Business Law Final
58. As the result of the Magnuson-Moss Warranty Act, manufacturers of goods produced after 1975 are required to do the following? a. If an express warranty is given, the seller at least must repair or replace all defective items sold regardless of who is ultimately responsible for the defect. b. If an express warranty is given, the warranty must be labeled as either " full or limited" warranty. c. The manufacturer seller must provide follow upon all sales to ensure consumes satisfaction. d. The manufacturer seller must offer full and unlimited warranties on their products.
...
68. Repudiation is a: a. Breach b. Method of rejecting goods. c. Party's indication of an intention not to perform. d. "cure"
...
77. Donna defaults on her loan owed to Second State Bank. The loan was secured with her car. Donna used the car for personal and going back and forth to college. a. Second State may take Donna's car if this is done without a breach of the peace. b. Second State may take Donna's car even if it means a breach of the peace. c. Second State may not take Donna's car as it is a consumer good. d. Second State may not take Donna's car because perfection was automatic.
...
78. To perfect a security interest in a negotiable instrument, Second State Bank should: a. File a financing statement. b. Take possession of the instrument. c. Do nothing, perfection is automatic. d. Secure a court order.
...
80. First Bank loaned $400.000 to Ted, taking a security interest in his yacht. Ted defaulted on the loan and First Bank repossesses the yacht. First Bank sold the yacht at a public sale and the sale yield $450,000. First Bank: a. Must pay the $50,000 to Ted. b. Is entitled to keep the $50,000. c. Must share the $50,000 with Ted. d. Must pay the surplus to the Secretary of the State of Maryland.
...
81. Landscaper Lottie used her machinery, employee labor and her expertise to landscape Opal's new guest house. Opal fails to pay for the landscaping because she ran out of money. Lottie files a lien against the real property. This lien is called: a. An artisan's lien, her landscape design is a work of art. b. A landlord's lien, Opal is planning to rent the guest house. c. A mechanic's lien, it was created by improving real property. d. A purchase money security interest.
...
82 Which of the following is an example of a purchase money security interest in consumer goods? a. A doctor purchasing a computer on credit to create a Webpage to make services and information available to patients. b. A doctor purchasing on credit a blood glucose monitor to check his own blood sugar levels. c. A doctor purchasing a TV/VCR unit on credit to place in the office waiting room. d. A doctor purchasing am exercise bike for employees to use over the lunch hour.
...
90. Wedney, Inc. sold a meat processing machine to Yoro Chickens, taking a security interest in the machine. Yoro Chicken defaults and Wedney repossessed the machine. Wedney would like to keep the machine and use it as a model. Which of the following statements is correct? a. Wedney must notify the debtor that it intends to retain the machine and give Yoro 20 days to object. b. By taking possession, Wedney automatically foreclosed on the collateral and now has valid title, thus need to do nothing else. c. Since the machine is equipment, Wedney cannot retain the machine and must dispose of the collateral in a commercially reasonable manner. d. Wedney can retain the machine, but must pay Yoro the surplus value of the different of market value and amount of debit.
...
20. Harly Siding Inc. manufactures aluminum siding. Harly enters into a contract to deliver siding to Slippery Siding Ltd., a retailer of aluminum siding. The written agreement insists that all modifications to the agreement be in writing and signed by both parties. This prohibition against oral modification is: a. Valid b. Invalid as only Harly can sign c. Invalid as only Slippery Siding can sign. d. Invalid as it needs new consideration from both parties to be valid.
a
21. Buyer is located in Des Moines, IA. And the seller is located in Sacramento, CA. The contract specifies F.O.B. Des Moines. This contract is a: a. Destination contract. b. Sale or return contract c. Shipment collect contract. d. Sale on approval.
a
27. On impulse you buy a travel trailer and ask your acquaintance Max, if you can leave the trailer at the edge of his restaurant's parking lot until you can have a concrete pad built to store the trailer on your property. Max agrees. When you return the next week, it is gone and you find out that Max sold it. You can. a. Recover the trailer as Max did not have any ownership interest to pass. b. Recover, but only if you Max bought insurance to cover the trailer. c. Not recover, as you entrusted the trailer to Max, who then had the right to sell it. d. Not recover, as Max had only a voidable title to transfer.
a
28. Tanae takes her diamond solitaire ring to Sparkle Jewelry Shop to have to prongs holding the diamond tightened and the ring cleaned. She is told that she would have to leave the ring and it will be ready in a week. Tanae returns to collect her ring and find out that her ring was sold. Which of the following is true, a. Sparkle Jewelry had the power to transfer title to a buyer in good faith, in ordinary course of business. b. This situation is a theft by Sparkle and Sparkle must retrieve the ring. c. Tanae can retrieve the ring directly from the buyer. d. Tanae has lost the title to the ring and has no recourse as she left the ring.
