Exam 1

If Tornado Trucking arrives at Canary's business at 3:00 am and the business is closed, Tornado can unload the birdseed and leave it in the parking lot. T/F

False

If a clause in a contract is deemed to be unconscionable by a court, the UCC requires the court to invalidate the entire contract. T/F

False

In order to disclaim the implied warranty of merchantability, the seller must use a writing. t/f

False

In order to recover damages under 2-706, a seller must resell the goods concerned at a public sale. t/f

False

In order to satisfy the writing requirement of the UCC Statute of Frauds, a memorandum must be signed by both parties to a contract for the sale of goods for $500 or more. T/f

False

Once a buyer notifies a seller that he is rejecting nonconforming goods that have been delivered, the buyer has no further duties with respect to those goods. t/f

False

Rona makes and sells jewelry in her shop in Carbondale. Rona enters a contract to sell her car to Stan for $10,000. In her contract with Stan, Rona is a "merchant" under the UCC. T/F

False

The UCC does not apply to a contract for the sale of goods under $500. T/F

False

The UCC retains the common law principle that modifications to a contract require consideration to be enforceable. T/F

False

The UCC retains the traditional common law "mirror image" rule, which says that when an offeree's acceptance contains additional terms, the acceptance will be deemed a counteroffer and no contract can be formed by the acceptance. T/F

False

The general rule for tender of delivery under the UCC is that goods may be delivered in installments so long as all the installments eventually arrive. T/F

False

The obligation of good faith imposed by the UCC can be disclaimed by agreement. T/F

False

The warranty provisions of the UCC apply to anyone harmed by a product. t/f

False

When a seller fails to deliver, or repudiates, the buyer has an absolute right to obtain specific performance. t/f

False

When both parties to a contract for the sale of goods are merchants, additional terms in an acceptance will become part of the contract even if the additional terms materially alter the contract. T/F

False

The statue of limitations for an action for breach of warranty under the UCC is 2 years.

False- 4 years

In order to recover "cover" damages, a buyer must purchase substitute goods identical to those in the original contract. t/f

False- reasonable substitute

Article 2 of the Uniform Commercial Code governs the sale of real estate. T/F

False- sale of goods

The implied warranty of fitness for a particular purpose arises only when the seller is a merchant. t/f

Fasle

Which of the following sets forth the priority given by a court when interpreting a contract for the sale of goods: I. Usage of trade II. Course of dealing III. Course of performance IV. Express terms

1. Express terms 2. Course of performance 3. Course of dealing 4. Usage of trade

A buyer is entitled to inspect goods prior to payment in a COD sale.

False

A court that is interpreting the terms of a fully integrated written contract for the sale of goods may consider oral statements made by the parties at the time of contracting, even if those statements contradict the terms of the written agreement. T/F

False

A determination of who bears the risk of loss for goods in a sales transaction is determined by who has title to those goods at the time of the loss. T/F

False

A seller has no right to cure a non-conforming tender of goods after the time for performance has expired. T/F

False

A seller must use the words such as "warranty" or "guarantee" to create an express warranty. t/f

False

Anyone who sells something defined as "goods" under the UCC can be disclaimed by agreement. T/F

False

Which of the following conditions must be met for an implied warranty of fitness for a particular purpose to arise in connection with a sale of goods? I. Warranty must be in writing II. The seller must know that the buyer was relying on the seller in selecting the goods.

II only

Lou and Grace enter an oral contract where Grace agrees to buy Lou's pet pig for $300. Prior to payment and delivery, the pig wins a trophy at the Illinois State Fair. Lou then calls Grace on the phone to share the goods news and asks Grace to increase the purchase price to $500. Grace happily agrees. Lou then decides that she can't bear to part with the pig and backs out of the deal. Grace files a small claims lawsuit for the breach of contract. What is true?

Lou has a valid Statute of Frauds defense because the contract, as modified, needed to be in writing to be enforceable.

Thorn purchased a used entertainment system from Sound Corp. The sales contract stated that the entertainment system was being sold, "as is." Under the Sales Article of the UCC, which of the following statements is (are) correct regarding the seller's warranty to title and against infringement? I. Including the term "as is" in the sales contract is adequate communication that the seller is conveying the entertainment system without warranty of title and against infringement. II. The seller's warranty of title and against infringement may be disclaimed at any time after the contract is formed.

