Question 1

Alaskan salmon that fill the hold of Bill and Carla's fishing boat are fungible if the salmon are

Accepted Answer

Fungibility refers to the ability of assets to be interchanged. In this case, if the salmon are alike in nature or by agreement or trade usage, they can be interchanged with one another as they have the same qualities and characteristics.

Question 2

Curtis enters into a contract with Drive-Away Lease Company for a three-year lease of a car.This contract is subject to

Accepted Answer

Article 2A of the UCC governs leases of personal property, including automobiles. Therefore, Curtis's lease contract with Drive-Away Lease Company falls under the jurisdiction of Article 2A of the UCC.

Question 3

EZ Equipment Corporation leases six forklifts to Fresco Refining Company,but as the forklifts are delivered,they are lost in an explosion.Under the UCC,the parties' rights and obligations with respect to the loss depend on the concept of

Accepted Answer

The concept of risk of loss determines which party ultimately bears the loss in the case of an unexpected event like an explosion. Since the forklifts were in transit at the time of the loss, the UCC provides default rules for allocating risk of loss between the lessor (EZ Equipment Corporation) and the lessee (Fresco Refining Company). The parties may have negotiated a different allocation of risk in their lease agreement, but absent such an agreement, the UCC would apply.

Question 4

Ideal Gadgets,Inc.,and Jolly Outlets Corporation enter into a contract for a sale of kitchenware.The contract requires Ideal to deliver the goods to Ladle Carrier Company for transport to Jolly's warehouse in Metro City.Risk of loss passes to Jolly when

Accepted Answer

According to the contract, Ideal is required to deliver the goods to Ladle Carrier Company for transport to Jolly's warehouse. Therefore, the risk of loss passes to Jolly only when Ideal delivers the goods to Ladle.

Question 5

Timber Products,Inc.,and Walt,a consumer,enter into a contract for a sale of plywood.If the contract includes a clause that is perceived as grossly unfair to Walt,its enforcement may be challenged under the doctrine of

Accepted Answer

The doctrine of unconscionability allows a court to refuse to enforce a contract that is so one-sided or unfair that it would be oppressive to enforce it. If the clause perceived as grossly unfair to Walt is deemed unconscionable, it may not be enforced.

Question 6

A specific grade of corn that fills BioFuel Cooperative's silo is fungible.This means that the corn is

Accepted Answer

Fungible means that each unit is interchangeable with another unit of the same type and quality, with no unique characteristics that set it apart. So, if the grade of corn in BioFuel Cooperative's silo is fungible, it means that all units of that grade of corn are alike naturally, by agreement, or trade usage.

Question 7

Metro Daily and New City Newsstand enter into a contract under which Metro agrees to deliver a certain quantity of newspapers to New City each day.The contract does not include a price term.In a suit between the parties over the price,a court will

Accepted Answer

When a contract does not have a price term, the court will determine a reasonable price based on the circumstances surrounding the agreement, such as market value, past business dealings between the parties, and industry standards. This is known as an implied term of the contract. Therefore, choice A is the best option.

Question 8

Doctors Medical Clinic orders 1,000 bandages from Emergency Supplies Company but fails to specify the sizes.The bandages are delivered in an assortment of sizes.Doctors Medical Clinic may

Accepted Answer

Doctors Medical Clinic may accept only the bandages that it wants and reject the rest because they failed to specify the sizes. Accepting the bandages "as is" may result in receiving unusable sizes, and rejecting the entire shipment would be an overreaction. Therefore, accepting only the desired sizes would be the best course of action.

Question 9

Office Equipment Leasing,Inc.(OEL),agrees to lease five computer workstations to Product Promotion Corporation (PPC).Before any interest in the workstations can pass from OEL to PPC,they must be

Accepted Answer

In order for the interest in the workstations to pass from OEL to PPC, the goods must not only be in existence but also identified as the specific goods designated in the contract. This requirement ensures that there is no ambiguity or confusion regarding the goods being leased. Therefore, Option A is the best answer.