a
30. Microchip Computers is a retailer, which buys its inventory from Acme Co. on credit, giving Acme Co. a security interest in the inventory. Kyle buys a computer from Microchip in the normal course of business. Kyle 's title in the computer is: a. A good title. b. A voidable title c. Kyle has no title as title did not pass to Microchip until Microchip pays in full its debt to Acme Co. d. Kyle has good title that is subject to Acme's secured interest.
a
33. Assume that Dick steals Nathaniel's camcorder and sells it to Sid. Nathaniel can recover the camcorder from Sid: a. Under any circumstances. b. Only if Sid knew the camcorder was stolen from Nathaniel. c. Only if Sid did not know the camcorder was stolen d. Only if Sid paid less that the fair market value for the camcorder.
a
35. A gun manufacturer, in Denver, Co. agrees to sell guns and ammunition to the ATF in Washington, DC. The terms of the contract specify that the goods are to be shipped F.O.B. Chicago. When does the buyer acquire title and risk of loss? a. When the goods reach Chicago. b. When the goods are delivered to the carrier in Colorado. c. When the goods are tendered in Washington, DC by the carrier. d. When the goods reach Washington CD.
a
46. A sales representative at Oxtren, Inc. orally told the purchasing agent at Wety, Inc. that its industrial saw will cut through metal up to 5 inches thick. Wety purchased the saw. Which statement is correct concerning the claim that the saw would cut medal up to 5 inches thick? a. The claim is an expressed warranty. b. The claim is an implied warranty of merchantability. c. The claim is not a warranty as it is not in writing. d. The claim is not a warranty because it is sales puffery.
a
49. Tu-thumbs buys a paint sprayer from the local paint store. The sprayer had a large sign on it stating "as is". The dealer made no promises or statements concerning the sprayer's performance. Tu-thumbs attempts to paint his house, the trigger on the sprayer sticks and will not turn off. By the time Tu-thumbs turns off the power to the sprayer, he has sprayed the neighbors car. Tu-Thumbs sues the dealership. Who wins? a. The dealership wins, as there is no expressed warranty and all implied warranties were disclaimed. b. Tu-thumbs wins, recover on the bases of expressed warranty. c. Tu-thumbs wins based on the implied warranty of merchantability. d. Tu-thmubs wins based on the implied warranty of fitness for a particular purpose.
a
50. Bill is injured while standing on a corner of Hollywood and Vine when Cody's new Hog speeds out of control because of a defective part. In most jurisdiction, Bill: a. Can sue the motorcycle manufacturer even though he was only a bystander. b. Cannot sue the motorcycle manufacturer as there is no privity of contract. c. Cannot sue the motorcycle manufacturer because of the lemon law. d. Cannot sue the motorcycle manufacturer because his injuries are personal injuries.
a
51. Lemon laws that assist buyers of automobiles that turn out to be "lemons": a. Are enacted by state legislatures. b. Are included in the warranty provisions of the UCC. c. Have been preempted by the Magnuson-Moss Warranty Act. d. Only enforced on new automobiles.
a
64. The Cleveland Indians ordered 500 wooden bats from Bats, Inc., for delivery on June 1. On May 15, the Cleveland Indians received 500 aluminum bats. As of May 16, Bats, Inc.: a. May cure before June 1. b. Has breached the contract and is liable for damages. c. Has breached the contract only if the Cleveland Indians reject the goods. d. May cure if done within a reasonable time after June 1.
a
65. The UCC "perfect tender" provision provides: a. The buyer can reject the entire shipment if any portion of the goods are non-conforming. b. The buyer must accept the goods if the defects are minor and correctable. c. The buyer may not accept the conforming part of the shipment and reject the non-conforming part. d. A buyer must reject non-conforming goods.
a
67. Precision had a contract to supply Higgins, Co. with 500 medical instruments for delivery in three months. Several weeks later Higgins reads in the: Wall Street Journal" that Precision has been sued for selling defective instruments. Higgins can: a. Require written assurances from Precision. b. Sue Precision for damages immediately c. " cover" d. Declare the contract is breached.
a
69. If a contract does not provide for a time for inspection, the UCC allows inspection: a. In a reasonable time b. The same day as delivery. c. Within three days of delivery d. Within ten days of delivery.
a
70. If a seller cures within a reasonable amount of time, the contract: a. Has been performed. b. Is breached. c. Is void d. Is voidable.
