exam 2
The commonly-used shipping term _____ requires the seller to bear the expense and risk of loss until the goods are unloaded from the ship at its port of destination.
Ex-ship (from the carrying vessel)
Which of the following is an INCORRECT statement regarding the implied warranty of fitness for a particular purpose?
The implied warranty of fitness for a particular purpose guarantees that sold or leased goods are fit for the ordinary purpose for which they are sold or leased.
A completed contract is called a(n) _____ contract.
executed contract An executed contract has been fully performed by both sides. It is a complete contract.
A written agreement to buy an automobile from a dealership is a(n)_____ contract.
express An express contract is expressed in written or oral words. A written agreement to buy an automobile from a dealership is an express contract because it is in written words.
A destination contract requires the seller to deliver goods to either the buyer's place of business or another destination, with title passing when
seller tenders delivery of the goods at the specified destination A destination contract requires the seller to deliver goods to either the buyer's place of business or another destination, with title passing when the seller tenders delivery of the goods at the specified destination.
Who bears the risk of loss during shipment in a destination contract?
seller
Who bears the risk of loss during shipment in a sale on approval?
seller
A shipment contract requires the seller to ship the goods to the buyer via a common carrier. The seller is required to make proper shipping arrangements and deliver the goods into the carrier's hands. In this instance the title to goods sold in a transactions would pass from seller to purchaser in accordance with the UCC when
seller delivers the goods to the carrier A shipment contract requires the seller to ship the goods to the buyer via a common carrier. The seller is required to make proper shipping arrangements and deliver the goods into the carrier's hands. In this instance the title to goods sold in a transactions would pass from seller to purchaser in accordance with the UCC when delivered to the carrier.
A disclaimer of an implied warranty of fitness for a particular purpose may contain general language without the specific term
"fitness." A disclaimer of an implied warranty of fitness for a particular purpose may contain general language without the specific term "fitness."
The commonly-used shipping term _____ requires the seller to arrange to ship the goods and put the goods in the carrier's possession. The buyer bears the shipping expense and risk of loss while the goods are in transit.
(F.O.B.) point of shipment Free on board (F.O.B.) point of shipment requires the seller to arrange to ship the goods and put the goods in the carrier's possession. The buyer bears the shipping expense and risk of loss while the goods are in transit.
Suppose Mary, the owner of the Chic Dress Shop, says to Peter, a painter, "If you promise to paint my store by July 1, I will pay you $3,000." Peter says, "I promise to do so." A _____ was created at the moment Peter promised to paint the dress shop.
A bilateral contract is a contract entered into by way of an exchange of promises of the parties. It is a "promise for a promise." A bilateral contract was created at the moment Peter promised to paint the dress shop (a promise for a promise).
What is a good faith subsequent lessee?
A person to whom a lease interest can be transferred from a person with voidable title is known as a good faith subsequent lessee.
Who can transfer good title to a good faith purchaser for value?
A person with voidable title can transfer good title to a good faith purchaser for value.
Who is a buyer in the ordinary course of business?
A person who, in good faith and without knowledge that the sale violates the ownership or security interests of a third party, buys goods in the ordinary course of business.
Which of the following is an INCORRECT statement regarding disclaimer of the implied warranty of fitness for a particular purpose?
A seller cannot disclaim the implied warranty of fitness for a particular purpose. Expressions such as "as is," "with all faults," or other language that makes it clear to the buyer that there are no implied warranties disclaims all implied warranties, including the implied warranty of fitness for a particular purpose. If the "as is" type of disclaimer is not used, a disclaimer of the implied warranty of fitness for a particular purpose may contain general language, without specific use of the term fitness.
Which of the following is an INCORRECT statement regarding disclaimer of the implied warranty of merchantability?
A seller cannot disclaim the implied warranty of merchantability. Expressions such as "as is," "with all faults," or other language that makes it clear to the buyer that there are no implied warranties disclaims all implied warranties, including the implied warranty of merchantability. If the "as is" type of disclaimer is not used, a disclaimer of the implied warranty of merchantability must specifically mention the term merchantability for the implied warranty of merchantability to be disclaimed.
