BUL3310 Unit 6 quiz

The party who takes possession of property belonging to another with the understanding that the property must be returned to the owner or delivered to a designated third party is an__________________. a. Bailee b. Donee c. Lessor d. Mortgagee

a. Bailee

WireCo manufactures different types of electrical wires used in the building industry, and CopperCo has been one of its major suppliers for over ten years. If a court had to construe a contract between WireCo and CopperCo, it could use this ten year history of business transactions as evidence of a. Course of dealing b. Course of performance c. Usage of trade d. Commercial reasonableness.

a. Course of dealing

Punitive damages are available for which of the following? a. Fraudulent misrepresentation b. Innocent misrepresentation c. Unilateral mistake of fact d. Bilateral mistake of fact

a. Fraudulent misrepresentation

Mike, a minor, sold his trail bike to Allen, an adult. Assume that Allen sold the bike to Ben Buyer, who paid cash and had no knowledge that Allen had purchased the bike from a minor. What kind of title does Ben have to the bike? a. Good title b. Void title c. Voidable title if Mike exercises his right to avoid the contract with Allen d. Voidable title if Allen exercises his right to avoid the contract with Mike.

a. Good title

Article 2A of the Code governs a. Leases of goods b. Consignments c. Sales of fixtures d. Sales of securities

a. Leases of goods

Mike, a minor, bought a car from Used Car Lot for 6,000. Two months before he turned 18, the age of majority in his state, Mike decided he didn't want the car anymore and returned it to Used Car Lot. Mike had put 50,000 miles on the car. Applying the law followed by the majority of states, please select the statement that best describes Mike's rights in these circumstances. a. Mike would be entitled to get back the full 6,000 purchase price. b. Mike would get back only the market value of the car when he returned it. c. Mike cannot return the car because the excess mileage constituted an act of ownership that ratified the contract. d. Mike will be entitled to 6,000 minus the rental value of the car for the months he used it.

a. Mike would be entitled to get back the full 6,000 purchase price.

If goods are being sold under a negotiable document of title, such as a bill of lading, risk of loss passes to the buyer when a. The document is tendered to the buyer b. The goods are tendered to the buyer c. The buyer takes possession of the goods d. The buyer pays for the goods.

a. The document is tendered to the buyer

Which of the following statements is false about sale or return contracts? a. The goods must be used as consumer goods. b. Buyer has the risk of loss until the goods are sold c. Buyer has the risk of loss during shipment of the goods back to the seller. d. The goods are subject to claims by the buyers creditors while they are in his possession.

a. The goods must be used as consumer goods.

A party to a contract who lacks mental capacity, but has not been adjudicated insane, is liable in quasi-contract for necessaries. a. True b. False

a. True

A party who misstates an important fact during contract negotiations has an affirmative duty to correct that misstatement before entering into the contract. a. True b. False

a. True

A seller who knows that his property has a defect not discoverable by the buyer will be liable for fraudulent misrepresentation if he does not disclose the defect. a. True b. False

a. True

An intentional misrepresentation of law by a seller who is not a lawyer will be grounds for rescinding the contract. a. True b. False

a. True

Anne bought an antique bracelet from a jeweler. Unfortunately, the bracelet was not part of the jeweler's inventory, but had had been brought in for repairs. Nonetheless, Anne has good title to the goods. a. True b. False

a. True

C.I.F. in a sales contract indicates that the price includes the cost of the goods, insurance and shipping charges. a. True b. False

a. True

Crops are identified to the contract when they are planted. a. True b. False

a. True

Farmers are Article 2 "merchants "in some states and "non-merchants" in other states. a. True b. False

a. True

In a sale on approval, the seller must pay the costs for returning the goods. a. True b. False

a. True

In interpreting a particular sales contract, courts rely more on course of performance than on usage of the trade. a. True b. False

a. True

Innocent misrepresentation can be the basis for the injured party to rescind the contract. a. True b. False

a. True

One of the elements of fraudulent misrepresentation is that the victim's reliance on the false representation was justifiable. a. True b. False

a. True

Punitive damages may be awarded to victims of fraudulent misrepresentation. a. True b. False

a. True

Scienter includes not only actual knowledge that a statement is false, but also reckless disregard for whether the statement is true or false. a. True b. False

a. True

The buyer attains the right to insure the goods once the goods are identified to the contract. a. True b. False

