law 3220: chapter 11
with respect to parol evidence and the UCC
oral evidence may be used to explain trade deals
a ____ is when a buyer agrees to take all of the output of a certain seller
output contract
Under the common law, contract modifications must be supported by new consideration to be binding on the parties. Under UCC Article 2:
parties need not provide new consideration to modify an existing sales contract
Under Article 2 of the UCC a contract can exist even if which of the following terms is(are) omitted:
payment terms, delivery terms, and price
a ____ is one in which a seller agrees to provide all of a certain good that a buyer needs
requirements contract
according to the UCC's statute of frauds all
sales of goods worth more than $500 must be in writing
to satisfy the statute of frauds under UCC article 2 there must be
some basis for believing that the parties made a contract of the sale of goods
____ is a valid and sufficient offer of performance under a contract
tender
under the UCC, the seller's basic obligation includes being concerned with
the appropriate manner of delivery, the timeliness of delivery, the place of delivery, and the quality of the goods provided
when terms in contracts conflict, it is called
the battle of the forms
a person may hold legal title to a good if
the good exits AND the good has been identified to the contract
if a good has been stolen and is then sold to an unsuspecting buyer
the good title does not pass to the buyer
under UCC article 2, a "reasonble time" for delivery of a good is determined by
trade custom, the apparent intentions of the parties, and the availability of transportation services.
If parties to a contract involving a sale of goods fail to specify price, and if there is dispute, so that a court must determine the price, under the UCC the price will be:
a reasonable price
An item is movable if: (A) it can be carried from one location to another (B) it can be cannot be moved (C) it is a service that can be performed anywhere (D) it can be easily reproduced (E) it can be bought in any state
a. it can be carried from one location to another
The UCC's Article 2 does not cover the sale of: (A) land (B) furniture (C) a load of corn (D) a computer sold to a business (E) a truck load of printer paper
a. land
with respect to the buyers basic obligations under article 2, the most critical element is
accept conforming goods and pay for them according to the contract
the UCC modifies the common law perfect tender rule by
allowing the buyer to accept less than the entire shipment
Under the common law, an acceptance cannot deviate from the terms of the offer without being considered either a rejection or a counteroffer. Under UCC Article 2:
an acceptance is valid when he parties intent to form a contract even though the offeree's acceptance contains different terms from those in the offer
under the common law, an offer can be revoked
anytime before accpetance
a seller's rights to cure an improper tender of goods protects sellers from
buyers rejecting shipments based on minor problems when the price of a good is falling
if a contract for the sale of goods doesn't specifhy where goods are to be delivered, the UCC presumes in most cases
delivery is at the seller's place of business
if a price is unclear when a contract is found to exist, the UCC directs the courts to
determine a reasonable price
the sellers basic obligation doesn't include
financing the purchase of conforming goods
suppose parties to a contract that is under the UCC fail to specify some term. The UCC:
has rules to fill the gap about a silent term
under the UCC, parol evidence may not be used
if the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement
Which of the following is not true, under UCC Article 2, about a merchant's firm offer:
it must be open to all members of the public
the title represents the
legal rights of ownership of a thing
a "reasonable price"
may or may not be "fair market value"
A buyer ordered custom made equipment. The delivery date was not set, but the seller promised to do the job in a reasonable time. When the equipment was not ready when the buyer hoped, the buyer cancelled the order. The seller demanded payment. You would expect the court to hold that:
no delivery date was fixed, but the seller worked on the equipment and so will be paid for the work done up to time of cancellation
in a sale under the UCC, title to goods passes when the goods
- arrive for shipment at a port or train or trucking facility - arrive at the buyers facility - leave the sellers facility - when the goods are halfway between buyer and seller
Under Article 2 of the UCC, a merchant's firm offer:
- requires a signed writing by the offeror that the offer will remain open for a given period - is irrevocable if stated in writing that it remains open for a given time - stays open for a time not to exceed 3 months, if no other period of time is stated in the offer - doesn't require consideration to be irrevocable
if the parties to a sale under the UCC do not specify when the title to the goods passes, then, assuming the goods didn't have to be moved, title passes to the buyer when
- the seller delivers the title documents - the seller completes all obligations regarding delivery
Ramirez contracted to buy a new truck. On the delivery date, the truck was not ready. After it was delivered, the truck had many problems that could not be fixed. Ramirez wanted to rescind the contract but the seller wanted more chances to repair. The court likely found:
Ramierz; the problems should have been fixed, so the sellers rights to further efforts to cure defects was lost
under the common law a contract can't be formed until an offer is clearly accepted. Under UCC article 2:
a contract "may be made in any manner sufficient to show areement" between the parties
