Law of Business Organizations Midterm (Multiple Choice Problems)
True or False: Agency relationships are usually formed by contract.
True
True or False: Normally, a duty to pay the agent is implied unless special circumstances or the relationship of the parties suggests that a gratuitous agency was intended.
True
True or False: A corporation is a legal entity that can act only through agents.
True
True or False: A court may find that there is an agency relationship even though the parties have expressly agreed that they do not intend to create one.
True
True or False: Generally, a person can do anything through an agent that he or she could legally do personally.
True
True or False: Goods sold "as is" are not covered by the implied warranty of merchantability.
True
True or False: If a buyer accepts any part of a commercial unit of goods, she is considered to have accepted the whole unit.
True
True or False: If a seller's capacity to deliver is partially affected by unforeseen conditions, the seller may allocate production among his customers. If the seller chooses to allocate production, notice must be given to the buyers. When a buyer receives this notice, the buyer may either terminate the contract or agree to accept the allocation.
True
True or False: If the buyer wrongfully rejects goods, he is liable to the seller for breach of the sales contract.
True
True or False: If the shipping terms are cash on delivery (C.O.D.), the buyer must pay for the goods before inspecting them unless they are marked "Inspection Allowed."
True
True or False: If there is a conflict between the express terms of the contract and the past course of dealing between the parties, the express terms of the contract prevail.
True
True or False: In the case of a merchant, good faith means honesty in fact as well as the observance of reasonable commercial standards of fair dealing in the trade.
True
True or False: Normally, the buyer has the right to inspect the goods before she accepts or pays for them.
True
True or False: The agency at will doctrine stems from the judicial reluctance to force people to continue personal relationships against their will.
True
True or False: The agent has a duty to inform the principal of knowledge the agent gains in the course of his or her responsibilities.
True
True or False: The basic duty of the buyer is to accept and pay for the goods if they conform to the contract.
True
True or False: The buyer and seller may agree on the place where the goods will be delivered. If no such agreement is made, then the goods are to be delivered at the seller's place of business.
True
True or False: The duty of loyalty demands that the agent avoid even the appearance of impropriety.
True
True or False: The fact that a buyer may have to pay for goods before inspecting them does not deprive the buyer of remedies against the seller if the goods do not conform to the contract.
True
True or False: To reject goods, the buyer must notify the seller of the rejection and specify the defect or nonconformity.
True
A buyer is _____ if he cannot pay his bills when they become due. A. insolvent B. unconscionable C. immune from liability D. liquidated
A
Acme Enterprises, Inc. (Acme), a large and well-known corporation, plans to purchase five hundred (500) acres of land for a new plant. To avoid escalating land prices if landowners in the area discover Acme's intentions, the corporation orchestrates a plan to purchase the land in small tracts from dozens of landowners. It does so by employing several agents, with each agent purporting to purchase the land for personal use. In this case, Acme is a(n) _____. A. undisclosed principal B. subagent C. partially disclosed principal D. disclosed principal
A
Adam offered to buy automobile batteries from Ben. Adam's purchase order was complete with respect to all significant terms except price, which was omitted. If Ben accepts Adam's offer, and the price of automobile batteries is well established in the industry, which of the following is true? A. A contract can be formed between Adam and Ben even though the price term was omitted. B. A contract cannot be formed between Adam and Ben if the price is not included. C. A contract can be formed between Adam and Ben, but only if it can be proved that the parties intended to enter a contract to discuss the price. D. A contract can be formed between Adam and Ben, but the price will be treated as a proposed addition to the contract which must be accepted by both parties.
A
Any attempt to limit consequential damages for injury caused to a person by consumer goods is considered prima facie _____. A. unconscionable B. caveat emptor C. enforceable D. in good faith
A
Henri Flambé owns and operates a gourmet restaurant. A large glass sculpture stood in the lobby since the restaurant opened ten years ago. Although Henri had not planned to sell the sculpture, Audrey Smyth took such a strong fancy to it that she convinced Henri to sell it to her. After receiving payment in full from Audrey, Henri tendered delivery of the sculpture. Audrey informed Henri that she would be unable to take possession of the sculpture until the next day, when she would have a vehicle with appropriate restraints and padding. Vandals broke into the restaurant that night and damaged many furnishings in the restaurant, including the sculpture. The risk of loss A. Passed to Audrey on Henri's tender of delivery. B. Remained with Henri, because the parties agreed on a later time of delivery. C. Remained with Henri, because Audrey had not yet received the sculpture. D. Passed to Audrey at the time the payment was made.
