ch 20 to ch 30
Mary cleaned her dorm room in the spring and left a pile of books in Sara's room. Mary told everybody that the books were a gift to Sara. Does Sara own the books now?
c. No, because Sara did not accept the books.
A "sale" of goods happens when:
c. the transfer of title to the goods is passed.
In a __________, no sale takes place (meaning there is no transfer of title) until the buyer approves, or accepts, the goods.
d. sale on approval
__________ represents a pattern of performance between the parties to a contract.
a. Course of dealing
Under the UCC an illegal contract is:
a. void.
In which of the following situations does the seller have the right to cure?
c. Where the buyer has revoked acceptance of nonconforming goods.
A __________ is a check drawn by a bank upon itself to the order of a named payee.
d. cashier's check
__________ property means land and things embedded in the land.
Real
When goods are delivered to a common carrier for immediate shipment and while they are in transit, what are the exceptions to the normal liability for any loss or damage to the goods?
a. An act of God. b. An act of a public enemy. c. An act of public authority. d. All of these are correct.
What is the effect of a restrictive indorsement with an ineffective restriction?
a. An indorsement that purports to prohibit further transfer of the instrument is given the same effect as unrestricted indorsement.
Sam, a buyer in Atlanta enters into a sales contract with JP Manufacturing, a seller in Chicago. If the contract does not mention the place for delivery of the goods, where will Uniform Commercial Code (UCC) likely require the delivery to be made?
a. At JP Manufacturing's place of business in Chicago.
Zoe is going on vacation for 3 weeks and leaves her dog at the kennels during her trip. The kennel chargers her $100 per week. What type of bailment arrangement is this?
a. Bailment for mutual benefit
In which of the following cases is the instrument NOT effectively negotiated based on the imposter rule?
a. Brent is the manager at Brantley's Restaurant. He takes one of the checks that a customer used to pay for their meal and forges the payees name to his own and cashes the check.
Carter Martin is the CEO of Creative Candles Inc. In order to expand the candle making facilities, Carter borrows money from Central City Savings in the amount of $100,000. The note contained the following information "Carter Martin agrees to repay Central City Savings the sum of $100,000 in 24 equal monthly payments beginning in 1 month from today." The note is then signed and dated by carter and the bank. Carter makes 5 payments using Creative Candles checks but then stops the payments. Central City Savings files suit against Carter Martin personally. However, Carter claims he was signing the note as an agent of the company Creative Candles and he cannot be held personally liable. What is liable for repayment of the note?
a. Carter Martin because he failed to put his job title on the note.
Bartow Equipment entered a contract to sell 100 cases of various hardware such as hammers, saws, etc. to Harris Hardware who was opening a new store. The goods were to be delivered to the new store on March 1, which was 1 week prior to the grand opening. On February 25, Harris Hardware informed Bartow Equipment that the opening had been delayed 1 week and he would be unable to take delivery until March 7. Bartow had to store the equipment in a public storage facility for that week because they had expected the shipment to go out and did not have room for storage on site. Who has to pay the bill for the storage facility?
a. Harris Hardware because it will be considered incidental damages.
When is a buyer deemed to have accepted goods that are delivered pursuant to a contract?
a. If he fails to reject the goods after he has had a reasonable opportunity to inspect them.
Which of the following need not be present for an instrument to be negotiable?
a. It must be payable on demand.
Ace Appliances agrees to sell Jason one stainless-steel oven for $700. It is to be delivered to Jason's home by July 7. On July 5, Ace Appliances delivers the same oven, but in black rather than stainless-steel. Under the perfect tender rule, which of the following steps should Jason take to effectively reject the goods?
a. Jason must call Ace Appliances and notify them that the wrong oven was delivered.
The Weston Fertilizer Company stored its goods with the Sasson Warehouse Company and received a negotiable warehouse receipt. Weston then borrowed money from the Second Bank and turned over the warehouse receipt as security. Weston, the fertilizer company, defaulted on the bank loan and the bank demanded that Sasson Warehouse turn the goods over to them. Sasson stated that it already had delivered the goods to Weston Fertilizer Company on the strength of that company's promise that it would surrender the receipt shortly thereafter. The Second Bank sued the Sasson Warehouse for the value of the goods. What is the likely outcome?
a. Judgment will be for Second Bank.
Mason ordered a set of golf clubs from Sports Unlimited and paid for them with a credit card. The clubs were delivered to his home on May 1. When Mason opened the box, he discovered that the clubs were the wrong brand. He immediately, that same day, contacted Sports Unlimited and asked for a refund. Sports Unlimited said they will issue the refund once the clubs are returned. Which of the following is correct regarding return of the clubs?
a. Mason is entitled to keep the clubs until a refund has been issued.
On Monday, Middleton Concession Stands, contracted with Easy Express to deliver a truckload boxed pretzels and popcorn to be sold at a county fair. According to the contract, the goods were to be delivered by Friday at 8am so that Middleton could set up their stand for the fair which ran on Saturday and Sunday. The truck driver got lost and did not arrive until Sunday at noon preventing Middleton from selling those products for the majority of the event. Middleton refused the shipment saying that the fair was almost over and they didn't have time to set up to sell the pretzels and popcorn. Easy Express is suing Middleton for the delivery amount. Is Easy Express entitled to payment?
a. No, because they did not make the delivery as specified in the contract.
