LES 305 Exam 2

How many separate Articles of the UCC exist?

11

A rule under the UCC where conflicting clauses cancel each other out and neither clause will become part of the contract but rather will be determined by UCC gap-filler rules is called

A knockout rule

Lon has just come home from serving in the Marines and contracts with a local car dealership to purchase a car. The car must be ordered, and payment is to be made when the car arrives. The next day, Lon receives orders to return to active duty. Realizing that he doesn't need the car, he brings Tony to the dealership and asks that Tony substitute for him. Tony will take delivery and ownership of the car, and Tony will pay the dealership upon delivery. The dealership agrees to have Tony substitute for Lon. What has occurred?

A novation.

Without genuiness of assent

A promise made is not legally binding.

Which of the following examples is an example of a merchant according to the UCC?

A vacuum sales person selling door to door.

According to the rationale behind the statute of frauds of the UCC, all of the following statements are correct, except

A writing indicates that both parties are commercially literate.

Toy Tech (TT) has ordered 50,000 aluminum widgets from the Acme Widget Corporation (AWC) with delivery to be made on November 1. These widgets will be used in TT products to create toys for the holiday season. Under which circumstance may TT claim that AWC has made an anticipatory repudiation of the contract?

AWC's sole manufacturing plant burned down on October 1, yet AWC insists that it will rebuild and honor the contract.

If a term in a contract is ambiguous and unclear, when interpreting the term the court will generally construe the terms

Against the drafter

Aiden ordered encyclopedias and the contract specified that delivery was to be made to Aiden's home. Instead, the encyclopedias were delivered to his post office box and he never received them. He refuses to pay for them and the encyclopedia company sues him. How would a court likely rule?

Aiden does not have to pay because the goods were never tendered to her properly, so the risk of loss never passed.

Michael Motors enter into a business contract with Charles to sell Charles a car. The contract specifically states that upon the date that both parties sign the contract, Michael motors is not responsible for any damages that occur to the car during delivery to Charles' house. This is an example of what type of default rule?

Allocating risk

The goal of a default rule is to

Allow the court to fill in the gaps to save an incomplete contract.

In order to have mutual assent, there must be

An offer and an acceptance that is the precise mirror image of the offer

Anthony buys a couch from Basaba Interiors and arranges to pick it up from the store once he borrows a truck from a friend. Anthony pays for the couch and leaves the store. That night, the store burns down. According to the UCC, who is responsible for the cost of the couch?

Anthony

In a destination contract, risk of loss passes to the buyer when the goods

Are tendered at the specific destination.

In general, when dealing with an adhesion contract, courts will

Assume that the non-drafter had no real opportunity to bargain for the terms

If a person unintentionally engages in innocent misrepresentation, the other party may

Avoid the contract

Rex tells his buddy Terry that he has decided not to show up to work for him tomorrow but still asks for the money Terry promised to pay him for the day of work. Which statement below is true?

Based upon Rex's statement, Terry can refuse to pay Rex as promised.

The ability to understand the terms of an agreement is

Capacity

What source of law applies to service contracts?

Common Law

A consulting contract between a management consulting firm and a software company is governed by what source of law?

Common law

When a contract has terms such as "provided that" or "unless" in a contract that indicates a performance obligation that is called a

Condition precedent

An event that occurs after the performance under a contract and discharges the parties' contractual obligations is best referred to as a(n)

Condition subsequent.

Goods that exactly meet the specifications of a contract are called

Conforming goods

Foreseeable indirect losses not covered by compensatory damages are called

Consequential damages

The process by which parties to a contract perform their obligations in good faith and fulfill the terms of the contract is called

Discharge

Becker Corporation hires a social media influencer, Bekah, to use their product and post about it on social media. This is an example of which type of an agreement?

Employment

Hailey purchased an automobile insurance policy through State Insurance. However, State Insurance failed to use the proper legally mandated insurance form. Hailey gets into an accident and seeks to use her policy. Which statement below is most likely correct concerning the outcome of the issue?