a
71. Which of the following statements is not true regarding the buyer's right to cover? a. The buyer must cover. b. The measure of damages in a cover is the difference between the cover price and the contract price. c. Cover must be done by reasonably obtaining substitute goods. d. Con sequential damages can be recovered in addition to the cover damages.
a
73. Reba orders a pair of custom leather cowboy boots, C.O.D. from Home on the Range Western Wear When the boots arrive, Reba pays the carrier and opens the package, only to discover that the boots are the wrong snake skin color and three sizes too small. At this point: a. She is entitled to inspect the goods after paying( due to the C.O.D. terms) and she can reject the boots as they are non-conforming. b. Reba cannot revoke the acceptance, because the wrong color and size of the boots are not substantial impairments. c. Home on the Range can allege that Reba did not conduct a proper pre- inspection before payment, therefor Reba accepted the boots. d. None of the above.
a
74. The Code's requirement of good faith in the performance and enforcement Of every contract: a. A greater duty on merchants than consumers. b. A greater duty on consumers than merchants. c. The same duty on both consumers and merchants. d. A greater duty on parties to a sales contract with the contract price over $500.
a
83. If repossessed collateral is sold or otherwise disposed of by the creditor, time, place, manner and method of disposal must be: a. Commercially reasonable. b. Scheduled with the debtor so that the debtor is able to attend. c. Court ordered d. Perfected.
a
86. A security interest in money may be perfected by: a. Filing a financing statement. b. Creating a PMSI. c. Possession only. d. Redemption.
a
9. Which of the following contracts is most likely to be declared unconscionable? a. A consumer sales contract which charges 300 times the fair market value of the goods. b. A consumer sales contract which limits the consumer's remedies to repair or replacement. c. A contract between wholesaler and retailer which adds delivery charges at 15% of the costs of the goods. d. A sales contract between wholesaler and retailer which limits remedies such as consequential damages.
a
36. Tuan, Inc. contracted to buy 200 monogrammed blankets from Titex, Inc. Tuan advance paid for the order and before segregating and monogramming the blankets, Titex filed for bankruptcy. Tuan will not be able to recover the blankets because: a. Tuan is a merchant. b. The blankets were not identified to the contract c. Tuan became bankrupt after the contract was formed. d. The goods were specially manufactured.
b
39. A contract that requires a seller to deliver goods to the carrier is: a. A destination Contract. b. A shipment contract c. C.I.F. contract. d. A C.O.B. Contract
b
44. Under which of the following warranties must the seller be a merchant? a. Expressed warranties. b. Implied warranty of merchantability. c. Implied warranty of fitness for a particular purpose. d. Both b and c.
b
45. Bugs R Us sells and delivers 100 units of live lady bugs to eat the bad bugs on the buyer's vegetables. The buyer ordered the lady bugs without consulting Bugs R US as the buyer correctly know that lady bugs were the appropriate bugs for eating bad bugs on vegetables. When the bugs were delivered they refused to eat the bad bugs. Bugs R Us has breached which warranty? a. Implied warranty of fitness for a particular purpose. b. Implied Warranty of merchantability. c. Implied warranty of title. d. Implies warranty against infringement.
b
48. In all but which of the following instances is a statement more likely to be an affirmation of fact that puffery or an opinion? a. It is specific. b. It is oral. c. The seller has greater expertise that the buyer. d. The defects are not obvious.
b
54. Daddy buys an electric car for his 10 year-old son. While daddy followed the directions for assembly carefully, his son gets an injuring electric shock when he usages the car. Daddy sues the manufacturer for negligence. He will: a. Be successful only if he can prove that the car manufacturer knew of the defect and failed to correct it. b. Be successful only if he can prove that the car manufacturer failed to use reasonable care in the design, manufacturing or warning the purchasers of foreseeable possible misuse. c. Lose, because the son had no privity of the contract. d. Not successful as it was sold "as is".
b
56. Ted sold his car to his neighbor, Ian. Ted fails to tell Ian he has not finished paying for the car and the SFUC has a lien on it. a. Ted has breached the warranty against infringement. b. Ted has breached the warranty of title/ c. Ted has breached the warranty of merchantability. d. Ted has not breached any warranty because he did not guarantee that the car was free and clear of any security liens.
b
62. Under the UCC, the seller's rights to correct a shipment of non-conforming goods is called: a. Correction. b. Cure. c. Cover. d. Retender.
b
63. Bryson Hardware accepted delivery of 50 door handles it ordered. If it later finds the handles do not conform to the contract specifications, it may return the goods only if: a. It shows the handles are non-conforming. b. It shows that the defect substantially impair their value. c. It can prove it is commercially impracticable for it to keep the goods. d. The document of title is in order.
