BUS 251 FINAL EXAM STUDY pt.1
Lon has just come home from serving in the Marines and contracts with a local car dealership to purchase a car. The car must be ordered, and payment is to be made when the car arrives. The next day, Lon receives orders to return to active duty. Realizing that he doesn't need the car, he brings Tony to the dealership and asks that Tony substitute for him. Tony will take delivery and ownership of the car, and Tony will pay the dealership upon delivery. The dealership agrees to have Tony substitute for Lon. What has occurred?
A novation.
Monmouth Publishing employs very brilliant attorneys to search through the laws to find legal loopholes that benefit their profit margin. They find a legal loophole which allows them to require a certain sect of employees to work far under minimum wage, often times taking advantage of people. Therefore, they decide to fire all of their current employees in favor of the sect of employees that they can pay under minimum wage. Are they acting unethically?
A particular act can be deemed unethical yet still be legal.
Cat's Coaster Company uses cork in all of the protective drink coasters that it manufactures. If Cat's enters into an agreement with a cork exporter from Portugal to purchase all of the cork it needs to produce its products, this would be
A requirements contract
Ed writes Gwen a letter and offers her a job as a financial analyst for his construction company at a salary of $75,000.00 a year. Two days later he sends her another letter telling her that he has changed his mind. Gwen receives both of the letters and after reading the letter with the job offer, does not open the second letter, and spends a couple of days thinking about the offer and whether she should accept it. Four days later, Gwen decides to accept the offer but still has not read the second letter revoking the offer. Which statement is correct?
A revocation is effective once it is received and no actual notice is needed.
Which of the following statements best describes what a secured transaction is?
A secured transaction is when the seller retains title to the goods being sold.
Which of the following examples is an example of a merchant according to the UCC?
A vacuum sales person selling door to door.
Pete has been fired from his job and believes that he has been wrongfully terminated. As he decides how to fight the perceived injustice, how can he best mitigate his damages?
Actively seek new employment as soon as possible.
T.T. Inc. creates and sells hats. The Local Ironworkers 452 have contracted with T.T. Inc to purchase 150,000 hats for $15,000 with a delivery date of July 1. Local Ironworkers 452 paid a $5,000 deposit upon signing the contract, with the remaining $10,000 balance due when the hats are delivered. In the contract, Local Ironworkers 452 specified that "time is of the essence due to a local union campaign." Local Ironworkers 452 has reason to believe from another local chapter that there was an issue in the hats arriving a day after an important rally. After requesting reassurances, T.T. Inc. fails to respond within 35 days. What may happen to T.T. Inc. if they fail to deliver the hats timely?
All of the choices are correct.
What must be included in a finance lease
All of the choices are correct.
What types of remedies are available during a breach of contract?
All of the choices are correct.
When does a lease for goods create a security interest in the goods?
All of the choices are correct.
Michael Motors enter into a business contract with Charles to sell Charles a car. The contract specifically states that upon the date that both parties sign the contract, Michael motors is not responsible for any damages that occur to the car during delivery to Charles' house. This is an example of what type of default rule?
Allocating risk
The goal of a default rule is to
Allow the court to fill in the gaps to save an incomplete contract.
A process of recovery that allows the non-breaching party to recover before the non-performing party actually breaches the contract even before the performance is due is called
Anticipatory repudiation
If a person unintentionally engages in innocent misrepresentation, the other party may
Avoid the contract
A major-league baseball team based on the North side of Chicago is in the playoffs and doing well. Behind the left-field wall there is an apartment building, and the owner advertises, "Space available on the apartment building roof with a clear view of the field for the World Series. Bring a lawn chair, your radio, and a cooler and enjoy the game. Just $50 per game." Bart, a lifelong fan, answers the ad and pays the building owner $100 to reserve space for the first two games. Unfortunately, the team fails to advance to the World Series.
Bart will get a refund because of frustration of purpose.
Rex tells his buddy Terry that he has decided not to show up to work for him tomorrow but still asks for the money Terry promised to pay him for the day of work. Which statement below is true?
Based upon Terry's statement, Terry can refuse to pay Rex as promised.
When the terms stated on an invoice conflict with the terms stated on the purchase order in the same transaction it is called
Battle of the forms
A new type of business that requires its board and officers to consider the impact their decisions have on shareholders, society and the environment are called
Benefit corporation
A document that shows a delivery of title is
Bill of lading
Hannah is employed by Munchin Financial. As an employee benefit, the employer will pay for employees to earn their Masters in Financial Accounting provided that they agree to work exclusively for Munchin Financial for five years following graduation. If an employee does not work the additional five years there, then that employee must repay Munchin Financial the total cost of the tuition. This provision of the contract is called
Clawback
When a contract has terms such as "provided that" or "unless" in a contract that indicates a performance obligation that is called a
Condition precedent
What type of title does a secured transaction pass to the buyer?
Conditional
Foreseeable indirect losses not covered by compensatory damages are called
Consequential damages
Something of value that is exchanged as part of an agreement is called
Consideration
Which type of legal theory ethics states that if people negotiate from a veil of ignorance people will negotiate ethical principles that are fair to all?
Contracts-based
__________ is similar to course of performance in that both refer to patterns of performance by the parties.
Course of dealing
Aurthur, owner of Mango Industries, enters into a contract with Hurley's grocery store wherein they agreed to sell mangos to the grocery store for $.50 a mango. The agreement did not state anything about what would occur if a mango was delivered with mango worms. If this event occurred and the contract is silent on this issue, according to the UCC what rule might apply to cover any unforeseen contingencies?
Default rules
If a contract does not state when title will pass, the UCC will apply __________ to determine when title passes.
Default rules
16 year old Grace agrees to quit school to work for Andrew in his flower shop full-time. When Grace's mom finds out what she has done, she orders her to tell Andrew that she will quit the job. This is called
Disaffirmance
Gabrielle purchase a coffee press from Coffees R Us! to be delivered. When packing the product at Coffees R Us! the employee accidentally breaks it, but ships it anyway. When the box is delivered to Gabrielle's house she accepts the sealed box and immediately runs into the house to open the box. She immediately notices that the coffee press is broken and calls Coffees R Us! to request her money back. What will most likely be the outcome of this situation under the UCC?
Gabrielle may reject the broken coffee press.