Which of the following is a contract most likely to fall under UCC Article 2: (A) Abbie purchases a suite of office furniture from Office Lots (B) Landers hires Ace to move and store her furniture while she is in London for two years (C) Nock hires CompuW to service its computers for a year so they are kept in good condition (D) Disney buys the copyright on a book to make it into a movie (E) none of the other choices
a. abbie purchases a suit of office furniture from office lots
The UCC defines goods as: (A) all things which are moveable at the time of identification to the contract for sale (B) all services which are relevant at the time of identification to the contract for sale (C) any item that a seller offers to a buyer (D) the combination of the items and services listed in the contract (E) all the items listed in the contract and their related services
a. all things which are moveable at the time of identification to the contract for sale
A good is tangible if it: (A) can be seen and touched (B) can be seen, but not necessarily touched (C) can be found in more than one state (D) is a service that anyone can perform without special training (E) is inexpensive
a. can be seen and touched
Commercial codes: (A) date back thousands of years (B) began in England in the early 1800s to use in the British empire (C) were started by the United Nations in the 1950s (D) were started by the World Trade Organization in the 1980s (E) none of the other choices
a. date back thousands of years
Article 2 of the UCC covers the sale of: (A) goods (B) services (C) investment securities (D) goods and business services (E) all of the other choices
a. goods
Lex mercatoria refers to: (A) medieval European rules governing trade issues (B) ancient Greek rules governing trade issues (C) modern Japanese law governing trade issues (D) the Supreme Court's views on trade issues (E) medieval European rules governing land rental
a. medieval European rules governing trade issues
Most states accept the UCC's provisions on most topics because: (A) the benefits of lowering the costs of doing business across state lines was so great (B) the federal government gave them no choice (C) the European Union required consistency in U.S. sales law to encourage trade (D) national unity is very important to all states (E) there were a lot of federal tax breaks associated with accepting the UCC
a. the benefits of lowering the costs of doing business across state lines were so great
Which of the following is a contract most likely to fall under UCC Article 2: (A) IBM sells an office building in Atlanta to Microsoft (B) GM buys seat belts from Ace to install in new Cadillacs (C) Nock hires CompuW to service its computers for a year so they are kept in good condition (D) Disney buys the copyright on a book to make it into a movie (E) none of the other choices
b. GM buys seat belts from Ace to instanll in new cadillacs
____ of the Uniform Commercial Code governs the law of commercial sales. (A) Article 1 (B) Article 2 (C) Article 3 (D) Article 4 (E) Article 5
b. article 2
Under the UCC, a merchant is not one who: (A) uses an agent who holds herself out as having special knowledge about the goods sold (B) has an Internet site that links to sellers of multiple goods (C) regularly deals in goods of the kind involved in transactions (D) presents himself as having skill specialized in the transactions (E) all of the other choices are included in the definition of a merchant
b. has an internet site that links to sellers of multiple goods
The subject matter of a sales contract is not considered a good under Article 2 unless: (A) it is real and visible (B) it is movable and tangible (C) it is ephemeral and tangible (D) it is diaphanous and movable (E) it is movable and intangible
b. it is movable and tangible
Sales law developed in medieval Europe was known as: (A) lex vendido (B) lex mercatoria (C) the Medieval Code (D) the merchant code (E) the rules of sales
b. lex mercatoria
Ready Construction buys a computer system from Ace that Ace will also service. Two years after the sale, a disagreement develops. Ace has determined that the common law of contracts favors it. Article 2 favors Ready. Ace should: (A) realize that the agreement is for the sale of goods so it must be covered by Article 2, so work to settle on the best terms possible (B) try to show that the value of service dominates (C) establish the contract as one for the sale of tangible goods (D) define itself as a merchant under Article 2 of the UCC (E) none of the other choices
b. try to show that the value of service dominates
UCC Article 2 has been adopted: (A) by Congress (B) by 31 states (C) by 49 states (D) by all 50 states (E) none of the other choices
c. by 49 states all but louisiana
Early sales law was governed by state law. This created a significant legal challenge for managers because: (A) Article 2 of the UCC was unclear (B) it forced managers to write sales agreements with many terms left open (C) different rules developed across the states (D) it required a new sales agreement each time a new order was placed (E) none of the other choices
c. different rules devleoped across the states
Ready Construction buys a computer system from Ace that Ace will also service. Two years after the sale, a disagreement develops. Ace has determined that the common law of contracts favors it. Article 2 favors Ready. Ready should: (A) realize that the agreement is for the sale of goods, and so settle on the best terms possible (B) try to characterize the agreement as a service contract (C) show that the value of the system is greater than the value of the service (D) define itself as a merchant under Article 2 of the UCC (E) none of the other choices
c. show that the value of the system is greaterthan the value of the service