A system for electronic funds transfers (EFT) in which machines are located in a merchant's store and are activated by the consumer's identification card and code is:
a. POS (Point of Sale).
Emily purchased a DVD player from an online store and was required to click on a terms contract that stated the only remedy for a defective product is repair or replacement. When Emily received the DVD player it would not work. After several calls to technical support, they determined that the DVD player was defective and asked her to return the DVD player and they would send her out a new one. Emily refused and stated that she was "tired of dealing with this" and demanded a refund. What remedy is Emily entitled to?
a. She is entitled to either a repair or replacement only
Ethan wrote a check to Sofia for $300 on June 2nd. Because he didn't get paid for 2 more days, he postdated the check using the date June 5th. Sofia didn't notice the date and deposited the check on the day she got it, June 2nd, and the check was dishonored due to insufficient funds. Ethan claims the bank is liable for the money because they did not hold the check. What is the outcome?
a. Sofia's bank was not obligated to hold the postdated check.
If the instrument is bearer paper, how can a person become a holder?
a. Transfer of its possession.
Mark agreed to sell his car to Henry for $5,000. The contract required Mark to take the car on that same day to a mechanic where Henry was going to have certain repairs made. Henry paid Mark the money, kicked the tires and said, "I'm glad you're mine," and drove off. Mark then drove the car on to the trailer and drove the car to the mechanic. When does the title pass to Henry?
a. When it is delivered to the mechanic.
A contract that does not satisfy the writing requirement of the Article 2 statute of frauds, but which is otherwise valid, is enforceable in which of the following situations?
a. Where the goods have been delivered and accepted. b. Where payment has been accepted. c. Where the goods have been specially manufactured and are not suitable for resale in the ordinary course of business. d. All of these are correct.
Which of the following rules are applied when ambiguous language exists in words or descriptions?
a. Words control figures where conflict exists. b. Handwriting supersedes conflicting typewritten and printed terms. c. Typewritten terms supersede preprinted terms. d. All of these are correct
Tablets Plus, Ltd. enters into a contract with Electronics Mfg, Inc. to manufacturer one million tablets to be delivered by September 30th, in time for the holiday season. Electronics Mtg. notifies Tablets Plus that it will not perform the contract on August 1st. In this situation, the notice is
a. an anticipatory repudiation.
Under the UCC, for a contract or policy of insurance to be valid, the insured must have:
a. an insurable interest.
A buyer in New York enters into a sales contract with a seller in Los Angeles. If the contract makes no mention of where the delivery of the goods will take place, the place of delivery will be:
a. at the seller's business or residence in Los Angeles.
When delivery is to be made without moving the goods, unless otherwise agreed, title passes:
a. at the time the contract is entered into by the buyer and seller.
Office Mate, Inc manufactures up-scale leather office chairs primarily used by executives or in board rooms. They make approximately 50 items per day that are then stored on-site at the manufacturing facility until an order is placed and the items are tagged for delivery. Office Mate had approximately 100 black chairs and 100 brown chairs on hand when Jenpro Corp ordered 20 brown chairs for their new office building. Before the Jenpro order was pulled from storage, part of the facility caught fire destroying all the chairs that were stored. Why doesn't Jenpro have to pay for the chairs?
a. because they were not identified goods
A common carrier transporting goods under a COD shipment may accept which of following forms of payment:
a. cash. b. certified checks. c. cashier's checks. d. All of these are correct
Sara draws a check on First Bank payable "to the order of Amy Jones." Amy indorses it and deposits it in her account at State Bank. First Bank is a:
a. drawee bank.
A merchant is defined as a person who:
a. is a dealer in a particular type of goods. b. by his occupation holds himself out as having knowledge or skills peculiar to certain goods or practices. c. employs an agent or broker whom he holds out as having such knowledge or skill. d. All of these are correct.
Francis is the holder of a check that contains the indorsement "Without Recourse, (signed) Anna Smith." This indorsement:
a. limits the liability of Anna Smith
A transferee of a nonnegotiable warehouse receipt acquires only the title and rights that transferor had the actual authority to transfer. Therefore, the transferee's rights:
a. may be defeated by a good-faith purchaser of the goods from the transferor of the receipt.
The statute of limitations for breach of a sales contract:
a. may be reduced by the buyer and the seller to one year.
The amount of liquidated damages included in a contract that would be upheld by a court:
a. must be reasonable in light of the anticipated or actual harm.
Most courts hold that when a customer takes an item from the shelf in a self-service store, there is:
a. no sale.
A bill of lading that consigns the goods to a named person is called a:
a. nonnegotiable bill of lading. b. straight bill of lading. c. None of these are correct. d. All of these are correct.
If a bank receives a check on an account with insufficient funds to cover the amount of the check, the bank can:
a. pay the item and charge it to the customer's account even though an overdraft is created. b. treat the overdraft as a loan from the bank to the customer. c. None of these are correct. d. All of these are correct
A seller's right to retain possession of goods until the seller has been paid is called a:
a. seller's lien.