b
66. The buyer who properly rejects goods. a. Can do so by sending the goods back in any manner. b. Must notify the seller of the rejection within a reasonable time. c. Must pay the cost of returning the rejected goods. d. None of the above.
b
72. Master Glue Hairspray, Inc. contracts to purchase 100 umbrellas with its logo and its slogan, "A spray a day keeps the rain and wind away!" specially printed on the umbrellas and its 800 number on the handle. After the seller completes the order, Master Glue Hairspray refused to accept or pay for the umbrella. Because of the special logo and telephone number, the seller has been unable to find a new buyer. If the seller sues Master Glue Hairspray, what is the proper measure of the seller's damages? a. Contract price minus market value of the goods at the time of delivery. b. Contract price. c. Lost profit. d. Cover price minus contract price.
b
82. Ted bought a 50 foot yacht from Myrtle's Marina by entering into a note and security agreement promising the yacht as collateral for the PMSI. When Ted failed to make three payments, Myrtle's Marina repossessed the yacht by removing the engine and advertised a public sale of the yacht. Ted appealed to a friend and managed to pay off the debit balance and the expenses of repossessing and advertising the yacht. Ted's actions represent: a. Strict foreclosure. b. Redemption. c. Silent bidding at the auction. d. An artisan's lien.
b
85. The initial term a financing statement will be effective is: a. Ten years. b. Five years. c. Two years d. One year.
b
87. Country Bank, located in Indiana, loaned Mike $5,000 and obtained a security interest in a copyright Mike owns. Mike lives in Illinois, but works in Indiana. Country Bank files a financing statement in Indiana. The statement provides Mike's correct name, his business address and a reasonable description of the copyright used as collateral. Is the financing statement sufficient? a. Yes, it meets the UCC requirements for contents and filing. b. No, if the debtor is an individual, the secured party must file in the state the debtor's principal residence is located. c. No, the contents of the financing Statement are incomplete. d. Both b and c are correct.
b
89. Florence borrows $1,500 from Ann and leaves with Ann a gold necklace as collateral. Two weeks later Florence borrows $1,000 from Corner Bank. Florence signs a security agreement and a financing statement giving Corner Bank a security interest in the same gold necklace. The financing statement is filed. If Florence defaults on both loans, which creditor has the superior rights to the necklace? a. Ann, because her loan was first to attach. b. Ann, because her loan was first to perfect. c. Corner bank, because Ann did not perfect her interest. d. Corner bank, because Ann did not have a written security agreement.
b
92. On February5, Panda Gardens puts up as collateral Chinese cookie inventory and as well any future inventory for a loan from Fortune Bank. Fortune Bank perfects its security interest by filing the same day. June 10, Panda Gardens buys unstuffed cookies from Olga under a purchase money security interest. Olga notifies Fortune Bank of its PMSI and perfects the PMSI before Panda Garden take possession of the unstuffed cookies. Panda files for bankruptcy. Between Fortune Bank and Olga, who has the superior interest in the unstuffed cookies? a. Fortune Bank, first to file. b. Olga as it has PMSI has meet the conditions in order to take priority over Fortune Bank. c. Olga and Fortune Bank share the priority interest in the inventory. d. Neither Olga or Fortune Bank as the employees and the IRS have superior claims.
b
93. Wanderlust gave a security interest in his Conestoga wagon to Iowa Bank, who perfected its security interest by filing with the appropriate official in Iowa. Five months later Wanderlust moves to Montana. If Iowa Bank wants to continue its perfected security interest it should. a. File a continuation statement for another five years in Iowa before Wanderlust moves. b. Re-perfect by filing in Montana within four months of Wanderlust relocation. c. Repossess the wagon. d. File a continuation statement for another four months in Iowa.
b
29. Graham, an adult purchases a car from a minor and subsequently sells it to Elizabeth, another adult. Elizabeth paid in full and had no reason to know that the car was originally purchase from a minor. Which of the following best describes this situation? a. Graham had good title, thus Elizabeth has good title. b. Graham has good title, and Elizabeth has a voidable title. c. Graham has a voidable title and Elizabeth has a good title. d. Graham has a void title, thus Elizabeth has a void title.
c
31. Gregory contracted to sell 1,000barrels of oil to AMF. The oil is located in a public tank storage, which has issued a "warehouse receipt" for the 1,000 barrels of oil. Which of the following is correct? a. The risk of loss passes to the buyer when the contract is made. b. The risk of loss passes to the buyer when goods are tendered. c. The risk of loss passes to the buyer when the "warehouse receipt" is delivered to the buyer. d. The risk of loss passes to the buyer when the buyer gets the oil to its final destination.
