BLAW 703: ch. 19-19.5, 19.6-19.9, 20.1-20.6
Cookie Co. offered to sell Distrib Markets 20,000 pounds of cookies at $1.00 per pound, subject to certain specified terms for delivery. Distrib replied in writing as follows: "We accept your offer for 20,000 pounds of cookies at $1.00 per pound, weighing scale to have valid city certificate." Under the UCC,
A contract was formed between the parties.
On day 1, Jackson, a merchant, mailed Sandy a signed letter that contained an offer to sell Sandy 500 electric fans at $10 per fan. The letter was received by Sandy on day 3. The letter contained a promise not to revoke the offer but no expiration date. On day 4, Jackson mailed Sandy a revocation of the offer to sell the fans. Sandy received the revocation on day 6. On day 7, Sandy mailed Jackson an acceptance of the offer. Jackson received the acceptance on day 9. Under the Sales Article of the UCC, was a contract formed?
A contract was formed on the day Sandy mailed the acceptance to Jackson.
Bush Hardware ordered 300 Ram hammers from Ajax Hardware. Ajax accepted the order in writing. On the final date allowed for delivery, Ajax discovered it did not have enough Ram hammers to fill the order. Instead, Ajax sent 300 Strong hammers. Ajax stated on the invoice that the shipment was sent only as an accommodation. Which of the following statements is true?
Ajax's shipment of Strong hammers is a breach of contract.
Al Martin, a wholesale distributor, made a contract for the purchase of 10,000 gallons of gasoline from the Wilberforce Oil Company. The price was to be determined in accordance with the refinery price as of the close of business on the delivery date. Credit terms were net/30 after delivery. Under these circumstances, which of the following statements is true?
Although the price has some degree of uncertainty, the contract is enforceable.
On Monday, Wolfe paid Aston Co., a furniture retailer, $500 for a table. On Thursday, Aston notified Wolfe that the table was ready to be picked up. On Saturday, while Aston was still in possession of the table, it was destroyed in a fire. Who bears the loss of the table?
Aston, because Wolfe had not yet taken possession of the table.
Greed Co. telephoned Stieb Co. and ordered 30 tables at $100 each. Greed agreed to pay 15% immediately and the balance within 30 days after receipt of the entire shipment. Greed forwarded a check for $450, and Stieb shipped 15 tables the next day, intending to ship the balance by the end of the week. Greed decided that the contract was a bad bargain and repudiated it, asserting the statute of frauds. Stieb sued Greed. Which of the following will allow Stieb to enforce the contract in its entirety despite the statute of frauds?
Greed admitted in court that it made the contract in question.
Under Article 2 of the UCC and unless otherwise agreed to, the seller's obligation to the buyer is to
Hold conforming goods and give the buyer whatever notification is reasonably necessary to enable the buyer to take delivery.
On May 2, Handy Hardware sent Ram Industries a signed purchase order that stated, in part, as follows: "Ship for May 8 delivery 300 Model A-X socket sets at current dealer price. Terms 2/10/net 30." Ram received Handy's purchase order on May 4. On May 5, Ram discovered that it had only 200 Model A-X socket sets and 100 Model W-Z socket sets in stock. Ram shipped the Model A-X and Model W-Z sets to Handy without any explanation concerning the shipment. The socket sets were received by Handy on May 8. Assuming a contract exists between Handy and Ram, which of the following warranties would result? I.Implied warranty of merchantability II.Implied warranty of fitness for a particular purpose IIIWarranty of title
I and III only.
Which of the following factors result(s) in an express warranty with respect to a sale of goods? I. The seller's description of the goods as part of the basis of the bargain II. The seller's selection of goods knowing the buyer's intended use
I only
Which of the following is necessary for the warranty of merchantability to arise in a sale of goods? I. The seller must be a merchant with respect to goods of that kind. II. The warranty must be in writing. III. The buyer must have relied on the seller's skill or judgment in selecting the goods.
I only
Under the Sales Article of the UCC, unless a contract provides otherwise, before title to goods can pass from a seller to a buyer, the goods must be
Identified to the contract.