The UCC's purpose is: (A) to give each state a unique set of trade laws (B) to mediate international business disputes (C) to simplify, clarify and modernize the law governing commercial transactions (D) to reduce taxes (E) to make it easier to prosecute parties who breach contracts
c. to simplify, clarify, and modernize the law governing commercial transactions
Contracts under Article 2 of the UCC could include: (A) a house (B) a patent (C) a bank account (D) a load of wheat (E) all of the other choices
d. a load of wheat
A seller or buyer is considered a merchant by the UCC when he: (A) regularly deals in goods of the kind involved in the transaction (B) by occupation presents himself as having knowledge or skill specialized to the transaction (C) employs an agent or broker who holds himself out as having requisite knowledge or skill (D) any of the other specific choices (E) none of the other choices
d. any of the other specific choices
The UCC defines good-faith dealings as: (A) the ordinary standards of the industry (B) the standards set by the Domestic Corruption Practices Act (C) fiduciary obligations among parties involved (D) honest in fact in the conduct or transaction incurred (E) none of the other choices
d. honest in fact in the conduct or transaction incurred
Under the UCC, a merchant is not one who: (A) uses an agent who holds herself out as having special knowledge about the goods sold (B) presents himself as having skill specialized in the transactions (C) regularly deals in goods of the kind involved in transactions (D) has business expertise used in transactions involving particular goods (E) all of the other choices are merchants under the UCC
e. all of the choices
The UCC's Article 2 does not cover the sale of: (A) a truck load of printer paper (B) furniture (C) a load of corn (D) a computer sold to a business (E) all of the other specific choices are covered by Article 2
e. all of the other specific choices are covered by article 2
when a court must determine a price for a contract under UCC, they look to
fair market value, usual business practices, and a reasonable price
under 2a of the ucc, recently adopted by most states, expands the UCC to cover:
leases of personal property
Andrea offered to buy apricots from Aramos. The offer was for 10 tons at $1.20 per pound to be transported to Andrea's warehouse in Aramos trucks. Aramos accepted the offer, but said that the goods would be transported in Andrea's trucks. A dispute later arose and Aramos refused to sell the apricots, asserting that no contract existed. If Aramos sues, it:
loses if it can be shown that the parties intended to form a contract even though the acceptance contained different terms from those of the offer
under the UC a buyer who receives good that are nonconforming
may reject them and withhold payment, may cancel the contract and recover from the seller any prepayments, or must notify the seller of a rejection in a timely manner to allow the seller to either cure the non-conformities or reclaim the goods
Suppose two parties to a contract that is under the UCC decide to make a significant change in the contract, obligating the seller to provide more goods. When the terms of the contract change, it requires:
no consideration
under UCC article 2, terms regarding payment, delivery and price are:
not necessarily necessary for the formation of a contract
when considering a contract under the UCC, the court needs to resolve a term that is not clearly specified, the court prefers to look to
past dealings of the party
under the _____ the seller must tender the quality, quantitity and delivery method exactly as specified in the contract or the buyer has the right to reject the ogods and rescind the contract
perfect tender rule
Under the common law, there is a doctrine called the perfect tender rule. It means the seller's tender of delivery is required to conform in detail to the agreement between the parties. The UCC restates the perfect tender rule, holding that if the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may:
reject the whole shipment, accept the whole shipment, or accept any commerial unit/units and reject the rest
under UCC article 2, when there is a failure to respond to a writing signed by the other party
there may be a good contract
by definition, a sale under article 2 of the UCC requires that
title to the goods pass from the seller to the buyer and that a price be paid for the good
the proper tender of goods to, and their acceptance by, the buyer entitles the seller
to be paid according to contract
the sellers basic obligation under the UCC is to
transfer and deliver goods that conform to the contract to the buyer
A buyer and seller have been doing business for months without a formal contract. Every Monday, the seller delivers supplies to the buyer's business. Every Thursday, the buyer pays the invoice by mail. Is there a contract between the parties?
under UCC, a contract has been formed by the conduct of the parties
A buyer and seller have been doing business for months without a formal contract. Every Monday, the seller delivers supplies to the buyer's business. Every Thursday, the buyer pays the invoice by mail. Difficult times arrive. The buyer fails to make payment and the seller sues for breach of contract. Is there a contract?
under UCC, a contract has been formed by the conduct of the parties. the seller will prevail
Balls, Inc. sells all baseballs needed by Major League Baseball (MLB). MLB agrees that prices and quantities will be determined at the beginning of each year. After 4 years, MLB decides its needs fewer balls and demands it be allowed to buy less. Balls demands MLB buy as much as in years before. If MLB sues under the UCC it will likely:
win if the contract modification is sought in good faith