c
34. Presuming that a seller ships non-conforming goods to the buyer and the buyer rejects the shipment, the risk of loss: a. Will pass according to the terms of the contract. b. Will pass to the buyer pending cure or acceptance. c. Remains with the seller until he cures the defect or the buyer decides to accept the goods. d. Is apportioned to the seller to the extent of any insurance coverage.
c
37. Assume that Bubba orders 15 cases of BBQ chips from Hannah's Potato Chips for his restaurant, Bubba's BBQ. Hannah ships the 15 cases of regular chips. Bubba decides to keep the regular chips in spite of the non-conformity with the contract. Then there is the destruction of the chips when a water pipe breaks in the storage room, will result in: a. Hannah's having to bear the loss, because it shipped non-conforming chips. b. Hannah's having to bear the loss, because it failed to insure the chips. c. Bubba's having to bear the loss, because he accepted delivery. d. Bubba's having to bear the loss, because it was a sale on approval.
c
38. Max has received goods from Maura pursuant to a sale or return agreement. If Max subsequently declares bankruptcy, the goods will be: a. Returned to Maura because title did not pass to Max under this type of sale. b. Belong to Max and will not be part of the bankruptcy. c. Subject to the claims of Max's creditors under section 2-326 of the UCC. d. Will be kept by the bankruptcy Judge/ Trustee.
c
4. Bradly, a full-time college student, sold his car to Joanna, another student. In the performance of this contract, Bradly: a. has a duty of good faith which means honesty in fact and the exercise of good judgment. b. has a duty of good faith which means honesty in fact c. has a duty of good faith which means honesty in fact and the exercise of reasonable commercial standards of fair dealing. d. does not have a duty of good faith.
c
41. Which of the following warranties provides that the goods will be fit for the ordinary purposes for which they are used? a. Infringement. b. Fitness for a particular purpose. c. Merchantability. d. Title.
c
43. Which of the following statements could create an expressed warranty? a. This is the best car in town. b. This car will double in value in the next years. c. These tires are good for 10,000 miles on them. d. This antique is quite a bargain.
c
5. Which of the following types of property would be classified as "goods" under Article 2 of the UCC? a. Cash in hand. b. A stock certificate c. A computer d. A membership to a health club.
c
59. In order to disclaim a warranty of fitness for a particular purpose, a merchant: a. Need do nothing, such a warranty will not exist unless the merchant intends to create the warranty. b. Must disclaim the warranty orally and directly to the buyer. c. May disclaim the warranty with any language that is clear and conspicuous. d. None of the above. Implied warranties cannot be disclaimed.
c
6. In a mixed contract, one selling both goods and services, the court will: a. Apply the UCC to the provisions of the contract involving the sale of goods and the common law to the provisions of the contract involving the sale of services. b. Apply the lex mercatoria to the contract. c. First determine the dominant purpose of the contract. If the sale of goods dominates the contract, then the court will apply the law of UCC, Article 2. If the sale of services is the dominant purpose of the contract, the court will apply the common law. d. Apply Article 2A.
c
60. M & E Store sold a lathe "as is" to Jhevaughn. M & E has . a. Disclaimed strict liability. b. Disclaimed liability for negligence. c. Disclaimed all implied warranties. d. Disclaimed a and b above.
c
61. The duties of the buyer includes all of the following except: a. Acceptance of conforming goods. b. Payment for conforming goods. c. Delivery of the documents of title to the seller as a tender of goods. d. Notifying the seller of rejection of non-conforming goods.
c
7. Which of the following contracts requires to be in writing under the UCC< Article 2? a. Michael, a full-time student, sold his snow blower to a friend for $450. b. Michael, a full-time student, purchased a used computer from Office Max for $300. c. A toy manufacturer contracted to sell suits valued at $10, 000 to a department store. d. Macey's Department Store contracted to sell Michael a$400 suit.
c
79. Second State Bank loans money to Seth, securing the loan with property owned by Seth,. Second State is advised by its attorney to file a financing statement, but does not want to spend the extra money for this filing as Seth has told them that there are no other creditors. Why should Second State file a financing statement? a. There are criminal penalties for failing to file. b. The financing statement allows Second State to repossess the collateral upon the default without a court order. c. The financing state will protect Second State priority rights with the other creditors by giving notice that it claims security interest in the collateral. d. Filing the financing statement is necessary to complete the attachment requirement in order to create a security interest.
