Business Law 2, Test 1 - Chapter 20

Intangible property has conceptual existence and thus comes under Article 2.

False

The UCC applies to the formation of sales and lease contracts and observes the same degree of formality used in forming other types of contracts.

False

Under a finance lease, the lessee can stop performing and making lease payments if the leased equipment turns out to be defective.

False

Under the UCC, a contract for a sale of goods that does not include the quantity will not fail for indefiniteness.

False

Under the UCC, a firm offer for a sale or lease of goods made by a merchant without consideration can be revoked at any time before acceptance.

False

When no delivery terms are specified in a contract for a sale of goods, there is no basis for determining a remedy.

False

In a limited number of instances, the UCC imposes presumes that special business standards ought to be imposed on merchants because of their relatively high degree of commercial expertise.

True

The UCC applies only to the extent that it has been adopted a state.

True

The United Nations Convention on Contracts for the International Sale of Goods (CISG) is the uniform international sales law of countries that account for more than two-thirds of all global trade.

True

Under the UCC, an agreement modifying a contract needs no consideration to be binding.

True

Under the UCC, an offeree can accept an offer to buy goods by a prompt shipment of conforming goods.

True

Under the UCC, an offeror must be notified within a reasonable time that the offeree has accepted.

True

Under the UCC, good faith means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.

True

Under the UCC, the meaning of any agreement must be interpreted in light of commercial practices.

True

Output contract

An agreement in which a seller agrees to sell and a buyer agrees to buy all or up to a stated amount of what the seller produces.

Firm offer

An offer (by a merchant) that is irrevocable without consideration for a period of time (not longer than three months). A firm offer by a merchant must be in writing and must be signed by the offeror.

A lessee is a party who transfers a right to the possession and use of goods under a lease.

False

All oral contracts are enforceable under the UCC.

False

Ripe Produce, Inc., and Southeast Asian Bistro & Market enter into a contract for the delivery of locally grown fruits and vegetables. The parties use a standard Ripe Produce form that contains some of the terms the parties agree on but not others. Some of the produce spoils before it can be cooked, served, and eaten, or sold. Southeast Asian refuses to pay for the spoiled goods. 1. Ripe Produce responds that it did not waive payment for spoiled goods in the parties' previous transaction. Ripe Produce is arguing that the court should take into account 2. Ripe Produce files a suit against Southeast Asian, claiming that the buyer assumed the risk of the spoilage of the unsold goods. The court may allow evidence of this term if it finds that the parties' contract is 3. Southeast Asian contends that the practice in the trade with respect to payment for spoiled produce justifies its refusal to pay. Southeast Asian is arguing that the court should take into account

1. a. the course of dealing. 2. b. not fully integrated. 3. c. the usage of trade.

Requirements contract

An agreement in which a buyer agrees to purchase and the seller agrees to sell all or up to a stated amount of what the buyer needs or requires.

Choice-of-law clause

A clause in a contract designating the law (such as the law of a particular state or nation) that will govern the contract.

Choice-of-language clause

A clause in a contract designating the official language by which the contract will be interpreted in the event of a future disagreement over the contract's terms.

Sales contract

A contract for the sale of goods under which the ownership of goods is transferred from a seller to a buyer for a price.

Merchant

A person who is engaged in the purchase and sale of goods. Under the Uniform Commercial Code, a person who deals in goods of the kind involved in the sales contract.

Force majeure (pronounced mah-zhure) clause

A provision in a contract stipulating that certain unforeseen events?such as war, political upheavals, acts of God, or other events?will excuse a party from liability for nonperformance of contractual obligations.

Predominant-factor test

A test courts use to determine whether a contract is primarily for the sale of goods or for the sale of services.

Usage of trade

Any practice or method of dealing having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in question.

A contract for a sale of real property or services is a contract for a sale of goods.

False

Lease agreement

In regard to the lease of goods, an agreement in which one person (the lessor) agrees to transfer the right to the possession and use of property to another person (the lessee) in exchange for rental payments.

Course of dealing

Prior conduct between parties to a contract that establishes a common basis for their understanding.

Tangible property

Property that has physical existence and can be distinguished by the senses of touch, sight, and so on. A car is tangible property; a patent right is intangible property.

Intangible property

Property that is incapable of being apprehended by the senses (such as by sight or touch); intellectual property is an example of intangible property.

Course of performance

The conduct that occurs under the terms of a particular agreement; such conduct indicates what the parties to an agreement intended it to mean.

Sale

The passing of title (evidence of ownership rights) from the seller to the buyer for a price.

