Question 1

Contractors Construction Corporation offers to buy from Dandy Cement Company a certain quantity of cement for a certain price. Dandy can ac?cept the offer by
A) doing nothing.
B) promising to ship or promptly shipping the cement.
C) promising to ship the cement only.
D) promptly shipping the cement only.

Accepted Answer

By promising to ship or promptly shipping the cement, Dandy Cement Company would be accepting the offer made by Contractors Construction Corporation. Option A, doing nothing, is not a valid response as silence usually does not indicate acceptance in a contract. Option C, promising to ship the cement only, may be considered acceptance but it would be better for Dandy to actually ship the cement to fully accept the offer. Option D, promptly shipping the cement only, does not guarantee acceptance as Dandy would need to indicate their agreement to the terms of the offer.

Question 2

Rite Clothiers, Inc., sells t-shirts to Brand Name Stores, Inc., under an existing con?tract. When textile costs increase, Brand agrees to a price increase, but later wants to cancel the con?tract. Brand may
A) cancel the contract immediately.
B) cancel the contract only after accepting a final shipment.
C) cancel the contract only on reasonable notice.
D) not cancel the contract.

Accepted Answer

Brand Name Stores, Inc. agreed to a price increase due to rising textile costs, which implies a modification of the contract terms. Once agreed upon, the contract is binding, and Brand cannot unilaterally cancel it without breaching the contract.

Question 3

Tasty Pastries, Inc., and other bakers refer to a "baker's dozen" as con?sisting of a collection of thirteen baked goods. This is an example of
A) course of dealing.
B) course of performance.
C) square dealing.
D) usage of trade.

Accepted Answer

This is an example of usage of trade, which refers to a consistent practice or method used by professionals in a particular industry. In the baking industry, a "baker's dozen" commonly refers to thirteen baked goods instead of the standard twelve, and this practice is widely recognized and accepted.

Question 4

Kelly offers to buy cooking oil from Jim. Jim believes Kelly asks for 10,000 gallons and orally agrees to the sale. When the parties later dispute the deal in court, Jim's claim of 10,000 gallons and Kelly's testimony that she ordered only 1,000 gallons
A) prevents the enforcement of any contract between these parties.
B) supports an enforceable contract for 10,000 gallons.
C) supports an enforceable contract for 5,500 gallons.
D) supports an enforceable contract for 1,000 gallons.

Accepted Answer

The Statute of Frauds requires certain contracts to be in writing to be enforceable, including sales of goods over a certain amount. Without written evidence, the enforceable contract is limited to the quantity admitted by both parties, which is 1,000 gallons in this case.

Question 5

Rodeo, S.A., which is based in Spain, enters into a contract for the sale of seven hydraulic lifts to Tonnage Shipping Company, which is based in the United States. This contract is governed by
A) Spanish law.
B) the provisions in the laws of both countries that are similar.
C) the UCC.
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) is a treaty that governs contracts for the sale of goods between parties from different countries. Both Spain and the United States are parties to the treaty, and as such, the CISG would govern this contract. The UCC (answer C) only applies to contracts for the sale of goods within the United States, and the provisions in the laws of both countries that are similar (answer B) would be difficult to apply and enforce in practice. Spanish law (answer A) would not apply as the sale is taking place outside of Spain.

Question 6

Desktop Company offers to sell eRetail, Inc., 1,000 computers for a $500,000, states that the offer will be open for six days, and asks for a response by fax. On the fourth day, eRetail sends an acceptance to Desktop via the mail, which is received on the sixth day. In this deal
A) a contract is formed.
B) no contract is formed, because Desktop asked for a response by fax.
C) no contract is formed, because Desktop received the acceptance late.
D) no contract is formed, because eRetail sent the acceptance late.

Accepted Answer

Desktop's offer was open for six days, and eRetail's acceptance was received on the sixth day. Therefore, a contract was formed.

Question 7

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 the sale of
A) any of the property evidenced by a writing.
B) any of the property that may involve fraud.
C) the furnishings priced at $500 or more.
D) the land and the building.

Accepted Answer

The answer of Quinn enters into a series of agreements...

Question 8

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 doc?trine of
A) good faith.
B) square dealing.
C) the mere image rule.
D) unconscionability.

Accepted Answer

The doctrine of unconscionability allows a court to refuse to enforce a contract if one of the parties was unable to fully understand the terms of the contract or was coerced into accepting them, resulting in a grossly unfair outcome.

Question 9

In Case 20.3, Jones v. Star Credit Corp., which of the following factors was not considered by the court when it declared a contract for the pur?chase of a freezer unconscionable
A) The price the plaintiffs were charged was more than four times the freezer's retail value.
B) The credit charges alone exceeded the freezer's retail value.
C) The seller knew of the buyers' limited resources.
D) The freezer was not merchantable.

