Law Ch. 11

25. Under the UCC, parol evidence may NOT be used: a. "if the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement." b. "if the court does not find the writing to have been intended also as a complete and exclusive statement of the terms of the agreement." c. to explain customary trade dealings. d. if both parties do not agree to it.

a. "if the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement."

57. In QVC v. MJC America, where QVC sued for breach of contract after electric heaters delivered by MJC were shown to have defects, the trial court held that: a. MJC was liable to QVC for a number of kinds of damages. b. MJC was liable to QVC only for lost profits (expectancy damages) due to waiver of other kinds of damages in the contract. c. MJC did not make the heaters, a supplier in China did, so QVC would have to sue the maker for damages. d. MJC did not make the heaters, a supplier named Soleus obtained them from China, so QVC would have to sue Soleus.

a. MJC was liable to QVC for a number of kinds of damages.

13. In Crest Ridge Construction v. Newcourt, where an order for construction materials that Crest Ridge needed was rejected for failure to meet credit terms, and Crest Ridge had to find a higher-cost replacement and sued Newcourt for damages, the appeals court held that: a. Newcourt was liable for breach of contract because there was sufficient evidence that the two companies had formed a contract under the definition found in the UCC. b. Newcourt was not liable for breach of contract because there was not sufficient evidence that the two companies had formed a contract under the definition found in the UCC. c. Crest Ridge was liable for breach of contract because it failed to inform Newcourt that it would not be able to pay before delivery. d. Newcourt was not liable for damages, even though there was sufficient evidence that the two companies had formed a contract under the definition found in the UCC.

a. Newcourt was liable for breach of contract because there was sufficient evidence that the two companies had formed a contract under the definition found in the UCC.

39. Northwest is a micro-brewery. It orders bottles from M that must have crests inscribed on the bottles. To be sure the bottles meet specifications, Northwest hires someone to check them as they were produced at M. With respect to the expenses of hiring the inspector: a. Northwest pays the expenses but may recover them if the bottles do not conform. b. Northwest must pay the expenses under any circumstances. c. M must pay the expenses because the bottles are a unique item. d. M must pay the expenses since Northwest is not liable for any expenses until the bottles are accepted.

a. Northwest pays the expenses but may recover them if the bottles do not conform.

41. When the seller has delivered conforming goods, the buyer has a duty to take them. This is referred to as: a. buyer's duty of acceptance. b. buyer's duty of cure. c. buyer's duty of tender. d. buyer's duty of contract.

a. buyer's duty of acceptance.

40. A buyer who receives goods that are nonconforming may refuse to accept them as a breach of contract and withhold payment. This is referred to as: a. buyer's right of rejection. b. buyer's right of tender. c. buyer's right of inspection. d. buyer's right of cure.

a. buyer's right of rejection.

38. A seller's right to cure an improper tender of goods protects sellers from: a. buyers rejecting shipments based on minor problems when the price of the good is falling. b. buyers demanding larger shipments. c. buyers failing to pay in a timely manner. d. buyers suing for breach of contract.

a. buyers rejecting shipments based on minor problems when the price of the good is falling.

30. If a contract for the sale of goods does not specify where goods are to be delivered, the UCC presumes that in most cases: a. delivery is at the seller's place of business. b. delivery is to the buyer's place of business. c. delivery is to the buyer's agent. d. delivery is to a common carrier.

a. delivery is at the seller's place of business.

33. The seller's basic obligation under the UCC does NOT include: a. financing the purchase of conforming goods b. transferring conforming goods c. delivering conforming goods d. location of delivery or goods.

a. financing the purchase of conforming goods

66. If a country has adopted the United Nations' Convention on the Recognition and Enforcement of Foreign Arbitrable Awards then: a. its courts are bound to recognize and enforce arbitration decisions that have followed proper procedure. b. its courts are not bound to recognize and enforce arbitration decisions that have followed proper procedure. c. its courts are unlikely to recognize and enforce arbitration decisions that are not consistent with the country's laws. d. its courts will charge a fee from both parties to hear cases.

a. its courts are bound to recognize and enforce arbitration decisions that have followed proper procedure.

28. Under the UCC a "reasonable price": a. may or may not be "fair market value" b. must be "fair market value." c. is a set percentage above "fair market value." d. is a set percentage below "fair market value."

a. may or may not be "fair market value"

61. Unlike the UCC, the CISG governs: a. only commercial sales or sales between merchants. b. only sales to the consuming public. c. only sales of intangible goods. d. only sales involving goods worth more than $10,000.

a. only commercial sales or sales between merchants.