A
Suppose that Frankie's Tire and Alignment, LLC (Frankie's) sells Alexandria an automobile tire, warranting it to be four-ply construction. The tire goes flat when it is punctured by a nail, and Alexandria discovers that the tire is really only two-ply (and therefore less puncture-resistant). If Alexandria gives the store prompt notice of the breach, she _____. A. can keep the tire and recover from Frankie's the difference in value between a two-ply and a four-ply tire B. must cover by locating a substitute seller, purchasing a four-ply tire from the substitute seller, and if the cost is greater than the original purchase price, recovering the difference from Frankie's (the Uniform Commercial Code recognizes that Alexandria will have lost confidence in Frankie's, and from a practical standpoint, should no longer do business with that particular tire shop) C. can recover from Frankie's both incidental damages and punitive damages D. must return the two-ply tire to Frankie's and exchange it for a four-ply tire
A
Suppose that Tom contracts in writing to purchase from Felix a classic 1964 Ford Mustang. The car is in "showroom" condition and was only the third Mustang to "roll off" the Ford assembly line back in the 1960s. Still in possession of the Mustang, Felix decides not to sell it (this despite the fact that Tom has already written him a check for $400,000, the contract price for the car), knowing that it will be impossible to replace. Which of the following is Tom's appropriate remedy in this situation? A. Specific performance B. Commercial Impracticability C. Frustration of purpose D. Promissory estoppel
A
The critical elements for creation of a(n) _____ are that the seller make a statement of fact or a promise to the buyer concerning the goods that becomes part of the bargain between the buyer and seller. A. express warranty B. warranty per se C. implied warranty of merchantability D. implied warranty of fitness for a particular purpose
A
The objective of providing remedies for the breach of a sales contract is to _____. A. put the injured person in the same position as if the contract has been performed B. encourage parties to rely on trade practices rather than express terms C. encourage parties to rely on oral contracts rather than written contracts D. punish or penalize the party responsible for breaching the contract
A
Vale Mountain Properties, Inc. (Vale) has contracted with Colorado Property Brokers, LLC (Colorado) to sell several of its land holdings at a public auction. Rob, Patricia, and Luke, sales representatives employed by Colorado, arrange for and effect the sale of Vale's properties. In this case, in terms of the sale of Vale's land holdings, Rob, Patricia, and Luke are _____ of _____. A. subagents of Colorado B. agents of Colorado C. agents of Vale D. subagents of Vale
A
Which of the following is true regarding Article 2 of the Uniform Commercial Code (UCC)? A. It applies only to transactions in goods. B. In addition to goods transactions, it also applies to contracts for the sale of real property. C. In addition to goods transactions, it also applies to contracts to provide services. D. It is federal statutory law.
A
Which of the following is true regarding a warranty of title? A. The warranty of title does not apply when a sheriff's sale is involved. B. The warranty of title does not apply to any claims of patent infringement by third parties. C. The seller warrants only that the seller has the right to sell the goods, and no representation is made in regard to prior liens. D. A warranty of title protects the buyer in relation to the quality of goods sold.
A
Monty Baines has contracted to buy a painting owned by Bernard Owens for $10,000. After signing a sale contract with Baines, Owens is offered $100,000 for the painting by Richard Novella. Owens accepts payment from, and ships the painting to, Novella. Baines A. May cancel the contract and collect punitive damages. B. May obtain specific performance. C. Does not have a cause of action against Owens. D. May reject the nonconforming goods.
B
Which of the following is true of a negotiable document of title? A. It is used when a buyer rejects the goods delivered. B. It is given to a buyer before he or she makes the payment for the goods. C. It serves as a contract between the seller and the shipper. D. It does not identify who has control of the goods.