When a seller enters into an output contract with another, the seller
Gives up the right to sell the goods of the contract to another.
When the parties perform the contract, the courts presume __________ is present
Good faith
A person who acts honestly and provides reasonable value for good is called a
Good faith buyer
If a contract becomes extremely burdensome due to some unforeseen circumstance, the contract may be discharged due to
Impracticability
Abdullah purchases a couch from Murphy Interiors for $500.00 which includes delivery to his house the next day. During transit, the delivery truck gets into an accident and the fabric on the couch is damaged. Who bears the risk of loss in this situation?
Murphy Interiors since the risk of loss transfers only upon delivery of a conforming good.
If an agreement is illegal in purpose and unperformed
Neither party will be able to enforce it.
Tom is late for a class and tells his friend Shameem that he will pay her $100.00 to drive 20 miles over the speed limit so that he can make it to class on time. Is there a contract?
No as an agreement to violate a statue is illegal and void
Edith sells on Craigslist a life sized statute of a zebra that her mother in law gave to her as a birthday gift. Would this transaction be governed by the UCC?
No because Edith is not a merchant.
Edith hires Randal an attorney at Parker Law Offices to write her will. Randal asks his paralegal, Polly, to write Edith's will while he goes on vacation and mail it to her to sign. Is this a proper accord and satisfaction?
No because as a paralegal, Polly is not licensed to write a will as the attorney is.
Renee's housekeeper has the stomach flu and cannot keep her scheduled cleaning appointment to clear Renee's house as scheduled. Has the contract been discharged?
No because her illness is temporary and will only suspend her duty.
Basaba Realty sells a house to Mary Moore. Will the Article 2 of the UCC apply to the terms of the contract?
No because real estate contracts do not involve the sale of goods
Shirley lives next to Reid and has always admired his use of lawn ornaments in his landscaping. She particularly loves Reid's life sized elephant and therefore wants to purchase insurance to protect the lawn ornament from loss or damage during shipping as he sells it to a friend in another state. Will Shirley be able to do that?
No because she does not own the ornament and will not suffer a recognizable loss.
Alex purchases a computer from Dell to be delivered via Fed Ex. Dell delivers the computer to Fed Ex to be shipped to Alex. During the delivery, the Fed Ex driver is having a bad day and just throws the boxes out the window of the delivery truck rather than setting the box by the front door as is standard practice. While throwing the computer it is damaged. Would Dell be responsible for the damage to the computer?
No because title transfers to the buyer once the good is delivered to a common carrier.
Allie hires Christie to knit 55 pairs of socks by April 1. Christie accidentally knits only 53 pairs and mails off the 53 pairs of socks so that it reaches Allie by the due date. When Allie discovers this, she notifies Christie that she did not complete the contract. Can Allie refuse to pay Christie?
No if the court rules that the breach was not material and therefore a partial breach.
Senator Beach agrees with his donors that if they give him $500 he will arrange a meeting with a group of Senators. Brett donates $500 and requests the meeting but is denied. He sues Senator Beach for breach of contract. Will he be successful?
No it is illegal to sell public office influence and time.
Pitzer Medical Services enters into an agreement with Doctor Jones to sell him a kidney of a person who is willing to sell one of his kidneys. The sale of body organs is illegal, however, all parties to this situation are entering into the agreement willingly, voluntarily and with full-knowledge of the circumstances. The agreement even states this in it. Therefore, will the courts enforce the agreement as a business contract?
No, mandatory rules cannot be overridden even if the parties specifically address it.
Shannon Steamers, a carpet cleaning business enters into a contract with Danyelle to clean her carpeting and also sell her carpet spot remover solution in a bottle. Will Article 2 of the UCC apply in this situation?
No, since the main purpose of the contract is the service of cleaning the contract.
Paris hires Donald to mow her lawn tomorrow for $50.00. She states she will give him the money tomorrow when he shows up. He never shows up, but Steve, Paris' neighbor steps up and offers to mow her lawn for $50.00 to which Paris agrees. For what damages can Paris recover for Donald's breach?
None.
Which of the following involves a third-party substitution?
Novation
If a contract for the sale of goods is analyzed based on the parties' course of dealing, the goods must be
Of the same quality as found in past contracts
A revocation is effective
Once the offeree receives the revocation
Default rules, under the UCC,
Only applies to unforeseen terms not addressed in the contract.
In the case, Lucente v. IBM, differentiated when a covenant not to compete can be enforced by the employer against the employee and determined that it can be applied
Only when the employee chooses to leave the employer
For a contract to be enforceable it must not violate some __________.
Public policy
The broadest view of Corporate Social Responsibility is that corporations have a social responsibility to which profit is secondary is called
Public theory
Custom Candy Creations, a candy shop, has on its sign "The Finest Candy in the World." This is an example of
Puffing
Damages expended to prevent further loss for harmful or malicious acts are:
Punitive
Once a minor reaches majority, if that person continues with the terms of the contract they have __________ the contract.
Ratified
Mitigation of damages requires:
Reasonable efforts
After extensive negotiation Bob agrees to sell Sally his office building for $100,000.00. He has his assistant type up the contract to send to Sally to sign. His assistant accidentally adds and extra zero in the price, making it $1,000,000.00 and sends it off. Sally too overlooks the mistake and signs the agreement. Later Sally requests that the contract be corrected to reflect their true intentions through a process called
Reformation
A remedy designed to prevent unjust enrichment of one party of an agreement is called
Restitution damages
Mary's attic is being invaded by raccoons through a hole in the roof. Therefore, she hires Daech Roofing to repair her roof and make the attic raccoon proof for $1000.00 to which they agree. On the day that they were supposed to repair the roof, the worker actually just takes a day long nap in the attic and never completes the job. Mary leaves on her vacation believing that her raccoon problem has been solved. Two weeks later she returns home only to find that the raccoons entered into her house through the attic and proceeded into the rest of the house and destroyed it. The carpet was destroyed as was all of her furniture by the raccoons' activities. Which statement below is correct?
She could sue for the actual costs of the contract itself as well as the consequential damages that flowed from that breach which included the destruction by the raccoons of her carpeting and furniture.
Liz purchases a bed from Bisani Bedding to be shipped via Fed Ex. What type of contract is this?