a. True

The purpose of reformation is to correct the written contract to reflect the actual intentions of the parties. a. True b. False

a. True

The victim of negligent misrepresentation may recover contract damages, but not punitive damages. a. True b. False

a. True

Larry Lawyer entered into a contract to buy land from a client at well below market value. The client was elderly and trusted Larry as his lawyer and son of his best friend to be fair and give him good advice. Client can rescind the contract based on a. Undue influence b. Duress c. Unilateral mistake of fact d. Unilateral mistake of value

a. Undue influence

Dan Dentist was selling the building in which his office was located so that he could relocate to a larger space. Ron, a very aggressive commercial real estate broker, told Dan that unless he gave Ron an exclusive one year contract to list the property, he would spread word in the community that Dan was selling his building to pay a large malpractice claim and that Dan had been liable in so many malpractice suits that no company would insure him. Dan believed that Ron would carry out this threat and signed the contract. Dan can rescind the contract based on a. Fraud b. Duress c. Undue influence d. Fiduciary malfeasance

b. Duress

Acme, a Dover, Delaware company, is to send widgets to a customer in Elmira, New York, under a destination contract. The contract will read a. F.O.B.Dover, Delaware b. F.O.B.Elmira, New York c. F.A.S.Dover, Delaware d. F.A.S.Elmira, New York

b. F.O.B.Elmira, New York

A thief can pass good title to a subsequent purchaser, so long as the purchaser bought in good faith, for value, and did not know that the goods were stolen. a. True b. False

b. False

A unilateral mistake of fact is grounds for rescinding the contract. a. True b. False

b. False

An automobile mechanic who has possession of a car while repairing it is the bailor of the car. a. True b. False

b. False

If a contract is silent about payment, payment is due when the goods are identified to the contract. a. True b. False

b. False

If a minor ratifies a contract before the age of majority, he gives up the right to avoid the K. a. True b. False

b. False

If a minor ratifies a contract before the age of majority, he gives up the right to avoid the contract. a. True b. False

b. False

If goods are sold subject to a bill of lading, title to the goods passes when the goods are in the hands of the buyer. a. True b. False

b. False

If there is a clerical error in a contract, a court will order the equitable remedy of quantum meruit to correct the error. a. True b. False

b. False

In most states, the test of mental competence for entering into a contract is the same as the test for making a valid will. a. True b. False

b. False

Tender of delivery occurs when the buyer takes physical possession of the goods. a. True b. False

b. False

The victim of fraudulent misrepresentation may rescind the contract, but the victim of merely negligent misrepresentation may not. a. True b. False

b. False

The victim of innocent misrepresentation may sue to recover contract damages. a. True b. False

b. False

Hilary sold Meredith a broach that had belonged to her mother. She told Meredith, in good faith, that it was a genuine cameo from the 1880's. In fact, it was a copy manufactured in the 1980's out of polymers. Meredith can rescind the contract based on a. Fraudulent misrepresentation b. Innocent misrepresentation c. Unilateral mistake of fact d. Unilateral mistake of value

b. Innocent misrepresentation

For which of the following purchases would a minor have to pay the full contract price? a. Medicine b. Insurance c. An iPod d. All of the above

b. Insurance

Debbie, who owns an art gallery, lets regular customers take home prints and large works of art so they can "think about them" before buying. A customer who wants the print sends Debbie a check for the selling price. A customer who decides not to buy the work has 15 days to return it to Debbie. This arrangement is classified as an ____________. a. Sale or return b. Sale on approval c. Consignment d. Installment sales contract

b. Sale on approval

Under the Code, goods are "tendered" when a. The buyer takes physical possession of them b. The seller makes the goods available to the buyer and gives him notice that they are available. c. The buyer pays for the goods d. Both a and b are necessary for tender of delivery.

b. The seller makes the goods available to the buyer and gives him notice that they are available.

Six months after being adjudicated insane, Connie signed a contract for premium cable service. The legal status of this contract is a. Valid b. Void c. Voidable by Connie d. Voidable by Connie or Cable Company

b. Void

A person who occupies any position of trust and confidence in relation to another person or the property of another person is a(n) ______________. a. Administrator b. Executor c. Fiduciary d. Guardian

c. Fiduciary

Goods which are required for maintaining life or health are classified as a. Res in chose b. Sustenance c. Necessaries d. Obligatories

c. Necessaries

Buyer and Seller have a contract that calls for Seller to ship Buyer 10 dozen blue widgets. Seller ships 10 dozen red widgets instead, and the shipment is destroyed in transit. Which party has the risk of loss and why? a. Seller has the risk of loss if it was a destination contract. b. Buyer has the risk of loss if it was a shipment contract. c. Seller has the risk of loss because the red widgets are a non-conforming tender. d. Buyer has the risk of loss because he had an insurable interest when the widgets were identified to the contract.

c. Seller has the risk of loss because the red widgets are a non-conforming tender.