C
A seller who has voidable title can pass good title to __________. A. a non-merchant who has knowledge related to why the title is voidable B. a good faith purchaser for value C. a good faith donee D. a merchant who has knowledge related to why the title is voidable
B
Abernathy Jewelry sells new and pre-owned fine jewelry and timepieces. Abernathy has Roger, an independent jewelry and timepiece repair technician, on the premises twice a week to repair both Abernathy's and Abernathy's customers' pieces. Brian brought a watch to Abernathy to be repaired, leaving it with Abernathy until Roger's next visit. After the repair was complete, one of Abernathy's clerks sold Brian's watch to Gerald, not realizing it belonged to Brian. Under the Sales Article of the UCC, will Brian win a suit against Gerald for the return of the watch? A. Yes, because Abernathy could not convey good title of the watch. B. No, because Abernathy is a merchant to whom goods had been entrusted. C. No, because the clerk was not aware that the watch belonged to Brian. D. Yes, because the clerk was negligent in selling the watch.
B
Amir bought a television from Corbel Electronics (Corbel) for $999. Corbel offered a six-year warranty for any manufacturing defect in the television. After three years of use, the television caught on fire due to a manufacturing defect. The fire also damaged other items in Amir's house and the house itself. Which of the following is most accurate regarding Corbel's liability in this scenario? A. Amir cannot recover damages for loss in value of the television set. B. Amir can claim consequential damages for a breach of warranty resulting in damage to his property. C. Amir's right to recover damages is barred by the Uniform Commercial Code's (UCC's) statute of limitations. D. Amir can recover both liquidated damages and punitive damages.
B
Apparent authority may exist _____. A. only if the agent has actual authority established in a written agreement between the principal and the agent B. if the principal's conduct causes a third person to reasonably believe that another has the authority to act on the principal's behalf C. if the principal reasonably believes that the agent has the authority to act on the principal's behalf D. only if the agent has express authority conferred by the principal either orally or in writing
B
Common law rather than Article 2 of the Uniform Commercial Code governs A. A written contract by a dealer to sell and install a heater in the buyer's home for $6,000. B. An oral contract to cut and style hair involving the application of expensive styling products. C. An oral contract by a merchant to sell an antique book for $200. D. A written contract by a private party to sell an original painting for $600.
B
David signs a contract to purchase Orrin's property. David informs Orrin that the property is being purchased for one of his clients but refuses to tell Orrin who the client is. The principal here is _____. A. disclosed B. partially disclosed C. illegal D. undisclosed
B
Jessica went to Angel Beauty Salon to get a facial. The cosmetic products used by the beautician contained certain harmful chemicals that adversely reacted with Jessica's face. This resulted in several rashes and spots on her face. Which of the following statements is true of Article 2 of the Uniform Commercial Code (UCC) in determining the rights and responsibilities of the parties? A. Article 2 of the UCC would apply because any contract involving the use of cosmetic products is governed by the Code. B. Article 2 of the Uniform Commercial Code (UCC) would not apply because Jessica entered into a contract that was predominantly a service contract. C. Article 2 of the UCC would apply because the cosmetic products are not Jessica's tangible personal property. D. Article 2 of the UCC would not apply because Jessica is not a merchant.
B
Jim makes a contract with Oleta to sell her a 1965 lava lamp once owned by a famous artist. Jim later decides that he does not want to sell the lamp to Oleta. In this scenario, Oleta _____. A. cannot resort to any remedy because the lamp is not a generic product B. can require Jim to specifically perform the contract C. can sue Jim for an unfair and deceptive trade practice D. can claim exemplary damages
B
Pascal is a clothing buyer for Kelly-Benjamin Fine Fashions, Inc. (Kelly-Benjamin) in Paducah, Kentucky. While on a business-related trip to San Francisco, California, Pascal noticed a solar-powered automobile on sale for $29,000. Since Kelly-Benjamin had expressed corporate support for alternative energy (including solar technology) as well as the need for a new company car, Pascal contracted to buy the car for Kelly-Benjamin. Upon being informed of the purchase, Kelly-Benjamin instructed the seller to ship the car to the company. Under these circumstances, _____. A. Kelly-Benjamin is not liable on the contract, since Pascal only had the authority to purchase clothing for the company B. Kelly-Benjamin is considered to have ratified the contract C. Pascal is considered to have ratified the contract D. Kelly-Benjamin and Pascal are both liable on the contract, since Kelly-Benjamin is Pascal's employer-principal, and Pascal is Kelly-Benjamin's employee-agent
B
Sam Landscaping sells plants, supplies, and gardening equipment. Sam may make all the following implied warranties, if not expressly disclaimed, except A. Title B. Strict liability C. Merchantability D. Fitness for a particular purpose
B
Sam contracted with Roadies Garage, LLC (Roadies) for customized pink seat covers on a new Porsche intended as a gift for his fiancé. Two days before delivery was due, Sam ended his engagement and told Roadies that he was no longer interested in purchasing the seat covers. Which of the following is the most reasonable course of action that Roadies should take? A. It should start a line of pink seat covers so that they have more to sell. B. It should sell the incomplete covers for their scrap or salvage value. C. It should coerce Sam into buying the covers. D. It should complete manufacture anyway and hope that Sam changes his mind.