An unconscionable contract is one that is so unfair and one sided that it would be unreasonable to enforce it.

True

Article 2A of the UCC covers any transaction that creates a lease of goods or a sublease of goods.

True

Goods associated with real estate often fall within the scope of Article 2.

True

Seasonably

Within a specified time period. If no period is specified, within a reasonable time.

Over the course of a year, Suites & Sets Corporation sells household furnishings to customers to whom it extends credit. Suites & Sets orders the furnishings from The Storage Depot's warehouse, from which the items are shipped via common carrier to Suites & Sets customers. Article 2 of the UCC governs

a. all of the parties' sales of the goods.

Stop n' Gas Convenience Stores, Inc., is an East Coast-based firm that does business throughout the United States. With respect to this circumstance, the UCC has been adopted by, and applies in,

a. all of the states, in whole or in part.

Refined Grains, Inc., is a Kansas-based firm that does business throughout the world. Refined Grains manages retail and wholesale operations, buys and sells commercial venues, undeveloped land, and agricultural products, and other goods. Refined Grains has had to deal with employee and customer theft. With respect to these circumstances, the Uniform Commercial Code (UCC) provides a framework for

a. commercial transactions for the sale of and payment for goods.

iSharp, Inc., and Jenene, the owner of a Kitchen Time shop, orally agree to a sale of knives and other utensils for $12,000. Jenene gives iSharp a check for $4,000 as a partial payment. This contract is

a. enforceable to the extent of $4,000.

Fresh Dairy, Inc., is the offeror and Gelato Ice Cream Company is the offeree under a unilateral sales contract in which Hector's Helado Corporation is also interested. Gelato is not notified of Fresh Dairy's performance within a reason- able time. Gelato

a. may treat the offer as having lapsed.

American Coffee Company and Beans Brokers, Inc., enter into a contract for the sale of a certain quality and quantity of coffee beans, with Beans Brokers to determine the price. The price must be set according to

a. the concept of good faith.

County Dentists Clinic offers to buy from Dental & Medical Supplies Company a certain quantity of floss and other items for a certain price. Dental & Medical can accept the offer by

b. a promise to ship or a prompt shipment of the goods.

Great Gear, Inc., enters into a contract to sell sports clothing and equipment to Healthways Workout store, which in turn sells a pair of bike shorts to Ilene, a consumer. In comparison to standards that apply to consumers, the UCC imposes on merchants

b. special business standards.

Perfect Poultry Company agrees to sell chicken, turkey, and other meats to Quik Markets, Inc., to sell to its customers. Normally, their contract would not be enforceable unless it includes

c. the quantity of the goods.

Ferris is refinishing his kitchen floor and needs a floor sander to complete the job. Ferris's neighbor Gerda suggests that he call Home Repair Rentals, Inc. Home Repair leases Ferris a floor sander. In this transaction, the lessor is

c. Home Repair.

Diet & Health Food stores orders 1,000 boxes of granola bars from Energy Products, Inc., but fails to specify the varieties. The granola bars are delivered in an assortment of varieties. Diet & Health may

c. accept only the granola bars that it wants and reject the rest.

Savannah and Tim enter into a sales contract for orchids. With respect to the specific contractual provisions set out in the UCC, Savannah and Tim may

c. agree to whatever terms they wish.

La-Z Days Motels, Inc., and Beds R Us Corporation enter into a contract that does not specify the payment terms. Payment may be made in

c. any commercially normal or acceptable means.

Downtown Contractors and Equipment Rental Corporation are parties to an oral agreement for a one-year lease of a crane with payments totaling more than $10,000. They may satisfy the Statute of Frauds by

c. setting out the terms in a memo.

Nature's Products, Inc., sends its standard order form to Omni Distribution Corporation to evidence a sale of packing materials. Omni responds with its own standard purchase order form. Additional terms in the purchase order automatically become part of the contract unless

d. any of the choices.(a. the terms materially alter the original contract. b. the original offer expressly required acceptance of its terms. c. the offeror objects to the new terms within a reasonable time.)

Toro, S.A., which is based in Mexico, enters into a contract for the purchase of portable livestock fencing from United Fencing Company, which is based in the United States. This contract is governed by

d. the United Nations Convention on Contracts for the International Sale of Goods.

Global Outfitters Outlet and Hyacinth, a consumer, enter into a contract for a sale of ultra-weather camping gear. If the contract includes a clause that is perceived as grossly unfair to Hyacinth, its enforcement may be challenged under

d. the doctrine of unconscionability.