Mary, the owner of the Chic Dress Shop, says to Peter, a painter, "If you paint my shop by July 1, I will pay you $3,000." This offer creates a _____.
A unilateral contract is a contract in which the offeror's offer can be accepted only by the performance of an act by the offeree. It is a "promise for an act." Mary's offer can be accepted only by Peter's painting of the shop. If Peter does not paint the shop by July 1, there has been no acceptance, and Mary cannot sue Peter for damages. If Peter paints the shop by July 1, Mary owes Peter $3,000.
A(n) _____ contract has no legal effect.
A void contract It is as if no contract had ever been created. A contract to commit a crime is void. If a contract is void then neither party is obligated to perform the contract and neither party can enforce the contract.
The expression "as is" is an example of a(n)
A warranty disclaimer is a statement that negates express and implied warranties.
requires an offer by the offeror and an acceptance of the offer by the offeree. There must be mutual assent by the parties.
Agreement
A contract is defined as which of the following?
An agreement that is enforceable by a court of law or equity.
A written agreement to purchase a house is an example of a(n)
An express contract is an agreement that is expressed in written or oral words. The purchase of the house is expressed in written words.
When is an express warranty created?
An express warranty is created when a seller or lessor affirms that the goods he or she is selling meet certain standards of quality, description, performance, or condition.
"The goods must be fit for the ordinary purposes for which they are used," is an example of a(n) ________.
An implied warranty of merchantability a warranty that is implied that sold or leased goods are fit for the ordinary purpose for which they are sold or leased, and other assurances, unless otherwise disclaimed.
Who can an original owner reclaim his or her goods from?
An original owner can reclaim stolen goods from the person who purchased them.
The defendant must be given an opportunity to reject the property or services provided by the plaintiff in a(n) ___________________ contract.
An implied-in-fact contract is a contract in which agreement between parties has been inferred from their conduct. Implied-in-fact contracts require that the plaintiff supply property or services to the defendant that they expected to be paid for, and that the defendant had an opportunity to reject the property or services and failed to do so.
A contract in which agreement between parties has been inferred from their conduct is known as a(n) ________.
An implied-in-fact contract is a contract in which agreement between parties has been inferred from their conduct.
A quasi-contract is also known as a(n) _____ contract.
An implied-in-law is an equitable doctrine whereby a court may award monetary damages to a plaintiff for providing work or services to a defendant even though no actual contract existed. The doctrine is intended to prevent unjust enrichment and unjust detriment.
What section of the UCC governs sales contracts?
Article 2 of the UCC governs the sales.
In a shipment contract, the _____ bears the risk of loss of the goods during transportation.
Buyer A shipment contract requires the seller to deliver goods conforming to the contract to a carrier. The risk of loss in a shipment contract passes to the buyer when the seller delivers the conforming goods to the carrier. The buyer bears the risk of loss of the goods during transportation.
Contracts are either ______ or _______, depending on what the offeree must do to accept the offeror's offer.
Contracts are either bilateral or unilateral A contract entered into by way of exchange of promises of the parties ("a promise for a promise") is known as a bilateral contract. A contract in which the offeror's offer can be accepted only by the performance of an act by the offeree (a "promise for an act") is known as a unilateral contract.
Which of the following is NOT a required element of a contract?
Counteroffer For a contract to be enforceable, the following basic requirements must be met: a) agreement b) consideration c) contractual capacity d) lawful object.
Adams Company, a manufacturer of machines that make shoes, sells a machine to Smith & Franklin, a shoe manufacturer. Subsequently, Nerdette claims that she has a patent on the machine. Nerdette proves her patent claim in court. Nerdette notifies Smith & Franklin that the machine can no longer be used without her permission and the payment of a fee to her. Smith & Franklin may rescind the sales contract with Adams Company, based on breach of
Implied warranty against infringements an automatic warranty provided by a seller or lessor who regularly deals in goods of the kind sold or leased that warrants that the goods are delivered free of any third-party patent, trademark, or copyright claim.
A warranty that arises where a seller or lessor warrants that the goods will meet the buyer's or lessee's expressed needs is known as a(n)
Implied warranty of fitness for a particular purpose
A(n) ________________ is implied at the time of contracting if the lessee relies on the lessor's skill and judgment and leases the goods.