Even though the form may not be the legally approved form, an insured under the policy may still enforce that policy.

The International Chamber of Commerce abbreviation indicating that goods are to be delivered by the seller to the carrier for shipment is

FOB

An act of God, or something that is beyond our control is called

Force Majeur

Gabrielle purchase a coffee press from Coffees R Us! to be delivered. When packing the product at Coffees R Us! the employee accidentally breaks it, but ships it anyway. When the box is delivered to Gabrielle's house she accepts the sealed box and immediately runs into the house to open the box. She immediately notices that the coffee press is broken and calls Coffees R Us! to request her money back. What will most likely be the outcome of this situation under the UCC?

Gabrielle may reject the broken coffee press.

Maddie cannot read. She signs a cell phone agreement without being able to read the document. This is an example of

Information asymmetry

When one person has more or better information than the other is an example of

Information asymmetry

A court order to refrain from performing a particular act is known as

Injunctive relief

Another term for a non-breaching party to a contract is

Innocent Party

What is the name of the organization that published abbreviations that are meant to avoid confusion in international business transactions?

International Chamber of Commerce

Rachel received a shipment of facial cleaner from Posh Skincare, Inc. In the shipment there was a preprinted document with blanks filled in that stated the items delivered, the price per item and the total price from the seller. This document is a(n)

Invoice

A fact is material if

It concerns a basic assumption in the agreement that could change the value of the contract.

In order to have an insurable interest when a loss or damage of a good occurs

It must cause a person to suffer financial or other recognizable loss.

One of the greatest values of the UCC is that

It provides standardized and simple procedures for merchants in commercial transactions.

The UCC will permit an incomplete or slightly ambiguous contract to be enforced using each of the following criteria except:

Judicial input of any terms necessary to maintain fairness

In which of the following situations is a court most likely to find substantial performance?

KM Corporation orders 500 boxes of copy paper from MK supply, but MK can deliver only 450 boxes.

In Lucy v. Zehmer, the court ruled that under the objective theory of contracts

Lucy and Zehmer's conduct and language would be viewed by a reasonable person as a serious intent to contract.

Abdullah purchases a couch from Murphy Interiors for $500.00 which includes delivery to his house the next day. During transit, the delivery truck gets into an accident and the fabric on the couch is damaged. Who bears the risk of loss in this situation?

Murphy Interiors since the risk of loss transfers only upon delivery of a conforming good.

Renee's housekeeper has the stomach flu and cannot keep her scheduled cleaning appointment to clear Renee's house as scheduled. Has the contract been discharged?

No because her illness is temporary and will only suspend her duty.

Josh sells t-shirts at an amusement park. When selling t-shirts, he often tells people that the shirts are the softest shirts ever created. If he did not truly believe that and it was a lie, would this be an example of misrepresentation?

No because it is a lie about an opinion.

Basaba Realty sells a house to Mary Moore. Will the Article 2 of the UCC apply to the terms of the contract?

No because real estate contracts do not involve the sale of goods.

Shirley lives next to Reid and has always admired his use of lawn ornaments in his landscaping. She particularly loves Reid's life sized elephant and therefore wants to purchase insurance to protect the lawn ornament from loss or damage during shipping as he sells it to a friend in another state. Will Shirley be able to do that?

No because she does not own the ornament and will not suffer a recognizable loss.

Myra agrees to sell Connie her house for $250,000.00. The next day, a tornado destroys the house. Will either party be bound by the terms of the contract?

No because the contract becomes impossible due to the destruction of the subject matter

Myra agrees to sell Connie her house for $250,000.00. The next day, a tornado destroys the house. Will either party be bound by the terms of the contract?

No because the contract becomes impossible due to the destruction of the subject matter.

Alex purchases a computer from Dell to be delivered via Fed Ex. Dell delivers the computer to Fed Ex to be shipped to Alex. During the delivery, the Fed Ex driver is having a bad day and just throws the boxes out the window of the delivery truck rather than setting the box by the front door as is standard practice. While throwing the computer it is damaged. Would Dell be responsible for the damage to the computer?