Question 10

Tasty Pastries,Inc.,and other bakers refer to a "baker's dozen" as consisting of a collection of thirteen baked goods.This is an example of

Accepted Answer

The term "baker's dozen" referring to 13 baked goods is an example of usage of trade, which is a well-established practice or custom within a particular industry or trade.

Question 11

Rikki and Sid enter into a sales contract.With respect to the specific contractual provisions set out in the UCC,Rikki and Sid may

Accepted Answer

The answer of Rikki and Sid enter into a sales...

Question 12

VuTech Company agrees to sell digital video equipment to Home & Business Stores,Inc.,for Home & Business to market to its customers.Their contract will not be enforceable unless it includes

Accepted Answer

The answer of VuTech Company agrees to sell digital video...

Question 13

On behalf of Premier Shipbuilding Corporation (PSC),Rita orders 1,000 cases of 1/4-inch nuts from Steel Parts Company's 10,000-case lot.Steel Parts separates 1,000 cases from the lot.Title and risk of loss

Accepted Answer

The answer of On behalf of Premier Shipbuilding Corporation (PSC),Rita...

Question 14

Raw Material,Inc.,and Sewn Fabric Corporation enter into a contract for a sale of muslin.The terms do not clearly indicate whether it is a destination or shipment contract.A court would most likely presume that it is

Accepted Answer

When a contract does not clearly indicate whether it is a destination or shipment contract, courts generally presume it to be a shipment contract. Under a shipment contract, the seller is responsible for delivering the goods to a carrier for transportation to the buyer, and the risk of loss or damage passes to the buyer when the goods are delivered to the carrier. In a destination contract, on the other hand, the seller is responsible for delivering the goods to a specific destination, and the risk of loss or damage passes to the buyer only when the goods are delivered to that destination.

Question 15

Uri sells 100 cases of vitamins to Wanda,but before she takes physical possession,the cases are lost.Under the UCC,the parties' rights and obligations with respect to the loss depend on the concept of

Accepted Answer

The parties' rights and obligations with respect to the loss depend on the concept of risk of loss, which determines at what point in time the risk of loss shifts from the seller to the buyer.

Question 16

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

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.

Question 17

Expert Stitching Corporation enters into a contract to sell denim clothing to Fine Fashion Company,which in turn sells a pair of jeans to Grady,a consumer.In contrast to standards that apply to consumers,the UCC imposes on merchants

Accepted Answer

The UCC imposes special business standards on merchants, which are higher than those imposed on consumers. This is because merchants are expected to have greater knowledge and experience in the sale of goods and are held to a higher level of commercial responsibility.

Question 18

Kip,a representative for Lite-Weight Shipping Company,delivers a bill of lading to Meg,the owner of Capacity Storage Warehouse.A bill of lading is

Accepted Answer

The answer of Kip,a representative for Lite-Weight Shipping Company,delivers a...

Question 19

Lewey's Bicycle Store contracts to buy fifty bicycles from Mountain Bikes,Inc.Unless the contract states otherwise,this is

Accepted Answer

The fact that the contract does not specify a destination indicates that it is a shipment contract, where the seller is responsible for getting the goods to a common carrier for delivery to the buyer. A bill of lading would be the document used to track the delivery of the goods, and a warehouse receipt would only be issued if the goods were being stored in a warehouse.

Question 20

In a dispute over a sale involving a bicycle,Dain argues that as to this deal Elle's Hobby Shop,where Dain bought the bike,is a merchant.A court may determine whether Elle's is a merchant by assessing whether

Accepted Answer

The correct factor to consider when determining whether Elle's Hobby Shop is a merchant is whether they hold themselves out, by occupation, as having knowledge or skill unique to the bike in the transaction. The other options, such as whether they sold any bikes in the last year, whether the owner enjoys biking, or if they subscribe to a bike trade magazine, do not necessarily determine if they are a merchant.

Quiz 15: The Formation of Sales and Lease Contracts