Shipment contract
Les orders a set of vitamins online. When it arrives the vitamins were packaged in shrink wrap. When he opens the packaging, he is accepting what type of agreement?
Shrink Wrap
Ethan is an attorney in Texas practicing contract law involving the sale of goods. He moves his practice to Montana to engage in the same type of practice of law. Which statement below is correct?
Since every state in the United States has adopted either all or substantially all of the UCC, he will have to learn which portions of the UCC Montana has adopted.
After a rather unfortunate visit to the local hair salon, Janet asks John if the hair on the back of her head has been trimmed evenly and smoothly. John observes was not and actually she has many bald spots as a result of her haircut. According to Immanuel Kant's theory of ethical theory of categorical imperative ethical decision making regime, which one of the following statement should John make?
"No! Your hair is not trimmed evenly and smoothly."
When both parties are required to render performance simultaneously it is
A condition concurrent
Japheth offers to purchase a wedding care from Edible Dreams Bakery for $400.00. He states they have two days to accept the offer. This is an example of which type of offer?
A firm offer
Which of the following is not true regarding firm offers?
A firm offer automatically occurs when an offer or promise is made by one merchant to another.
To determine if a person is lucid, courts employ
A flexible standard
Harry sees an AK-47 automatic assault rifle in a gun shop window. He inquires about the price and is told that it is $2,500. Harry signs a contract promising to pay the $2,500 on Friday, at which time he will take possession of the rifle. On Thursday, a law is enacted making the ownership, sale, or possession of an automatic rifle illegal. This contract
automatically terminates due to impossibility.
Which of the following requires a written contract to be enforceable?
Stanton's pit bull has just had a litter, and her agrees to sell you a puppy for $500 when the pups are weaned from their mother.
According to the UCC, for the sale of goods that requires shipping, the presumption is that unless stated otherwise, the seller need only deliver the goods to __________ to complete performance.
The common carrier
Serena's Soup Bowls sells Betty's Bakery and Restaurant 100 hand-painted soup bowls for $4.00 each bowl. The purchase order states that Serena must deliver the bowls to Betty's. The invoice from Serena states that Betty's must pick up the bowls. According to the UCC, what will most likely be the outcome of this conflicting terms?
The conflicting terms will be dropped out of the contract and UCC gap-filler terms will apply.
Lonnie's Liquor store agreed to purchase 90 proof moonshine from Moonshine Manufacturing Inc. Before Moonshine Manufacturing can ship the product to Lonnie's, a law is passed making the production, sale and consumption of moonshine illegal. Which statement below is correct?
The contract is impossible to complete due to the law now making the subject matter illegal.
Sharon has contracted with Craig to buy Craig's car. She has agreed to pay $5,000 in cash in exchange for the title and registration for the vehicle. Sharon and Craig agree to meet at 10 a.m. on Wednesday to exchange their consideration. Unfortunately, Craig dies Tuesday evening.
The contract is still valid and Craig's heirs must go through with it based on the agreed terms.
When a contract for the sale of goods is missing provisions such as delivery, quantity and payment terms, which of the following statement under the UCC is correct?
The contract will be acceptable so long as the contract shows that the parties intended to enter into a contract.
In the Reading Pipe case, the contractor installed the wrong brand of piping throughout the building that was specifically stated in the contract. Once it was discovered, it was far too late in the construction process to replace all the pipes without a substantial extra cost to the contractor. What was the resolution of the case when the contractor was sued by his client for breach of contract?
The court determined that the breach was not material as it did not frustrate the purpose of the contract.
Andy pays Tom $50.00 to buy a case of oil. Tom never delivers the oil. Andy sues Tom for specific performance to force Tom to turn over the case of oil. What would most likely be the outcome of this suit?
The court will not allow for specific performance as it is a sale of goods that are not unique.
Doctor Adams comes across a Callie, a woman who was alone and in active labor and helps her deliver her baby as no medical assistance was available. Two weeks after Doctor Adams delivers the baby, she sends a reasonable bill to the woman for the services she provided in delivering a healthy baby. Callie refuses to pay it stating that she did not voluntarily accept Doctor Adam's services, lacked mental capacity and had no other options. What will most likely be the outcome of the issue?
The court will order Callie to pay the reasonable bill because otherwise she would be unjustly enriched.
Leona is a mean, vindictive woman with a great deal of money. Instead of sharing her money with her family, she donates almost all of her fortune, $53,000,000.00, to the local dog pound in exchange for them naming the building shelter after her daughter. She laughs all the way home. When her daughter finds out, she challenges the contract by stating that her mother lacked legal mental capacity. What would most likely be the outcome of the case?
The court would determine that Leona had mental competency as she fully understood the consequences of her actions.
What most likely happens at the end of the lease term?
The equipment is returned to the lessor
What must be present under the UCC for title to a good to pass to a buyer at the time of contract creation?
The good must actually exist at the time of creation of the contract and it must be identified to the contract.
Which party acts as a middleman in a finance lease?
The lessor
Joiner Industries agrees to sell to Browning 500 bolts for $1.00 each. After the first 250 bolts are produced, Joiner realizes that they severely under-priced the bolts and that if they continued to make and to sell the additional 250 bolts at the agreed upon price, they would lose a lot of money and most likely go out of business. They approached Browning with their dilemma and requested that they increase the price per bolt to $1.50 each for the entire contract. Browning agreed. According to the UCC which statement below is correct about the modification of the terms of the contract?
The modification is valid as the UCC does not require any additional consideration to modify the contract.
Stahlhut Corporation's human resource department sends a letter to Nancy stating the following: "We want you to work for us as a sales representative effective July 15 at an annual salary of $45,000.00. Please sign this document and return it in the self-addressed stamped envelope." Nancy signs the document and drops it in the mail. Nancy is
The offeree
All of the following are required for promissory estoppel except
The offeree was a minor
Tanner texts a friend, "hey, I'll let you use my car today if you do my grocery shopping for me because I am out of time!" Tanner is
The offeror
Makubuya Futbol World ordered 500 U.S.A. replica soccer jerseys from Smith Apparel, a sports apparel manufacturer. The jerseys were to be delivered to Makubuya's place of business. When the shipment arrived, Makubuya discovered that it received 500 pairs of replica shorts but no jerseys. Before Makubuya could notify Smith and return the shorts, a fire destroyed the building in which the shorts were stored. Which of the following statements is true?
