ACCT 340 Exam 3
Article _____ of the UCC applies to domestic transactions in the sales of goods.
2
Article _____ (Leases) of the UCC directly addresses personal property leases.
2A
BEH Grocery orders 100 boxes of cereal from Post, Inc. on a delivery contract. Post, Inc. ships the 100 boxes of cereal but while they are being delivered BEH changes its mind and says it no longer want the cereal and will not accept them. The boxes of cereal are destroyed in transit. Who bears this loss?
BEH breached the sales contract by refusing to accept the conforming goods and so they must bear the loss.
After speaking on the phone with a salesperson from Reed, Inc., BEH, Inc., a merchant, sends a sales order form that afternoon to purchase 3,000 outdoor grills. They are to be delivered in two weeks from Reed, Inc., also a merchant, for $200,000. Reed does not sign the sales form BEH sent, but sends back its own signed sales form, which contains slightly different terms than the form that BEH sent BEH does not respond to Reed's email. Under traditional common law rules and not the UCC, _____.
BEH is not bound to the contract because Reed's acceptance was not a mirror image of the original offer
The _____ is a model act for international sales contracts that provides legal rules that govern the formation, performance, and enforcement of international sales contracts entered into between international businesses.
CISG
The Uniform _____ Code is a model act that includes comprehensive laws that cover most aspects of commercial transactions.
Commercial
_____ law placed the risk of loss to goods on the party who held title to the goods.
Common
_____ means a computer program or an electronic or other automated means used independently to initiate an action or respond to electronic records or performances in whole or in part, without review or action by an individual.
Electronic agent
The shipping term _____ requires the seller to bear the expense and risk of loss until the goods are tendered to the buyer at the place of destination.
F.O.B. place of destination
The 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
_____ goods are not yet in existence.
Future
Which of the following is NOT true regarding payment of accepted goods?
Goods can be paid for in any manner even if the contract states otherwise.
Cecily contracts to lease a BMW automobile from Hot Autos, Inc. for delivery on July 1. On June 15, Hot Autos delivers a BMW to Cecily who rejects it as nonconforming. Which of the following is true?
Hot Autos has until July 1 to cure the nonconformity by delivering the BMW specified in the contract.
_____ of goods is distinguishing the goods named in a contract from the seller's or lessor's other goods.
Identification
Which of the following is an INCORRECT statement regarding a sale on approval contract?
It is also referred to as a sale or return contract.
All states except _____ have adopted some version of Article 2 (Sales) of the UCC.
Louisiana
All of the following are true about letters of credit EXCEPT?
Most banks do not require that international letters of credit be governed by the Uniform Customs and Practices for Documentary Credits (UCP).
After speaking on the phone with a salesperson from Reed, Inc., BEH, Inc., a merchant, sends a sales order form that afternoon to purchase 3,000 outdoor grills. They are to be delivered in two weeks from Reed, Inc., also a merchant, for $200,000. Reed never responds to the email containing the sales order. When Reed fails to make the delivery on June 1st, BEH threatens to sue Reed. Under the UCC, _____.
Reed is bound to the sales order
_____ of acceptance is reversal of acceptance.
Revocation
_____ of delivery is the obligation of a seller to transfer and deliver goods to the buyer or lessee in accordance with a sales or lease contract.
Tender
Which of the following is an INCORRECT statement regarding the buyer's right of rejection?
The buyer must revoke acceptance of nonconforming goods prior to their rejection.
Which of the following is NOT true about the United Nations Convention on Contracts for the International Sale of Goods (CISG)?
The contracting parties may not agree to exclude (i.e., opt out of) or modify the application of the CISG.
Which of the following is NOT true regarding the written confirmation rule?
The receiving party has to sign the written confirmation.
A salesperson at a Verizon store offers to sell a cellphone to a buyer. The buyer writes on the sales contract, "I accept your offer, but I would like a case for the phone." Assuming we are following the UCC's guidance for additional terms, which of the following is true?
The salesperson may choose to reject the proposed addition of a phone case and a sales contract of just the phone would still exist.