Cey Corp. entered into a contract to sell parts to Deck, Ltd. The contract provided that the goods would be shipped "FOB Cey's warehouse." Cey shipped parts different from those specified in the contract. Deck rejected the parts. A few hours after Deck informed Cey that the parts were rejected, they were destroyed by fire in Deck's warehouse. Cey believed that the parts were conforming to the contract. Which of the following statements is true?
If the parts were nonconforming, Cey will bear the risk of loss, even though the contract was a shipment contract.
Unless the parties to a sale of goods have agreed otherwise, the UCC states that
If the seller demands payment in cash, (s)he must give any reasonably necessary extension of time.
Webstar Corp. orally agreed to sell Northco, Inc., a computer for $20,000. Northco sent a signed purchase order to Webstar confirming the agreement. Webstar received the purchase order and did not respond. Webstar refused to deliver the computer to Northco, claiming that the purchase order did not satisfy the UCC Statute of Frauds because it was not signed by Webstar. Northco sells computers to the general public and Webstar is a computer wholesaler. Under the UCC Sales Article, Webstar's position is
Incorrect because it failed to object to Northco's purchase order.
On May 2, Mason orally contracted with Acme Appliances to pay $480 for a washer and dryer for household use. Mason and the Acme salesperson agreed that delivery would be made on July 2. On May 5, Mason telephoned Acme and requested that the delivery date be moved to June 2. The Acme salesperson agreed to this request. On June 2, Acme failed to deliver the washer and dryer to Mason because of an inventory shortage. Acme advised Mason that it would deliver the appliances on July 2 as originally agreed. Mason believes that Acme has breached its agreement with Mason. Acme contends that its agreement to deliver on June 2 was not binding. Acme's contention is
Incorrect, because the agreement to change the delivery date was binding.
To satisfy the UCC statute of frauds, a written agreement for the sale of goods must
Indicate that a contract for sale has been made.
A provision in a contract for the sale of goods providing that the seller may accelerate payment at will when (s)he deems himself or herself insecure
Is enforceable subject to the good-faith belief of the seller.
Yost Corp., a computer manufacturer, contracted to sell 15 computers to Ivor Corp., a computer retailer. The contract specified that delivery was to be made by truck to Ivor's warehouse. Instead, Yost shipped the computers by rail. When Ivor claimed that Yost did not comply with the contract, Yost told Ivor that there had been a trucker's strike when the goods were shipped. Ivor refused to pay for the computers. Under these circumstances, Ivor
Is obligated to pay for the computers because Yost made a valid substituted performance.
Kirk Corp. sold Nix an Ajax freezer, Model 24, for $490. The contract required delivery to be made by June 23. On June 12, Kirk delivered an Ajax freezer, Model 52, to Nix. Nix immediately notified Kirk that the wrong freezer had been delivered and indicated that the delivery of a correct freezer would not be acceptable. Kirk wishes to deliver an Ajax freezer, Model 24, on June 23. Which of the following statements is true?
Kirk may deliver the freezer on June 23 if it first seasonably notifies Nix of its intent to do so.
On May 2, Lace Corp., an appliance wholesaler, offered to sell appliances worth $3,000 to Parco, Inc., a household appliances retailer. The offer was signed by Lace's president and provided that it would not be withdrawn before June 1. On May 29, Parco mailed an acceptance of Lace's offer. Lace received the acceptance June 2. Which of the following statements is true if Lace sent Parco a telegram revoking its offer, and Parco received the telegram on May 25?
Lace's revocation was ineffective because the offer could not be revoked before June 1.
Argot Manufacturing wrote Palm offering to sell specified merchandise with the offer to remain open 30 days. Ten days later, Argot and Palm orally agreed on the terms of the sale, and Argot prepared a letter that it sent to Palm stating, "This incorporates our agreement." The letter specified the goods but failed to include the agreed price. Later, prior to the date specified for delivery, Argot agreed in writing to modify the terms of the contract as requested by Palm, but Argot gave no consideration for the modification. Based on these facts,
Lack of consideration for the modification of the agreement would not prevent its enforceability.