Accepted Answer

The court did not consider whether the freezer was merchantable in determining whether the contract was unconscionable.

Question 10

United Farms offers to sell Valu Bakeries, Inc., fifty bushels of wheat. Valu's representative Wendy responds, "We agree to buy fifty bushels only if the wheat is Grade A quality." Wendy's statement is
A) a breach of the parties' contract.
B) a counteroffer.
C) a fulfillment of the parties' contract.
D) an acceptance.

Accepted Answer

Wendy is making a counteroffer to United Farms' offer to sell fifty bushels of wheat. She is adding a condition to the offer, which means that her statement does not constitute an acceptance. Therefore, option B is the correct answer.

Question 11

Equipment Rental Corporation and Family Farm, Inc., are parties to an oral agreement for a lease of goods with payments in excess of $10,000. They may satisfy the Statute of Frauds by
A) mutually agreeing not to commit fraud.
B) restating the terms in a phone call.
C) setting out the terms in an e-mail.
D) shaking hands on the deal.

Accepted Answer

The Statute of Frauds requires that contracts for the lease of goods with payments in excess of $10,000 must be in writing. To satisfy this requirement, the parties may set out the terms of the agreement in an e-mail, which will provide written evidence of the agreement. Mutually agreeing not to commit fraud or shaking hands on the deal does not satisfy the requirement for a written agreement, while restating the terms in a phone call does not provide a permanent record of the agreement.

Question 12

Overseas Corporation (OC), a U.S. firm, orally agrees to sell six freezers to Pisa Pizza, Ltd., in Italy. OC fails to deliver. Under the CISG, Pisa Pizza can
A) enforce the agreement.
B) not enforce the agreement because it is not in writing.
C) not enforce the agreement because the price term is not specified.
D) not enforce the agreement because there is no consideration.

Accepted Answer

Under the CISG, a contract for the sale of goods can be formed orally and does not require a writing. Additionally, the CISG provides for remedies in case of breach of contract, allowing Pisa Pizza to enforce the agreement and seek damages for OC’s failure to deliver. The price term may be determined through other means, such as course of dealing or usage of trade, and consideration is presumed in a contract for the sale of goods.

Question 13

Gail enters into a contract with Hi-Price Appliances, Inc. In a suit be?tween the parties over payment under the contract, Gail claims that a certain clause is unconscionable. If the court agrees, it may
A) enforce, limit, or refuse to enforce the contract or the disputed clause.
B) enforce the contract without the disputed clause only.
C) limit the application of the disputed clause only.
D) refuse to enforce the entire contract only.

Accepted Answer

If the court finds the clause unconscionable, it has the discretion to either enforce the contract, limit the disputed clause, or refuse to enforce the contract or the disputed clause altogether. A would be the best choice because it allows for the widest range of possible outcomes. B and C are too limited in their scope, while D is too extreme.

Question 14

Retail Music, Inc., offers to buy from Super Products Corporation (SPC) 1,000 blank CDs of a certain brand. Without notifying Retail, SPC timely ships CDs of a different brand. This shipment is
A) an acceptance of the offer and a breach of the parties' contract.
B) an acceptance of the offer and a fulfillment of the parties' contract.
C) a refusal of the offer and a breach of the parties' contract.
D) a refusal of the offer and a fulfillment of the parties' contract.

Accepted Answer

SPC's shipment of CDs of a different brand without notifying Retail constitutes acceptance of Retail's offer to buy 1,000 blank CDs. However, because the shipment is of a different brand, it breaches the parties' contract as it does not conform to the terms of the offer.

Question 15

Regional Products, Inc., agrees to sell to Quantity Dealers Corporation a certain amount of goods 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 UCC-designated warehouse.
C) Regional's place of business.
D) Quantity's place of business.

Accepted Answer

Under the UCC, if the place of delivery is not specified, the default rule is that delivery takes place at the seller's place of business.

Question 16

Roy's Chick'n Shack orders chicken from Standard Food Supplier, but Standard does not deliver. Roy's will probably be unable to enforce the agreement if the parties
A) did not limit the duration of the deal.
B) did not specify a payment term.
C) did not specify a quantity term.
D) have not begun to perform.

Accepted Answer

The lack of a quantity term means that there is no specific amount of chicken that Standard Food Supplier is obligated to provide. This makes it difficult for Roy's Chick'n Shack to enforce the agreement.

Question 17

Fruits & Vegetables, Inc., and Great Grocery Stores dispute the interpretation of an ambiguous phrase in their contract. In a suit between the parties to con?strue the contract, a court may accept evidence of
A) consistent additional terms only.
B) consistent additional terms and contradictory terms only.
C) contradictory terms only.
D) anything extrinsic to the contract.

Accepted Answer

Evidence of consistent additional terms may be admitted to explain an ambiguous phrase in a contract.

