Ch 8

Most states have adopted all or most of Article ___ of the Uniform Commercial Code, which governs contracts for the sale of goods.

2

Miami Beach Surf Shop sends a purchase order to Beach Wear Manufacturing for 500 pairs of "Extreme Board Shorts" swim shorts by December 1. The purchase order contains an arbitration clause. Beach Wear sends back an acknowledgement letter for the merchandise. Which of the following are the terms of the contract?

500 pairs of shorts with the arbitration clause.

Miami Beach Surf Shop sends a purchase order to Beach Wear Manufacturing for 500 pairs of "Extreme Board Shorts" swim shorts by December 1. Beach Wear sends back an acknowledgement letter that includes an arbitration clause in the event of a dispute. Which of the following are the terms of the contract?

500 pairs of shorts without the arbitration clause.

Which of the following sales agreements is most likely to be subject to Article 2 of the Uniform Commercial Code(UCC) because it represents a merchant transaction?

A sales agreement made by Jon, owner of a wholesale plant nursery, who sells to Selene, the owner of a gardening store.

Mirror, Mirror, LLC has a shipment contract with Speedy Ship, Inc. for all their delivery services. Speedy Ship picked up a crate containing five large mirrors from the Mirror, Mirror warehouse but they shattered during transit to the customer. Which party bears the risk of loss?

The customer

On January 2, Laila University (LU) signed an agreement to purchase and pick up 1,000 baseballs from Regional Sports Equipment (RSE), a merchant seller of baseballs. RSE arranges for the baseballs to be marked "Sold" and placed in the RSE warehouse for pickup by LU's athletic department crew. Before the LU truck arrives, the baseballs are stolen from the warehouse. Who had title at the time of the loss?

Title never passed from RSE because it is a merchant, and goods were to be picked up by LU.

On January 2, Laila University (LU) signed an agreement to purchase 1,000 baseballs from Regional Sports Equipment (RSE), and the parties agree that it is a destination contract. RSE arranges for the baseballs to be placed with a local delivery company with instructions for delivery to LU. While en route to LU, the delivery truck met with an accident, and the baseballs are destroyed. Who had title at the time of the accident?

Title never passed from RSE because the delivery was never completed.

On January 2, Laila University (LU) signed an agreement to purchase 1,000 baseballs from Regional Sports Equipment (RSE). RSE arranges for the baseballs to be placed with a local delivery company with instructions for delivery to LU. While en route to LU, the delivery truck is in an accident, and the baseballs are destroyed. The parties do not have any express agreement as to risk of loss. Who had title at the time of the accident?

Title passed to LU when RSE placed the baseballs with the delivery company.

Article 2 of the Uniform Commercial Code (UCC) contains special provisions that apply only in transactions between merchants.

True

Common law dictates that several specific terms of a contract must be in writing, while the Uniform Commercial Code (UCC) has a much more liberal rule concerning what must be in writing.

True

The good faith provision of the Uniform Commercial Code (UCC) imposes a duty of honesty and commercial reasonableness which is the bedrock of any sales contract.

True

Under the Uniform Commercial Code (UCC), if a seller fails to achieve perfect tender in a sales contract, the buyer has the option of rejecting the entire shipment of goods within a reasonable time.

True (If a seller fails to achieve perfect tender, the buyer has three options: (1) Reject the entire shipment of goods within a reasonable time, (2) accept the shipment of goods as is, or (3) accept any number of commercial units and reject the rest of the goods in a reasonable time.)

The Uniform Commercial Code (UCC) does not apply to real estate sales contracts.

True (The UCC applies only to contracts for the sale of goods. The UCC defines "goods" as property that is tangible (has a physical existence) and movable from place to place. Real estate transactions are subject to common law rules.)

The Uniform Commercial Code (UCC) considers electronic records and signatures in a sales transaction to be valid.

True (The UCC recognizes electronic records and signatures in a sales transaction as valid.)

The underlying policy of the Uniform Commercial Code (UCC) is to promote commercial efficiency by providing standardized procedures that merchants and consumers may rely upon.

True (The underlying policy of the UCC is to promote commercial efficiency by providing standardized procedures that merchants and consumers may rely upon.)

When a seller breaches a sales contract, the Uniform Commercial Code (UCC) permits the buyer to prevent further losses by canceling the contract and purchasing substitute goods from another vendor in order to continue business operations. This right is known as _____.

cover

Buyer and seller enter into a contract that provides for delivery of goods at the buyer's place of business. The contract states, "Seller assumes all risk until goods are delivered at destination." The parties have entered into a a _________ contract.

destination

When one merchant proposes a term in the purchase order but the other merchant's acknowledgment form includes a term that is different from the offer, the majority of states apply the rule that the conflicting terms cancel each other out and neither term becomes part of the contract. This is known as the _____.

knockout rule

In general, the UCC provides that a _____________ can be held open and irrevocable by the offeror for a maximum period of three months.

merchant's firm offer

When one who is regularly engaged in the sale of a particular type of good offers to hold open an offer to sell the goods with an explicit promise in writing, this is a(n)______________.

merchant's firm offer

Ancient Grove specializes in selling premium olive oil. If Ancient Grove enters into an agreement with an olive oil producer in Greece to purchase all the oil they produce, this would be a(n) _____.

output contract

Under the Uniform Commercial Code (UCC), a seller's obligation actually goes beyond just delivering conforming goods. The seller must deliver the goods in a manner that matches the contract terms in every respect. This is known as the _____.

perfect tender rule

The UCC provides buyers with the immediate remedy of ___________ of all or part of the lot when the seller delivers nonconforming goods.

rightful rejection

The UCC rules that set forth an allocation of liability between buyer and seller for loss of goods while in transit are called the:

risk of loss provisions

The legal rules in the UCC that determine which party in a sales contract bears the financial burden in case the goods are destroyed in transit are referred to as:

risk of loss provisions.

