Sales and Lease

Where the offeror is a merchant and the offeree is a nonmerchant, what is the effect of minor different terms contained in an acceptance?

A contract is formed according to the terms of the offer, and the additional terms are treated as proposed additions to the contract.

Which of the following statements is not true about a finance lease as defined in Article 2A of the UCC?

A finance lease is a two-party transaction where the lessor sells the goods to the lessee and provides the financing of the goods.

A buyer and seller enter into a written contract for the sale of some specialty steel to be used by the buyer in the manufacture of some appliances. The contract specified all the terms of the contract except the price. Which of the following is true?

A reasonable price will be implied.

Which of the following is true relating to a "firm offer" under the UCC?

A) It can be made only by a merchant. AND B) It must be in writing and signed by the merchant.

An order or other offer to buy goods which requires prompt or current shipment may be accepted by:

A) a prompt shipment of conforming goods OR B) a prompt shipment of nonconforming goods

According to the UCC, which of the following will be enforceable even if it is not in writing?

A) admissions in pleadings or court AND B) part acceptance by the buyer or lessee AND C) specially manufactured goods

A merchant is a person who:

A) deals in goods of the kind involved in the transaction B) by his or her skill or occupation, holds himself or herself out as having special skill or knowledge regarding the goods in the transaction C) employs a merchant as his or her agent

Which of the following is not true about Article 2A of the UCC?

Article 2A was drafted in the late 1950s, a few years after Article 2 was drafted.

Which of the following statements is true regarding sales contract terms left open under the UCC?

B) If not stated, the price is a "reasonable" price at the time of delivery. OR C) The price may be fixed by a market, a third person, or another standard, if so provided in the contract.

Under Article 2 of the UCC, when a court finds a clause in a contract to be unconscionable, the court will:

B) not enforce any aspects of the contract OR D) enforce the contract, but limit the application of the unconscionable clause

Seller orally contracts to sell goods to Buyer for a total price of $450. Several days later, both parties orally agree to raise the price to $550 because of a shortage of these goods. When the goods are delivered, Buyer refuses to accept them. Seller sues. Both parties are merchants. In this situation, which of the following is true?

Seller wins; the contract is enforceable without a writing, but Seller can collect only $450.

Where a contract for the sale of goods does not mention the place of delivery for the goods, which of the following is true?

C) The seller is obligated to deliver the goods at the seller's place of business. OR D) Sellers without a place of business are obligated to deliver the goods at the seller's home.

What is required to meet the writing requirement of the Statute of Frauds under the UCC?

In cases where both parties are merchants, a writing signed by the party to be charged or a written confirmation of an oral agreement that is sent by one party to the other and not objected to by the other party. In all other transactions, a writing signed by the party to be charged.

A buyer agrees to purchase "two cars" from an elevator company. All material terms are contained in a written contract, but "two cars" is not further defined. Which of the following evidence can be admitted if there is a dispute over what "two cars" refers to?

Oral evidence that the word "car" refers to an elevator, since that is normal in the elevator industry, and that it does not refer to any of the company's automobiles.

lessee

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

lessor

person who transfers the right to the possession and use of named goods for a set term in return for certain consideration

merchant

person who: deals in the goods of the kind involved in a transaction by his or her occupation holds himself or herself out as having knowledge or skill peculiar to the goods involved in the transaction

Under Article 2 of the UCC, a contract is usually enforceable even if which of the following terms is omitted:

price

electronic record

record that is created, generated, sent, communicated, received, or stored by electronic means

statute of frauds

rule in the UCC that requires all contracts for the sale of goods costing $500 or more and lease contract involving payments $1000 or more to be in writing

written confirmation rule

rule that provides that if both parties to an oral sales or lease contract are merchants, the Statute of Frauds writing requirement can be satisfied if: 1. one of the parties to an oral agreement sends a written confirmation of the sale or ease within a reasonable time after contracting 2. other merchant doesnt give written notice of an object to the contract within ten days after receiving confirmation

