Ch. 19-47 terms-nm

Stone, a merchant seller in Seattle, contracted with Rose, a merchant buyer in Rochester, for the sale of goods to be shipped by truck. The terms of the contract were "F.O.B. Seattle". Stone delivered the goods to the carrier. After leaving Seattle, the truck containing the goods was never seen again. Stone has demanded payment for the goods, and Rose has refused. If Stone sues, the outcome will be:

Rose will win because under the UCC this was a shipment contract.

Ryan enters into a contract with Dave, the neighborhood grocer, to supply fresh vegetable daily. After four months, the grocery store expands its business considerably and attracts customers from the neighboring areas as well. As a result, Dave demands that Ryan triple his supply as he cannot keep up with the demand? Which of the following will apply in determining the amount that can be supplied in such circumstances?

Rule of good faith

Which of the following is most likely to be considered a sale of goods to which the UCC applies?

A gas station sells and installs a new battery in a car.

For which of the following sale contracts does title and risk of loss remain with the seller until the buyer accepts the goods?

A sale on approval

Toby and Roy are car dealers; Toby makes a deal with Roy to sell a 1978 Buick. However, they failed to reach any agreement regarding the price of the car and decided to leave the matter to a future date to be decided once Toby delivers the car. Which of the following is true about this deal?

According to the Code, a reasonable price will be put on delivery.

Megan has purchased two tickets for a lucky draw at the local supermarket, which are with the store's cashier. Tracy, her friend who knows about this, convinces the cashier that she is Megan and takes the tickets. She then goes and sells the tickets to Anya, who has no knowledge of the case. Which of the following statements is true?

Anya is a good faith purchaser.

Frank, a business law professor who has never sold a car before; sells his 1995 Honda Civic to Wanda. This sale is governed by:

Article 2 of the UCC.

Sean goes to Pinnacle Corp., convinces the store manager that he is their loyal online customer Ryan and purchases a DVD credited to Ryan's account. He then sells the DVD to Jason for a higher price. When Ryan finds out, he wants the DVD back from Jason. Which of the following is true of the case?

Sean has voidable title to the DVD

Brizon, a toy company enters into a five-year agreement with Toys Paradise (TP), a toy shoppe. The agreement states that Brizon is to provide all the toys required by the distinguished shop at a fixed rate. During the first 3 years of the contract, Brizon uses its excess capacity to meet-up with the anticipated requirements and delivers between 1.25-1.5 million toys to TP. However, in the 4th year of the agreement TP wants Brizon to deliver approximately twice as many toys, so that the toys can be used at other outlets owned by TP. In such a case:

Brizon need not provide the required amount of toys

Which of the following terms in a contract for the sale of goods requires the seller to insure the goods?

CIF

If the delivery term of the contract is _____ the place at which the goods originate, the seller is obligated to deliver to the carrier goods that conform to the contract and are properly prepared for shipment to the buyer, and the seller must make a reasonable contract for transportation of the goods on behalf of the buyer.

FOB

Cey Corp. entered into a contract to sell parts to Deck, Ltd. The contract provided that the goods would be shipped "FOB Cey's warehouse." Cey shipped parts different from those specified in the contract. Deck rejected the parts. A few hours after Deck informed Cey that the parts were rejected, they were destroyed by fire in Deck's warehouse. Cey believed that the parts were conforming to the contract. Which of the following statements is correct?

If the parts were nonconforming, Cey will bear the risk of loss, even though the contract was a shipment contract.

Which of the following is a transfer of the right to possess and use goods belonging to another?

Lease

Mayker, Inc. and Oylco contracted to have Oylco be the exclusive provider of Mayker's fuel oil for three months. The stated price was subject to increases of up to a total of 10% if the market price increased. The market price rose 25% and Mayker tripled its normal order. Oylco seeks to avoid performance. Oylco's best argument in support of its position is that

Mayker ordered amounts of oil unreasonably greater than its normal requirements.

Under Article 2 of the UCC, why does it matter whether a party to a contract is a merchant?

Merchants sometimes are treated differently than other parties.

Joe went to a music store; misrepresenting himself as James to the store attendant. He buys a plasma television on credit, charging it to James's account. He then sells that set to Mike. Mike buys the set in good faith. Which of the following is true in such cases?

Mike will hold a good title; hence no harm can be caused to him.

Which of the following is true of price terms in a contract?

No contract is created if price terms are not agreed on.

Abe took his bicycle to a bicycle shop for repair. By mistake, a sales clerk sold Abe's bike to Leon. This was a sale in the ordinary course of business; neither the clerk nor Leon was aware that the bike belonged to Abe. Can Abe recover his bike from Leon?

No, because Abe entrusted his bike to the bike shop.