29. In what type of contract does a buyer agree to take the entire amount produced by a certain seller? a. output contract b. input contract c. requirements contract d. total contract

a. output contract

22. To satisfy the Statute of Frauds under UCC Article 2 there must be: a. some basis for believing that the parties made a contract of the sale of goods. b. a legal document signed by both parties to the contract and witnessed by a judge. c. a full description of all goods involved in the sale. d. a notarized document detailing all details of the sale and contract.

a. some basis for believing that the parties made a contract of the sale of goods.

2. 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. 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 was so great.

55. In the event of a breach by the seller for shipping improper goods, and assuming the buyer correctly rejected the delivery of the goods, the buyer's incidental damages may include: a. the reasonable costs of inspecting, transporting, and caring for goods while in buyer's possession. b. the value of lost sales. c. distress suffered by personnel due to having to work with nonconforming products. d. the costs for transporting and handling the goods after the breach.

a. the reasonable costs of inspecting, transporting, and caring for goods while in buyer's possession.

23. Under UCC Article 2, when there is a failure to respond to a writing signed by the other party: a. there may be a good contract. b. there cannot be a good contract. c. there cannot be a good contract, but under the common law there could be. d. the court may require the other party to respond in writing to make the contract legal.

a. there may be a good contract.

7. Under UCC Article 2, a sale must involve the transfer of what? a. title b. will c. deed d. bill of sale

a. title

8. Cao bought a "Dream Light" on Amazon. It was defective and caused a house fire. The insurance company sued Amazon to recover the cost of the fire loss it covered. The court held: a. Amazon responsible for damage caused by a product it featured on its website. b. Amazon not responsible for damage caused because it provided distribution service for the seller of the light; it did not own the product and pass title. c. Amazon not responsible for damage caused because its website said the product was sold "as is" so the risk was on the buyer. d. Amazon not responsible for damage caused because under the UCC a seller is not liable for damage unless the seller was the maker also.

b. Amazon not responsible for damage caused because it provided distribution service for the seller of the light; it did not own the product and pass title.

1. Which article of the Uniform Commercial Code governs the law of commercial sales? a. Article 1 b. Article 2 c. Article 3 d. Article 4

b. Article 2

48. QD representatives met with EDS managers. They discussed plans for finishing a conference room with Persian carpets, quality furniture, and nice art. The parties agreed that the job would be done for $100,000. QD delivered a room with ordinary carpet and furniture and posters of dogs. They sent a bill for $85,000. EDS sues QD. Which result would you expect? a. EDS should win based on the UCC's perfect tender rule b. EDS should win based on the UCC's provisions providing express and implied warranties of quality and merchantability c. QD should win because the terms of the contract were vague, based on oral discussions, and the price was cut d. QC should win on the basis of the seller's right to cure defects

b. EDS should win based on the UCC's provisions providing express and implied warranties of quality and merchantability

3. 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.

b. GM buys seat belts from Ace to install in new Cadillacs.

52. In Lee v. R&K Marine, where a boat that Lee bought became unusable after only three years when it fell apart, and the seller had expressly disclaimed all warranties, the court held: a. Lee was out of luck as warranties do not apply to personal watercraft. b. Lee was out of luck because the seller properly disclaimed warranties. c. the seller could not disclaim warranties for reasonable repairs. d. the seller could not disclaim warranties that evade industry standards of quality.

b. Lee was out of luck because the seller properly disclaimed warranties.

17. 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: a. an acceptance is not valid if the offeree's acceptance contains different terms from those in the offer. b. an acceptance is valid when the parties intend to form a contract, even if the offeree's acceptance contains different terms from those in the offer. c. an acceptance is only valid if it occurs in writing. d. an acceptance is only valid if it is communicated orally.

b. an acceptance is valid when the parties intend to form a contract, even if the offeree's acceptance contains different terms from those in the offer.

27. If a price is unclear when a contract is found to exist, the UCC directs the courts to: a. determine "a realistic price." b. determine "a reasonable price." c. determine who should have to pay the price. d. determine the price based on fair market value.

b. determine "a reasonable price."

49. Because the UCC's warranty requirements create a tough standard, sellers may wish to reduce their liability by issuing: a. limits of liability. b. disclaimers. c. disclosures. d. revocations of liability.

b. disclaimers.