This was a destination contract and the shorts were nonconforming goods, so Smith did not complete the performance and retained the risk of loss.
__________, was a medieval theologian developed the theory which state natural law is given by God; it is authoritative over all human beings; and it is knowable through the use of reason.
Thomas Aquinas
When a contract is entered into that is so grossly unfair that it shocks the conscience it is called
Unconscionable
The UCC allows all of the following to be an enforceable contract except
Unilateral action
Restitution is a damages allowed to prevent
Unjust enrichment
__________ refers to any general practice or method of performance that is specific to a particular trade or industry
Usage of trade
Bill is a very skilled attorney with a very strong background in Latin. Therefore, when he writes contracts for his clients, he uses as much legalese and Latin legal terminology as possible. Which statement below is correct?
Whenever possible, an attorney should avoid legalese and instead use plain-English to make contracts easier to understand.
ABC Technologies sells to Devon a television with a fair market value of $1000.00. According to the UCC must this contract be in writing to be enforceable?
Yes as contracts with goods with a total value of $500.00 or more must be in writing to be enforceable.
Shylo Art Gallery wrongfully convinces Sally that her painting is a fake painting and offers to pay her $100 which is far under that actual value of the painting. Shortly thereafter, the painting is sold to Hannah in Shylo Art Gallery for $5000, the true value of the painting. Will Hannah be able to keep the painting?
Yes because Hannah is a good-faith buyer.
Jen is in charge of her child's school picnic and calls Uptown Bakery only to get their answering machine. She leaves the following message, "Hi, this it Jen and I am in kind of a difficult situation. A parent backed out for baking 200 zebra cupcakes for our school picnic tomorrow. I know this is last minute, but would you be able to help out?" The next day, Uptown Bakery shows up to the school with 200 zebra cupcakes. According to the UCC would this be an agreement?
Yes because Uptown accepted by performance.
Chris, the owner of Bloom's Aglow, offers to contract with Lisa for her upcoming wedding bouquet and decoration needs. Chris specifically states in the offer that he will only use the Western Prairie Fringed Orchids in all arrangements. While contemplating the offer, the federal government passes a law that classifies the Western Prairie Fringed Orchids as a near extinct flower and makes it illegal to use, to sell or to kill it. Does this affect the offer between Chris and Lisa?
Yes because the change in law constitutes a supervening illegality and therefore, the offer is revoked.
Mandy, a minor, disaffirms an agreement to purchase a car from Jamie, an adult, for $1000.00. Must Mandy give back the car?
Yes in order to disaffirm it, the minor must return whatever consideration received.
Jen purchases a couch from Ace Furniture store which includes delivery of the couch. Does Article 2 of the UCC apply to this contract?
Yes since the sale of a good, the couch is the predominant purpose of the contract and the delivery is incidental.
n which of the following scenarios would enforcement of specific performance be appropriate?
You own the pistol used by Hamilton and contract to buy the pistol used by Burr in the Hamilton-Burr duel to complete your set, but despite the contract the Burr pistol owner refuses to sell at the last minute.
Good faith is defined in the UCC as "honesty in __________ in the conduct or transaction concerned."
fact
Which of the following is not a discharge by mutual consent?
frustration of purpose
Fred's Flooring (FF) contracted with Harry homeowner to install wood flooring throughout Harry's home. Harry was to purchase the flooring, and the contract was solely for installation. Payment was to be 20 percent at the time that the work commenced and 80 percent once the flooring was installed. Harry purchased the flooring materials and paid the 20 percent, so FF began work. When FF's work was halfway completed, Harry realized that he didn't have the money to pay FF on completion, so he bolted the doors and refused access. If FF wants to rescind the contract and be paid for work completed, FF would sue for
restitution.
A contractual remedy in which the court orders a party to actually perform its promise as closely as possible, because monetary damages are somehow inadequate to fix the harm is known as:
specific performance
If the seller has delivered goods and the buyer rejects them under the perfect tender rule, the seller has the right to repair or replace the rejected goods so long as
the time period for performance has not expired.
If the seller has shipped conforming goods as agreed, the buyer has the duty to accept them and become the owner of the goods in accordance with concepts of __________.
title
A contract that lacks one or more of the basic required elements of a contract or that has not been formed in conformance with the law from the outset of the agreement is considered
void.
According to the mailbox rule, an acceptance if effective
when dispatched by the offeree in a commercially reasonable manner.
All of the following are necessary elements of a contract except
writing.
The UCC is grounded in the principle that the law should encourage the completion of business transactions, it also defines what constitutes nonperformance, known as a __________, and provides relief for parties who acted in good faith and sustained damages through no fault of their own.
breach
Beth has just signed a contract to work for a bank. A clause in the contract says that before she begins work, she must pass a drug test and should drug use be discovered, the contract becomes void. This clause would be a
condition subsequent.
ABC Land Co. is negotiating the sale of an office building to Mega Co. Which laws will govern the contract for the sale of the building?
State common law
What law states that if the total payments to be made under the lease, excluding payments for options to renew or buy, are $1,000 or more, the lease must be in writing?
Statute of Frauds
How many separate Articles of the UCC exist?
11
Which of the following is not an example of when a contract must be in writing according to the statute of frauds?
Jeff agrees to mow Julie's lawn for $100.00
The utilitarian approach to moral philosophy was founded by
Jeremy Bentham
Jackie, an orange supplier, contracted with Jimmy's Sushi for the delivery of 50 crates of grade B oranges. Every three months, Jackie regularly sends Jimmy's Sushi 50 crates of grade B oranges. Due to an oversight, Jackie sent Jimmy's Sushi 50 crates of grade A oranges. In this case,
Jimmy's Sushi may accept the goods
In the case of United States v. Apple, the court determined that the Sherman Antitrust Act
Made only unreasonable restraints of trade illegal
What may a business lease be used for?
Machinery
What document is necessary for a lessor to file when acquiring a security interest in collateral?
UCC financing statement
__________ is the property subject to a security interest?
Collateral
What source of law applies to service contracts?
Common law
Which statement below is correct when comparing the UCC and common law?
Common law is much stricter than the UCC.