Maple Interiors, located in Boston, contracted to sell and ship sofas to Peach Furniture, located in Atlanta. The contract stated that the goods were to be shipped "F.O.B. Boston, via XYZ railroad". Maple delivered the sofas to XYZ railroad. They were shipped from Boston but never seen again. Both Peach and Maple had assumed that the other party had the risk of loss, so neither had obtained insurance. Who must bear this loss?

Peach must bear the loss because the risk passed to it after the sofas were delivered to XYZ railroad.

Pulse Corp. maintained a warehouse where it stored its manufactured goods. Pulse received an order from Star. Shortly after Pulse identified the goods to be shipped to Star and before moving them to the loading dock, a fire destroyed the warehouse and its contents. With respect to the goods, which of the following statements is correct?

Pulse has title and an insurable interest.

If goods have been delivered to a buyer pursuant to a sale or return contract, the:

risk of loss for the goods passed to they buyer.

In a _____ contract, the goods are delivered to the buyer primarily for the buyer's use.

sale on approval

In a _____ contract, the goods are delivered to the buyer primarily for resale with the understanding that the buyer has the right to return them.

sale or return

Goods are being sold by Anne in Seattle and shipped by ABC Railroad to Brian in Portland, Oregon. In this situation, the term "FOB Seattle" means that the risk of loss passes from the seller to the buyer when:

the goods are delivered to ABC Railroad in Seattle.

The common law placed the risk of loss on _________ at the time of the loss.

the party that had technical title

An exception to the general rule is that if goods are entrusted to a merchant who deals in goods of that kind, the merchant has:

the power to transfer all rights of the entruster to a buyer in the ordinary course of business.

In a "mixed" contract for the sale of both goods and services, the court will apply the contract rules of the UCC or of the common law, depending on whether:

the predominant purpose of the contract is goods or services.

If a buyer and seller of goods fail to specify in their contract when title is to pass, the UCC's "gap filler" provision provides that title will pass when:

the seller completes obligation with respect to physical delivery of the goods.

A seller who has a _____ has the power to pass good title to a good faith purchaser for value.

voidable title

If a buyer rejects tender of the goods, title to those goods:

will automatically be revested in the seller

Which of the following factors is most important in deciding who bears the risk of loss between merchants when goods are destroyed during shipment?

The agreement between the parties.

Which of the following is most important in determining who bears the risk of loss in a sale of goods contract?

The agreement between the parties.

Which of the following characterizes an output contact?

The buyer must accept any amount that is reasonably proportionate to any stated estimate in the contract.

Which of the following is true of the Code's rules on title to goods?

Title passes to a buyer only when the seller performs his duties completely.

A bicycle manufacturer sells 100 bikes to Bill's Bike Shop. The contract says that Bill's may return any bike not sold within six months, and he will be reimbursed for them. Bill's Bike Shop burns down in one week after the delivery of the bikes, which are destroyed in the fire. Bill's bears the risk of loss for the 100 bikes.

True

A department store sells a TV set to Wilson, who pays with a bad check. Wilson immediately sells the TV to Davis for $500. Davis knew nothing about how Wilson acquired the TV from the store. Davis has good title to the TV and will prevail against the store if it sues Davis for the TV or its value.

True

Article 2 of the UCC determines the rights of the seller, the buyer, and third parties irrespective of who has title at any given moment.

True

At common law, the risk of loss for shipped goods falls upon the person or party who had "technical title" at the time the goods were damaged or destroyed.

True

In Exclusive Dealing Contracts, sellers have an obligation to use their best efforts to supply the goods to the buyers.

True

In mixed goods-services situations, courts determine whether the contract is for the sale of goods by determining whether the good or the service is the dominant part of the transaction.

True

Law of sale of goods codified in the Article-2 of the UCC is modified to accommodate current practices of the merchants.

True

The Benson Bearing Company sells Textron, Inc. a quantity of baseball bats that were stored in an independent warehouse at the time of the sale. The contract says that Textron is to pick up the bats at the warehouse. The risk of loss passes to Textron:

at the time it receives a negotiable warehouse receipt for the bats.

If the Uniform Commercial Code recognizes the fact that the parties to sales contract frequently omit terms from their agreements or state ambiguous terms, then the Code:

can fill in the blanks with reference to common trade practices.

In general, the UCC Sales Article applies to the sale of:

consumer goods by a non-merchant.

Baker and Able signed a contract which required Able to purchase 600 books from Baker at 90¢ per book. Subsequently, Able, in good faith, requested that the price of the books be reduced to 80¢. Under the circumstances, the oral agreement is:

enforceable, and proof of it will be admissible into evidence.

In determining the quantity of goods to be produced or taken pursuant to an output or needs contract, the rule of _____ applies.

good faith

To satisfy the UCC Statute of Frauds, a written agreement for the sale of goods must:

indicate that a contract for sale has been made.