Larch Corp. manufactured and sold Oak a stove. The sale documents included a disclaimer of warranty for personal injury. The stove was defective. It exploded, causing serious injuries to Oak's spouse. Larch was notified 1 week after the explosion. Under the UCC Sales Article, which of the following statements concerning Larch's liability for personal injury to Oak's spouse is true?
Larch will be liable because liability for personal injury cannot be disclaimed.
Lazur Corp. entered into a contract with Baker Suppliers, Inc., to purchase a used numeric keypad from Baker. Lazur is engaged in the business of selling new and used numeric keypads to the general public. The contract required Baker to ship the goods to Lazur by common carrier pursuant to the following provision in the contract: "FOB Baker Suppliers, Inc. loading dock." Assume that the contract between Lazur and Baker is otherwise silent. Under Article 2 of the UCC,
Lazur will be entitled to inspect the numeric keypad before it accepts or pays for it.
Sklar, CPA, purchased two computers from Wiz Corp. Sklar discovered material defects in the computers 10 months after taking delivery. Sklar commenced an action for breach of warranty against Wiz 3 years later. Wiz has raised the statute of limitations as a defense. The original contract between Wiz and Sklar contained a conspicuous clause providing that the statute of limitations for breach of warranty actions would be limited to 18 months. Under the circumstances, Sklar will
Lose because the clause providing that the statute of limitations would be limited to 18 months is enforceable.
Bell, by telegram to Major Corp., ordered 10,000 yards of fabric, first quality, 50% wool and 50% cotton. Major accepted the order and packed the fabric for shipment. In the process, it discovered that one-half of the fabric packed had been commingled with fabric that was 30% wool and 70% cotton. Because Major did not have any additional 50% wool fabric, it decided to send the shipment to Bell as an accommodation. The goods were shipped and, later the same day, Major wired Bell its apology, informing Bell of the facts and indicating that the 5,000 yards of 30% wool would be priced at $2 a yard less. The carrier delivering the goods was destroyed on the way to Bell. Who bears the risk of loss?
Major, because it shipped goods that failed to conform to the contract.
Taylor signed and mailed a letter to Peel that stated: "Ship promptly 600 dozen grade A eggs." Taylor's offer
May be accepted by Peel either by a prompt promise to ship or prompt shipment.
Under the UCC Sales Article, the implied warranty of merchantability
May be disclaimed by a seller's oral statement that mentions merchantability.
On February 15, Mazur Corp. contracted to sell 1,000 bushels of wheat to Good Bread, Inc., at $6.00 per bushel with delivery to be made on June 23. On June 1, Good advised Mazur that it would not accept or pay for the wheat. On June 2, Mazur sold the wheat to another customer at the market price of $5.00 per bushel. Mazur had advised Good that it intended to resell the wheat. Which of the following statements is true?
Mazur can successfully sue Good for the difference between the resale price and the contract price.
An oral agreement concerning the sale of goods entered into without consideration is binding if the agreement
Modifies the price in an existing, enforceable contract from $525 to $475.
Pam wrote Matz setting forth specifications for a printing press of a unique nature to be constructed to order and asked for a firm price offer if Matz were interested. Matz wrote Pam 1 week later, "Offer to construct as per your letter for twenty thousand seven hundred dollars cash on November delivery. Offer terminates 2 days. Matz." The letter omitted the words "seven hundred" when delivered to Pam. Pam immediately phoned Matz and stated, "I accept as stated in your letter." Matz said, "Done." Based on the above facts and assuming no further writing,
Pam probably cannot assert the statute of frauds as a defense to a suit by Matz if she notifies Matz that she will not take the goods after Matz has completed about 40% of the work.
Parks furnished specifications and ordered 1,000 specially constructed folding tables from Metal Manufacturing Company, Inc. The tables were unique in design and had not appeared in the local market. Metal completed the job and delivered the order to Parks. Parks sold about 600 of the tables when Unusual Tables, Inc., sued both Parks and Metal for patent infringement. If Unusual wins, what is the status of Parks and Metal?
Parks is liable to Metal for damages resulting from an infringement claim.