Unless expressly addressed in the contract, any agreement for the sale of goods and delivery is considered a______ contract under the UCC.

shipment

Unless the parties agree otherwise, the UCC characterizes any agreement for the sale of goods and delivery as a______ contract.

shipment

The U.N. Convention on Contracts for the International Sale of Goods (CISG) is different from the Uniform Commercial Code (UCC) in that

the CISG allows sellers the right to cure even after the performance period is over.

Generally, the Uniform Commercial Code (UCC) provides that a merchant's firm offer can only be irrevocable for a maximum period of _____.

three months

Passing of _____ occurs when the ownership of the goods is transferred from seller to buyer.

title

The UCC refers to the passing of _____ to indicate the point at which actual transfer of ownership of goods takes place.

title

The legal term for the right of ownership in a good is _______________.

title (Title is the legal term used to refer to one's right of ownership in a good.)

A wholesaler notices that a retailer has not paid its inventory bills for six months and has reasonable grounds to believe that the retailer will not perform as agreed. Under the UCC, the wholesaler may demand________________.

written assurances

Which of the following are not factors that may indicate the formation of a contract under Article 2? I. Past commercial conduct. II. Common law concerns. III. Preprinted forms. IV. Industry standards and norms.

II and III.

Maya enters into a sales contract with Kevin. Which of the following is most likely to be true if Kevin breaches the contract even before he receives the goods?

If Maya recovers the full value of the contract from Kevin, she cannot resell the goods to a new buyer.

Greenberg agrees to purchase 100 new-generation Chungski smart phones for his sales staff. The parties agreethat the phones will be $200 per unit and that all units would be shipped by May 1. On April 15, the seller ships 25new-generation Chungski smart phones and 75 old-generation Chungski smart phones. What are Greenberg'soptions? I. Reject the entire shipment of goods. II. Accept the entire shipment "as is." III. Accept the 25 new-generation phones and reject the rest. IV. Could cure by May 1.

I, II, and III.

Under the Uniform Commercial Code, which of the following are required to be expressed in a sales contract tosatisfy the statute of frauds? I. Quantity. II. Signature of the party against whom enforcement is sought. III. Language indicating objective intent to contract. IV. Price.

I, II, and III.

The Uniform Commercial Code's statute of frauds requires which of the following contracts to be in writing in order to be enforced?

Contracts for the sale of goods totaling $500 or more.

In destination contracts, the risk of loss is usually allocated to the seller once the goods are properly tendered.

False

When a buyer agrees to purchase all of the goods needed to complete a project from a particular seller, the contract is called an output contract.

False

Which of the following are factors that may indicate the formation of a contract under Article 2? I. Past commercial conduct. II. Common law concerns. III. Preprinted forms. IV. Industry standards and norms.

I and IV.

Greenberg agrees to purchase 100 new-generation Chungski smart phones for his sales staff. The parties agree that the phones will be $200 per unit and that all units would be shipped by May 1. On April 15, the seller ships 25 new-generation Chungski smart phones and 75 old-generation Chungski smart phones. If Greenberg rejects the shipment as nonconforming, what is/are the seller's option(s)? I. Reject the entire shipment of goods. II. Accept the entire shipment "as is." III. Accept the 25 new-gene ation phones and reject the rest. IV. Right to cure until May 1.

I, II, III, and IV.

Greenberg agrees to purchase 100 new-generation Chungski smart phones for his sales staff. The parties agree that the phones will be $200 per unit and that all units would be shipped by May 1. On May 1, the seller ships 25 Chungski smart phones and 75 Hyper-charged smart phones (which were more expensive than the Chungski brand). Which of the following are true? I. Greenberg may reject the entire shipment of goods. II. Greenberg may accept the entire shipment "as is." III. Greenberg may accept the Chungski smart phones and reject the rest. IV. If Greenberg rejects any of the goods, he must allow the seller a reasonable cure period.

I, II, III, and IV.

In determining whether or not a contract was formed under Article 2, a court will consider: I. Past commercial conduct of the parties. II. Common law doctrines regarding formation. III. Communications (written or oral) between the parties. IV. Industry standards and norms.

I, III, and IV.

Which of the following is an irrevocable offer under the Uniform Commercial Code?

Merchant's firm offer.

Miami Beach Surf Shop sends a purchase order to Beach Wear Manufacturing for 500 pairs of "Extreme Board Shorts" swim shorts by December 1. Beach Wear sends back an acknowledgement letter that includes an arbitration clause in the event of a dispute. Is the arbitration clause part of the contract?

No, because the arbitration clause is a material change.

The UCC defines what constitutes nonperformance, known as a(n) ____________.

breach

Terms of a contract that predetermine which nation's laws and court system will be used in a potential lawsuit over that contract are called _____.

choice of law and forum clauses

The provisions of the Uniform Commercial Code were drafted with the goal of promoting the ______ of a sales contract.

completion

A merchant who receives a signed from the other merchant will be bound by the memorandum just as if she had signed it, unless she promptly objects.

confirmation memorandum