B
The test of an agent's express authority is the _____. A. subjective belief of the third party dealing with the agent B. specific language used by the principal in granting the authority C. subjective belief of the agent D. appearance of the agent's authority as determined by an objective standard of reasonableness
B
What is "honesty in fact in the transaction concerned?" A. Good title B. Good faith C. Good value D. Good risk
B
When an agent takes an unauthorized action, the _____. A. action may be ratified only if the principal is a corporation B. principal may not ratify only a portion of the action C. action cannot be ratified by the principal D. principal can transfer liability to the agent while enjoying the benefits of the action
B
When goods are defective and the buyer provides the seller with notice, which of the following remedies is applicable? A. The buyer cannot recover damages and can only get the reimbursement amount that the seller thinks is reasonable. B. The buyer can recover the difference between the value of the goods received and the value the goods would have had if they had been as warranted. C. The buyer is entitled to only consequential damages. D. The buyer can claim only incidental damages.
B
Which of the following is a test of merchantability for all sales contracts? A. The goods need not necessarily be packaged or labeled adequately. B. The goods conform to any promises or statements of fact made on the container or label. C. The goods conform to the general description of the goods available in the market. D. The goods are of different kind, quality, and quantity within each unit.
B
Which of the following terms is closely related to destination contracts? A. FAS (free alongside) B. Ex-ship C. CIF (cost, insurance, and freight) D. C&F (cost and freight)
B
Which of the following would create an express warranty? A. "This computer rocks." B. "This car has a V8 engine." C. "This car is a real steal." D. "This bike is awesome."
B
According to the Uniform Commercial Code (UCC), title to goods passes to the buyer __________. A. only if the seller delivers the goods to the buyer's residence B. before the buyer pays for the goods C. when the document of title is delivered by the seller D. upon selection of the goods by the buyer
C
An attorney-in-fact is the label given to an agent whose authority is _____. A. apparent B. reasonably forseeable C. in writing D. implied
C
Doomsday Development wants to purchase several blocks of land downtown to build a large convention complex. Doomsday engaged a different agent to buy each land parcel. Each agent is instructed not to disclose the agency relationship, so the 18 different landowners will not unite and increase prices. Harriet is one of these agents. What right will a landowner have after validly contracting with Harriet? A. The right to void the contract after the disclosure of the principal's existence. B. The right to Harriet's disclosure of the agency relationship. C. The right to Harriet's contract performance. D. The right to Doomsday's contract ratification.
C
If a buyer repudiates a contract for identified, conforming goods before risk of loss has passed to them, __________. A. the buyer and the seller must share the loss equally B. the seller is liable for a commercially reasonable time for any loss or damage to the goods C. the buyer is liable for a commercially reasonable time for any loss or damage to the goods that is not covered by the seller's insurance D. the buyer is not liable for any loss or damage to the goods
C
Marissa, the chief executive officer (CEO) of Carmine Laboratories, Inc., appointed Raphael as marketing manager and gave him the express authority to hire other people to help him carry out his duties. Raphael hired Dana as his secretary. Based on these facts, which of the following is true? A. Only Marissa is bound to a third party by Dana's actions as an employee. B. Dana is solely bound to third parties for her actions as an employee. C. Between Marissa and Raphael, it is Raphael who is ultimately liable for Dana's actions as an employee. D. Neither Marissa nor Raphael is bound to a third party by Dana's actions as an employee.