Bond purchased a painting from Wool, who is not in the business of selling art. Wool tendered delivery of the painting after receiving payment in full from Bond. Bond informed Wool that Bond would be unable to take possession of the painting until later that day. Thieves stole the painting before Bond returned. The risk of loss
Passed to Bond on Wool's tender of delivery.
Sutter purchased a computer from Harp. Harp is not in the business of selling computers. Harp tendered delivery of the computer after receiving payment in full from Sutter. Sutter informed Harp that Sutter was unable to take possession of the computer at that time but would return later that day. Before Sutter returned, the computer was destroyed by a fire. The risk of loss
Passed to Sutter upon Harp's tender of delivery.
Smith contracted in writing to sell Peters a used personal computer for $600. The contract did not specifically address the time for payment, place of delivery, or Peters's right to inspect the computer. Which of the following statements is true?
Peters is entitled to inspect the computer before paying for it.
Under the Sales Article of the UCC, the warranty of title
Provides that the seller deliver the goods free from any lien of which the buyer lacked knowledge when the contract was made.
Pulse Corp. maintained a warehouse where it stored its manufactured goods. Pulse received an order from Star. Shortly after Pulse identified the goods to be shipped to Star but before moving them to the loading dock, a fire destroyed the warehouse and its contents. With respect to the goods, which of the following statements is true?
Pulse has title and an insurable interest.
To satisfy the UCC statute of frauds regarding the sale of goods, which of the following must generally be in writing?
Quantity of the goods.
Quick Corp. agreed to purchase 200 typewriters from Union Suppliers, Inc. Union is a wholesaler of appliances, and Quick is an appliance retailer. The contract required Union to ship the typewriters to Quick by common carrier, "FOB Union Suppliers, Inc. Loading Dock." Which of the parties bears the risk of loss during shipment?
Quick, because the risk of loss passes when the typewriters are delivered to the carrier.
On May 2, Handy Hardware sent Ram Industries a signed purchase order that stated, in part, as follows: "Ship for May 8 delivery 300 Model A-X socket sets at current dealer price. Terms 2/10/net 30." Ram received Handy's purchase order on May 4. On May 5, Ram discovered that it had only 200 Model A-X socket sets and 100 Model W-Z socket sets in stock. Ram shipped the Model A-X and Model W-Z sets to Handy without any explanation concerning the shipment. The socket sets were received by Handy on May 8. Which of the following statements concerning the shipment is true?
Ram's shipment is an acceptance of Handy's offer.
Under the Sales Article of the UCC, which of the following events will release the buyer from all its obligations under a sales contract?
Refusal of the seller to give written assurance of performance when reasonably demanded by the buyer.
On May 2, Lace Corp., an appliance wholesaler, offered to sell appliances worth $3,000 to Parco, Inc., a household appliances retailer. The offer was signed by Lace's president and provided that it would not be withdrawn before June 1. It also included the shipping terms: "FOB -- Parco's warehouse." Parco accepted Lace's offer. If Lace inadvertently ships the wrong appliances to Parco and Parco rejects them 2 days after receipt, title to the goods will
Revest to Lace when they are rejected by Parco.
Sand Corp. sold and delivered a photocopier to Barr for use in Barr's business. According to their agreement, Barr may return the copier within 30 days. During the 30-day period, if Barr has not returned the copier or indicated acceptance of it, which of the following statements is true with respect to risk of loss and title?
Risk of loss and title remain with Sand.
If goods have been delivered to a buyer pursuant to a sale or return contract, the
Risk of loss for the goods passed to the buyer.
Which of the following statements applies to a sale on approval under the UCC Sales Article?
Risk of loss for the goods passes to the buyer when the goods are accepted after the trial period.
If a contract for the sale of goods includes a C&F shipping term and the seller has fulfilled all of its obligations, the
Risk of loss will pass to the buyer upon delivery of the goods to the carrier.
Buyer ordered goods from Sue Seller. The contract required Seller to deliver them FOB Buyer's place of business. Buyer inspected the goods, discovered they failed to conform to the contract, and rightfully rejected them. In the event of loss of the goods, which of the following is a true statement?