Standardized, preprinted contracts are called
Adhesion contracts
When there is a __________, the seller does not retain any ties to the goods.
Sale
An agreement to transfer title of property or tangible assets for a certain price is called a
Sales contract
The legal term for ownership is
Title
In general, when dealing with an adhesion contract, courts will
Assume that the non-drafter had no real opportunity to bargain for the terms
Which of the following items would be properly subject to a UCC sales contract?
A Christmas tree sold in a parking lot
A rule under the UCC where conflicting clauses cancel each other out and neither clause will become part of the contract but rather will be determined by UCC gap-filler rules is called
A knockout rule
Under the UCC, a writing sufficient according to the statute of frauds, must contain all of the following except,
A notarized acknowledgment of the terms of the contract
Without genuiness of assent
A promise made is not legally binding
Normally, the buyer's offer in a commercial transaction takes the form of
A purchase order
If the seller fails to achieve perfect tender, the buyer may:
All of the choices are correct.
T.T. Inc creates and sells hats. The Local Ironworkers 452 have contracted with T.T. Inc to purchase 150,000 hats for $15,000 with a delivery date of July 1. Local Ironworkers 452 paid a $5,000 deposit upon signing the contract, with the remaining $10,000 balance due when the hats are delivered. In the contract, Local Ironworkers 452 specified that "time is of the essence due to a local union campaign." What must Local Ironworkers 452 do at this time:
All of the choices are correct.
What is most important in understanding UCC leasing rules?
All of the choices are correct.
What may be the best reason(s) to lease equipment?
All of the choices are correct.
Kylie rented a boat, from "Si Boat Rentals' Fireworks Viewing Boat Special" to view the 4th of July fireworks over the Mississippi River near St. Louis. She puts down a deposit of $100.00 with the balance due on the day of the rental. Two days after she reserves the boat with the deposit, the city of St. Louis announces that they have cancelled the fireworks. Kylie wants to cancel the boat rental and seeks to get her deposit back. Most likely, what will the outcome of the case be?
Assuming that the cancelation was unforeseeable and the boat rental place knew the purpose of the rental, Kylie will get her money back.
The court determined Jimmy John's non-competition clause was all the following except
Completely reasonable
Becker Corporation hires a social media influencer, Bekah, to use their product and post about it on social media. This is an example of which type of an agreement?
Employment
Because of the increased effort for businesses to create a Code of Conduct and a Code of ethics for business decisions
Ethical dilemmas faced by employers are still often complex with no clear ethical choice.
The International Chamber of Commerce abbreviation indicating that goods are to be delivered by the seller to the carrier for shipment is
FOB
An act of God, or something that is beyond our control is called
Force Majeur
Another word for a default rule is
Gap-fillers
What case applied the economic realities test to the transaction and held that, even though the parties intended the Master Agreement to be a lease, the transactions was, in fact, a secured financing arrangement?
In Re: Pillowtex, Inc., 349 F.3d 711 (3d Cir. 2003)
When one person has more or better information than the other is an example of
Information asymmetry
A secured transaction occurs when the seller retains a security __________ in the goods being sold.
Interest
What is the name of the organization that published abbreviations that are meant to avoid confusion in international business transactions?
International Chamber of Commerce
John owns Marine Brewery and hires Beth to advise him on business decision making. Beth is very aggressive and believes that society is best served when seek a competitive advantage and that ethical violations will harm the companies, always advises John in a manner that focuses on finding that competitive advantage. Beth employs which type theory of corporate social responsibility?
Invisible hand
Option contracts form an offer that is
Irrevocable
A fact is material if
It concerns a basic assumption in the agreement that could change the value of the contract.
One advantage of a community-based nonprofit type of corporation is
It is tax-exempt
In order for a party to avoid a contract based upon the defense of misrepresentation, all of the following must be present, except
It must be a lie about an opinion.
In order to have an insurable interest when a loss or damage of a good occurs
It must cause a person to suffer financial or other recognizable loss.
Equipment that a business may lease include:
Machinery
__________ is often an attractive alternative because the business can use equipment on an exclusive basis without the large up-front investment required to purchase it.
Leasing
Long complex sentences embedded with legal terminology, hidden clauses, and that uses obscure terms is called
Legalese
The requirement that both the subject matter and performance of a contract must be legal is called
Legality
Who must sign the lease agreement in order to be valid?
Lessee
The __________, the party who owns the leased goods and is making them available for lease.
Lessor
To fund a new building project, Kuhl Corporation enters into a contract with Bank of Highlander to lend them the money. This is an example of which type of agreement?
Loan agreement
n Lucy v. Zehmer, the court ruled that under the objective theory of contracts
Lucy and Zehmer's conduct and language would be viewed by a reasonable person as a serious intent to contract.
If a person materially breaches a contract, the non-breaching party
May be suspended from their obligations
__________ have a greater duty to act in a commercially reasonable manner.
Merchants
Oral contracts, also sometimes known as a "handshake" contract are not preferred in the business environment because
Most businesses prefer written contracts to minimize risk and uncertainty as it can be difficult to prove the terms of the contract without a writing.
Candace texts Rosa the following, "Hey Rosa, do you want to buy a car for a really great price?" Rosa immediately replies, "YES!!!!" Has there been a meeting of minds?
No because the offer is too vague
Fraudulent misrepresentation requires
Scienter
Paris offers to buy "all the mulch" Market Basket has and they agree. This contract is called a(n)
Output contract
Paris offers to sell her landscaping business to Steve for $100,000.00. Before Steve responds, Paris tells him that she has changed her mind. Which statement is true?
Paris is the master of her offer and she can cancel it any time up until Steve accepts it.
The interpretation rule stating that any writing by the parties intended to be the final expression of their agreement may not be contradicted by any oral or written agreements made prior to the writing is called the
Parol evidence rule
The main purpose of the statute of frauds is to
Prevent fraud by requiring a written contract to have written evidence of the agreement.
Religious documents, such as the Koran and the Old Testament utilize what type of ethical decision-making regime?