Who bears the risk of loss in a contract where the buyer is to pick up the goods from the seller or from another specified location? Assume that the seller is a merchant.
The seller bears the risk until the goods are picked up.
On June 1, BEH Grocery orders 100 boxes of cereal from Post, Inc. The contract provides that BEH will pick them up from the warehouse belonging to Post, Inc., a merchant, on June 10. Post, Inc. delivers a document of title on June 5 to BEH. If the goods are destroyed at the Post Inc. warehouse on June 6, who bears the risk of loss?
Title passed to BEH on June 5, so BEH would bear the risk of loss.
Trader Bill's contracts to purchase 1,000 bushels of organic brussels sprouts from Illinois Farms $20,000. The contract requires delivery on September 1. If Illinois Farms does not deliver the 1,000 bushels of organic brussels sprouts by September 1, _____.
Trader Bill's has the right to cover by purchasing very similar organic brussels sprouts from another farm and would be entitled to recover the cost of the brussels sprouts in excess of $20,000 from Illinois Farms
Trader Bill's contracts to purchase 1,000 bushels of organic brussels sprouts from Illinois Farms. The contract requires delivery on September 1. In July, Trader Bill's learns that floods have caused substantial crop loss in central Illinois where Illinois Farms is located. After Trader Bill's written demand for adequate assurance on July 15, Illinois Farms does not respond. Which of the following is true?
Trader Bill's may suspend performance and treat the sales contract as having been repudiated.
According to UCC 2-206(1)(b), a shipment of nonconforming goods does not constitute an acceptance if the seller reasonably notifies the buyer that the shipment is offered only as a(n) _____ to the buyer.
accommodation
Which of the following are considered goods as defined by Article 2 of the UCC?
automobiles
What is the term for a warehouse that holds goods and that is not a seller or a buyer of the goods?
bailee
A(n) _____ is a holder of goods who is not a seller or a buyer.
bailee
After speaking on the phone with a salesperson from Reed, Inc., BEH, Inc., a merchant, sends a sales order form that afternoon to purchase 3,000 outdoor grills. They are to be delivered in two weeks from Reed, Inc., also a merchant, for $200,000. Reed does not sign the sales form BEH sent, but sends back its own signed sales form, which contains some minor additional terms that were not included in the form from BEH. BEH does not respond to Reed's email. Under the UCC, _____.
because BEH did not object to the different form, it is bound to the Reed agreement
After speaking on the phone with a salesperson from Reed, Inc., BEH, Inc., a merchant, sends a sales order form that afternoon to purchase 3,000 outdoor grills. They are to be delivered in two weeks from Reed, Inc., also a merchant, for $200,000. Reed never responds to the email containing the sales order. When Reed fails to make the delivery on June 1st, BEH threatens to sue Reed. Under traditional common law rules and not the UCC, _____.
because Reed did not sign the sales order, it is not bound to the agreement
A(n) _____ is the failure of a party to perform an obligation in a sales or lease contract.
breach
Which of the following is NOT a party to a finance lease?
carrier
In a(n) _____, a seller delivers goods to a buyer to sell on his or her behalf.
consignment
Occasionally, the express terms of a written contract are not clear on their own and must be interpreted. In such cases, reference may be made to certain conduct outside the contract. In what order of priority are these conducts considered? (Note: Answer choices are in descending order of priority - most important to least important.)
course of performance, course of dealing, usage of trade
A _____ contract requires the seller to deliver conforming goods to a specific destination.
destination
A(n) _____ 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.
destination
A(n) _____ contract requires the seller to deliver the goods to the buyer's place of business or another specified destination.
destination
When does the buyer bear the risk of loss in a point of shipment contract?
during transportation
According to the _____ rule, when an owner entrusts 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) to the goods to a buyer in the ordinary course of business.
entrustment
The _____ rule says that a merchant who makes an offer to buy, sell, or lease goods and assures the other party in a separate writing that the offer will be held open cannot revoke the offer for the time stated or, if no time is stated, for a reasonable time.
