms.

Question 20

Refined Grains, Inc., is a Kansas-based firm that does business throughout the world. Refined Grains manages retail and wholesale operations, buys and sells commercial venues, undeveloped land, and agricultural products, and other goods. Refined Grains has had to deal with employee and customer theft. With respect to these circumstances, the Uniform Commercial Code (UCC) provides a framework for
A) commercial transactions for the sale of and payment for goods.
B) international distribution agreements.
C) domestic and foreign transactions in real estate.
D) prosecuting crimes against business interests.

Accepted Answer

The Uniform Commercial Code (UCC) provides a framework for commercial transactions for the sale of and payment for goods. Theft of goods by employees or customers would fall under this framework. The UCC does not apply to international distribution agreements, transactions in real estate, or prosecutions of crimes against business interests.

Quiz 20: Formation of Sales and Lease Contracts

American Coffee Company and Beans Brokers, Inc., enter into a contract for the sale of a certain quality and quantity of coffee beans, with Beans Brokers to determine the price. The price must be set according to

La-Z Days Motels, Inc., and Beds R Us Corporation enter into a contract that does not specify the payment terms. Payment may be made in

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

Savannah and Tim enter into a sales contract for orchids. With respect to the specific contractual provisions set out in the UCC, Savannah and Tim may

Nature's Products, Inc., sends its standard order form to Omni Distribution Corporation to evidence a sale of packing materials. Omni responds with its own standard purchase order form. Additional terms in the purchase order automatically become part of the contract unless

Ferris is refinishing his kitchen floor and needs a floor sander to complete the job. Ferris's neighbor Gerda suggests that he call Home Repair Rentals, Inc. Home Repair leases Ferris a floor sander. In this transaction, the lessor is

Perfect Poultry Company agrees to sell chicken, turkey, and other meats to Quik Markets, Inc., to sell to its customers. Normally, their contract would not be en?forceable unless it includes

Great Gear, Inc., enters into a contract to sell sports clothing and equipment to Healthways Workout store, which in turn sells a pair of bike shorts to Ilene, a consumer. In comparison to standards that apply to consumers, the UCC imposes on merchants

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

Stop n' Gas Convenience Stores, Inc., is an East Coast-based firm that does business throughout the United States. With respect to this circumstance, the UCC has been adopted by, and applies in,

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 ac?cept the offer by

Downtown Contractors 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

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 rea?son?able time. Gelato

Diet & Health Food stores orders 1,000 boxes of granola bars from Energy Products, Inc., but fails to specify the varieties. The granola bars are delivered in an assortment of varieties. Diet & Health may

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