A gift causa mortis is revoked if:
a. the donor does not die. b. the donor revokes the gift before dying c. the donee dies before the donor. d. All of these are correct.
Article I of the UCC defines "holder" as:
a. the instrument has been transferred to that person by negotiation. b. the instrument has been issued to that person. c. None of these are correct d. Both of these are correct.
One cannot simply negotiate by delivery of an instrument to when it is payable to:
a. the order of John Jones and is not indorsed.
As security for unpaid transportation and service charges, a common carrier has:
a. the right to a lien on goods that it transports. b. a lien that includes the cost of preservation of the goods. c. a lien that secures demurrage. d. All of these are correct.
Order paper is created by making the instrument payable:
a. to an identified person or order. b. to the order of an identified person. c. Both of these are correct
If appropriate assurance is not given in response to a demand for assurance of performance, the demanding party may:
a. treat the contract as repudiated.
The relationship of guest and hotelkeeper does not automatically end when the hotel bill is paid. It ends:
a. when the guest's bill is paid. b. when the guest leaves or ceases to be a transient. c. when the guest advises the hotelkeeper that the guest is leaving. d. when the guest asks to take on the more permanent status of an employee.
An aggrieved seller may:
a. withhold delivery. b. resell or recover damages for non-acceptance or recover the price. c. cancel the contract. d. All of these are correct
When a carrier accepts goods for air transportation, it ordinarily issues to the shipper a(n):
airbill
Until the necessary indorsement has been supplied, a transferee of a negotiable order without an indorsement, has the same rights as if the instrument has been:
assigned
Which of the following would be order paper?
b. A check that says "pay to the order of Jessie Jones."
Wyatt, as a representative of East Coast Shoes, delivered 50 crates of shoes for storage to ATC Warehouse, a public warehouse, just as the warehouse was about to close. Owen, the warehouse employee could not find the receipt form, and being in a hurry, he wrote on a plain piece of paper all of the details of the transaction, signed it and gave it to Wyatt as a receipt. When Wyatt went back to retrieve the shoes, he was told they had been sold at public sale because no record of the transaction could be found. Wyatt then produced the signed, detailed receipt, but ATC Warehouse refused to take liability because the proper form was not used. Who is liable for the shoes?
b. ATC Warehouse because no form is required is the receipt is specific
Middleton Farm entered into a contract Bagels Bakery to provide the bakery with milk, cheese and butter products. Middleton makes delivers twice per month and the bakery is billed at the end of the month. For the past few months, the bakery has been making payments late and has asked for an extension several times. The owner of Middleton then reads a newspaper article stating that several businesses in town, including Bagels Bakery are reporting severe economic downturns because of a growing criminal element in the downtown area. Middleton fears that they will not get paid for their deliveries to the bakery so they ask to see Bagels' financial statements from the past year. The owner of Bagels says it is not necessary and he gives his word to Middleton Farms that the bills will be paid on time. What, if anything, is Bagels required to do?
b. Bagels would be required provide the financial statements.
Sand and Surfboards in Anaheim, California has entered into an "FOB place of shipment: Anaheim" contract to sell 250 surf boards to Big Buy Stores in Miami, Florida. The boards will be transported by Tandem Trucks, a commercial carrier. When the truck, loaded with the surf boards, gets to Texas, it is involved in a multi-car accident and the surfboards are all damaged and unusable by Big Buy stores. What is the likely outcome of this situation?
b. Big Buy Stores must still pay for the goods according to the contract price and terms.
Mark wants to give Susan his car. How can he effectively "deliver" it?
b. By giving her an indorsed title certificate.
Cathy buys some items at the grocery store and writes a check to the store on her account at Countryside Bank. Who is the drawee?
b. Countryside Bank.
Edward was a merchant who deposited 4,000 barrels of vegetable oil in a public warehouse operated by Standard Warehouse. Edward was issued a negotiable warehouse receipt for the oil. Edward found himself in needed cash after some bad business decisions so he duly negotiated the warehouse receipt to Dallas Enterprises for cash. Edward continued to make bad business deals and never repaid Standard Warehouse or Dallas Enterprises. An agent from Dallas Enterprises requested the oil from Standard Warehouse and offered to remit the warehouse receipt. Standard refused to release the oil, claiming that they had a lien on the oil for Edward's debt owed to them. Who is entitled to the 4,000 barrels of vegetable oil?
b. Dallas because they have the negotiable warehouse receipt.
A check that is wrongfully dishonored by the drawee bank means all but which one of the following?
b. Despite the fact it is properly payable.
Dylan ordered 5 cases of plastic cups to use in his catering business from Plastics Worldwide, Inc. No shipment or delivery provision was made in the contract. Under the Uniform Commercial Code (UCC) how or where will the delivery take place?
b. Dylan will be required to take delivery at Plastics Worldwide's place of business.
If a contract contains a delivery term of __________, the seller's responsibility is to get the goods to the buyer.
b. FOB
Gabe writes a check to Bella for $8. He is in a rush so he left some blank space on the check and didn't draw a line after the amount. Because of this, Bella was able to alter the check for the amount of $800. What is the liability in this situation?
b. Gabe will be liable for the $800 because he should have taken better care in writing the check.