gap-filling rule

rule that says an open term can be a "read-into" contract

parol evidence rule

rule that says that if a written contract is a complete and final statement of the parties' agreement, any prior or contemporaneous oral or written statements that alter, contradict, or are in addition to the terms of the written contract are inadmissible in court regarding a dispute over the contract

mixed sale

sale that involved the provision of a service and a good in the same transaction

Articles 2 and 2A of the UCC cover which types of transactions

sales of goods and leases of goods

accommodation

shipment that is offered to a buyer as a replacement for the original shipment when the original shipment cannot be filled

A general purpose of the UCC is to:

standardize commercial law and facilitate commercial transactions

goods

tangible things that are movable at the time of their identification to a contract

The proper relationship between the common law and the UCC regarding sales is:

the UCC controls sales, but where the UCC is silent, common law still controls

Under the UCC, between merchants, if a purported acceptance contains additional terms, there is an acceptance, and:

the additional terms do not become part of the contract if they materially alter the contract

JetRed Airlines wants a new plane that is manufactured by the Boeing Corporation. A local bank agrees to purchase the plane from Boeing, and lease the aircraft to JetRed. The plane is delivered directly to JetRed. Who is the lessor in this arrangement?

the bank

For the firm offer rule to apply, who must be a merchant?

the offeror

sale

the passing of title of goods from a seller to a buyer for a price

If the time, place, and manner of delivery of goods is not mentioned in a contract:

the place of delivery is the seller's place of business

What is "course of performance?"

the previous conduct of the parties regarding the contract in question

Seller offers to sell to Buyer 1,000 widgets at $5 each. Buyer responds in writing, stating that Buyer accepts the offer, but at a reduced price of $4.95. Seller refuses to deliver at this price. Buyer sues. Both parties are merchants. In this situation, which of hte following is true?

there is no contract

finance lease

three party transaction consisting of a lessor, lessee, and a supplier

lease

transfer of the right to the possession and use of named goods for a set term in return for certain consideration

A "firm offer" can be held open as long as 3 months.

true

A party is considered a merchant if that party holds herself out as having special knowledge of the goods involved in the transaction, even if she does not regularly deal in the goods.

true

A sale involving both goods and services is known as a mixed sale.

true

A seller or buyer who reserves the right to fix a price must do so in good faith.

true

A sporting goods dealer is a merchant with respect to golf clubs but not if he sells a wheelbarrow to a neighbor.

true

A transaction that includes both a goods and a services component will be covered by the UCC so long as the goods are the predominant part of the transaction.

true

Additional terms to a contract are considered proposed additions if one or both parties to a sales contract are nonmerchants.

true

Article 2 of the UCC applies to transactions in goods.

true

Article 2A of the UCC directly addresses personal property leases.

true

Every state except Louisiana has enacted the UCC as its commercial statute.

true

Generally, under the UCC, the only term that needs to be stated in a contract is quantity, and even that is not necessary in output and requirements contracts.

true

Growing crops that are severable from real estate may be classified as goods and subject to Article 2.

true

If both parties to an oral sale or lease contract are merchants, the Statute of Frauds requirement can be satisfied if one of the parties sends a written confirmation and the other merchant does not object within 10 days of receiving the confirmation.

true

In a lease, the lessee does not acquire title to the leased goods.

true

The common law of contracts governs if either Article 2 or Article 2A is silent on the issue.

true

Under Article 2 of the UCC, acceptances are effective when dispatched.

true

Under the UCC, courts will frequently enforce a contract that does not state a price.

true

Under the Uniform Commercial Code, it is possible for a nonmerchant to be liable on a contract for the sale of goods of $500 or more without having signed any writing.

true

Company A signs a lease contract with Company B on Monday. The signor leaves the contract on his desk until Tuesday. The contract is brought to the post office on Tuesday afternoon. The post office temporarily misplaces the document, and does not locate it until Thursday. The contract is delivered to Company B on Friday. At what point was the contract accepted?