Question 18

Best Sales, Inc., is the offeror and City Goods Corporation is the offeree under a unilateral sales contract in which Delta Products Company is also interested. Best is not notified of City's performance within a rea?son?able time. Best
A) may treat the offer as having lapsed.
B) must assume that City has started to perform.
C) must contact City.
D) must contract with Delta.

Accepted Answer

Under a unilateral contract, the offeror (Best) is only bound if the offeree (City) performs within a reasonable time. If Best is not notified of City's performance within a reasonable time, the offer lapses and Best is no longer bound. Therefore, Best may treat the offer as having lapsed. Choices B, C, and D are not correct options in this scenario.

Question 19

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
A) accept the bandages "as is" only.
B) accept the bandages "as is" or reject the entire shipment only.
C) accept only the bandages that it wants and reject the rest.
D) reject the entire shipment only.

Accepted Answer

Doctors Medical Clinic can accept only the bandages it wants and reject the rest since they did not specify the sizes when placing the order. This is because the Emergency Supplies Company was not given any information about the specific sizes needed for the order, so they could not deliver only the sizes required by the clinic. Therefore, the clinic can make a selection of the needed sizes and can reject the rest.

Question 20

Recreation Supplies, Inc. (RSI), and Sam, the owner of a Tourist Time shop, orally agree to a sale of beach balls and seashells for $1,000. Sam gives RSI a check for $400 as a partial payment. This contract is
A) enforceable to the extent of $400.
B) fully enforceable because it is for specially made 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 Sam, which is $400. There is no evidence of a written contract or specific terms beyond the sale of beach balls and seashells, so the contract is not fully enforceable. Specially made goods would not be a factor in this scenario.

Quiz 20: The Formation of Sales and Lease Contracts

Contractors Construction Corporation offers to buy from Dandy Cement Company a certain quantity of cement for a certain price. Dandy can ac?cept the offer by

Rite Clothiers, Inc., sells t-shirts to Brand Name Stores, Inc., under an existing con?tract. When textile costs increase, Brand agrees to a price increase, but later wants to cancel the con?tract. Brand may

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

Kelly offers to buy cooking oil from Jim. Jim believes Kelly asks for 10,000 gallons and orally agrees to the sale. When the parties later dispute the deal in court, Jim's claim of 10,000 gallons and Kelly's testimony that she ordered only 1,000 gallons

Rodeo, S.A., which is based in Spain, enters into a contract for the sale of seven hydraulic lifts to Tonnage Shipping Company, which is based in the United States. This contract is governed by

Desktop Company offers to sell eRetail, Inc., 1,000 computers for a $500,000, states that the offer will be open for six days, and asks for a response by fax. On the fourth day, eRetail sends an acceptance to Desktop via the mail, which is received on the sixth day. In this deal

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 doc?trine of

In Case 20.3, Jones v. Star Credit Corp., which of the following factors was not considered by the court when it declared a contract for the pur?chase of a freezer unconscionable

United Farms offers to sell Valu Bakeries, Inc., fifty bushels of wheat. Valu's representative Wendy responds, "We agree to buy fifty bushels only if the wheat is Grade A quality." Wendy's statement is

Equipment Rental Corporation and Family Farm, Inc., are parties to an oral agreement for a lease of goods with payments in excess of $10,000. They may satisfy the Statute of Frauds by

Overseas Corporation (OC) , a U.S. firm, orally agrees to sell six freezers to Pisa Pizza, Ltd., in Italy. OC fails to deliver. Under the CISG, Pisa Pizza can

Gail enters into a contract with Hi-Price Appliances, Inc. In a suit be?tween the parties over payment under the contract, Gail claims that a certain clause is unconscionable. If the court agrees, it may

Retail Music, Inc., offers to buy from Super Products Corporation (SPC) 1,000 blank CDs of a certain brand. Without notifying Retail, SPC timely ships CDs of a different brand. This shipment is

Regional Products, Inc., agrees to sell to Quantity Dealers Corporation a certain amount of goods but no mention is made of where the goods are to be delivered. In general, the UCC requires that the delivery take place at

Roy's Chick'n Shack orders chicken from Standard Food Supplier, but Standard does not deliver. Roy's will probably be unable to enforce the agreement if the parties

Fruits & Vegetables, Inc., and Great Grocery Stores dispute the interpretation of an ambiguous phrase in their contract. In a suit between the parties to con?strue the contract, a court may accept evidence of

Best Sales, Inc., is the offeror and City Goods Corporation is the offeree under a unilateral sales contract in which Delta Products Company is also interested. Best is not notified of City's performance within a rea?son?able time. Best

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

Recreation Supplies, Inc. (RSI) , and Sam, the owner of a Tourist Time shop, orally agree to a sale of beach balls and seashells for $1,000. Sam gives RSI a check for $400 as a partial payment. This contract is