Implied warranty of fitness for a particular purpose
A(n) __________________ is implied at the time of contracting if the seller has reason to know the particular purpose for which the buyer is purchasing the goods.
Implied warranty of fitness for a particular purpose
The warranty that applies to food or drink consumed on or off the premises of restaurants, grocery stores, fast-food outlets, and vending machines is known as a(n)
Implied warranty of fitness for human consumption is a warranty that applies to food or drink consumed on or off the premises of restaurants, grocery stores, fast-food outlets, and vending machines.
Suppose Ingersoll-Rand owns a heavy-duty crane. A thief steals the crane and sells it to Turner Construction. Turner Construction does not know that the crane is stolen. If Ingersoll-Rand discovers that Turner Construction has the equipment, it can reclaim it. Turner Construction, in turn, can recover against the thief for breach of
Implied warranty of good title is an implied warranty in which the seller warrants that he or she has valid title to the goods he or she is selling and that the transfer of title is rightful.
In a __________________, there is no sale unless and until the buyer accepts the goods.
In a sale on approval
the seller delivers the goods to a buyer with an understanding that the buyer may return them if they are not used or sold within a stated period of time.
In a sale or return contract
In a _________________, a seller delivers the goods to a buyer to sell on his or her behalf.
In a consignment, a seller (the consignor) delivers the goods to a buyer (the consignee) to sell on his or her behalf.
Which of the following is a correct statement regarding express warranties?
It is not necessary to use formal words to create an express warranty. It is not necessary to use formal words such as "warrant" or "guarantee" to create an express warranty.
Which of the following is a defense to the enforcement of a contract?
Lack of genuineness of assent consent is a defense to contract formation. Assent requires that the consent of the parties to create a contract must be genuine
A conditional sale is a(n)
Type of sale where the seller entrusts possession of goods to a buyer on a trial basis
In a destination contract, the _____ bears the risk of loss of the goods during transportation.
Seller A destination contract requires the seller to deliver conforming goods to a specific destination. The risk of loss in a destination contract is on the seller while the goods are in transport.
Which of the following is an INCORRECT statement regarding express warranties? A. Sellers are required to make express warranties. B. Lessees can recover for breach of an express warranty if the warranty induced the lessee to lease the product. C. Buyers can recover for breach of an express warranty if the warranty induced the buyer to purchase the product. D. Express warranties are often found in advertisements. E. Generally, express warranties are made to entice consumers and others to buy or lease products.
Sellers are required to make express warranties. ***Sellers and lessors are not required to make express warranties. Generally, express warranties are made to entice(attract) consumers and others to buy or lease their products.
Which of the following is an INCORRECT statement regarding the implied warranty of merchantability?
The implied warranty of merchantability requires that the goods must be sold at a price consistent with industry standard or the prior course of dealings between the parties. The implied warranty of merchantability requires that the following standards be met: 1) the goods must be fit for the ordinary purposes for which they are used; 2) the goods must be adequately contained, packaged, and labeled; 3) the goods must be of an even kind, quality, and quantity within each unit; 4) the goods must conform to any promise or affirmation of fact made on the container or label; 5) the quality of the goods must pass without objection in the trade; 6) fungible goods must meet a fair average or middle range or quality.
A disclaimer of an implied warranty of merchantability must specifically mention the term __________________ in the disclaimer.
The term "merchantability" must be specifically mentioned in order to disclaim an implied warranty of merchantability.
Which of the following is a correct statement regarding the definition of goods according to the Uniform Commercial Code (UCC)?
The unborn young of animals meet the UCC definition of goods. According to the Uniform Commercial Code (UCC), goods are defined as tangible items that are movable at the time of their identification to a contract. Based on this definition, the unborn young of animals can constitute goods.
Suppose Susan wants to buy lumber to build a small deck in her backyard. She goes to Joe's Lumber Yard to purchase the lumber and describes to Joe, the owner of the lumber yard, the size of the deck she intends to build. Susan also tells Joe that she is relying on him to select the right lumber for the project. Joe selects the lumber and states that the lumber will serve Susan's needs. Susan buys the lumber and builds the deck. The deck collapses because the lumber was not strong enough to support it. Susan can sue Joe for breach of which of the following implied warranties?