C
Quinten repairs presses for Borland Corp., an auto-parts manufacturer. What circumstance best suggests that Quinten is an employee of Borland rather than an independent contractor? A. A high degree of skill is required to do Quinten's work. B. Quinten owns the tools used to do Quinten's work. C. Borland pays Quinten weekly. D. Borland's personnel do not supervise Quinten's work.
C
The principal is bound by representations that _____. A. the agent ratifies in the course and scope of the agency agreement B. the agent makes, even if the third person is aware that the agent has exceeded his actual authority C. the agent is expressly authorized to make D. the agent must make to accomplish the agency's purpose, since such representations automatically arise from the agent's apparent authority
C
Timothy grants Johnny the authority as his real estate agent to sell his house for $249,900 or more, with Johnny to receive a six (6) percent commission on the sale price when it actually sells. This arrangement will last for six (6) months, subject to renewal with the consent of both parties. Johnny has _____ authority to sell Timothy's house. A. authenticated B. ratified C. actual D. apparent
C
When one of the parties to a contract fails to perform his obligations, the injured party has a variety of remedies for _____. A. liquidated damages B. promissory estoppel C. breach of contract D. exemplary damages
C
Which of the following is true regarding a principal's liability for notice and payments to the agent? A. Known as the exculpatory doctrine, notice to the agent is notice to the principal if it relates to the business of the agency. B. If it relates to the business of the agency, notice to the agent is not notice to the principal. C. Payment to the agent of a debt owed to the principal discharges the debt if the agent has the authority to receive such payments. D. By law, an agent who makes over-the-counter sales has the express authority to collect for the goods.
C
Which of the following is true regarding a sale or return contract? A. Return of the goods is at the seller's risk and expense. B. Title rests with the seller. C. It is generally a commercial transaction. D. Risk of loss rests with the seller.
C
Which of the following is true regarding the doctrine of respondeat superior? A. According to the doctrine of respondeat superior, when an agent commits a tort or crime while working for the principal, the agent is personally liable for the consequences of his actions. B. A principal's liability under the doctrine of respondeat superior is also called vituperous liability. C. The doctrine of respondeat superior makes the principal responsible without regard to whether the principal was actually at fault. D. Agents are often liable for the torts of their principals under the doctrine of respondeat superior.
C
Which of the following situations would create an implied warranty of merchantability? A. Ollie hires Louise to work in his electronics store. B. Greta moves to Paris and gives her car to her younger brother. C. Vinnie buys a microwave oven at MegaMart. D. Ben sells his high-definition television to his cousin, Sam.
C
Which section of the Uniform Commercial Code (UCC) recognizes the implied warranty of title? A. Section 2A-212 B. The Uniform Commercial Code (UCC) does not recognize the implied warranty of title; instead, any title warranty a seller provides to a buyer must be created expressly (particularly, through a written document of title). C. Section 2-312 D. Section 3-112
C
A buyer has a retail store in Florida and the seller is a manufacturer in California. If the buyer orders goods from the seller and the goods are shipped "FOB Florida," which of the following is true? A. The buyer bears the risk of loss, since he is responsible for taking possession of the goods. B. The seller is allowed to charge a nominal fee for delivering the goods. C. Neither the seller nor the buyer bears the risk of delivering the goods, since the goods are insured. D. The seller bears the expense and risk of delivering the goods to Florida.
D
A principal to be liable to a third party, if an agent A. Is an employee who commits a negligent act outside the scope of employment, resulting in injury to a third party. B. Is an employee who commits an intentional tort outside the scope of employment, resulting in injury to a third party. C. Is an independent contractor who commits a negligent act, in performance of the contract, resulting in injury to a third party. D. Is an employee who fails to notify the employer of a dangerous condition, resulting in injury to a third party.
D
According to the Uniform Commercial Code (UCC), title passes to the buyer when the seller has completely performed his or her duties concerning __________ of the goods. A. design B. title and risk of loss insurance C. production D. physical delivery
D
If the future performance of a product is covered by its warranty, then a breach occurs _____. A. when the purchase is marked as complete and the product is delivered to the buyer B. when the buyer complains to the manufacturer about a defect in the product C. one (1) year after the defect in the product is discovered by the buyer D. at the time the buyer should have discovered the defect in the product
D
Jane gave her car for maintenance to Bell Corporation, a company that deals in used cars and maintenance of cars. One of the employees at Bell Corporation accidentally sold Jane's car to Fiona. Under these circumstances, which of the following is correct? A. Jane can recover the value of the car from Fiona or Bell Corporation since neither Bell Corporation nor Fiona had title to the car. B. Jane can recover the car from Fiona because Bell Corporation did not have ownership of the car when it was sold to Fiona. C. Jane cannot recover the value of the car from Bell Corporation because she is a nonmerchant. D. Jane cannot recover the car from Fiona because under the Uniform Commercial Code (UCC), Bell Corporation could give good title to a buyer in the ordinary course of business.
