Question 1

Cotton Brokers,Inc. ,enters into a contract to sell denim clothing to Delite Natural Fashion store,which in turn sells a pair of jeans to Esmé,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, including requirements for good faith dealings and commercial reasonableness in performance and enforcement of contracts. These standards are higher than those imposed on consumers.

Question 2

Resource Remarketers,Inc. ,offers to buy crude oil from Petro Producers,Inc.The parties later dispute the deal in court.Petro's claim that Resource ordered 10,000 gallons and Resource's testimony that it 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 court will likely enforce an enforceable contract for the amount that both parties agreed upon, which in this case is 1,000 gallons. The fact that there is a dispute over the amount ordered does not necessarily prevent the enforcement of a contract. However, if the court cannot determine the actual amount ordered, it may be difficult to enforce the contract.

Question 3

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

Under the UCC, parties to a sales contract have the freedom to agree to any terms they wish, as long as they are not illegal or unconscionable.

Question 4

Radiant Phone Company and Precision Works,Inc.(PWI),enter into a contract for the sale of a certain quantity of cell-phone parts,with PWI 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 price must be set according to the concept of good faith, which requires honesty and fairness in the determination of the price in a contract where one party has the discretion to set the price.

Question 5

Fact Pattern 19-B1 
Fruits & Vegetables,Inc. ,and Grover's Market enter into a contract for the delivery of locally grown produce.The parties use a standard Fruits & Vegetables form that contains some of the terms the parties agree on but not others.Some of the produce spoils before it can be sold.Grover's refuses to pay for the spoiled goods.
-Refer to Fact Pattern 19-B1.Grover's contends that the practice in the grocery trade with respect to payment for spoiled produce justifies its refusal to pay.Grover's 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

The answer of Fact Pattern 19-B1 
Fruits & Vegetables,Inc. ,and...

Question 6

Fact Pattern 19-B1 
Fruits & Vegetables,Inc. ,and Grover's Market enter into a contract for the delivery of locally grown produce.The parties use a standard Fruits & Vegetables form that contains some of the terms the parties agree on but not others.Some of the produce spoils before it can be sold.Grover's refuses to pay for the spoiled goods.
-Refer to Fact Pattern 19-B1.Fruits & Vegetables files a suit against Grover's,claiming that the buyer assumed the risk of the spoilage of the unsold produce.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

If the contract is not fully integrated, evidence of additional terms can be allowed.

Question 7

GR*Tech Company agrees to sell computer equipment to Home Office Stores,Inc. ,to market 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

According to the Statute of Frauds, contracts for the sale of goods priced at $500 or more are not enforceable unless they are evidenced by a writing and signed by the party against whom enforcement is sought. The writing must include, among other things, the quantity of goods being sold. Therefore, the contract between GR*Tech Company and Home Office Stores, Inc. would not be enforceable unless it includes the quantity of goods being sold. While the duration of the deal, the price of the goods, and the shipping arrangements are all important terms to include in a contract, they are not necessary for the contract to be enforceable under the Statute of Frauds.

Question 8

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 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) is a treaty that provides a uniform set of rules for international commercial contracts between parties from different countries. It is designed to promote international trade by eliminating legal barriers and reducing transaction costs. Spain and the United States are both signatories of the CISG, so this international treaty would govern the sale of the hydraulic lifts between Rodeo, S.A. and Tonnage Shipping Company.

Question 9

Discount Mart,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)most of the states on the Atlantic and Pacific coasts.
C)none of the states,to date.
D)only the states on the Mississippi,Missouri,and Ohio Rivers.

Accepted Answer

The UCC (Uniform Commercial Code) has been adopted by all of the states, either wholly or partly. Therefore, it applies to Discount Mart Inc. wherever it does business in the United States.

Question 10

Over the course of a year,Mom's Appliance Company sells its wares to customers to whom it extends credit.Mom's orders the appliances from NET Appliance Depot's warehouse,from which the items are shipped via common carrier to Mom's customers.Article 2 of the UCC governs
A)all of the parties' sales of the goods.
B)Mom's extension of credit.
C)NET's storage of the goods.
D)the common carrier's delivery of the goods.

Accepted Answer

Article 2 of the UCC governs the sale of goods. In this scenario, both Mom's Appliance Company and NET Appliance Depot are involved in the sale of goods to customers, and therefore the provisions of Article 2 of the UCC will apply to their transactions. The extension of credit, storage of goods, and delivery of goods by a common carrier may involve other areas of law, but Article 2 will govern the parties' sales of the goods.

Question 11

Readymade Construction Corporation offers to buy from Set-Still Cement Company a certain quantity of cement for a certain price.Set-Still 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 cement.
C)a prompt shipment of the cement only.
D)a shipment of nonconforming goods with a notice of accommodation.

Accepted Answer

Set-Still can accept the offer by promising to ship or making a prompt shipment of the cement, as this would be considered acceptance under the UCC. The other options do not qualify as acceptance under UCC rules.

Question 12

Excel Autos & Trucks,Inc. ,contracts to sell five trucks to First Leasing Corporation,which contracts to lease the trucks to General Delivery Company.Article 2A of the UCC applies to
A)neither the lease nor the sale.
B)the lease and the sale.
C)the lease only.
D)the sale only.

Accepted Answer

Article 2A of the UCC specifically governs leases of goods, not sales. Therefore, it applies to the lease between First Leasing Corporation and General Delivery Company, but not to the sale between Excel Autos & Trucks, Inc. and First Leasing Corporation.

Question 13

Crafted Countertops,Inc. ,and Kitchen Design 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

This choice allows for flexibility in payment methods and aligns with commercially acceptable practices. Option A excludes credit cards, which may limit the buyer's ability to pay, and option B limits payment to cash only, which may not be feasible or safe for either party. Option D limits payment to cash and checks only, which may not include other forms of electronic payment.