The warranty of fitness for a particular purpose is implied at the time of contracting if: 1) the seller has reason to know the particular purpose for which the buyer is purchasing the goods; 2) the seller makes a statement that the goods will serve this purpose; and 3) the buyer relies on the seller's skill and judgment and purchases the goods.
applies to those who make an express warranty, although it does not require sellers to make an express warranty.
The Magnuson-Moss Warranty Act is a federal statute that regulates written warranties on consumer products. Although it does not require the seller to make an express warranty, it does apply to those who do
offeror; offeree
The _____ is the party who makes an offer to enter into a contract, and the _____ is the party to whom the offer is made.
Which of the following is an example of an express warranty? A.This is the best car on the market. B.This is my favorite car. C.This will be your favorite car. D.This car gets 25 miles per gallon. E.This is the hottest car on the market.
This car gets 25 miles per gallon. Because this is a statement of fact, this would constitute an express warranty.
Legal tangible evidence of ownership of goods is called
Title Title is legal, tangible evidence of ownership of goods.
All of the following are elements of a contract EXCEPT? A. UCC B. lawful object C. consideration D. agreement E. contractual capacity
UCC The UCC is not an element of a contract. The UCC (Uniform Commercial Code) is a source of contract law, not an element of a contract.
Contracts that have an illegal object are
Void The object of a contract must be lawful. Most contracts have a lawful object. However, contracts that have an illegal object are void and cannot be enforced.
What is voidable title?
Voidable title is a title that a purchaser has on goods obtained by fraud, dishonor, or impersonation of another person.
When a seller or lessor who is a merchant who regularly deals in goods of the kind sold or leased warrants that the goods are delivered free of any third-party patent, trademark, or copyright claim it is known as a
Warranty against infringements when a seller or lessor who is a merchant who regularly deals in goods of the kind sold or leased automatically warrants that the goods are delivered free of any third-party patent, trademark, or copyright claim.
When sellers of goods warrant that they have valid title to the goods they are selling (unless properly disclaimed) it is known as a
Warranty of good title when sellers warrant that they have valid title to the goods they are selling and that the transfer of title is rightful.
When sellers of goods warrant that the goods they sell are delivered free from any third-party security interests, liens, or encumbrances that are unknown to the buyer it is known as a
Warranty of no security interests When sellers of goods warrant that the goods they sell are delivered free from any third-party security interests, liens, or encumbrances that are unknown to the buyer.
Who is a good faith purchaser for value?
a person who pays sufficient consideration or rent for the goods to the person he or she honestly believes has good title to or leasehold interest in those goods
An agreement that is expressed in written or oral words is known as which of the following?
an express contract
In a shipment contract, title passes to the buyer
at the time and place of shipment
To be classified as a certain grade, goods must meet the _____ range of quality of that grade.
average To be classified as a certain grade, such as "pearl millet" grain or iron ore, goods must meet the average range of quality of that grade.
A promise answered with a promise of acceptance is known as a(n)
bilateral contract. A contract entered into by way of exchange of promises of the parties; "a promise for a promise" is known as a bilateral contract.
Who bears the risk of loss during shipment in a shipment contract?
buyer
Who bears the risk of loss when the goods are stolen and resold?
buyer If a buyer has purchased stolen goods from a thief, the real owner can reclaim the goods from the purchaser or lessee. This is a void title. The buyer would bear the risk of loss.
How are damages usually determined for the breach of an express warranty?
by subtracting the actual value of goods from the value of the goods as warranted A breach of an express warranty will permit the buyer or lessor to sue for compensatory damages,
Suppose Max buys a Rolex watch from his neighbor Dorothy for nearly fair market value. It is later discovered that Dorothy obtained the watch from Jewelry Store with a bounced check. Jewelry Store _____ reclaim the watch from Max because Max, the second purchaser, purchased the watch in _____ and for _____.
cannot; good faith; consideration A good faith purchaser for value is a person to whom good title can be transferred from a person with voidable title. The real owner cannot reclaim goods from a good faith purchaser for value. In the instant example, Jewelry Store cannot reclaim the watch from Max because Max, the second purchaser, purchased the watch in good faith and for consideration. In other words, Max was a good faith purchaser for value.