Bill orders a pair of boots from Rooks Shoes to be delivered by Friday at 5 p.m. When the boots are delivered to his office on Friday afternoon, he is in conference with a client. His assistant accepts delivery and places the boots in his closet. Bill takes the boots home and when tries them on Saturday evening, he discovers that they do not fit correctly, so he calls Rooks on Monday and informs them that he is returning the boots and asks for the correct size. Rooks says they no longer have that style in his size. Can Bill revoke acceptance?
b. He can revoke acceptance if Rooks cannot send him the correct size.
A collecting bank, or a bank simply collecting an item for a customer, is protected from liability when it follows its customer's instructions. Which of the following statements is true?
b. It is not required to inquire or verify that the customer had the authority to give such instructions.
Mrs. Newton lives next door to Olivia and Alex Taylor. When the two of them tell Mrs. Newton they are going to have a baby, she give them a check for $5,000 and tells them to save it for the baby's college fund. The check is made payable as follows "Olivia and Alex Taylor." They decide, instead to use the money to go on vacation before the baby is born. Alex indorses the check and takes it to the bank to cash it. Can the bank cash the check?
b. No because both Alex and Oliva have to indorse the check
Noah wrote a check to Maria for $100. When Maria deposited the check into her account at First National Bank, she was notified that the check was dishonored for insufficient funds. Who is ultimately responsible for repaying Maria the $100 that did not go into her account?
b. Noah
Max is the clerk for the Superior Construction Company. He makes out the payroll; prepares all of the payroll checks and reconciles the bank statements for the firm. He decides to increase his income by padding the payroll; accordingly, he makes out a check in the name of someone who does not exist. He then indorses the check with the payee's name and his name and cashes the check himself at Lane Street Bank where the company has its account. Under the fictitious payee/imposter rule, who will be liable for this check?
b. Superior Construction Company
When a bailor sues the bailee for damages to the bailed property, who has the burden of proving fault and that such fault was the proximate cause of the bailor's loss?
b. The bailor.
Which of the following is not a remedy of the buyer?
b. The buyer has the right to stop delivery of the goods.
Zoey is advertising her new restaurant and contracted with United Graphics for $1,000 to design and print 250 coffee cups that featured the name and address of her restaurant. Zoey then refuses to pay for the mugs because she has decided not to open the restaurant. What remedy is United Graphics entitled to?
b. The contracted purchase price of the mugs plus the mugs themselves
Andy entered the Hotel South to attend a conference being held within the hotel. Andy left his laptop in his locked room during one of the sessions. The laptop was gone when he returned to his room. At common law, what responsibility would the hotel have had as innkeeper?
b. The hotel is liable for any property that a guest might bring into the hotel.
On March 3 Dylan signed a promissory note to repay his sister Hannah $750 that he borrowed to pay his rent. The note stated that Dylan would pay back the money in full by June 1. Both parties signed the note, but neither of them dated the note and, in fact, other than the due date of June 1, no other date was included on the note. On what date is the note deemed dated?
b. The note is deemed dated on March 3
Which of the following transactions is governed by Article 2 of the UCC?
b. The sale of oranges to be picked from a 10-acre grove.
Commercial GC, Ltd. orders 100 doors from WoodWorks, a company in California. They are sent "F.O.B. Hartford, Connecticut," but they are damaged in transit. What are the likely consequences?
b. WoodWorks will have to replace the doors or refund their money.
Negotiable instruments have __________ in usage since 1995.
b. decreased
In a consignment, the dealer-consignee is often referred to as a(n):
b. factor.
A buyer's cancellation of a contract based on the seller's anticipatory repudiation is effective:
b. if the cancellation precedes the seller's attempt to retract her repudiation.
Ed's car broke down on a dark, rainy night. Along came Bev in her service station's four-wheel drive truck with tools and supplies in the back. Ed didn't have any credit cards and only $3.25 cash, so Bev told him to write a check or an IOU. Neither Bev nor Ed had any paper, so Ed wrote on the cover of Bev's magazine: "If my car is fixed right by Bev Brady, I will pay her $150. (Signed) Ed Wasner." Bev indorses the note and takes it to a commercial bank for negotiation. The bank refuses, saying it is non-negotiable because it:
b. is conditional on satisfactory repair of the car.
The definition of "usage of trade" includes:
b. language and customs of an industry.
A bailee's __________ gives the bailee the right to maintain possession of the bailed property until reasonable storage and/or repair charges are paid.
b. lien
Acceptance of goods is not shown by:
b. payment for the goods if they are sent COD.
Sarah received an email from a company in Nigeria telling her that if she would allow them to use her checking account to collect money that is owed to them by American companies the company will pay her a 15% fee. Sarah agrees and sure enough, the company deposited $20,000 into her account and asked her to write a check to them for the amount less her 15% fee. The first few times it seems to be fine, but later the checks are dishonored and Sarah's account now has insufficient funds to pay the checks. Sarah's bank now demands that she pays the overdraft fees created by the company when they cashed her check. She now realizes she was the victim of a scan, but what options does Sarah have?
b. she is liable and will owe the money to the bank
Chase and Reid are friends and decide purchase and restore a classic car together. Reid passed away suddenly and his share of the car was transferred to his 2 children. What type of ownership would this be?
b. tenancy in common
A certificate of deposit is similar to a promissory note in that:
b. there are two parties to the transaction.