Principles-based approach
Southeastern Supplies (SS) is a manufacturer and supplier of office equipment. SS contracts to sell University of Florida (UF), a local university, 5,000 UF Gator mousepads at $10 per mousepad for delivery on August 1 and payment of $100,000 due upon delivery. If UF breaches before accepting the goods, SS has the following options for remedies:
Resell the goods at fair market value to another party and sue for the purchase price if a resale is unsuccessful or not feasible due to the unique nature of the goods
The duty to mitigate damages requires the non-breaching party to
Take reasonable steps to lessen damages
In a contract for the sale of goods, the goods must correspond with:
That understood to be the description from a course of dealings with the seller
A-phone Corporation, a California corporation, enters into an agreement with Matt to sell him a phone. In the contract, Matt specifically states that a representative from A-phone must travel to his home in Uganda and deliver it to Matt in person and title will pass once the phone is safely placed in Matt's hands in Uganda. A-phone drops the phone in the mail as they realize it is too expensive to travel to Uganda to deliver it in person. Which statement below is correct according to the UCC as to when title actually passed?
The UCC allows the parties to the contract to determine when title passes and the court will enforce the parties' agreement.
Innocent misrepresentation includes all of the following except
The aggrieved party can recover punitive damages
Two merchants agree to a sale of goods to be shipped by boat from Maine to Florida. No other shipping terms are indicated. If the boat sinks during the trip and all the goods are destroyed
The buyer may sue the carrier, but not the seller, for its loss.
Ethan enters into a business contract with Riley for the purchase of 200 school desks. The contract specifically states that Riley must deliver all of the 200 desks in one week, set them up and Ethan must determine that all 200 desks are in perfect condition, or Riley must remove all the desks immediately and Ethan will owe Riley nothing. Which statement below is correct based upon the application of default rules in this situation should Riley only be able to deliver 199 perfect, according to Ethan, school desks?
The court will determine that since the parties specifically addressed a provision of the contract, it cannot be overridden by a default rule.
25 year old Chloe agrees to sell 10 bottles of vodka to 21 year old Victor for $300.00 and two pounds of an illegal drug for $200.00. She delivers the vodka and illegal drug to Victor but he refuses to pay for the alcohol, stating it was not the brand that he wanted, and he also refused to pay for the illegal drug. She sues him for breach of contract. What will be the outcome of the suit?
The court will enforce only the portion of the agreement that is legal, the sale of the Vodka to Victor.
If a rule is mandatory, regarding business contracts, which of the following statements are correct?
The court will enforce the mandatory rule.
Modern Corporation operates a steel mill. It has never contributed anything to the local community and it knowingly polluted both the air and the river that runs by its mill. The corporation's reasoning is that the cost of installing pollution control devices would diminish its profits, and it supports the community because it provides jobs and doesn't think it owes anything else to the citizens in it area. Donating to the community would also diminish its profits. Which theory of corporate social responsibility is Modern Corporation exhibiting?
The narrow view or invisible hand theory
A professor tells a student that if she writes a 5,000-word paper on the evils of plagiarism by May 13, he will pay her $750. Which of the following is true?
The offer is for a unilateral contract.
Two merchant companies have entered into a contract for the sale of goods but have had no prior dealings that would establish a course of conduct between them. The UCC will allow gap fillers to apply to their contract regarding missing terms in each of the following situations except when
They have failed to specify the quality or grade of the goods to be delivered.
Abon purchases 500 books with a total value of $2000.00 from the Narnes and Boble Online bookstore. Abon uses an "electronic" signature feature on the website to acknowledge acceptance of the terms of the agreement. When the books are delivered to Abon, he refuses to accept delivery stating that no enforceable contract existed according to the statute of frauds of the UCC. Which statement below is correct about the transaction according to the UCC statute of frauds?
This agreement does satisfy the writing requirement of the UCC as electronic signatures are sufficient.
Helen's cat Fluffy has run away, and she places reward posters throughout her neighborhood. Mark sees one of the reward posters and spends the next six hours searching for Fluffy. While Mark is searching the neighborhood, Fluffy gets hungry and comes home.
This is a unilateral contract, and Mark is entitled to nothing because he did not perform.
Tye is selling his house which sustained a lot of water damage due to a leaky roof. Water damage stains grace the living room walls. Right before he shows his house, he paints over the water stains. Which statement below is correct?
This is an example of misrepresentation because he took affirmative actions to conceal the truth.
Which legal philosopher asserted that natural law is asserted by God, that it is authoritative over all human beings and it is knowable through the use of reason?
Thomas Aquinas
What types of warranties are offered when goods are leased?
Valid
Illegal contracts are
Void
When a person lacks capacity, generally those contracts are
Voidable
Once the time contemplated for performance has expired, the seller's right to __________ also expires.
cure
A promise that can be accepted only by the performance of the person to whom it is offered is an example of
a unilateral contract.
UCC rules on acceptance of goods and payment in regard to installment contracts mandate that
acceptance is made separately for each shipment, and payment for each shipment is due on delivery of that shipment.
The right to cure may exist __________ the time period for performance has come due.
after
Liquidated damages that are unreasonably low will not be enforced __________.
as unconscionable
In the absence of a specific contract provision regarding the details of payment, the UCC provides that payment be made in full
at the time and place that delivery occurs.
Conforming goods simply means the goods __________ in an agreement.
bargained for
What may be a method to show what the parties intended through their own actions in performing the specific contract in question?
course of performance
Southeastern Supplies (SS) is a manufacturer and supplier of office equipment. SS contracts to sell University of Florida (UF), a local university, 5,000 UF Gator mousepads at $10 per mousepad for delivery on August 1 and payment of $100,000 due upon delivery. On July 19, UF receives 5,000 Florida State University mousepads. SS has the right to:
cure and ship conforming goods
Which of the following is not an equitable remedy?
damages
At this moment, your contract with your university or college is
express, bilateral, and valid.
Each of the following is a key component in the creation and implementation of a company's values management program except
identifying the values that the company's peer competitors promote.
A seller may also incur __________ damages at any point due to the buyer's breach. These damages include expenses related to holding goods that were wrongfully rejected, shipping, and advertising for resale.
incidental
The UCC provides the parties with __________ flexibility in how they carry out their obligation
maximum
Commercial impracticability is a __________ doctrine.
narrow
Commercially reasonable means:
observing industry standards and practices that may be unique to the particular industry.
