Business Law 2, Test 2 Practice Questions

When Lisa offers to sell all of the tamales that she makes to Xavier, they have created a requirements contract.

False

Nello wants to purchase a large tent for his catering business. He convinces the owner of Ajax Supplies, an outdoor equipment store, to buy the tent from the tent's manufacturer and then lease it to him. They have created a _________ .

Financial lease

What is NOT one of the requirements for a merchant's firm offer?

The offer must state the date for all future shipments.

Seasonably

Within a specified time period if no period is specified, within a reasonable time.

Zeppo offers to sell his sofa to Brian for $385. Brian says, "I'll take it, and I would like you to throw in the coffee table along with it." Under the Uniform Commercial Code, Zeppo and Brian have _________ .

a contract for the sofa only

Sales Contract

A contract for the sale of goods under which the ownership of goods is transferred from a seller to a buyer for a price.

Force majeure clause

A provision in a contract stipulating that certain unforeseen events, such as war, will excuse a party from liability for nonperformance of contractual obligations.

Ed offers to sell to Nicole an antique chest of drawers worth more than $2,000. Nicole agrees to buy the chest and signs a contract for the purpose, but the price of the chest is left out of the contract. Ed and Nicole have:

A valid contract as long as the court can determine a reasonable price.

Firm offer

An offer (by a merchant) that is irrevocable without consideration for a period of time (not longer than three months). A firm offer by a merchant must be in writing and must be signed by the offeror.

A person who employs a merchant as a broker, agent, or other intermediary has the ________ of merchant in that transaction.

Status

The UCC provides rules of construction for interpreting contracts. When the court considers a construction unreasonable, the UCC establishes the following order of priority.

Express Terms --> Course of Performance ---> Course of Dealing --> Usage of Trade

The common law of contracts and the Uniform Commercial Code are exactly the same.

False

A merchant is a person who, by occupation, holds himself or herself out as having ________ and skill unique to the practices or goods involved in the transaction. This broad definition may include banks or universities as merchants.

Knowledge

Four Major Differences between the CISG and the Uniform Commercial Code:

Mirror image rule, irrevocable offers, statute of frauds, and time of contract formation

Lessor

One who acquires the right to the possession and use of goods under a lease.

Three of the most common open terms for which the UCC provides numerous provisions to fill the gaps in a contract:

Open price term, open payment term, and open delivery term.

Article 2 of the UCC governs _______ .

contracts for the sale of goods

Hubert makes a contract with Van Services to purchase several vans, but no quantity of vans is specified in the contract. When they get into a dispute about the size of the order, they have:

no contract at all.

There are situations When Additional Terms between Merchants Do Not Become Part of a Contract:

A.

Three Elements of a Consumer Lease:

A. A lessor who regularly engages in the business of leasing or selling. B. A lessee (except an organization) who leases the goods "primarily for a personal, family, or household purpose." C. Total lease payments that are less than $25,000.

A buyer promises to purchase only what he or she wishes to do so, so the promise constitutes a requirements contract.

False

Tangible Property

Property that has physical existence and can be distinguished by the senses of touch, sight, and so on. A car is tangible property.

Intangible Property

Property that is incapable of being apprehended by the senses (such as by sight or touch); intellectual property is an example of intangible property.

Businesspersons undertaking international sales transactions should draft specific forms to suit the needs of the particular transaction.

True

The United Nations Convention on Contracts for the International Sale of Goods (CISG) was created in ______ .

1980

Choice-of-law clause

A clause in a contract designating the law (such as the law of a particular state or nation) that will govern the contract.

Choice-of-language clause

A clause in a contract designating the official language by which the contract will be interpreted in the event of a future disagreement over the contract's terms.

The UCC states that a sales or lease contract will not fail for indefiniteness even if one or more terms are left open as long as both of the following are true.

A. The parties intended to make a contract. B. There is a reasonably certain basis for the court to grant an appropriate remedy

Requirements contract

An agreement in which a buyer agrees to purchase and the seller agrees to sell all or up to a stated amount of what the buyer needs or requires.

Gentry owns a jewelry store and Daphne agrees to buy a watch for $3,000 that Gentry orders from Germany. They fail to specify where delivery will take place. Under the UCC:

Daphne must take delivery of the watch at Gentry's store.

Only a handful of countries have adopted the CISG.

False

Output and requirements contracts are basically the same thing.