c
84. Which of the following may not be used as collateral within the scope of the UCC Article 9? a. Certificates of deposit. b. Accounts receivable. c. Good will. d. A 250 acre farm.
c
88. When the secured party has sold the repossessed collateral, the proceeds of the sale are distributed in which order? a. The creditor who has the highest priority, the expenses of the repossession and sale' other creditors according to priority rules and the balance of the debtor. b. The creditor who possessed the collateral even if this creditor does not have the highest priority, other creditors according to priority rules, the expenses of the repossession and sale and the balance to the debtor. c. The expenses of the repossession and sale, the creditor with the highest priority, other creditors according to the priority rules and the balance to the debtor. d. The debtor, for his value in the collateral, the expenses of the repossession and sale, the creditor with the highest priority and other creditors according to the priority rules.
c
94. Great State Bank took a security interest in Gresham, Inc.'s meat processing equipment . Gresham defaulted on the loan. Which statement is correct? a. Great State Bank may take possession of the collateral. b. Great State Bank may ignore its rights in the collateral and sue for the money owed. c. Both a and b are courses of action that Great Bank may follow. d. Neither a nor b are courses of action that Great Bank may follow.
c
53. When Angelena was shopping for a lawn mower, the salesperson told her the model she was interested in cuts 18" swath and the only maintenance it needs is an oil change and a spark plug change each year. Upon the sale the salesperson handed Angelena a warranty booklet which describes that the model is a mulching mower with a five-year full warranty. The booklet also disclaim any and all other warranties or statements made by any agent or salesperson. The effect of the written disclaimer is: a. That it is valid to disclaim only the written warranties within the booklet. b. That it is valid to disclaim both oral and written warranties. c. It does not disclaim either oral or written warranties. d. That it disclaims oral warranties, but not written warranties.
d
55. Van is using his wrench as a hammer when it breaks and a piece flies off, injuring his neighbor who is helping Van change a tire. If Van wants sues the tool manufacturer, under what warranty would he sue? a. Merchantability. b. Fitness for a particular purpose. c. Infringement d. No warranty as Van was misusing the product.
d
57. Which of the following is not guaranteed under the implied warranty? a. The goods are free of hidden security interests or liens. b. The goods are not subject to a rightful claim by a third party. c. The goods are merchantable. d. The goods mat be returnable for a refund or replacement in the event of any defect.
d
76. Which of the following parties can defeat a perfected security interest? a. A "buyer in ordinary course of business". b. A buyer of consumer goods if the buyer is not aware of the security interest, gives value for the goods, will continue to use the goods as consumer goods and the secured party has not filled a financing statement. c. A buyer who purchases chattel paper or an instrument in the ordinary course of business and takes possession. d. All of the above are correct.
d
8. Cody, gun dealer, offers to sell a rare civil war musket to Alexander another dealer, for $15,000, insurance and shipping paid by buyer. Alexander responds, " I accept. Insurance and shipping costs divided equally between the seller and the buyer." The parties: a. Do not have a contract since the acceptance violated the mirror image rule. b. Do not have a contract since Alexander's response was a counteroffer. c. Have a contract and in the majority of states, the terms of the offer control. d. Have a contract and in the majority of states, the different terms will cancel each other out.
d
3. Stanziano Construction needs a backhoe to complete a project. If it pays Hofmann Rentals for temporary use of the equipment, the transaction will be governed by: a. Article 2 of the UCC. b. Article 2A of the UCC c. Article 9 of the UCC d. Bulk transfer Law.
b
11. The difference between the UCC requirements of good faith and the doctrine of unconscionability is that: a. Good faith prohibits shockingly one-sided terms in a contract. b. Good faith focuses on the parties' behavior as they perform the contract. c. Unconscionability focuses on whether a party is honest in fact and exercises reasonable commercial standers of fair dealing. d. Unconscionability looks at the parties' attempt to carry out the terms of the contract in a reasonable manner.
b
14. Laura raises and sells hippos. In order to keep her hippos happy and healthy, she feeds them Hippo Chow, which she buys from the local pet store. Under the UCC, Laura is: a. A merchant of both hippos and Hippo Chow. b. A merchant of hippos, but not Hippo Chow. c. A merchant of Hippo Chow, but not hippos. d. Not a merchant of either hippos or Hippo Chow.