Question 14

Stardust Coffee Company is a Texas-based firm that does business throughout the world.Stardust manages retail and wholesale operations,buys and sells commercial venues,undeveloped land,and coffee beans,and other goods.Stardust 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, which includes the buying and selling of coffee beans and other goods by Stardust Coffee Company. The UCC does not pertain to international distribution agreements, domestic and foreign transactions in real estate, or prosecuting crimes against business interests.

Question 15

Charcoal Briquettes,Inc. ,is the offeror and Dante's Firewood Company is the offeree under a unilateral sales contract in which Ember's Kindling & Tinder Company is also interested.Charcoal is not notified of Dante's performance within a rea?son?able time.Charcoal
A)may treat the offer as having lapsed.
B)must assume that Dante has started to perform.
C)must contact Dante.
D)must make an offer to Ember.

Accepted Answer

If Charcoal is not notified of Dante's performance within a reasonable time, then Charcoal may treat the offer as having lapsed. This is because a unilateral contract requires the offeree to take some action for acceptance, and if that action is not taken within a reasonable time, the offer may be considered to have lapsed. Charcoal is not obligated to assume that Dante has started to perform or contact Dante, nor is Charcoal required to make an offer to Ember.

Question 16

Equipment Rental Corporation and Family Farm,Inc. ,are parties to an oral agreement for a lease of farm equipment with payments in excess of $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

The best way to satisfy the Statute of Frauds for an oral agreement with payments over $10,000 is to set out the terms in a memo or written agreement signed by both parties. This provides clear evidence of the agreement and its terms, and protects both parties in case of any disagreements or disputes in the future. Mutually agreeing not to commit fraud or shaking hands on the deal are not sufficient to satisfy the Statute of Frauds, and repeating the terms in a phone call may not provide clear and reliable evidence of the agreement.

Question 17

Fact Pattern 19-B1 
Fruits & Vegetables,Inc. ,and Grover's Market enter into a contract for the delivery of locally grown produce.The parties use a standard Fruits & Vegetables form that contains some of the terms the parties agree on but not others.Some of the produce spoils before it can be sold.Grover's refuses to pay for the spoiled goods.
-Refer to Fact Pattern 19-B1.Fruits & Vegetables responds that it did not waive payment for spoiled produce in the parties' previous transaction.Fruits & Vegetables 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

Fruits & Vegetables is arguing that the court should consider the course of dealing between the parties, which refers to the prior conduct of the parties in their previous transactions. This can help establish an implied agreement or practice between the parties that can be used to interpret or fill in gaps in the current contract.

Question 18

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 choose to accept only the bandages that it wants and reject the rest. The clinic did not specify the sizes, so they cannot expect Emergency Supplies Company to deliver a specific assortment of sizes. However, the clinic has the right to receive the quantity of bandages they ordered and can accept only the bandages that they need for their operations.

Question 19

Tom's Timber Outlet and Olivia,a consumer,enter into a contract for a sale of plywood.If the contract includes a clause that is perceived as grossly unfair to Olivia,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 to enforce a contract that is perceived as grossly unfair or oppressive to one party. If the clause is seen as unconscionable, Olivia can challenge its enforcement in court. The mirror image rule pertains to acceptance of an offer, the principle of fair trade is a general concept that applies to business practices, and the predominant-factor test is a tool used to determine which state's law should govern a contract dispute.

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 $400 because that is the amount of partial payment received. Without a written agreement or specific performance, the enforceability of an oral contract is limited. Additionally, there is no indication that the goods were specially made, which would have given the contract more force under the UCC.

Quiz 19: A: The Formation of Sales and Lease Contracts

Cotton Brokers,Inc. ,enters into a contract to sell denim clothing to Delite Natural Fashion store,which in turn sells a pair of jeans to Esmé,a consumer.In comparison to standards that apply to consumers,the UCC imposes on merchants

Resource Remarketers,Inc. ,offers to buy crude oil from Petro Producers,Inc.The parties later dispute the deal in court.Petro's claim that Resource ordered 10,000 gallons and Resource's testimony that it ordered only 1,000 gallons

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

Radiant Phone Company and Precision Works,Inc.(PWI) ,enter into a contract for the sale of a certain quantity of cell-phone parts,with PWI to determine the price.The price must be set according to

GR*Tech Company agrees to sell computer equipment to Home Office Stores,Inc. ,to market to its customers.Normally,their contract would not be en?forceable unless it includes

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

Discount Mart,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,

Over the course of a year,Mom's Appliance Company sells its wares to customers to whom it extends credit.Mom's orders the appliances from NET Appliance Depot's warehouse,from which the items are shipped via common carrier to Mom's customers.Article 2 of the UCC governs

Readymade Construction Corporation offers to buy from Set-Still Cement Company a certain quantity of cement for a certain price.Set-Still can ac?cept the offer by

Excel Autos & Trucks,Inc. ,contracts to sell five trucks to First Leasing Corporation,which contracts to lease the trucks to General Delivery Company.Article 2A of the UCC applies to

Crafted Countertops,Inc. ,and Kitchen Design Corporation enter into a contract that does not specify the payment terms.Payment may be made in

Charcoal Briquettes,Inc. ,is the offeror and Dante's Firewood Company is the offeree under a unilateral sales contract in which Ember's Kindling & Tinder Company is also interested.Charcoal is not notified of Dante's performance within a rea?son?able time.Charcoal

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

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

Tom's Timber Outlet and Olivia,a consumer,enter into a contract for a sale of plywood.If the contract includes a clause that is perceived as grossly unfair to Olivia,its enforcement may be challenged under

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