When a negotiable instrument is transferred by negotiation, the transferors give:
b. warranties.
The legal relation that arises when one person delivers possession of personal property to another under an express or implied agreement to return the property at a later date is called a(n):
bailment
A restrictive indorsement specifies the purpose of the indorsement or use to be made of the instrument. Which of the following is not a restrictive indorsement?
c. "Pay only John Doe."
Grayson's EFT (debit) card was stolen while he was on vacation. He didn't realize it until he returned home on April 20 and tried to make a purchase and noticed it was missing from his wallet. He thought maybe it was in his luggage so he kept looking for the card for several days and on April 25 (5 days later) he checked his account and realized the card was being used by an unauthorized person who had made $2,300 in charges. Grayson then contacts the bank and claims no liability for the charges. What is the maximum liability for Grayson?
c. $500
Which of the following is a negotiable instrument?
c. A certificate of deposit.
Anna agreed to walk Mr. Hamilton's dog every day while he was away on vacation. When Mr. Hamilton returned, he told Anna he had spent all his cash on vacation but he had a check, payable to Mr. Hamilton, which he indorsed and gave to her as payment. The next day, Anna went to the bank to cash the check but the bank refused saying that because Anna was only 16 years old, she was a minor and therefore not entitled to negotiate an instrument such as a check. Who is entitled to the money?
c. Anna because the check was indorsed and she is in possession of it
Which article of the UCC establishes a three-year statute of limitations for most actions involving negotiable instruments?
c. Article 3.
Bath & Bed Boutique ordered 100 Christmas themed towels from Charleston Textiles in July for a price of $2,000. In October, Charleston Textiles informed the boutique that they could not produce enough towels to meet their orders and would not be able to ship any towels to the boutique. Bath & Bed then looked for substitute towels but the selection was limited because of the seasonal nature of the items. Similar towels were found, but the price was $4,000 due to the fact that the holiday season was fast approaching. What remedy is Bath and Bed entitled to?
c. Bath and Bed is entitled to the $2,000 difference between the contract price and the substitute goods price.
Bartlett's Barn operates an on-line store in which it sells home furnishings. Their return policy states, among other things, that the buyer must notify the store within 5 business days by using an on-line form and they will then be able to print-out a return label. Ginny purchased a chair from them which was delivered on a Wednesday. On Friday, she discovered that one of the wooden legs was split so she boxed it back up and sent it back to the store asking for a refund without using the online form. The chair was received at Bartlett's the following Friday (8 days after the chair arrived). Bartlett's refused to accept the return because the 5 business days had expired and because Ginny didn't use the proper form. What is the likely outcome of this on-line conflict?
c. Ginny is not entitled to a refund because she did not adhere to the contracts stated time limit and requirements, regardless of Uniform Commercial Codes (UCC) interpretations.
M & Z Co. offers a "subscription" for two bottles of wine to be delivered every month for one year. Payment must be made within two weeks of delivery. Bob placed a subscription and began receiving shipments of wine each month. On the fourth month, one of the bottles of wine that arrived was bad. What are Bob's options?
c. He can reject the installment and refuse to pay for it if M & Z cannot cure it.
A bank's options for payment on a stale check include all but which one of the following?
c. It is not required to exercise reasonable care in making payment on the check.
Which of the following is true with regard to the federal Electronic Funds Transfer Act?
c. It limits a customer's liability for unauthorized transfers to $50 if the consumer notifies the financial institution within two days after learning of the loss or theft.
Ryan is selling custom motorcycles on consignment from several manufacturers. He sells a Mach 5 motorcycle to Mr. Hunter who is giving it to his son for birthday gift. A few weeks later Mr. Hunter comes in with the police because he has discovered that the motorcycle was actually stolen. Ryan claims he doesn't know anything about the motorcycles being stolen and that he is only selling on consignment and therefore not liable for them all. While the police launch an investigation, Mr. Hunter demands his money back but Ryan refuses saying he genuinely didn't know it was stolen and therefore did nothing wrong in selling it. Who is the owner of the motorcycle?
c. Mach 5 because they are the manufacturer from whom the bike was stolen
Aria love animals and had always wanted to open zoo featuring exotic animals from all around the world. She borrowed $500,000 from Highland Investments to purchase a large plot of land for the zoo. She signed a promissory note on June 1, 2010 stating that she would repay the money beginning December 2010 at a rate of $5,000 per month. The following March, Aria had made no payments and a representative from Highland contacted her. Aria said things were moving slow but she would start paying them back by June. Aria did in fact begin making payments in June, July and August, but stopped again. Aria continued to run into problems with the zoo such as zoning and import regulations and in December of 2012, she abandoned her hope of opening the zoo. In January of 2014, Highland Investments demanded payment on the note. Aria refused. Is Highland Investments entitled to have their money repaid by Aria?
c. No because the statute of limitations had passed.
Marilyn brought her $300 silk dress to University Dry Cleaners to be cleaned. On the back of the ticket she received in exchange for the dress was written, "Liability limited to ten times the cost of cleaning." Marilyn's dress was lost and University now claims it owes her only $96.50, ten times the cost of cleaning. Is this true?
c. No, because the limitation was not communicated to her.