firm offer
Unborn stock animals are examples of _____ goods.
future
Every contract or duty within the UCC imposes an obligation of _____ in its performance or enforcement.
good faith
According to UCC 1-203, modification of a sales or lease contract must be made _____.
in good faith
Unless otherwise agreed, the lessee has the right to _____ goods that are tendered, delivered, or identified in a lease contract prior to accepting or paying for them.
inspect
A(n) _____ contract requires or authorizes goods to be delivered and accepted in separate lots.
installment
A buyer purchases 200 boxes of goods from a seller and authorizes the goods to be delivered in four equal installments. What is this kind of contract called?
installment contract
A _____ is a transfer of the right to the possession and use of named goods for a set term in return for certain consideration.
lease
In a lease contract, the _____ is the person who acquires the right to possession and use of goods under a lease.
lessee
In a lease contract, the _____ is the person who transfers the right of possession and use of goods under the lease.
lessor
A(n) _____ is a document issued by a bank on behalf of a buyer who purchases goods on credit from a seller guaranteeing that if the buyer does not pay for the goods, the bank will pay the seller.
letter of credit
A _____ seller can recover lost profits from a defaulting buyer even though the seller sold the item to another buyer, where the seller has other similar items and would have made _____ sales had the original buyer not defaulted.
lost volume; two
According to Article 2 of the UCC, a _____ is a person who by his or her occupation holds himself or herself out as having knowledge peculiar to the goods involved in the transaction.
merchant
According to Article 2 of the UCC, a _____ is a person who deals in goods of the kind involved in a transaction.
merchant
A(n) _____ sale involves the provision of a service and a good in the same transaction.
mixed
The _____ rule states that when a sales or lease contract is evidenced by a writing that is intended to be a final expression of the parties' agreement or a confirmatory memorandum, the terms of the writing may not be contradicted by evidence of a prior oral or written agreement or a contemporaneous oral agreement.
parol evidence
According to the _____ rule, if the goods or tender of a delivery fail in any respect to conform to the contract, the buyer may opt to reject the whole shipment, accept the whole shipment, or reject part and accept part of the shipment.
perfect tender
If a sales contract does not contain a specific price, a _____ price is implied at the time of delivery.
reasonable
If the lessor's tender of delivery fails to conform to the lease contract in any way, the lessee has the right to reject the improperly tendered goods and may do all EXCEPT which of the following?
recover punitive damages
Which of the following is NOT a buyer's right under the perfect tender rule if the goods or tender of delivery fail in any respect to conform to the contract?
recover punitive damages
A lessee has the right to _____ goods from a lessor who is wrongfully withholding the goods.
replevy
Which of the following is NOT a UCC provision that affects the parties' performance of a sales or lease contract?
right to legal counsel
A(n) _____ consists of the passing of title of goods from a seller to a buyer for a price.
sale
In a _____, there is no sale unless and until the buyer accepts the goods.
sale on approval
A consignment is treated as a(n) _____ under the UCC; that is, title and risk of loss of the goods pass to the consignee when the consignee takes possession of the goods.
sale or return
In a _____ contract, the seller delivers goods to a buyer with the understanding that the buyer may return the goods if they are not used or resold within a stated or reasonable period of time.
sale or return
A _____ contract requires the seller to deliver goods conforming to the contract to a carrier.
shipment
A _____ contract requires the seller to ship the goods to the buyer via a common carrier.
shipment
A(n) _____ contract requires the seller to send the goods to the buyer, but not to a specifically named destination.
shipment
Very New Corp, Inc. wants to enter into a contract to purchase $1 million of scooters from Old Established Scooter, Co. Because Very New Corp does not have well established credit, Old Established Scooter asks that Very New Corp provide a _____ to guarantee that if Very New Corp does not pay for the goods, the bank will pay Old Established Scooter $1 million.
standby letter of credit
A finance lease is a three-party transaction consisting of a lessor, a lessee, and a _____.