11. Suppose parties to a contract that is under the UCC fail to specify some term. The UCC: a. invalidates the contract and requires a new one be written. b. has rules to fill the gap about a silent term. c. provides a special master to arbitrate all open terms. d. requires the terms to be completed before it recognizes a valid contract.

b. has rules to fill the gap about a silent term.

47. If the buyer relies on the seller's skill or judgment to select the goods for a particular need, what type of warranty is created? a. implied warranty of merchantability b. implied warranty of fitness for a particular purpose c. express warranty of merchantability d. express warranty of fitness for a particular purpose

b. implied warranty of fitness for a particular purpose

63. Suppose a contract to buy chickens is under the CISG, but the contract does not state what the age of the chickens should be. In a dispute, the courts would look to: a. the intent of the parties. b. industry practice. c. the practice in the nation of the seller. d. the practice in the nation of the buyer.

b. industry practice.

4. The subject matter of a sales contract is NOT considered a good under Article 2 unless: a. it is immovable and intangible b. it is movable and tangible c. it is immovable and tangible d. it is movable and intangible.

b. it is movable and tangible

62. Under the CISG, contracts: a. may not rely on parol evidence. b. need not be formally written. c. cannot be proved by witnesses. d. are not binding.

b. need not be formally written.

21. According the UCC's statute of frauds all: a. contracts involving the sale of land must be in writing. b. sales of goods worth more than $500 must be in writing. c. warranties must be in writing. d. material terms must be included in written contracts.

b. sales of goods worth more than $500 must be in writing.

18. Lisa mailed an offer to sell cotton to Jeff who sent an acceptance. However, Jeff made changes in the time and place of delivery. Under the UCC's Article 2: a. acceptance cannot change the terms of the offer without being considered either a rejection or a counteroffer. b. the acceptance is valid since the parties intend to form a contract, even though the acceptance contains some different terms from those in the offer. c. alterations are not valid under the UCC so the parties need to look to the common law of contracts for a solution. d. acceptance is valid only if this is an option contract.

b. the acceptance is valid since the parties intend to form a contract, even though the acceptance contains some different terms from those in the offer.

10. If the parties to a sale under the UCC do not specify when the title to the goods passes, then, assuming goods have to be shipped, title passes to the buyer when: a. the buyer sends full payment. b. the seller completes all obligations regarding delivery. c. the buyer inspects the goods. d. the buyer makes "substantial" payment.

b. the seller completes all obligations regarding delivery.

34. The proper tender of goods to, and their acceptance by, the buyer entitles the seller: a. to be paid at least 50 percent of the total amount specified in the contract. b. to be paid according to the contract. c. to be paid no later than 90 days after the proper tender of the goods. d. to invoice the buyer for payment.

b. to be paid according to the contract.

32. The seller's basic obligation under the UCC is to: a. arrange all elements of the transaction and deal with any problems that arise. b. transfer and deliver goods that conform to the contract to the buyer c. represent the goods properly d. refrain from swindling unsuspecting buyers

b. transfer and deliver goods that conform to the contract to the buyer

64. Under the CISG, offers made to whom are valid offers to make a contract? a. "the general public" b. "a broad audience" c. "one or more specific persons" d. "the international business community"

c. "one or more specific persons"

26. In Griffith v. Clear Lakes Trout, Griffith grew trout for Clear Lakes; the parties got into a dispute over what constitutes "market size" trout, as Clear Lakes wanted larger fish. The court held that: a. since the contract between the parties was vague about trout size, there was no enforceable contract. b. Clear Lakes was correct about trade usage regarding "market size" so Griffith had an obligation to grow larger fish and be in compliance with the contract. c. Clear Lakes was incorrect about trade usage regarding "market size" so Griffith had no obligation to grow larger fish to be in compliance with the contract. d. Clear Lakes had underpaid for the trout given current market prices, so owed Griffith damages equal to the market price versus the price paid.

c. Clear Lakes was incorrect about trade usage regarding "market size" so Griffith had no obligation to grow larger fish to be in compliance with the contract.

58. What was adopted by the United Nations to have a commercial code that parties would think unbiased? a. Uniform Commercial Code b. International Uniform Commercial Code c. Convention on Contracts for the International Sale of Goods d. Convention on the International Commercial Code

c. Convention on Contracts for the International Sale of Goods

50. Which of the following is true of language that attempts to dismiss an express warranty when the disclaimer is inconsistent with the warranty? a. It is considered effective. b. It will be considered effective in some states, but not others. c. It will not be effective. d. It will be allowed under certain circumstances

c. It will not be effective.