Northern Express is a common carrier hired by Hermitage Paper Company. Northern Express has a large storage facility where the shipments from Hermitage Paper remain for up to 2 weeks before they are loaded on the trucks and shipped to the destination. Northern receives notification to ship 2 crates of paper to American Supply which was delivered and accepted. When American Supply opened the boxes, they saw that there was water damage to the bottom of both packages making about half of the goods unusable. When questioned, Northern Express discovered that they had a plumbing leak in their facility and it had damaged some of the boxes. Who is liable for the damaged paper goods?
c. Northern Express because they damage was done in their warehouse
Perry is building his house and orders a hot water heater from Home Supply Co. to be installed by them. When the hot water heater arrived, it was a 45-gallon capacity, but Perry had ordered a 60-gallon capacity. Home Supply tells Perry they cannot provide a 60-gallon heater for two months, so Perry cancels the contract and gets a heater from Builders Stock Inc. Home Supply then claims that they must be allowed to install the hot water heater purchased from Builder's Stock because the original contract was to purchase and install the hot water heater.
c. Perry can have Builder's Stock Inc deliver and install the hot water heater because Home Supply breached the entire contract.
Over the past few years, Big Mart had contracted with several freight companies to deliver their products from their warehouse distribution centers to their stores. After multiple delivery delays and damaged products, Big Mart purchased their own fleet of trucks to deliver the goods. What type of carrier has Big Mart become?
c. Private Carrier
Riverside Growers grows and sells citrus fruit. They contracted with Benson Groceries to sell Benson 200 pounds of fruit to be delivered within 1 week of harvesting which would be about August 1. Before the deliver was made, Benson tells Riverside that they will not be able to accept shipment at that time and asked that they hold shipment for them. By August 10, Riverside had not heard from Benson Groceries so they notified Benson that they were going to sell the fruit to another buyer before it spoiled. On August 30, Benson Groceries contacted Riverside and asked that the fruit be shipped but Benson had already sold the fruit to another grocery. What is the likely outcome?
c. Riverside Growers would owe Benson Groceries nothing because they are entitled to resell the fruit before it spoils
While Michael is visiting Mr. Kilorn, he goes into the library and picks up a music box that is part of Mr. Kilorn's collection. Michael overwinds the stem and it breaks. Mr. Kilorn takes the music box for repair to a jeweler who sells similar ones. The jeweler fixes it, but forgets to tag it and an unsuspecting clerk sells it to Robert. Who now has good title to the music box?
c. Robert because he purchased the music box in good faith from a business who regularly sells those items.
To be effective, a stop payment order must be received in time to provide the bank a reasonable opportunity to act on it. A written order is effective for how long?
c. Six months.
Which of the following forms of co-tenancy does not have right of survivorship?
c. Tenancy in common.
Which of the following is required for delivery of goods?
c. That the goods be delivered according to the terms of the contract.
Kylee rights a check to Elena for $500 to purchase her big screen TV. A few days later, Elena tells Kylee that she cannot find the check and thinks it was stolen from her purse and asks Kylee to write her another check. Just to be safe, Kylee properly puts a stop-payment on the check on Monday and writes another check to Elena. When Kylee checks her balance on Friday of that week, she discovers that both checks have cleared the bank on Thursday. Kylee then contact the bank for recovery of the first check that had the stop-payment. What, if anything, is Kylee's bank obligated to do?
c. The bank is liable to Kylee for the first check and must repay her the money.
Hank deposits a $150 check in his account at Star Bank at 1:00 on Friday from Joe. It turns out that Joe does not have sufficient funds to pay the check so Star Bank dishonors it. Assuming the bank is closed on Saturday and Sunday, but opens again on Monday. What is the deadline for Star Bank to notify Hank that the check has been dishonored?
c. The bank must notify Hank before Monday night at midnight.
Dominic transfers funds in the amount of $1,000 from his account at Union First Bank to his brother Gavin's account at New Savings Bank. In making the transfer, Union First Bank accidentally added a zero making the transfer amount $10,000 and Dominic's account now had insufficient funds for which he was being charged overdraft fees. Who will have to bear the loss for the error?
c. Union First Bank because they added the zero
Larry leaves his car in a public parking garage. Is this a bailment?
c. Yes, because he has left his car in the possession of the parking garage owner.
RTC International located in Miami, enters into a contract that states that goods are to be delivered by Fast Fright, a commercial carrier, to Dayton Unlimited, a buyer in New York. If RTC wants to retain title until delivery, which of the following is the best option?
c. a destination contract.
Pat is very old-school when it comes to banking and still pays all of his bills by writing checks and has opted out of paperless statements. To keep up with his spending, he requests that the bank send him his cancelled checks by mail once per month when they clear the bank. What is the bank most likely going to send him?
c. a small reproduction of his checks included with his statement
A party to a sales contract who is afraid that the other party will not perform may seek to gain additional confidence by demanding some form of:
c. assurance.
A common carrier must deliver goods:
c. at the usual place of delivery at the specified destination.
If a lost instrument is bearer paper, the finder:
c. becomes the holder of the instrument.