b
23. Matthew Manufacturing Contracted to sell Kurtz Industries 3,000 steel clasps. The contract specified F.O.B. Matthew Manufacturing. Upon arrival and instruction the goods were rejected by Kurtz Industries because they did not conform to the contract specifications. In transit back to Matthew Manufacturing, the common carrier's truck overturned and completely destroyed the clasps. Which statement is true: a. Matthen may sue Kurtz for the contract price, as risk of loss transferred to Kurtz at the F.O.B. point. b. Kurtz will not be liable for the purchase price, as the risk of loss had not yet transferred since the goods were non-conforming. c. The loss will be split between the parties. d. The loss will be assigned to the party that can afford to bear the loss best.
b
24. Aaron Ski Shop purchased 500 pairs of skis from Skitron Skis. Aaron is located in Colorado and Skitron's business is in Tennessee. The purchase order included the following term: F.O.B. Colorado. The contract can be described as a: a. Shipment contract b. Destination contract c. Bulk shipment d. Sale on inspection.
b
25. In a consignment contract, the consignee: a. Holds title b. Takes the goods intending to resell them, and the goods are subject to the claims of the creditors of the consignor. c. Is the party who leaves goods with the consignor to be resold. d. Cannot transfer title since the consignor retains title.
b
26. Jenna sells goods to Lindsy for her personal use on the bases that the goods may be returned if Lindsy is not satisfied with them. The sale is: a. A sale or return. b. A sale on approval. c. A consignment. d. Outside the UCC.
b
95. At a garage sale June buys a vanity table from Carl for $1,600. June purchased the table for her personal use without knowledge that Carl had signed a security agreement giving All Purpose Furniture , Inc. a security interest in the vanity table. All Purpose did not file the financing statement and Carl is still paying off the purchase money security interest and owes All Purpose $1,000. Under these circumstances: a. June take the vanity subject to All Purpose's security interest, because their security interest automatically perfected and that made their interest superior. b. June takes the vanity free of All Purpose's security interest because June is a buyer of consumer goods.. c. June takes the vanity free of All Purpose's security interest because she is a buyer in the ordinary course of business. d. June must pay All Purpose $1,000 or the table must be resold and she and All Purpose will share the proceeds.
b or c
91. On April 10, Amy agreed to buy a riding mower from Mowers Plus. Signing a promissory note and security agreement with Mowers Plus. On April 15, Amy took delivery. On May 1, Mowers Plus filed a financing statement. Which of the following is correct? a. Despite the agreement, Mowers Plus could not create a security interest as the mower was a consumer good. b. Mowers Plus has had an attachment of a security interest in Amy's mower. c. Mower Plus has had an interest when it filed the financing statement on May 1. d. The security interest has not attached, but attachment is important to enforceability of a security interest.
b?
1. In which of the following situations is the seller a merchant under Article 2 of the UCC? a. Paul, a full-time college student, sold his textbooks to Hartwick Bookstore. b. Randall, a part-time college student and a full-time father, sold his textbooks to a friend. c. Zompa Inc. , a toy manufacture, contracted to sell dolls to TonTon Department Store. d. In all of the above situations the seller is a merchant.
c
12. Which of the following is true regarding an open price term? a. It makes the contract unenforceable. b. The price may be fixed by the seller. c. The price is the "reasonable" price at the time of delivery. d. The price is set by the buyer.
c
15. Nicholas Builders agree to purchase all of its sump pump requirements for the new houses it builds from Satisfactory Sump Pump Inc. These two business have had similar agreements the last three years and Nicholas' requirements have average 100 sump pumps pre year. This year there was as unusally wet spring and Nicholas'requirements doubled to 200 sump pumps. Because of the high demand of sump pumps, the market price of the pumps tripled. Satisfactory Sump Pump Inc. delivers 100 pumps at $75, the contract price. Satisfactory has exhausted its inventory and cannot deliverer anymore, so Nicholas buys the other 100 pumps from another supplier at $225 each. Dean sues Satisfactory for the additional expense. What is the most likely result? a. Satisfactory Sump Pump wins, output and requirements contracts are not enforceable. b. Nicholas wins, Satisfactory Sum Pump agree to meet the needs of Nicholas and did not do so, which is a breach. c. Satisfactory Sump Pump wins, requirements contracts are governed by a good faith standard, and it was unreasonable for Nicholas to demand so many additional pumps. d. Nicholas wins, the requirements of good faith applies only between merchants and Nicholas is not a merchant.
c
16. Linh's Department Store contracted to buy 1,000 drop-waist velour dress in heather gray from TriColour . Subsequently, TriColour called and asked to ship mink colored dresses instead of heather gray. Linh agreed in writing to the change. Which statement is correct? a. The modification is not enforceable since there was no consideration for the change. b. The modification is not enforceable since the parties are merchants. c. The modifications is enforceable. d. Whether the modification is enforceable depends on the gap-filler rule.