Neither I nor II

Unless parties to a contract for the sale of goods agree otherwise, title passes under a "destination" contract when delivery is tendered to the buy. T/F

True

When a buyer repudiates a contract while the goods are in transit, the seller may stop delivery of the goods. t/f

True

A buyer has an insurable interest in goods at the time that the goods are identified to the contract even if the goods are nonconforming. T/F

True

A buyer may reject an installment that is non-conforming if the non-conformity substantially impairs the value of that installment and cannot be cured. T/F

True

A buyer who accepts goods can no longer reject them, but may still revoke the acceptance. t/f

True

A contract for the sale of goods may be enforceable even if the price is not settled. T/F

True

A court that is interpreting the terms of a fully integrated written contract for the sale of goods may consider relevant industry practices in order to explain the terms of the contract. T/F

True

A product may be merchantable even if it is not perfect. t/f

True

A quantity term is never required in a contract for the sale of goods governed by the UCC. T/F

True

An offer by a merchant to buy or sell goods may be irrevocable for more than three months if supported by consideration. T/F

True

Bob and Roger enter an agreement for Roger to purchase Bob's used bicycle. Bob lives in a town 25 miles from Roger. Their contract is silent as to delivery. Under the UCC, Roger is required to pick up the bicycle at Bob's house. T/F

True

Documents of title can be either negotiable or non-negotiable. T/F

True

If a buyer rejects goods, the burden of proving that the goods conform to the contract is on the seller. t/f

True

In a contract for the sale of frozen goods, a seller in a "shipment contract" would be obligated to make a contract with a carrier that provides refrigeration. T/F

True

In the above question, the risk of loss during shipment is on SellCo. T/F

True

The UCC's good faith provision applies to all obligations relating to a seller's delivery. T/F

True

The buyer and seller to a contract for the sale of goods can have an insurable interest in the goods at the same time. T/F

True

The common law doctrine of "promissory estoppel" may still be used under the UCC as an exception to the Statue of Fraud. T/F

True

Which mercantile symbol is most appropriate for a transaction in which a St. Louis seller is to bear the risk and expense of transporting goods to a Chicago buyer? a. FOB Chicago b. CIF St. Louis c. FOB St. Louis d. C & F St. Louis

a. FOB Chicago

Rob (offeror) sends a fax to Lisa (offeree) requesting that Lisa begin manufacturing and shipping goods immediately. Lisa begins the required performance but does not inform Rob. Which of the following is true? a. Rob may acquire goods from another source without liability to Lisa. b. Lisa has accepted Rob's offer by beginning performance and did not need to inform Rob.

a. Rob may acquire goods from another source without liability to Lisa.

Jim sells a boat to Ted, who pays for the boat by check. the check is dishonored for insufficient funds. In the meantime, Ted resells the boat to Scott who pays fair value and has no knowledge of any problem with Ted's title to the boat. Which of the following is true? a. Scott has acquired good title to the boat. b. Scott has not acquired good title to the boat because of the irregularities with Ted's purchase.

a. Scott has acquired good title

On January 9th, Jill went to Compumart to buy a computer. Jill picked out a computer and paid for it. The store manager told Jill he would install some extra software and she could pick it up on January 12. On January 11, before Jill went back to the store to pick up the computer, it was destroyed in a fire at Compumart. Who bears the risk of loss? a. The store bears the risk of loss. b. Jill bears the risk of loss because she already paid for the computer c. The store bears the risk of loss only if its negligence caused the fire d. Risk of loss will fall on whichever party has the most insurance.

a. The store bears the risk of loss.

The issue of whether a provision in a contract for the sale of goods is "unconscionable" is a: a. matter of law for a judge to decide. b. matter of fact for a judge to decide. c. matter of law for a jury to decide. d. matter of fact for a judge to decide.

a. matter of law for a judge to decide.

If the birdseed is boxed and ready for pickup by Tornado Trucking, but is destroyed by an actual tornado in St. Louis before Tornado Trucking picks up goods, what is the result? a. Lark must acquire birdseed elsewhere and fulfill its contractual obligations to Canary. b. Lark is relieved of its obligations because the contract is avoided.

b.

Lark, a St. Louis seller, contracts to sell 10,000 funds of birdseed to Canary, a Chicago buyer, FOB St. Louis, with delivery to be made by Travelguys Trucking. Prior to delivery, Travelogues files bankruptcy and notifies Lark that it cannot pick up the birdseed. Lark arranges for Tornado Trucking to deliver the birdseed and calls Canary to notify them that delivery will now be made by Tornado. Which of the following is true? a. Canary can cancel the contract because the new delivery does not conform exactly to the original contract. b. Lark will be allowed to substitute trucking companies so long as the substitution is commercially reasonable.

b.