A specialized promise to pay money given by a bank is a:
c. certificate of deposit.
When the person making payment, such as the buyer, requests that payment be made to the beneficiary's bank the transaction is called a:
c. credit transfer.
Evelyn creates an instrument whereby a $50 is paid to her niece on the 10th day of each month from Evelyn's checking account into her niece's account. What type of instrument has Evelyn created?
c. draft
Goods that are not yet in existence or are not yet owned by the seller are __________ goods.
c. future
A warehouse is not an insurer of goods. A warehouse is liable for:
c. loss or damage to goods stored when the warehouse is negligent.
A transferor makes certain implied warranties to the transferee when a bill of lading is transferred. These warranties include all except that:
c. not applicable to negotiable transfers.
The standard for commercial impracticability is:
c. objective.
A liquidation of damages clause is valid if it:
c. reasonably attempts to estimate the actual harm caused by a breach.
When goods are sold and delivered to the buyer with an option to return them to the seller, a(n) __________ has occurred.
c. sale or return
The duty of care exercised by a collecting bank in handling an item transferred to it for collection does not include:
c. taking time to make a physical examination of each item that comes in.
A third person to whom a joint tenant's interest is transferred becomes a(n):
c. tenant in common.
To revoke acceptance of goods:
c. the nonconformity must substantially impair the value of the goods.
When goods are sold for consumer use and personal injuries are sustained, a total exclusion of liability in the sales contract is:
c. unconscionable.
In order to disclaim certain liability of the indorser to a maker or drawee, one should add __________ before or after his signature.
c. without recourse
Bryton Boutique agrees to buy several cases of scarves from Vanner Supply for a contract price of $2,000 payable on delivery. The boutique repudiates the contract 1 day prior to shipment and refuses to pay anything. Vanner Supply resells the scarves but can only get $1,700. In addition, they incur $200 shipping fee because of the last minute cancellation. How much, if anything, can Vanner Supply collect from Bryton Boutique?
d. $500 for the difference in the sell price plus the shipping fee.
The stop payment order may be either oral or by written or electronic order. If oral, however, the order is binding on the bank for only:
d. 14 calendar days.
Addison has a retail space in a busy town where she sells handmade furniture and woodcraft on consignment for local artisans. One of the people she sells for is Mr. Henry who makes tables and chairs. Addison really like one of the tables that Mr. Henry made so instead of placing it in her store, she took it home and is using it in her house for an upcoming party. While visiting her home, Mr. Henry notices the chair and demands that she pay him for it if she is going to use it in her home. Addison refuses saying she will put it back in the store and sell it after the party. Who is the rightful owner?
d. Mr. Henry is the owner as the consignor
Liam is frustrated with his cell phone because he is often without service and drops calls. After being unable to get the phone to turn on, he throws it in his trashcan by the roadside. Niall, his neighbor, sees this happens. The next day, just before the trash truck comes, Niall looks in the trashcan and sees that the phone is still there so he takes the phone and is able to get it working. When Liam sees that Niall has the phone, he asks for it back. Who is entitled to the phone?
d. Niall because he has possession of the phone.
On January 21, Cara wrote to Pandora Mfg. asking for shipment of 100 swimsuits in 2 shipments of 50 on 90-day credit. In the letter, she gave references that indicated that her store was financially sound. Actually she had bills that she could not pay and hoped to turn the business around with the summer bathing suit sales. Pandora sends the first shipment of 50 suits on March 1; they are received March 15. Cara immediately puts them on display and 20 are sold by March 30 when Pandora discovers that Cara has lied. What are Pandora's options for recovery?
d. Pandora can stop shipment on the remaining 50 suits
Based on The Check Clearing for the 21st Century Act (Check 21) which of the following is FALSE?
d. Paperless payments are on the decline, primarily due to hacking
Peachtree Shoe Outlet ordered a shipment of 25 pairs of sandals, 25 pairs of boots, and 25 pairs of sneakers from NKT Manufacturing Inc. When the shoes arrive, there were 25 pairs of sandals, 25 pairs of boots, and 25 pairs of dress shoes. Even though the order is wrong, they did not notify NKT and displayed all the shoes for sale. At the end of the month, when the bill arrives, Peachtree refuses to pay for the dress shoes because they didn't order them. What is the likely outcome?
d. Peachtree will have to pay for the goods because acceptance was implied.
Randy writes a check drawn on his account at State Bank to Ocean University to pay his tuition. In this case:
d. Randy is the drawer.
Connor needs a new copy machine for his law office but he isn't sure which one to get. Union Business Machines offers to let him try out their model 200A for 10 days. If he has not returned the copier in 10 days, he will be billed for the sale price. What type of sales contract is this?
d. Sale on Approval
Nora writes a check to Isaac for $100 for guitar lessons. She indorses the check and deposits it into her checking account. Which of the following is an implied warranty regarding the check?
d. That the signatures on the instrument are not forged
Lexy indorsed her paycheck by signing her name on the back, but she lost it on the way to the bank. What is the status of the check now?
d. The check is now a bearer instrument and anyone can cash it.