D
Oak Wood Furniture, LLC (Oak Wood), a furniture manufacturer, sold 150 chairs to Sierra, the owner of a furniture shop. In the sales contract between Oak Wood and Sierra, a provision of the contract read, "Seller hereby disclaims all implied warranties." Unlike the rest of the contract, this provision was written in all capital letters and placed prominently in the document. In this scenario, Oak Wood has effectively made a disclaimer of _____. A. neither the implied warranty of merchantability nor the implied warranty of fitness for a particular purpose B. the implied warranty of merchantability, but not the implied warranty of fitness for a particular purpose C. both the implied warranty of merchantability and the implied warranty of fitness for a particular purpose D. the implied warranty of fitness for a particular purpose, but not the implied warranty of merchantability
D
Preston Corporation terminated Abner as a sales agent and notified all of Abner's present and former customers and leads in Preston's computer system by letter. Tyramine Corporation is a retailer located outside of the sales territory previously assigned to Abner. Tyramine knew of Abner due to appearances at national industry conventions, but had never placed an order with Preston. After his termination, Abner sold Tyramine goods for shipment in a month, purportedly acting as Preston's agent. Tyramine gave Abner a deposit for 20% of the purchase price. It is usual for agents in the industry to receive such deposits. In an action by Tyramine against Preston on the sales contract, Tyramine will A. Prevail, because Tyramine made a deposit on the contract. B. Lose, because Abner lacked implied authority to sign contracts on Preston's behalf. C. Lose, because Abner lacked express authority to sign contracts on Preston's behalf. D. Prevail, because Preston's notice was inadequate to terminate Abner's apparent authority.
D
Sousa Sports Emporium contracted to sell a bicycle to Gerald Banks. In this situation, A. The contract will be either a sale or return or sale on approval contract. B. As Gerald is not a merchant, only Sousa is obligated to perform the contract in good faith. C. The contract may not involve the sale of personal property with a price of more than $500. D. The contract is voidable by Gerald, if he is a minor.
D
Suppose a seller says "These goods are first class." This is an example of _____. A. an express warranty B. an implied warranty of merchantability C. an implied warranty of fitness for a particular purpose D. sales talk
D
Suppose that Armadillo Groceries, Inc. (Armadillo) in San Antonio, Texas hires Rocky B. Atterson to work in its store delicatessen. Prior to hiring him and during his period of employment, Armadillo did not conduct a background check of Rocky. A background check would have revealed prior assault and battery convictions indicating that Rocky had a penchant for physically abusing children, including his own son. After six (6) months on the job, Rocky assaulted and battered two children "misbehaving" in the store deli area. In this case, _____. A. Armadillo is not liable, since it did not give Rocky the express or implied authority to assault and batter the children, and since it would not appear reasonable to a third party that Rocky had the authority to do so (i.e., Rock did not have apparent authority either) B. Armadillo is not liable, since the children were misbehaving C. Armadillo is liable under a theory of apparent authority D. Armadillo is liable under a theory of direct liability
D
When Nancy's aunt left for her annual holiday vacation, she left Nancy in charge of her coffee shop. During this time, there was a riot in the city and the door of the coffee shop was damaged. Under these circumstances, Nancy can make necessary repairs if she cannot successfully contact her aunt for further instructions because she has _____. A. express agency authority B. apparent agency authority C. power of attorney D. inherent agency power
D
When a buyer breaches a contract, the seller has a number of remedies under the Uniform Commercial Code (UCC), including the right to _____. A. recover from the buyer three (3) times the profit the seller would have made on the sale B. recover from the buyer three (3) times the damages the seller sustained C. resell the goods covered by the contract and recover punitive damages from the buyer D. cancel the contract
D
When a seller breaches a contract, the buyer may _____. A. obtain specific performance, but only if the goods are not unique and can be found elsewhere B. legally sue the seller into performing if the seller repudiated the contract based on the buyer's insolvency C. not recover consequential damages D. buy other goods and recover damages from the seller based on the additional expense incurred in obtaining the substitute goods
D
When the seller is a merchant, which of the following automatically occurs? A. A limited warranty B. The implied warranty of fitness for a particular purpose C. A full warranty D. The implied warranty of merchantability
D
When the seller is rightfully claiming for the buyer's rejection or repudiation, the seller can recover the difference between the contract price and the market price or _____. A. whatever the buyer determines in good faith B. the seller's cost C. the limits of the seller's comprehensive general liability insurance D. the profit the seller lost
D
Which of the following is true of a FAS (free alongside) contract? A. It is not accompanied by the name of a specific vessel or port. B. It does not include maritime contracts. C. The seller must deliver the goods alongside the vessel at the buyer's risk and expense. D. The seller must deliver the goods alongside the vessel at his or her own risk and expense.