SellCo, located in Tampa, sells 10,000 tons of beans to BuyCo located in Denver. The contract terms are "F.O.B. Denver". The contracted is called: a. Shipment contract b. Destination contract

b. Destination contract

Candace leaves her watch with a jeweler for repair. The jeweler stocks and sells new and used watches as part of its business. The jeweler sells the watch to Eileen, a customer who does not know that the jeweler has no right to see the watch. Who has better title to the watch after the sale? a. Candace b. Eileen

b. Eileen

Under Article 2 of the UCC, unless a contract provides otherwise, before title to goods can pass from a seller to a buyer, the goods must be- a. Tendered to the buyer. b. Identified to the contract. c. Accepted by the buyer. d. Paid for.

b. Identified to the contract.

Steven orders 1,000 orange and blue sweatshirts from Victor. Victor ships 1,000 garnet and gold sweatshirts and tells Steven the shipment was sent as an "accommodation". Which of the following is true? a. Steven may reject the shipment and sue Victor for damages. b. If Steven accepts delivery, a contract for the purchase and sale of garnet and gold sweatshirts is formed.

b. If Steven accepts delivery, a contract for the purchase and sale of garnet and gold sweatshirts is formed.

William Joel orders a piano from a piano store on a 30 day trial basis. After the piano is delivered, a tornado strikes Mr. Joel's house and the piano is destroyed. Who bears the risk? a. Mr. Joel b. Piano store

b. Piano store

John, a CPA with an office in Carbondale, contracts to sell his sailboat to Sally. The sailboat is located at Rend Lake Marina. The place for delivery of the boat by John to Sally is: a. John's CPA office b. Rend Lake Marina

b. Rend Lake Marina

Tammy offers to sell a boat and trailer to Nan for $2,000. Nan replies, "I accept, I'd also like to put new tires on the boat trailer." Which of the following is true? a. Tammy and Nan have a contract and Tammy is required to put new tires on the boat trailer. b. Tammy and Nan do not have a contract because Nan's reply was a counteroffer. c. Tammy and Nan have a contract, but Tammy is not required to put new tires on the boat trailer.

c. Tammy and Nan have a contract, but Tammy is not required to put new tires on the boat trailer.

With regard to a contract governed by Article 2 of the UCC, which one of the following statements is true? a. Merchants and non-merchants are treated alike. b. The contract may involve the sale of any type of personal property c. The obligations of the parties to a contract must be performed in good faith. d. The contract must involve the sale of goods for a price of $500 or more.

c. The obligations of the parties to the contract must be performed in good faith

The "predominant purpose test" is used to determine: a. Whether a contract has been formed prior to performance b. Whether the contract involves mainly real estate or personal property. c. Whether the contract is primarily for the sale of goods or for the sale of services.

c. Whether the contract is primarily for the sale of goods governed by the UCC

Under the Sales Article of the UCC, most goods sold by merchants are covered by certain warranties. An example of an express warranty is a warranty of: a. Usage of trade b. Fitness for a particular purpose c. Merchantability d. Conformity of goods to the sample

d.

S agrees to sell B 10,000 widgets at a price of $1 per widget. After B breaches the contract, S resells the widgets for $0.90 per widget. S incurred an additional $100 in sales commissions to resell the widgets. What amount can S recover from B under the UCC? a. Noting b. $100 c. $1,000 d. $1,100

d. $1,100

Which of the following are examples of incidental damages recoverable by a seller upon a buyer's breach? a. Expenses incurred in stopping delivery b. Expenses incurred in the resale of goods c. Expenses incurred in storing goods after the buyer's breach d. All of the above

d. All of the above

Mayker, Inc. and Olyco contracted for Olyco to be the exclusive provider of Mayker's fuel oil for 3 months. The state 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. Olyco seeks to avoid performance. Olyco's best argument in support of its position is that- a. There was no meeting of the minds. b. The contract was unconscionable. c. The quantity was not definite and certain enough. d. Mayker ordered amounts of oil unreasonably greater than its normal requirements.

d. Mayker order amounts of oil unreasonably greater than its normal requirements.

Which of the following transactions would Article 2 of the UCC more likely apply to? a. The grant of a security interest in inventory by a business to a bank. b. The lease of an apartment c. The sale of stock by an investment broker d. The sale of an M&M milkshake by Dairy Queen

d. The sale of an M&M milkshake by DQ

The general rule under the UCC is that a seller is required to tender goods that conform in all respects to the contract. T/F

true- "perfect tender"