In an installment contract, the buyer may __________ an installment only if the nonconformity substantially impairs the value of that installment and the nonconformity cannot be cured.
reject
The UCC treats a __________ as a breach even if performance is due.
repudiation
T.T. Inc. creates and sells hats. The Local Ironworkers 452 have contracted with T.T. Inc to purchase 150,000 hats for $15,000 with a delivery date of July 1. Local Ironworkers 452 paid a $5,000 deposit upon signing the contract, with the remaining $10,000 balance due when the hats are delivered. In the contract, Local Ironworkers 452 specified that "time is of the essence due to a local union campaign." Local Ironworkers 452 has reason to believe from another local chapter that there was an issue in the hats arriving a day after an important rally. What is/are Local Ironworkers 452's option(s)?
request written assurances
Upon the buyer's breach, the __________ has various options to pursue remedies that depend to some extent on whether the buyer has rejected the goods or accepted them.
seller
A __________ primary duty is to deliver conforming goods to the buyer as stipulated in the contract. Conforming goods are goods that match what was bargained for in the agreement.
seller's
If a buyer accepts conforming goods delivered by the seller and simply does not pay for them as required in the contract, what is most likely to happen? The seller can:
sue for the purchase price
Under the doctrine referred to as __________, the UCC obligates the seller to have or tender the goods, give the buyer appropriate notice of the tender, and take any actions necessary to allow the buyer to take delivery.
tender of delivery
Absent specific agreements between the parties, the reasonableness requirement of the UCC governing delivery of goods requires each of the following except
the goods must be delivered on a weekday.
buyer can accept one installment without giving up the right to reject any additional installments that are nonconforming which is an exception to:
the perfect tender rule
According to the UCC, which statement below is correct, if a contract is silent as to when title passes and a good must be shipped?
It passes once the good has been delivered to a common carrier.
In which of the following situations is a court most likely to find substantial performance?
KM Corporation orders 500 boxes of copy paper from MK supply, but MK can deliver only 450 boxes.
Again Motors offers to sell Shelby a 1977 Shelby Mustang Cobra for $10,000 on July 1, 2018. Shelby decides that she must think about it and one year later, on July 1, 2019 Shelby calls up Again Motors and tells them that she accepts their offer and will be to the store that day with the $10,000 for the car. Again Motors refuses to honor the offer even though they still have the exact car setting on the lot. Shelby sues Again Motors to enforce the agreement. Most likely, according to the UCC, what will be the outcome of the case?
The UCC only requires an offer to remain open for three months unless specifically stated otherwise. Therefore, Again Motors does not have to honor the offer.
Tyke's Bikes is a bicycle sales and repair shop in a small city. It sells new and used bikes with a narrow profit margin and does repairs at minimal costs. Frequently, if a child comes into the shop with a broken part or a flat tire, Tyke's makes the repair for free if the child has no money. Tyke's also provides a free one-hour repair class for those who want to learn how to fix their bikes. At large local organized bike rides, Tyke's provides free services, asking only for voluntary donations. Which theory of corporate social responsibility is Tyke's exhibiting?
The broad view, or good corporate citizenship.
According to the International Chamber of Commerce abbreviations, CF requires
The buyer must ascertain whether the goods are properly insured during transit.
Specific performance will most likely be allowed if
The person required to perform the service has unique and specific skills
When a commercial contract involves both a service and a sale of good, what test will the courts use to determine if Article 2 of the UCC applies?
The predominant purpose doctrine
Which of the following is true of open-price-term contracts?
The price becomes the reasonable price at the time goods are delivered.
Arnie and Matt are involved in a car accident. Immediately before the accident, Arnie was observed speeding and driving erratically. On the other hand, Matt was obeying the speed limit and driving in a very cautious and responsible manner. As a result of the accident, Matt's car needs $2,500 worth of repairs and Matt loses a week's salary because he has to take time off to recover from injuries sustained during the crash. Which of the following statements best describes the nature of the damages in this case?
The repairs are compensatory damages, and the lost wages are consequential damages.
The statute governing which contracts must be in writing to be enforceable is
The statute of frauds
In e-Contracts a "click wrap" agreement is when
The website provider posts terms and conditions and the user clicks an "I Accept" button located on the web page of the purchase.
A legally enforceable promise is
A contract
In the case of Vokes v. Arthur Murray Dance Studio, the court determined that the dance instructor's intentional lie to an elderly widow, claiming that she had excellent dance potential, was
A fact because the dance instructor had superior knowledge.
Janet is on the board of directors of a public company. The board is deciding on a new health care plan that would cost its workers more than its current plan, but would save the company millions. After asking herself how she would feel if this decision was announced to the public on social media, Janet decided to vote against changing the health plan. The approach Janet used in making her decision is referred to as the
Broadcast news test
Morgan downloads some software for a video gaming system. By completing the download she agrees to the terms in what type of agreement.
Browse-Wrap
Bundy's Bicycle Corporation, a U.S. corporation, had a windfall year in profits and is looking for legal loopholes to avoid paying taxes on it massive profit. To avoid taxes Bundy's merges with a foreign business, simply to avoid paying for taxes in a process called
Corporate inversion
Corey, a strategically qualified attorney for Adams Corporate Concepts, negotiates all of their contracts. He routinely uses a form or template to create any contract. Which one of the following statements is true?
Customized contracts are the preferred method of creating a contract because it allows the contract to be tailored to meet the specific, personal needs of the client.
Aimee and Claire both own their own bakeries in Edwardsville. They both agree with each other to sell their cupcakes for $5.00. Is this contract enforceable?
No as it is a restraint on trade which is against public policy.
Hailey purchased an automobile insurance policy through State Insurance. However, State Insurance failed to use the proper legally mandated insurance form. Hailey gets into an accident and seeks to use her policy. Which statement below is most likely correct concerning the outcome of the issue?
Even though the form may not be the legally approved form, an insured under the policy may still enforce that policy.
Gigi, as a kind gesture, offers to let her friend, Bonnie, stay at her house for free instead of paying the high rent she is currently paying. Bonnie loads up her moving truck and terminates her current lease. When Bonnie shows up to Gigi's house with a full moving truck, Gigi decides she no longer wants her to stay at her house and turns her away. Does Bonnie have any legal recourse?