False

Lease agreement

In regard to the lease of goods, an agreement in which one person (the lessor) agrees to transfer the right to the possession and use the property to another person (the lessee) in exchange for rental payments.

A merchant is a person who deals in goods of the kind ________ in the sales contract.

Involved

Sale

The passing of title (evidence of ownership rights) from the seller to the buyer for a price.

1. The UCC attempts to provide a consistent and integrated framework of rules to deal with all phases _______ in a commercial sales transaction from start to finish.

ordinarily arising

When merchants are involved in commercial sales transactions, they are held to certain standards because of their presumed commercial expertise. When nonmerchant buyers or sellers are involved:

they are held to less demanding standards than merchants.

What is the one requirement that is NOT necessary for a writing (or electronic record) to be sufficient to satisfy the UCC's statute of frauds?

A notary public's signature

Merchant

A person who is engaged in the purchase and sale of goods. Under the Uniform Commercial Code, a person who deals in goods of the kind involved in the sales contract.

Predominant-Factor Test

A test courts use to determine whether a contract is primarily for the sale of goods or for the sale of services.

The Two Points to Keep in Mind Regarding Article 2 of the UCC:

A. Article 2 deals with the sale of goods. It does not deal with real property (real estate), services, or intangible property such as stocks and bonds. Thus, if the subject matter of a dispute is goods, the UCC governs. If it is real estate or services, the common law applies. B. a. In some situations, the rules can vary depending on whether the buyer or the seller is a merchant.

An Oral Contract for the Sale or Lease of Custom-Made Goods Will Be Enforceable:

A. The goods are specially manufactured for a particular buyer or specially manufactured or obtained for a particular lessee. B. The goods are not suitable for resale or lease to others in the ordinary course of the seller's or lessor's business. C. The seller of lessor has substantially started to manufacture the goods or has made commitments for the manufacture or procurement of the goods.

The CISG Provides that an Offer Will Be Irrevocable If:

A. The offeror states orally that the offer is irrevocable. B. The offeree reasonably relies on the offer as being irrevocable.

There are situations When Additional Terms between Merchants Do Not Become Part of a Contract:

A. The original offer expressly limited acceptance to its terms. B. The new or changed terms materially alter the contract. C. The offeror objects to the new or changed terms within a reasonable period of time.

Output contract

An agreement in which a seller agrees to sell and a buyer agrees to buy all or up to a stated amount of what the seller produces.

Usage of trade

Any practice or method of dealing having such regularity of observance in a place, vocation, or trade as to justify an expectation that will be observed with respect the transaction in question.

When a court determines that a contract was unconscionable at the time that it was made, the UCC allows all of the following EXCEPT one, which is:

Make the parties go through with the contract no matter what.

A force majeure clause can be loosely defined as an act of God, but commonly designates other eventualities, which may excuse a party from liability for nonperformance. Four of those eventualities:

New governmental orders, new governmental regulations, embargo, and extreme shortages of materials.

Lessee

One who transfers the right to the possession and use of goods under a lease.

Course of performance

The conduct that occurs under the terms of a particular agreement; such conduct indicates what the parties to an agreement intended it to mean.

If an additional term relates to payment, quality, quantity, price, time, and place of delivery, the CISG considers the added terms as material alterations.

True

In contracts that involve the sale of both goods and services, once a court decides that such a contract is primarily a goods contract, any dispute, even over the services portion, will be decided under the UCC.

True

Sales contracts between parties residing in the United States and foreign countries are typically governed by the

United Nations Convention on Contracts for the International Sale of Goods (CISG).

Fully integrated contract

When a contract completely sets forth all the terms and conditions agreed to by the parties and is intended as a final statement of their agreement.

The Uniform Commercial Code (UCC) attempt to provide:

a framework of rules to deal with all aspects of commercial sales transactions.

The Uniform Commercial Code has been adopted by:

all of the states in whole or in part.

In order for the rules contained in the UCC to apply to a contract for the sale of goods, the goods must be ________ .

be tangible (have physical existence

Under the UCC, a contract that contains open terms will be:

valid if the parties intended to form a contract and there is a good basis for a court to grant a remedy.

Course of dealing

Prior conduct between parties to a contract that establishes a common basis for their understanding.

The CISG is similar to _______ .

Article 2

Three items that are typically included in a contract for the international sale of goods:

Choice-of-language clause, forum-selection clause, and choice-of-law clause