The term F.A.S. in a contract indicates that a. The buyer is a merchant b. The seller is a merchant c. The goods are being shipped by a merchant vessel d. The buyer paid the cost of insuring the goods.

c. The goods are being shipped by a merchant vessel

A buyer has the right to inspect good before paying for them unless a. A shipment contract is involved b. A destination contract is involved c. The shipment is C.O.D. d. The buyer is paying by cashier's check

c. The shipment is C.O.D.

Mike, a minor, sold his trail bike to Allen, an adult. The status of this contract is a. Valid b. Void c. Voidable by Mike d. Voidable by Mike or Allen

c. Voidable by Mike

If parties to a contract under the Code do not include in their agreement a price for the goods, a court will a. Void the contract b. Fix a price for the goods based on the cost of manufacture plus 10 seller's profit. c. Determine a reasonable price for the goods based on the market at the time the contract was formed. d. Determine a reasonable price for the goods based on the market at the time of delivery.

d. Determine a reasonable price for the goods based on the market at the time of delivery.

Sue, who was the executor of her uncle's estate, sold Ann a riding mower that had belonged to her uncle. Sue told Ann that she thought the mower was about 3 years old. When getting parts for the mower, Ann learned that the mower was in fact 7 years old. Ann can rescind the contract based on a. Duress b. Undue influence c. Fraudulent misrepresentation d. Innocent misrepresentation

d. Innocent misrepresentation

Seller, a Chicago business, sent a shipment of tractor parts to Buyer, a Detroit business, under a contract that read: "F.O.B.Chicago, Illinois." The parts were not those specified in the contract and Buyer rejected them. A few hours after Buyer notified Seller of the rejection, the parts were destroyed in a fire at Buyer's place of business. Which of the following best states the rights and duties of Buyer and Seller in this situation? a. Buyer has the risk of loss because this was a shipment contract. b. Buyer rightfully rejected the tender, but risk of loss did not pass to Seller again until Seller regained physical possession of the goods. c. Seller has the risk of loss because this was a destination contract. d. Seller has the risk of loss because the tender was non-conforming, but only to the extent that Buyer's insurance does not cover the loss.

d. Seller has the risk of loss because the tender was non-conforming, but only to the extent that Buyer's insurance does not cover the loss.

On Monday, Agnes bought and paid for a sofa from SofaStore. SofaStore offers free furniture delivery, but the first available delivery date was Thursday. On Wednesday the sofa was destroyed in a fire at SofaStore. Who bears the risk of loss? a. Agnes, because she had title to the sofa when it was destroyed. b. Agnes, because the sofa had already been identified to the contract c. Agnes, if her check had cleared; SofaStore, if the check had not yet cleared. d. SofaStore, because it is a merchant and Agnes had not yet taken possession of the sofa.

d. SofaStore, because it is a merchant and Agnes had not yet taken possession of the sofa.

If goods are destroyed while in the buyer's possession, and the buyer holds the goods under a sale on approval contract, the loss will fall on a. Whichever party has insured the goods. b. The buyer and the seller equally c. The buyer only d. The seller only

d. The seller only

If goods are sold under a negotiable warehouse receipt, risk of loss passes to the buyer when a. The buyer pays for the goods. b. The buyer takes possession of the goods c. The goods are tendered to the buyer. d. The warehouse receipt is tendered to the buyer

d. The warehouse receipt is tendered to the buyer

Lenny bought a computer from Computer Store for $1,000. For an additional $100, the store delivered the computer, connected up the various devices, and transferred Lenny's files from his old computer. Would this transaction constitute a sale of goods under Article2? a. No, this is a contract for personal services. b. No, this is a" work for hire" contract. c. Yes, any transaction in which title to some "good" is transferred" is an Article2 sale. d. Yes, in this transaction the sale of goods "predominates."

d. Yes, in this transaction the sale of goods "predominates."