Seller initially had the risk of loss, and it remains with her after delivery.
Buyer and Seller contracted for Buyer to purchase all of Seller's output for 1 year. The stated price was subject to decreases of up to 5% if the market price decreased. The market price fell by 2%, and Seller doubled its usual output. Accordingly, Buyer refuses to purchase Seller's output. In a suit by Seller against Buyer, Buyer's best defense is that
Seller supplied an unreasonable amount.
Dara bought an automobile needing repairs from Chevalier Motors, Inc. (CMI). CMI promised to repair it, but 1 month later had not yet completed the repairs. Dara was using the car anyway (1 month after purchase) when a fire in the dashboard rendered the vehicle inoperable. Dara returned the automobile immediately and orally informed a representative of CMI that she was demanding the purchase price. Dara sent a written notice of rescission 3 months later and filed suit 3 months after that. Who will most likely prevail, and what is the legal theory that best supports the result?
Dara, because she made a justifiable revocation of acceptance.
Casassa, a merchant in San Francisco, under the terms of a nonshipment contract, agrees to sell 50 cases of packaged macaroni to Paoli, a restaurant owner whose business is in San Jose. At the time of contracting for the sale, both parties are aware that these identified goods are in a warehouse in Fresno. The place for delivery is not specified in the agreement. On the basis of these facts, the place for delivery is
Fresno.
On Monday, Gullible George is induced to sell a computer to Fraudulent Freddy on the basis of Freddy's misrepresentation that he is Wealthy Walter. That same day, Freddy resells the computer to Innocent Ivan, a good faith purchaser for value. On Tuesday, Gullible George sells an electronic typewriter to Dishonest David who pays for the goods with a check that is later dishonored by the payor (drawee) bank. Before the check is dishonored, David sells the typewriter to Innocent Irene, a good faith purchaser for value. On the basis of these facts,
George's best remedy is to recover the value of the goods from Freddy and David in a tort action for deceit.
Under what conditions will the statute of frauds be a defense under the Uniform Commercial Code if there is a contract for the sale of goods for $500 or more?
The goods in question are fungible and actively traded by merchants in the business community.
On September 10, Bell Corp. entered into a contract to purchase 50 lamps from Glow Manufacturing. Bell prepaid 40% of the purchase price. Glow became insolvent on September 19 before segregating, in its inventory, the lamps to be delivered to Bell. Bell will not be able to recover the lamps because
The lamps were not identified to the contract.
Which of the following requirements must be met for modification of a sales contract under the Uniform Commercial Code?
The modification must satisfy the statute of frauds if the contract as modified is within its provisions.
With regard to a contract governed by Article 2 of the UCC, which one of the following statements is true?
The obligations of the parties to the contract must be performed in good faith.
Bond and Spear orally agreed that Bond would buy a car from Spear for $475. Bond paid Spear a $100 deposit. The next day, Spear received an offer of $575, the car's fair market value. Spear immediately notified Bond that Spear would not sell the car to Bond and returned Bond's $100. If Bond sues Spear and Spear defends on the basis of the statute of frauds, Bond will probably
Win, because the agreement was for less than $500.
Patch, a frequent shopper at Soon-Shop Stores, received a rain check for an advertised sale item after Soon-Shop's supply of the product ran out. The rain check was in writing and stated that the item would be offered to the customer at the advertised sale price for an unspecified period of time. A Soon-Shop employee signed the rain check. When Patch returned to the store one month later to purchase the item, the store refused to honor the rain check. Under Article 2 of the UCC, will Patch win a suit to enforce the rain check?
Yes, because the rain check met the requirements of a merchant's firm offer even though no effective time period was stated.
A sheep rancher agreed, in writing, to sell all the wool shorn during the shearing season to a weaver. The contract failed to establish the price and a minimum quantity of wool. After the shearing season, the rancher refused to deliver the wool. The weaver sued the rancher for breach of contract. Under Article 2 of the UCC, will the weaver win?
Yes, because this was an output contract.