If Bonnie can show that she reasonably relied on Gigi's promise to her detriment, Bonnie may have legal recourse under under the concept of detrimental reliance
Courts emply the objective theory of contracts to determine
If a reasonable person would believe the offeror's actions or words indicated that person was serious when making the offer
Karla is a CEO of Brinkman Corporation which designs, builds and markets slot machines for casinos. Karla's professional career has focused on marketing and employee relations but she is not really knowledgeable about the intellectual property law and protections in the United States that heavily dominates this industry. Which statement is correct?
Karla should have superior knowledge of the law as it relates to her business and work proactively with legal counsel to find ethical and effective business solutions.
While driving across country, Katherine and Ryan play their favorite game, "What would you do if you won the Mega-millions lottery?" Katherine states, "If I won the Mega-million I would give you $10,000,000.00." Two years later, Katherine actually wins the Mega-millions and Ryan demands his promised money. Katherine refused. What would likely be the outcome of the case?
Katherine's statement is an illusory promise; therefore, the court will not enforce it.
When Maria comes home from work, she finds that her yard has been mowed and trimmed. An hour later, a man comes to her door to collect payment for the yard work. Maria refuses to pay him because she has never seen him before and did not hire him to do the work. Which of the following is accurate?
Maria would not have to pay anything.
Gabrielle, a 19 year old college freshman, promises not to drink any alcohol while she is away at college in exchange for her parents' promise to pay for her tuition. Is there consideration?
No because Gabrielle is not giving up something of legal value as she is under 21 years.
Dottie, 15 years old, purchases a pint of milk and drinks it all. While she is not old enough to have contractual capacity, under what theory would she be held liable for this item that is necessary for her health and welfare?Dottie, 15 years old, purchases a pint of milk and drinks it all. While she is not old enough to have contractual capacity, under what theory would she be held liable for this item that is necessary for her health and welfare?
Necessaries
In Sparrow v. Demonico, the court ruled that in order for a person to lack mental capacity due to a mental illness
Must focus on a party's understanding at the time of the disputed transaction.
The four required elements of a contract are
Mutual assent, consideration, capacity and legal purpose
Gigi Hilonder, an up and coming tennis star on the tennis circuit, travels to Atlanta to compete in a tournament. Officer Grant, an Atlanta police officer on duty during her tournament, offers to give Gigi "added" security for an additional $100 a day, by standing outside her door and promising to aid her before anyone else should she need it. Gigi readily agrees as her popularity is sky-rocketing and her fans are intrusive. Is this a contract?
No because a public officer cannot accept greater pay other than what is fixed by law as it is against public policy.
Ralph, 32 years old, sells his car to Joe, 16 years old, thinking Joe is actually 18 years old. When Ralph finds out Joe is actually only 16 years old, he is outraged and wants to have the contract voided because Joe is a minor. Will Ralph be successful?
No the contract is only voidable by the Joe, the minor.
Travis and Brooke offer to buy a house from Michael and Tara because they love the location, the size, and the decorations. Michael and Tara accept the offer and reduce it to a writing that states Travis and Brooke will pay $100,000.00 to Michael and Tara for their house at 123 East 4th Street, Tulsa, OK. When Travis and Brooke move into the house, they are furious because Michael and Tara took all of their furniture and decorations with them, and Travis and Brooke loved the house so much primarily because of the furniture and decorations. Travis said they talked about this a lot with Michael and Tara during the sale. Which statement below is correct according to the parol evidence rule?
Since the writing only referred to the sale of the house and not the contents, the sale only includes the house
This rule requires that some agreements must be in writing to be a contract.
Statute of Frauds
Sarah worked for Southwestern Botanical Gardens and loved her job and loved her coworkers. Five years ago, her employer did not pay her for a week's work, thereby breaching her employment contract, because funds were very low. She decided that she would let it slide because she wanted to see the company make it through a difficult time. However, times have changed and the management has changed and the current managers does not value its employees or its central mission as it had previously. Moral is low and employees are leaving left and right. Sarah, wants to leave now in protest and she is considering suing for the old breach of contract case she could have pursued five years ago just to punish them and get as much money out of the company. When Sarah approaches an attorney about this, he informs her that she can no longer bring the lawsuit because she waited too long and it would be unfair to hold them currently responsible for past bad action. To which law is the attorney referring meant to avoid this situation?
Statute of limitations
Fly High Aviation provides maintenance for executive jets based on private contracts with corporations that maintain airplanes for company use. Which of the following is least likely to be a Fly High stakeholder?
The citizens who live near the airports that planes maintained by Fly High fly into
At an after work networking event, Mike drinks wine while negotiating the terms of an employment contract with Cyndy to start the next day. Cyndy shows up to work the next day and Mike states that he was drunk the night before and therefore lacked capacity. The court will most likely rule
The contract is voidable by Mike if he can prove that at the time he entered into the contract his intoxication prevented him from understanding the consequences of his actions.
In 1971 Poorwa offered to sell her new Ford Mustang to Tom for $2000.00. Tom asked to think about her offer and get back to Poorwa. 40 years later, Tom realizes Poorwa still has the Mustang that is now worth $121,000.00. He calls up Poorwa and says that he has finally had time to think about it and he now accepts Poorwa's offer from 1971 to buy the Mustang at $2000.00. Which statement below is correct?
The offer terminated after a reasonable amount of time had lapsed.
Nobel Prize-winning economist Milton Friedman believed that
The only responsibility a business has is to maximize shareholder wealth
Drake visited Dr. Young because his left foot was bothering him. After an examination, the doctor knew that the most common, most successful treatment would be rest, ice and an anti-inflammatory. However, Dr. Young knows that if he prescribes special vitamins he will profit from a special incentive program through a pharmaceutical company. Therefore, Dr. Young suggests that Drake also sign up for the vitamin regimen as well. While the vitamins will not hurt Drake, they also will not help his foot at all. Trusting Dr. Young, Drake signs up for the full vitamin regimen. Which would be the best defense to claim in this instance?
Undue influence
Shawn is selling her house. During an open house, she enters into a conversation with a prospective buyer, Ned, who keeps stating that he cannot believe that Shawn is selling this house with absolutely no termite damage for the price she is asking. Shawn has actual knowledge that the house is infested with termites but does not correct Ned at any time. Is this a lie?
Yes because Shawn failed to correct a past statement that she knew was false