supplier
If a buyer makes partial or full payment for goods before they are received and the seller becomes insolvent within _____ after receiving the first payment, the buyer has the right to _____ the goods from the insolvent seller.
ten days; recover
Which of the following is NOT considered to be valid acceptance?
the buyer inspects the goods
Which of the following factors will NOT support a revocation of acceptance?
the goods were accepted before the non-conformity was discovered and the seller did not give their assurance to the buyer that the goods were conforming
Article 2 of the UCC applies to mixed sales only if the goods are _____ part of the transaction.
the predominant
A(n) _________ is legal, tangible evidence of ownership of goods.
title
To prove _____, there must be proof that the parties had substantially unequal bargaining power, that the dominant party misused its power in contracting, and that it would be manifestly unfair or oppressive to enforce the contract.
unconscionability
A cattle rancher contracts to purchase 3,000 bushels of "corn" from a farmer. The farmer delivers feed corn, for cattle, to the rancher. The rancher rejects this corn and demands delivery of corn that is fit for human consumption. If the parties did not have any prior course of performance or course of dealing that would indicate otherwise, __________ would be used to interpret the word "corn". Thus, the delivery of feed corn __________ and become part of the contract.
usage of trade; would be assumed
A _____ title is a situation in which a thief acquires no title to goods he or she steals.
void
The UCC provides that if goods identified in a sales or lease contract are totally destroyed without the fault of either party before the risk of loss passes to the buyer or lessee, the contract is _____.
void
A purchaser has a _____ title on goods obtained by fraud, a check that is later dishonored, or impersonation of another person.
voidable
A document of title is an actual piece of paper, such as a _____ or a(n) ____, which is required in some transactions of pickup and delivery.
warehouse receipt; bill of lading
According to the UCC Statute of Frauds, lease contracts requiring payments of _____ or more must be in writing.
$1,000
According to the UCC Statute of Frauds, all contracts for the sale of goods priced at _____ or more must be in writing.
$500
_____ are defined as _____ items that are movable at the time of their sale.
Goods; tangible
Harriet purchases an antique dresser from her neighbor Jim. It is later discovered that Jim purchased the dresser from an antique store with a fraudulent check. Can the antique store reclaim the dresser from Harriet?
No, because Harriet purchased the dresser in good faith and for value, she may keep the dresser
BEH Grocery orders 100 boxes of cereal from Post, Inc. on a shipment contract. Post, Inc. does not pack the boxes carefully and they arrive completely smashed. Who bears this loss?
Post, Inc. bears the risk of loss because the goods being delivered were nonconforming goods.
BEH Grocery orders 100 boxes of cereal from Post, Inc. The contract provides that BEH will pick them up from the warehouse belonging to Post, Inc., a merchant, with no document of title required. If the goods are destroyed at the Post Inc. warehouse, who bears the risk of loss?
Post, Inc. bears the risk until the goods are picked up.
If one party to a contract has reasonable grounds to believe that the other party either will not or cannot perform his or her contractual obligations, a(n) _____ assurance of _____ may be demanded in writing.
adequate; performance
The 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)
Certain open terms are permitted to be "read into" sales or lease contracts. This rule is commonly referred to as the _____ rule.
gap-filling
If goods are delivered in a credit sale and the seller then discovers that the buyer was _____, the seller has _____ days to demand that the goods be returned.
insolvent; ten
If the lease is a finance lease and the supplier is a merchant, the risk of loss passes to the lessee on the _____ of the goods.
lessee's receipt
In the case of an ordinary lease, if the lessor is a merchant, the risk of loss passes to the lessee on the _____ of the goods.
lessee's receipt
The UCC statute of _____ provides that an action for breach of any written or oral sales or lease contract must commence within _____ year(s) after the legal claim accrues.
limitations; four
A(n) _____ is an action a party to a sales or lease contract is required by _____ to carry out.
obligation; law
Circuit Town Stores purchases 20 TVs from Jerry, who stole them off of a delivery truck heading to Wal-Town, which had already paid for them. Circuit Town holds _____ title to the TVs and _____.
void; Wal-Town can reclaim the goods