Under the UCC Sales Article, which of the following conditions most likely will prevent the formation of an enforceable sale of goods contract?
Open acceptance.
Under Article 2 of the UCC, a plaintiff who proves fraud in the formation of a contract may
Be entitled to rescind the contract and sue for damages resulting from the fraud.
Under Article 2 of the UCC, when a written offer has been made without specifying a means of acceptance but providing that the offer will remain open for only 10 days, which of the following statements represent(s) a valid acceptance of the offer? I. An acceptance sent by regular mail the day before the 10-day period expires that reaches the offeror on the eleventh day II. An acceptance faxed the day before the 10-day period expires that reaches the offeror on the eleventh day, due to a malfunction of the offeror's printer
Both I and II
Unless otherwise agreed in a contract for the sale of goods, the buyer is obligated to pay at the time and place at which the buyer receives the goods. The duty of the buyer, however, is subject to a right of inspection. If the sale is a documentary sale, the
Buyer has no right of inspection prior to payment.
Under the Sales Article of the UCC, most goods sold by merchants are covered by certain warranties. An example of an express warranty is a warranty of
Conformity of goods to the sample.
Article 2 of the UCC applies to the sale of
Consumer goods by a nonmerchant.
Under the Sales Article of the UCC, which of the following statements is correct regarding the creation of express warranties?
Express warranties must be part of the basis of the bargain between buyer and seller.
Unless the parties have otherwise agreed, an action for the breach of a contract within the UCC Sales Article must be commenced within
Four years after the cause of action has accrued.
Thorn purchased a used entertainment system from Sound Corp. The sales contract stated that the entertainment system was being sold "as is." Under the Sales Article of the UCC, which of the following statements is(are) correct regarding the seller's warranty of title and against infringement? I. Including the term "as is" in the sales contract is adequate communication that the seller is conveying the entertainment system without warranty of title and against infringement. II. The seller's warranty of title and against infringement may be disclaimed at any time after the contract is formed.
Neither I or II
Under Article 2 of the UCC, which of the following events will result in the risk of loss passing from a merchant seller to a buyer? Tender of the Goods at the Sellers Place of Business: Use of Seller's Truck to Deliver the Goods:
No and No
Grill deals in the repair and sale of new and used clocks. West brought a clock to Grill to be repaired. One of Grill's clerks mistakenly sold West's clock to Hone, another customer. Under the Sales Article of the UCC, will West win a suit against Hone for the return of the clock?
No, because Grill is a merchant to whom goods had been entrusted.
On November 1, Yost sent a telegram to Zen offering to sell a rare vase. The offer required that Zen's acceptance telegram be sent on or before 5:00 p.m. on November 2. On November 2, at 3:00 p.m., Zen sent an acceptance by overnight mail. It did not reach Yost until November 5. Yost refused to complete the sale to Zen. Is there an enforceable contract?
No, because Zen did not accept by telegram.
EG Door Co., a manufacturer of custom exterior doors, verbally contracted with Art Contractors to design and build a $2,000 custom door for a house that Art was restoring. After EG had completed substantial work on the door, Art advised EG that the house had been destroyed by fire and Art was canceling the contract. EG finished the door and shipped it to Art. Art refused to accept delivery. Art contends that the contract cannot be enforced because it violated the statute of frauds by not being in writing. Under the Sales Article of the UCC, is Art's contention true?
No, because the goods were specially manufactured for Art and cannot be resold in EG's regular course of business.
Under Article 2 of the UCC, a firm offer will be created only if the
Offer is made by a merchant in a signed writing.
An important factor in determining whether an express warranty has been created is whether the
Statements made by the seller became part of the basis of the bargain.
Under the UCC Sales Article, which of the following legal remedies would a buyer not have when a seller fails to transfer and deliver goods identified to the contract?
Sue for punitive damages.
Mix Clothing shipped 300 custom suits to Tara Retailers. The suits arrived on Thursday, earlier than Tara had anticipated and on an exceptionally busy day for its receiving department. They were perfunctorily examined and sent to a nearby warehouse for storage until needed. On the following day, upon closer examination, it was discovered that the quality of the linings of the suits was inferior to that specified in the sales contract. Which of the following is true insofar as Tara's rights are concerned?