D
Which of the following is true regarding a sale on approval? A. Goods are delivered to the buyer primarily for resale. B. The risk of loss and title pass to the buyer even before the buyer accepts the goods. C. Any use of the goods that is consistent with a trial of goods is regarded as an acceptance by the buyer. D. Goods are delivered to the buyer primarily for the buyer's use.
D
Which of the following is true regarding the seller's right to recover the purchase price of goods? A. Even if the seller successfully resells the goods, he can claim recovery of the purchase price from the buyer. B. The seller cannot recover the purchase price of goods damaged after the buyer assumed the risk for their loss. C. The seller is not entitled to the purchase price of all goods accepted by the buyer. D. If the seller resells the goods to another buyer, the seller must give the original buyer credit for the proceeds of the resale.
D
Which of the following warranties is created if the seller knows the particular use the buyer has for the goods in question and the seller makes a recommendation that the seller knows the buyer is relying on? A. Implied warranty of merchantability B. Implied warranty of recommendation C. Express warranty D. Implied warranty of fitness for a particular purpose
D
While dining at his favorite fast food restaurant, Donny noticed a fingernail in his French fries. Which of the following statements is true? A. The restaurant has breached the Magnuson-Moss Warranty Act. B. The restaurant has not breached any warranties based on the fingernail being a naturally occurring and organic, although unexpected, presence. C. The restaurant has breached their warranty of fitness for a particular purpose. D. The restaurant has breached their warranty of merchantability.
D
True or False: A seller creates an express warranty when she states an opinion.
False
True or False: An agency coupled with an interest is revocable without the consent of the agent.
False
True or False: The Uniform Commercial Code (UCC) gives the parties minimal flexibility in deciding between themselves how a contract will be performed.
False
True or False: An agency relationship may not arise in the absence of a contractual agreement.
False
True or False: An agent's fiduciary duty of loyalty to her principal can be eliminated by an agreement between the parties.
False
True or False: An unincorporated association is a legal entity that can act only through agents.
False
True or False: If a seller uses a drawing to convey the characteristics of goods that are taken into consideration in a sales transaction, that seller has merely express an opinion, but has not made an express warranty.
False
True or False: If an agent takes the principal's property with the intent to deprive the principal of it, the agent is guilty of the crime of extortion.
False
True or False: Termination of an agency occurs if the objective of the agency becomes impossible or illegal, but not if the subject matter of the agency is lost or destroyed.
False
True or False: The buyer or seller may become concerned that the other party may not be able to perform required contract obligations. If there is a reasonable basis for that concern, the buyer or seller can demand assurance from the other party that the contract will be performed. If such assurance is not given within seven (7) business days, the other party is considered to have repudiated the contract.
False
True or False: The parol evidence rule is designed to permit agents to collect commissions on sales completed after termination of the agency relationship if the sale primarily resulted from the agent's efforts.
False
True or False: The seller, but not the buyer, must act in good faith in the performance of a sales contract.
False
True or False: Under the UCC, disclaimers of implied warranties do not need to be conspicuous.
False
True or False: Under the Uniform Commercial Code (UCC), only the buyer can demand assurance from the other party that the contract will be performed.
False