Money, personal property, real property, provision of services, and the like, are examples of
consideration **
A warranty disclaimer must be
conspicuous. A warranty disclaimer must be conspicuously displayed to be valid. The courts have held that conspicuous means it would be noticeable to a reasonable person.
According to the _____ rule, if an owner commits the possession of his or her goods to a merchant who deals in goods of that kind, the merchant has the power to transfer all rights (including title) in the goods to a buyer in the ordinary course of business.
entrustment rule.
Contracts that have a(n) _______ are void and cannot be enforced.
illegal object
"The goods must be of an even kind, quality, and quantity within each unit," is an example of a(n)
implied warranty An implied warranty of merchantability is a warranty that is implied that sold or leased goods are fit for the ordinary purpose for which they are sold or leased, and other assurances, unless otherwise disclaimed. If the seller is a merchant normally dealing in the goods sold, there is an implied warranty of merchantability that the goods are fit for the purpose sold, that they are adequately contained, packaged, and labeled, and that they are of an even kind and quality. This warranty also means that the goods conform to all promises on their container, that their quality would pass without objection in the trade, and if they are fungible goods, that they are of at least average quality for the type of goods that they are.
A(n) ______________ is implied at the time of contracting if the seller or lessor makes a statement that the goods will serve this purpose.
implied warranty of fitness for a particular purpose
"The goods must be adequately contained, packaged, and labeled," is an example of a(n)
implied warranty of merchantability
Suppose Jack steals a truckload of Sony high-definition televisions that are owned by Electronics Store. The thief resells the televisions to City-Mart, which does not know that the goods were stolen. Which of the following is an accurate statement regarding whether City-Mart has rightful ownership of the televisions?
in a case in which a buyer purchases goods from a thief who has stolen them, the purchaser does not acquire title to the goods. The real owner can reclaim the goods from the purchaser. This is called void title. In this example, if Electronics Store determines where the televisions are, it can reclaim them because the thief had no title in the goods, so title (representing ownership) was not transferred to City-Mart. There was void title. City-Mart's only recourse is against the thief, if he or she can be found.
contract
is a promise or set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes a duty.
If an owner entrusts possession of his or her goods to a merchant who deals in goods of that kind, the merchant has the power to transfer all rights (including title) in the goods to a buyer in the ordinary course of business. This is known as
the entrustment rule
No contract is created unless
the offeror makes the offer and the offeree accepts the offer.
Which of the following is NOT true about express warranties A.they can be written B.they can be made to entice customers to buy a product C.they can be oral D.they can contain the words warrant or guarantee E.they must contain the words warrant or guarantee
they must contain the words warrant or guarantee
Every contract involves at least ________.
two parties the offeror who make an offer and the offeree to whom the offer is made.
A contract in which the offeror's offer can be accepted only by the performance of an act by the offeree, that is, a "promise for an act," is known as which of the following?
unilateral contract
If you paint my car by July 1st, I will pay you $1,000 is an example of a(n
unilateral contract.
A contract that meets all the essential elements to establish a contract is said to be which of the following?
valid
Sam offers to pay Huck $100 to steal a pack of gum. This contract is ________.
void
In a case in which a buyer purchases goods from a thief who has stolen them, the purchaser does not acquire title to the goods. The real owner can reclaim the goods from the purchaser. This is called
void Void title is a situation in which a thief acquires no title to goods he or she steals. In a case in which a buyer purchases goods from a thief who has stolen them, the purchaser does not acquire title to the goods. The real owner can reclaim the goods from the purchaser.
A contract in which one or both parties have the option to void their contractual obligations is said to be ________.
voidable
A contract entered into by mutual mistake is
voidable A contract entered into by mutual mistake is voidable meaning one or both parties have the option to void their contractual obligations. If a contract is voided, both parties are released from their contractual obligations.
In a destination contract, title passes to the buyer
when the seller tenders delivery of the goods at the specified destination A destination contract requires the seller to deliver the goods either to the buyer's place of business or to another destination specified in the sales contract. Title passes to the buyer when the seller tenders delivery of the goods at the specified destination.