15. A buyer and a seller would like to enter into a contract for the sale of goods. In his offer the buyer does not specify a price. The seller agrees with the arrangement. Which of the following is true of this situation? a. Under Article 2 there is a contract only if the parties have done business before b. Under the common law of contracts, but not the UCC, there is a contract because the parties intended to enter into a binding agreement even in the absence of the price term c. There is a contract under UCC Article 2 because it allows the parties to enter into a contract even though the price is to be determined later d. There is no contract under UCC Article 2 because "some of the offer's major terms were omitted or were simply left open for determination later"

c. There is a contract under UCC Article 2 because it allows the parties to enter into a contract even though the price is to be determined later

14. 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? a. In jurisdictions where the offer-acceptance rule is rigidly applied there is a contract under both the UCC and the common law of contracts. b. In jurisdictions where the offer-acceptance rule is rigidly applied there is no contract under either the UCC or the common law of contracts. c. Under the UCC, a contract has been formed by the conduct of the parties. d. Under the UCC, there is no contract formed because the delivery of supplies is a service, not a good.

c. Under the UCC, a contract has been formed by the conduct of the parties.

12. Under the common law, a contract cannot be formed until an offer is clearly accepted. Under UCC Article 2: a. a contract "must be notarized" and must "show sufficient agreement" between the parties. b. a contract "may be made only in the presence of a judicial official". c. a contract "may be made in any manner sufficient to show agreement" between the parties. d. a contract is not formed until an offer is clearly accepted.

c. a contract "may be made in any manner sufficient to show agreement" between the parties.

43. A warranty of title means: a. a buyer's goods are fit for a particular purpose. b. a seller's goods meet certain standards of quality. c. a seller is the rightful owner of the goods being sold. d. a buyer is legally capable of owning the goods for sale.

c. a seller is the rightful owner of the goods being sold.

35. Tender is: a. a proper initiation of a contract b. failure to provide a sufficient offer of performance under a contract c. a valid and sufficient offer of performance under a contract d. a contact that allows the offeree to terminate the contract at any point.

c. a valid and sufficient offer of performance under a contract

16. Under the common law, an offer can be revoked: a. anytime the offeror wants. b. only if allowed by a district court. c. anytime before acceptance. d. anytime after acceptance.

c. anytime before acceptance.

56. What are foreseeable damages that result from a seller's breach? a. incidental damages b. total damages c. consequential damages d. punitive damages

c. consequential damages

65. Under the CISG, in the event of breach, the parties: a. may immediately move for damage remedies. b. may move for damages after a 30-day rectification period. c. must be given a notice of breach and a chance to cure the problem. d. may not sue for damages, only cease dealings.

c. must be given a notice of breach and a chance to cure the problem.

31. 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: a. a breach was done with malice, so punitive damages could b added to the compensatory damages. b. because UCC 2-207(b) states that special terms are to be specified in the contract, as was the case with this order, the seller was in breach for not fixing a delivery date c. 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 d. no delivery date was specified by the buyer, so he had no right to cancel the order and is liable for all costs plus lost profits

c. 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

24. With respect to parol evidence and the UCC: a. oral evidence may never be used. b. it allows oral testimony to contradict written documents. c. oral evidence may be used to explain trade dealings. d. oral evidence may be used even if the court finds that the written documents are complete.

c. oral evidence may be used to explain trade dealings.

19. Under the common law, contract modifications must be supported by new consideration to be binding on the parties. Under UCC Article 2: a. parties cannot modify an existing sales contract. b. parties may not add new consideration to an existing sales contract. c. parties need not provide new consideration to modify an existing sales contract. d. parties need to provide new consideration to modify an existing sales contract.

c. parties need not provide new consideration to modify an existing sales contract.

54. The buyer's damage provisions under the UCC are designed: a. to allow the buyer to profit. b. to allow the seller a way to cure the breach. c. to put the buyer in as good a position as if the seller had performed according to the contract. d. to prevent the buyer from losing more than half of his principal capital.

c. to put the buyer in as good a position as if the seller had performed according to the contract.

59. Suppose a company in North Carolina contracts to buy toys from a company in another country that is a signatory to the CISG. What code of law must they follow? a. They must follow the UCC because it requires U.S. buyers to use the UCC b. They must follow the CISG because it is an international sale of goods c. They must follow the law of the other country because, under the CISG, the law of the seller is used d. They may pick any relevant law.

d. They may pick any relevant law.