c
18. By definition, a sale under Article 2 of the UCC requires: a. That the parties involved be merchants. b. That the product involved be goods, services or a mixture, that the sale be between merchants and that the sale take place in a normal course of business. c. That the title to the goods pass between the seller and the buyer and that a price is paid for the goods. d. That the service being sold cannot be a gift or a bailment.
c
2. Office Max, an office supply store, ordered sixty cases of computer of diskettes from Curtis Co., a manufacturer of computer products. Office Max placed the order using a preprinted purchase order form: Curtis acknowledged the order by sending a preprinted acceptance form back to Office Max. Unlike Office Max's form which says nothing about packing, Curtis's form specifies that the diskettes will be packaged in cases of 10 diskettes per box, 10 boxes per case. Which statement is correct? a. The UCC does not cover computer diskettes. b. Curtis's packaging term is different term which materially changes the offer. There is no contract. c. Curtis's packaging term is an additional term and therefore a part of the contract unless Office Max objects to the term within 10 days of receiving Curtis's acceptance form. d. The UCC does not cover the contract because both parties are merchants.
c
22. Dane's Grocery orders two dozen live lobsters from Sea Food Flyers. Dane's is to keep the lobsters happy by keeping them in a tank following certain instructions to keep the water at the right temperature, etc. The sale is made on a trial basis and Dane's may return all unsold lobsters at the end of 10 days. The contract is: a. Contract to sell future goods. b. Conditional sale. c. Sale or return. d. Sale on approval.
c
75. Which of the following statement is incorrect? a. The debtor and the obligor in a secured transaction may be different persons. b. A corporation may electronically authenticate a loan agreement by using the Internet to transmit a signature. c. Attachment is a series of steps the secured party must complete to protect its rights in collateral against people other than the debtor. d. In a bow to e-commerce, Article m9 of the UCC is now Medium-neutral.
c?
10. The basic principles of the UCC regarding sales include: a. A duty of good faith. b. A duty of exercising reasonable commercial standards of fair dealing for merchants. c. A prohibition against unconscionable contracts. d. All of the above are correct.
d
13. To simplify, clarify and modernize the law governing commercial transactions, the UCC permits the use of "open terms" is sales contracts. The use of "open terms" which of the following is true? a. The court will use market value and other comparable sales to determine what a reasonable price would have been at the time of delivery if the parties have not settled the price in the contract. b. If time of payment is not mentioned in the contract, payment within a commercially reasonable time is presumed. c. If a contract permits the buyer or seller to determine the price during the contract performance, The UCC requires the party to do so in good faith. d. All of above is true.
d
17. The stated purpose of Article 2 of the UCC is/are: a. To simplify the law govering sales. b. To permit the continued development on business practices through custom and usage. c. To make the laws governing sales uniform among the various states. d. All above are correct.
d
19. Modifications to contracts governed by Article 2 of the UCC: a. Need not to be supported by consideration to be binding. b. Must meet the same requirements as those governed by the common law rule. c. Must be supported by new consideration to be effective because of the pre-existing duty. d. Are treated as additional terms.
d
32. The identification of goods permits the buyer to: a. Obtain insurance on the goods. b. Take title to the goods in any manner that the parties agree upon. c. Enter into a contract with the seller. d. Both a and b are correct.
d
40. The statute of limitation for breach of warranty under the UCC is: a. One year. b. Two years. c. Three years. d. Four Years.
d
42. An expressed warranty can be created by which of the following? a. An affirmation of fact or promise. b. A description. c. A model. d. All of above.
d
47. A sales representative at Oxtren, Inc. orally told the purchasing agent at Wety, Inc. that its industrial saw is exceptional. Which statement is correct concerning the claim that the saw is exceptional? a. The claim is an express warranty. b. The claim is an implied warranty of merchantability. c. The claim is not a warranty because it is not in writing. d. The claim is not a warranty because it is sales puffery.
d
52. Laura bought a rotisserie in preparation for a party. When she put the chicken on the rotisserie, it would not rotate and stayed in one position. When she returned the rotisserie, the salesperson disclaimed any responsibility as he never told Laura the chicken would rotate while cooking in the rotisserie. Does Laura have any recourse? a. No, the salesperson did not make any expressed warranty. b. Yes, the salesperson made an express warranty just by selling the good. c. Yes, although the sales person did not make any expressed warranty, the UCC imposes an expressed warranty on the sale. d. Yes, although the salesperson did not make any expressed warranty, the UCC Imposes an implied warranty of merchantability which guarantee fit for ordinary purposes for which it is to be used.
d