Tara can reject the suits upon subsequent discovery of the defects.
Which of the following is a true statement about the general obligations of the parties to a sale of goods?
Tender of delivery is a condition of the buyer's duty to accept the goods.
Lazur Corp. entered into a contract with Baker Suppliers, Inc., to purchase a used personal computer from Baker. Lazur is engaged in the business of selling new and used personal computers to the general public. Baker also represented in the contract that the word processor had been used for only 10 hours by its previous owner. The contract included the provision that the word processor was being sold "as is," and this provision was in a larger and different font than the remainder of the contract. With regard to the contract between Lazur and Baker,
The "as is" provision would not prevent Baker from being liable for a breach of any express warranties created by the contract.
Which of the following factors is most important in deciding who bears the risk of loss between merchants when goods are destroyed during shipment?
The agreement of the parties.
Which of the following statements is true with regard to an auction of goods?
The auctioneer may withdraw the goods at any time prior to completion of the sale unless the goods are put up without reserve.
Which of the following statements does not apply to a written contract governed by the provisions of the UCC Sales Article?
The contract must involve the sale of goods for a price of $500 or more.
Under the Sales Article of the UCC, which of the following factors is most important in determining who bears the risk of loss in a sale of goods contract?
The contract's shipping terms.
One of the underlying purposes of the UCC is to permit the parties to exercise considerable contractual freedom. With regard to contractual modification or limitation of remedy, however, this freedom is circumscribed. Which is the true statement about the parties' ability to agree about remedies for breach of their contract for the sale of goods?
The damages for breach by either party may be liquidated in the agreement.
Almovar Electronics sent a letter on March 8 to Conduit Sales & Service Company offering an entire lot of electronic parts at a substantial reduction in price. The offer indicated that it was for "immediate acceptance." The terms were "cash, pick up by your carrier at our loading dock and not later than March 15." It also indicated that the terms of the offer were not subject to variance. The letter did not arrive until March 10, and Conduit's letter accepting the offer was not mailed until March 12. The letter of acceptance indicated that Conduit would take the entire lot, would pay in accordance with the usual terms (2/10, net/30), and would pick up the goods on March 16. Which of the following best describes the legal relationship of the parties?
The different terms of the acceptance are to be construed as proposals for changes in the contract.
Filmore purchased a Miracle color television set from Allison Appliances, an authorized dealer, for $499. The written contract contained the usual 1-year warranty as to parts and labor as long as the set was returned to the manufacturer or one of its authorized dealers. The contract also contained an effective disclaimer of any express warranty protection, other than that included in the contract. It further provided that the contract represented the entire agreement and understanding of the parties. Filmore claims that, during the bargaining process, Surry, Allison's agent, orally promised to service the set at Filmore's residence if anything went wrong within the year. Allison has offered to repair the set if it is brought to the service department but denies any liability under the alleged oral express agreement. Which of the following would be the best defense for Allison to rely upon in the event that Filmore sues?
The parol evidence rule.
Doral, Inc., wished to obtain an adequate supply of lumber for its factory extension to be constructed in the spring. It contacted Ace Lumber Company and obtained a 75-day written option (firm offer) to buy its estimated needs for the building. Doral supplied a form contract that included the option. Ace signed at the physical end of the contract but did not sign elsewhere. The price of lumber has risen drastically, and Ace wishes to avoid its obligation. Which of the following is Ace's best defense against Doral's assertion that Ace is legally bound by the option?
The promise of irrevocability was contained in a form supplied by Doral and was not separately signed by Ace.
Rowe Corp. purchased goods from Stair Co. that were shipped COD. Under the Sales Article of the UCC, which of the following rights does Rowe have?
The right to reject nonconforming goods.