No because title transfers to the buyer once the good is delivered to a common carrier.

Clyde contracts with Seaside Resorts to rent an oceanfront room for a romantic weekend with his girlfriend Anne. In fact, Clyde intends to propose to Anne on the beach under the full moon during their stay. He made this decision after booking the room. The contract with Seaside Resorts requires a $250 deposit with the remaining $250 due upon check-in. The deposit is nonrefundable unless the reservation is canceled at least 48 hours prior to check-in. The day before they are to leave for the resort, Clyde and Anne have a huge fight and break up. If Clyde calls Seaside, cancels the reservation, and demands a refund of his deposit, is Seaside legally obligated to refund Clyde's money?

No. Seaside is not legally obligated to provide a refund.

Frustration of purpose requires all of the following to occur except

One party to the contract will be unjustly enriched

If Continental Tires agreed to purchase all of the rubber that a particular Brazilian rubber plantation could produce, this would be a(n)

Output contract

The interpretation rule stating that any writing by the parties intended to be the final expression of their agreement may not be contradicted by any oral or written agreements made prior to the writing is called the

Parol evidence rule

A complete and well-written contract should contain all of the following except Termination conditions Definitions Clauses Philosophy

Philosophy

The main purpose of the statute of frauds is to

Prevent fraud by requiring a written contract to have written evidence of the agreement.

For a contract to be enforceable it must not violate some __________.

Public policy

A preprinted form with some blanks in the form to be filled out for specific negotiated terms unique to the transaction is called a

Purchase order

After extensive negotiation Bob agrees to sell Sally his office building for $100,000.00. He has his assistant type up the contract to send to Sally to sign. His assistant accidentally adds and extra zero in the price, making it $1,000,000.00 and sends it off. Sally too overlooks the mistake and signs the agreement. Later Sally requests that the contract be corrected to reflect their true intentions through a process called

Reformation

Which of the following is classified as an equitable remedy?

Reformation

Fred's Flooring (FF) contracted with Harry homeowner to install wood flooring throughout Harry's home. Harry was to purchase the flooring, and the contract was solely for installation. Payment was to be 20 percent at the time that the work commenced and 80 percent once the flooring was installed. Harry purchased the flooring materials and paid the 20 percent, so FF began work. When FF's work was halfway completed, Harry realized that he didn't have the money to pay FF on completion, so he bolted the doors and refused access. If FF wants to rescind the contract and be paid for work completed, FF would sue for

Restitution

Fraudulent misrepresentation requires

Scienter

Rex Radios sells 400 i-pods to Scott Shops for $4000.00. The contract states that the i-pods are to be delivered to Witt's Warehouse until Scott Shops has room to store the i-pods. Rex delivered the i-pods to Witt's and produced the bill of lading to Scott Shop the next morning. A week later, the warehouse burns down destroying all of the i-pod inventory. According to the UCC, who bears the responsibility of the i-pods?

Scott Shops as title was passed once Rex delivered bill of lading to Scott.

Liz purchases a bed from Bisani Bedding to be shipped via Fed Ex. What type of contract is this?

Shipment Contract

In the case of C.M.D. v. Facebook, Facebook allowed a minor to create a Facebook account, but the minor had to accept Facebook's terms, which included using the minor's name and likeness in advertisements. The minor's parents sued Facebook, claiming the terms of the agreement were not enforceable against a minor, and also claiming that the minor disaffirmed the agreement with Facebook. How did the court rule?

Since the minor kept using Facebook he never disaffirmed it.

Bekah purchased her dream wedding dress from Bridal Couture. Two weeks before her wedding she attempts to pick up the dress only to find that the store has closed. On the window of the store is a note that says they will refund the purchase price of all dresses. However, it is too close to the wedding for Bekah to get a dress and she just wants her dream dress that is hanging in the store rather than the money. What type of remedy would Bekah request?