Oliver is an artist who has contracted to sell 5 of his custom paintings to an art gallery. Because of the sale, he received a lot of publicity and has now repudiated the contract because he feels that he can get a better price in a private market. What recourse does the art gallery have under the circumstances?
d. The gallery can demand that Oliver to sell them the paintings
The Hacienda Hotel has enacted a hotelkeeper's lien on the baggage of Ralph, a guest of the hotel who did not pay his bill. Which of the following is FALSE about that lien?
d. The hotel can retain Ralph's baggage, even if he pays the bill, as a stipulation of the lien.
Noah places an advertisement online selling his car. Through several emails, Lilly agrees to purchase the car. Noah drives to Lilly's house, she pays him, and he gives her a bill-of-sale. When Lilly he car to be serviced, the mechanic tells her that the car was stolen from him last week and he refuses to return it to Lilly. Who has the right to retain the car?
d. The mechanic
A local Girl Scout troop was collecting money from the sale of their cookies. Emily stamped all the checks on the back with a rubber stamp that said "for deposit only" and the troop's checking account number. On the way to the bank, Emily stopped at a grocery store and when she got back to the car she found that the checks had been stolen. What can the thief do with the checks?
d. The thief can do nothing with the checks because they have been restricted
Logan Harris was behind on his car payment and owed $1,400 to State Finance Co. when he received an income tax refund in the amount of $1,400. Logan then wrote on the back of the check "payable to State Finance Co." and signed it. Has Logan effectively paid his car payment?
d. Yes because it contains both his signature and the words "payable to"
Sarah created an instrument containing the following language. "Sarah T. Stone, as CEO, hereby promises to pay $15,500 to the order of Andy Anderson Furniture for office equipment for Nylon Corporation, payable from its corporate assets. (Signed) Sarah T. Stone as President, Nylon Corporation." Will the instrument be negotiable?
d. Yes, because it meets all the requirements of negotiability.
Congress passed the Electronic Funds Transfer Act to protect:
d. consumers making electronic fund transfers.
Big River Farms grows granny smith apples which are then sold different companies. This season, Big River produced 20,000 pounds of apples. Which of the following best describes the apples?
d. fungible goods
The commercially reasonable charges incurred by a seller in caring for goods after the buyer's breach are recoverable by the seller in an action for damages as:
d. incidental damages.
A(n) __________ is the transfer of possession, whether voluntary or involuntary, by a person other than the issuer of a negotiable instrument in such a manner that the transferee becomes a holder.
d. negotiation
Mia needs a place to store some boxes and items that she brought back from college so she rented a storage unit from Home Town Storage for the summer. She moved in her things and locked the unit with her own lock, and paid for all 3 months in advance. What type of bailment is created by this agreement?
d. no bailment is created
If a seller elects to resell the goods remaining in the seller's possession after the buyer breaks the contract, the seller need not give:
d. notice to the original buyer if the goods are perishable.
Piper is selling her boat to Kerry for $8,000. She wants to be sure that Kerry's check clears the bank. Which of the following would offer the least assurance and should therefore be avoided?
d. personal check
A merchant cannot revoke a firm offer to buy or sell goods if the merchant has:
d. stated in a signed letter that the offer would not be revoked for a specified period of time.
The CISG applies to:
d. the international sale of goods.
A contract involving both services and goods is classified as a contract for the sale of goods if:
d. the sale of goods is the dominant aspect of the transaction.
Delamar Farms grows green beans. Green Hills Products contracts with Delmar to provide 3 tons of beans for their cannery for $75,000. Before the beans can be harvested, a reservoir near Delamar Farms breaks and the area floods, destroying the entire bean crop. Green Hills says that Delamar has to provide them with beans at the contract price, even if Delamar has to purchase them from a neighboring farm. What grounds, if any, can Delamar use as a defense to non-performance?
d. there is no defense in this case. Delamar farms would be required to provide green beans.
A building is not essential to __________, an entity that stores goods of others for compensation. Thus, an enterprise that stores boats outdoors on land could be categorized that way.
d. warehousing
When goods are sold at an auction in separate lots, the title to each lot passes:
d. when the auctioneer announces that the lot in question has been sold to the bidder.
Insurable interest cannot pass from the seller to the buyer unless existing goods have been:
identified
To establish a gift, the party claiming to be the donee must prove.
intent and delivery
Claire borrowed $5,000 from Matthew in order to purchase a car. In return, Claire signed a document stating the following: "I, Claire borrowed $5,000 from Matthews. In return I will turn over to him 10 stock certificates for the AKT Company valued at $6,000 on March 6. What type of instrument is this?
nonnegotiable
A person becomes a(n) __________ at the moment of taking possession of abandoned personal property.
owner
If the goods the seller has tendered do not conform to the contract in any way, the can __________ the goods.
reject
Margaret had tickets to a sold-out concert and saw that she was going to be unable to attend. She asked Bill if he would like the tickets and he said yes. On the day before the concert, Bill went by her house to pick up the tickets but Margaret said she had changed her mind and that Bill could not have the tickets. What element of a gift is missing that keeps Bill from being able to seek damages for the tickets?
Delivery
Which of the following is NOT a classification of ordinary bailments?
For the sole benefit of the third party beneficiary.
Howey stole a laptop from Jessica and then sold it to a pawn shop where Monica bought it for $50. Who has good title to the laptop?
Jessica