36. The UCC modifies the common law perfect tender rule by: a. allowing the seller to deliver only half the agreed upon shipment. b. not allowing the buyer to sue the seller. c. not allowing the buyer to accept less than the entire shipment. d. allowing the buyer to accept less than the entire shipment.

d. allowing the buyer to accept less than the entire shipment.

45. What is created by a seller's promise or guarantee as to the quality, safety, performance, or durability of goods being sold? a. a final warranty b. a warranty to title c. an implied warranty of merchantability d. an express warranty

d. an express warranty

44. An express warranty may be created by all but which of the following situations? a. seller makes a promise about goods being sold. b. seller makes a guarantee regarding the safety of a good. c. buyer receives a sample from the seller. d. buyer reasonably expects a certain guarantee for the product.

d. buyer reasonably expects a certain guarantee for the product.

42. Villalobos bought a used pickup from Atlanta Motorsports. It was sold "as is" and the seller said the truck was in "good condition" and had "no problems." The buyer learned immediately after purchase that it had major problems and sued to revoke acceptance. The appeals court held that under the UCC Villalobos: a. could not revoke acceptance as it was clearly sold "as is." b. had no claim under the UCC but could sue under the Used Car Dealer Act. c. had no claim under the UCC but could sue for common law fraud. d. had a possible claim for revocation of acceptance due to impairment of value.

d. had a possible claim for revocation of acceptance due to impairment of value.

5. The UCC defines good-faith dealings as: a. the "customary" 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.

d. honest in fact in the conduct or transaction incurred.

51. A disclaimer of an implied warranty is permitted if the disclaimer uses the word merchantability and the disclaimer: a. specifies the alternatives. b. provides alternatives. c. does not attempt to disclaim safety issues. d. is conspicuous.

d. is conspicuous.

9. Article 2A of the UCC, adopted by most states, expands the UCC to cover: a. sale of investment securities. b. sale of service contracts. c. sale of real estate. d. leases of personal property.

d. leases of personal property.

20. 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: a. fair market value consideration. b. at least nominal consideration. c. trade usage consideration. d. no new consideration.

d. no new consideration.

46. Article 2 provides minimum requirements that goods must satisfy to be merchantable, including that the goods must be: a. of the highest quality reasonably possible under the contract. b. reasonably fit for the specific purposes for which they are being sold. c. delivered in time to meet the market need for the goods. d. of a quality that is generally acceptable in that line or trade.

d. of a quality that is generally acceptable in that line or trade.

53. When reclaiming and reselling goods does not fully compensate a seller for a buyer's breach of contract, damages are the remedy. Damages are to put the seller in as good a position as if the buyer had fulfilled its obligations. The seller is also allowed to seek incidental damages for recovery of costs resulting from the breach. Those costs may include expenses for: a. the reasonable cost of inspecting, transporting, and caring for goods while still in buyer's possession. b. the value of lost sales. c. attorney fees in bringing the action for damages against the buyer. d. stopping delivery, transporting and handling the goods after the breach, and returning or reselling the goods.

d. stopping delivery, transporting and handling the goods after the breach, and returning or reselling the goods.

60. If a North Carolina firm contracts to buy toys from a seller in another country that is a signatory to the CISG, if there is a dispute: a. North Carolina courts have jurisdiction because the buyer is from there b. U.S. federal courts have jurisdiction because of diversity of citizenship c. the other country's courts have jurisdiction because the seller is from there d. the parties can choose in their contract where the dispute will be resolved

d. the parties can choose in their contract where the dispute will be resolved

37. If a buyer rejects a shipment of goods as not conforming, the seller has the right to cure the defect, EXCEPT for which of the following: a. the seller repairs or replaces the defective goods within the time for performance b. the seller notifies the buyer in a timely manner of the intent to cure the defect c. the time for the seller's performance under the contract has not passed d. the seller is due a "reasonable time" for repair or performance past the original due date

d. the seller is due a "reasonable time" for repair or performance past the original due date

6. By definition, a sale under Article 2 of the UCC requires that: a. both parties involved be merchants. b. contracts be for goods or services; that the sale be between merchants; and that the sale take place in the normal course of commerce. c. the product or service (good) be classified as a bailment. d. title to the goods pass from the seller to the buyer and that a price be paid for the good.

d. title to the goods pass from the seller to the buyer and that a price be paid for the good.