Specific Performance

The duty to mitigate damages requires the non-breaching party to

Take reasonable steps to lessen damages

According to the UCC, for the sale of goods that requires shipping, the presumption is that unless stated otherwise, the seller need only deliver the goods to __________ to complete performance.

The Common Carrier

The Uniform Commercial Code is created by

The National Conference of Commissioners of Uniform State Laws.

A-phone Corporation, a California corporation, enters into an agreement with Matt to sell him a phone. In the contract, Matt specifically states that a representative from A-phone must travel to his home in Uganda and deliver it to Matt in person and title will pass once the phone is safely placed in Matt's hands in Uganda. A-phone drops the phone in the mail as they realize it is too expensive to travel to Uganda to deliver it in person. Which statement below is correct according to the UCC as to when title actually passed?

The UCC allows the parties to the contract to determine when title passes and the court will enforce the parties' agreement.

Again Motors offers to sell Shelby a 1977 Shelby Mustang Cobra for $10,000 on July 1, 2018. Shelby decides that she must think about it and one year later, on July 1, 2019 Shelby calls up Again Motors and tells them that she accepts their offer and will be to the store that day with the $10,000 for the car. Again Motors refuses to honor the offer even though they still have the exact car setting on the lot. Shelby sues Again Motors to enforce the agreement. Most likely, according to the UCC, what will be the outcome of the case?

The UCC only requires an offer to remain open for three months unless specifically stated otherwise. Therefore, Again Motors does not have to honor the offer.

"Honesty in fact and the observance of reasonable commercial standards of fair dealing" is the definition of good faith according to

The Uniform Commercial Code and common law

According to the International Chamber of Commerce abbreviations, CF requires

The buyer must ascertain whether the goods are properly insured during transit.

Lonnie's Liquor store agreed to purchase 90 proof moonshine from Moonshine Manufacturing Inc. Before Moonshine Manufacturing can ship the product to Lonnie's, a law is passed making the production, sale and consumption of moonshine illegal. Which statement below is correct?

The contract is impossible to complete due to the law now making the subject matter illegal.

At an after work networking event, Mike drinks wine while negotiating the terms of an employment contract with Cyndy to start the next day. Cyndy shows up to work the next day and Mike states that he was drunk the night before and therefore lacked capacity. The court will most likely rule

The contract is voidable by Mike if he can prove that at the time he entered into the contract his intoxication prevented him from understanding the consequences of his actions.

When a contract for the sale of goods is missing provisions such as delivery, quantity and payment terms, which of the following statement under the UCC is correct?

The contract will be acceptable so long as the contract shows that the parties intended to enter into a contract.

What must be present under the UCC for title to a good to pass to a buyer at the time of contract creation?

The good must actually exist at the time of creation of the contract and it must be identified to the contract.

All of the following are required for promissory estoppel except The offeror makes a reasonable offer. The offeree actually relied on the promise and suffered an injury. The offeree was a minor The reliance was reasonably foreseeable.

The offeree was a minor

The statute governing which contracts must be in writing to be enforceable is

The statute of frauds

Brandi orally tells Mike, her landscaper, "If you trim my hedges, I'll pay you $" Mike trims her hedges. Which of the following is correct?

This is a unilateral contract.

Bosco Bibles sells 500 Bibles to Liberty Christian Academy. Due to the value and importance of the shipment, Bosco Bibles and Liberty Christian Academy want to purchase insurance to cover the Bibles while in transit for delivery and specify it in the contract itself. Which statement below is correct according to the UCC?

This would be considered overlapping insurance and the UCC does allow it.

According to the UCC if a time period of acceptance is not stated in the offer to sell goods, the time period for acceptance will be

Three Months

Which of the following is an example of when a person acquires an insurable interest?

Title

What type of damages are often allowed in fraud cases?