Lazur Corp. entered into a contract with Baker Suppliers, Inc., to purchase a used computer from Baker. Lazur is engaged in the business of selling new and used computers to the general public. The contract required Baker to ship the goods to Lazur by common carrier pursuant to the following provision: "FOB Baker Suppliers, Inc. loading dock." During shipment to Lazur, the computer was seriously damaged when the carrier's truck was involved in an accident. When the carrier attempted to deliver the computer, Lazur rejected it and has refused to pay Baker the purchase price. Under Article 2 of the UCC,
The risk of loss for the computer was on Lazur during shipment.
Under the Sales Article of the UCC, which of the following circumstances best describes how the implied warranty of fitness for a particular purpose arises in a sale of goods transaction?
The seller knows the particular purpose for which the buyer will use the goods and knows the buyer is relying on the seller's skill or judgment to select suitable goods.
Under a contract governed by Article 2 of the UCC, which of the following statements is true?
The seller may be excused from performance if the goods are accidentally destroyed before the risk of loss passes to the buyer.
Under Article 2 of the UCC, the warranty of title may be excluded by
The seller's statement that it is selling only such right or title that it has.
Under the Sales Article of the UCC, when a contract for the sale of goods stipulates that the seller ship the goods by common carrier, "FOB purchaser's loading dock," which of the parties bears the risk of loss during shipment?
The seller, because risk of loss passes only when the goods reach the purchaser's loading dock.
Suggs Company agreed to sell certain goods to Barr Corporation pursuant to a written contract. No shipment or delivery date was specified in the contract. Based on these facts,
The time for shipment is within a reasonable time.
Under Article 2 of the UCC, which of the following statements is true regarding the warranty of merchantability arising from a sale of goods by a merchant seller?
The warranty arises as a matter of law when the seller ordinarily sells the goods purchased.
Under the Sales Article of the UCC, which of the following requirements must be met for a writing to be an enforceable contract for the sale of goods?
The writing must contain a term specifying the quantity of the goods.
On October 1, Baker, a wholesaler, sent Clark, a retailer, a written, signed offer to sell 200 pinking shears at $9 each. The terms were FOB Baker's warehouse, net 30, late payment subject to a 15% per annum interest charge. The offer indicated that it must be accepted no later than October 10, that acceptance would be effective upon receipt, and that the terms were not to be varied by the offeree. Clark sent a telegram, which arrived on October 6, and accepted the offer expressly subject to a change of the payment terms to 2/10, net/30. Baker phoned Clark on October 7 to reject the change of payment terms. On the phone, Clark then indicated it would accept the October 1 offer in all respects and expected delivery within 10 days. Baker did not accept Clark's oral acceptance of the original offer. Which of the following is true?
There is no contract. Clark's modifications effectively rejected the October 1 offer, and Baker never accepted either of Clark's proposals.
Razor Corp. agreed to purchase 100 mixers from Home Suppliers, Inc. Home is a wholesaler of small home appliances, and Razor is an appliance retailer. The contract required Home to ship the mixers to Razor by common carrier, "FOB Home Suppliers, Inc. Loading Dock." Under Article 2 of the UCC
Title to the mixers passes to Razor at the time they are delivered to the carrier, even if the goods are nonconforming.
Vick bought a used boat from Ocean Marina that disclaimed "any and all warranties" in connection with the sale. Ocean was unaware the boat had been stolen from Kidd. Vick surrendered it to Kidd when confronted with proof of the theft. Vick sued Ocean. Who is likely to prevail and why?
Vick, because the warranty of title has been breached.
When a buyer is in breach of a contract for the sale of goods, the seller may withhold delivery. Which of the following is true?
When the breach regarding one installment substantially impairs the value of the whole contract, all undelivered goods may be withheld.
Under Article 2 of the UCC and the United Nations Convention for the International Sale of Goods (CISG), absent specific terms in an international sales shipment contract, when will risk of loss pass to the buyer?
When the goods are delivered to the first carrier for transmission to the buyer.
When do title and risk of loss for conforming goods pass to the buyer under a shipment contract covered by the Sales Article of the UCC?
When the goods are given to a common carrier.
Under Article 2 of the UCC, which of the following statements is true concerning a contract involving a merchant seller and a nonmerchant buyer?
Whether UCC Article 2 is applicable does not depend on the price of the goods involved.