Treble damages

Consent defects include all of the following except

Unwiseness

Consent defects include all of the following except Unwiseness Misrepresentation Fraud Unconscionability

Unwiseness

Amaya is a new attorney who is focusing on business matters especially contract negotiations. When she is hired by Holshauser Industries to negotiate all of their product purchase contracts for their car detailing business, as a strategically qualified attorney, she should do all the following except, Translate legal terminology to explain to clients Use strong-arm techniques to exploit maximum advantage over opposing interests Analyze the "big picture" to determine the effect Draft customized contracts to fit the specific needs of the client

Use strong-arm techniques to exploit maximum advantage over opposing interests

ABC Technologies sells to Devon a television with a fair market value of $1000.00. According to the UCC must this contract be in writing to be enforceable?

Yes as contracts with goods with a total value of $500.00 or more must be in writing to be enforceable.

Fred Fine Arts sends a letter addressed to Nicole stating it will trade a painting by Georgia O'Keefe for a Norman Rockwell painting Nicole owns. Two days later, Nicole shows up at Fred Fine Arts with the Normal Rockwell painting. According to the UCC, would this be sufficient to be an enforceable contract?

Yes as the actions of Nicole appear sufficient enough to show agreement by actions.

Shylo Art Gallery wrongfully convinces Sally that her painting is a fake painting and offers to pay her $100 which is far under that actual value of the painting. Shortly thereafter, the painting is sold to Hannah in Shylo Art Gallery for $5000, the true value of the painting. Will Hannah be able to keep the painting?

Yes because Hannah is a good-faith buyer.

Herb offers to sell Ron a cow that both parties believe is newly pregnant. A few months later they both realize that the cow is not pregnant. Can either party avoid the contract?

Yes because it was a mutual mistake.

Chris, the owner of Bloom's Aglow, offers to contract with Lisa for her upcoming wedding bouquet and decoration needs. Chris specifically states in the offer that he will only use the Western Prairie Fringed Orchids in all arrangements. While contemplating the offer, the federal government passes a law that classifies the Western Prairie Fringed Orchids as a near extinct flower and makes it illegal to use, to sell or to kill it. Does this affect the offer between Chris and Lisa?

Yes because the change in law constitutes a supervening illegality and therefore, the offer is revoked.

Mandy, a minor, disaffirms an agreement to purchase a car from Jamie, an adult, for $1000.00. Must Mandy give back the car?

Yes in order to disaffirm it, the minor must return whatever consideration received.

Jen purchases a couch from Ace Furniture store which includes delivery of the couch. Does Article 2 of the UCC apply to this contract?

Yes since the sale of a good, the couch is the predominant purpose of the contract and the delivery is incidental.

In which of the following scenarios would enforcement of specific performance be appropriate?

You own the pistol used by Hamilton and contract to buy the pistol used by Burr in the Hamilton-Burr duel to complete your set, but despite the contract the Burr pistol owner refuses to sell at the last minute.

A meeting of the mind requires

a true understanding, and acceptance, of the terms of the offer.

Fraud requires

actual knowledge of a lie

Standardized, preprinted contracts are called

adhesion contracts

According to the UCC tangible means

anything that is able to be touched

Harry sees an AK-47 automatic assault rifle in a gun shop window. He inquires about the price and is told that it is $2,500. Harry signs a contract promising to pay the $2,500 on Friday, at which time he will take possession of the rifle. On Thursday, a law is enacted making the ownership, sale, or possession of an automatic rifle illegal. This contract

automatically terminates due to impossibility.

Beth has just signed a contract to work for a bank. A clause in the contract says that before she begins work, she must pass a drug test and should drug use be discovered, the contract becomes void. This clause would be a

condition subsequent.

Another word for a default rule is

gap fillers

A person who acts honestly and provides reasonable value for good is called a

good faith buyer

Larry has booked and paid for a hotel room for a conference at a rate of $100 per day for five days. When he arrives to check in, Larry is told that the hotel was overbooked and it cannot supply him with a room. Larry is forced to go to the only hotel in town with available rooms and pay $150 per night. If Larry sues the original hotel for damages and wins

he will be entitled to compensatory damages in the amount of $250.

When the reason and outcome of a contract are legal, the contract has

legal purpose.

In general, contracts for the sale of goods are governed by:

state statutory law based on the Uniform Commercial Code.