upon delivery of the document to the post office on Tuesday

Under the UCC Article 2, unless otherwise agreed, an acceptance of an offer is effective:

when dispatched

A retailer ordered some inventory by phone from a manufacturer. The order was for 1,000 machines from the manufacturer's inventory at $300 each. The manufacturer sent the retailer a fax moments later detailing the order. The retailer looked at the fax and was satisfied that it stated the terms of the contract, but never responded in any way. When the goods were delivered on time a month later, the retailer refused to accept them, asserting that the contract was unenforceable. Which is true?

The contract is enforceable under the written confirmation rule.

A buyer purchases some equipment that costs $20,000. As part of the contract, the seller agrees to install this equipment for an additional $2,000. After the buyer begins using the equipment, problems develop. Some of the problems relate to how the equipment was installed, while others relate to the equipment itself. Which of the following is true?

The entire contract is covered under the UCC.

Regarding differences under the UCC in the treatment of merchants and nonmerchants, which is true?

The requirements for a merchant to form a contract are less stringent than those for nonmerchants, and merchants receive fewer protections than nonmerchants.

A grocery store mails an offer to purchase 50,000 pounds of bananas to a produce importer. The importer immediately ships the 50,000 pounds of bananas by truck to the buyer but does not send notification to the buyer that it is making the shipment. Which of the following is true?

There has been an effective acceptance merely by shipping the bananas.

A homeowner orally contracted to buy some custom-made parts that the homeowner will use to build a retaining wall in the homeowner's back yard. The contract price for these materials was $2,000. The buyer refused to take delivery even though the materials were conforming. The seller is unable to sell these parts to anyone else because they were individually designed for the homeowner. In a lawsuit against the homeowner by the seller of the parts, which of the following is true?

This contract is fully enforceable even though it is not in writing.

A buyer who is not a merchant in boats is at a boat store and orally agrees to purchase a sailboat for $2,000. The buyer sends a written confirmation to the boat dealer the next day describing all relevant terms of their agreement. When the buyer goes to the store a week later to pick up the boat, the store refuses to sell the boat for $2,000. Which is true?

This contract is not enforceable because it is not in writing.

firm offer rule

UCC rule that says that a merchant who makes an offer to buy, sell, or lease goods an assure the other party in a separate writing that the offer will be held open cannot revoke the offer for the time stated or, if no times is stated, for a reasonable time

battle of the forms

UCC rule that states that if both parties are merchants, then additional terms contained in the acceptance become part of the sales contract unless: 1. the offer expressly limits the acceptance to the terms of the offer 2. the additional terms materially alter the original contract 3. the offeror notifies the offer that he or she objects to the additional terms within a reasonable time after receiving the offeree's modified acceptance theres no contract if the additional terms so materially alter the terms of the original agreement that the parties cannot agree on the contract

A lessor and lessee orally agree to a lease of goods in the amount of $400 per month. The lease is later modified to $600 per month. Must the modification be in writing?

Yes; a lack of writing would violate the Statute of Frauds.

Under Article 2A of the UCC, a consumer lease is defined as:

a lease involving goods leased to a consumer primarily for personal, family, or household purposes where the amount of the lease is $25,000 or less

If a buyer and seller agree to a contract for the sale of goods amounting to $400, which modifications must be in writing in order to be enforceable?

any modification increasing the price by $100 or more

Article 2A

article of UCC that governs lease contracts

Article 5

article of UCC that governs letters of credit

Article 2

article of UCC that governs sales contracts

Revised Article 2A

article that includes provisions that recognize changes in the commercial environment and the importance of electronic lease contracts

Revised Article 2

article that includes provisions that recognize changes in the commercial environment and the importance of electronic sales contracts

For the written confirmation rule to apply, who must be a merchant?

both offeror and offeree

electronic agent

computer program or electronic or other automated means used independently to initiate an action or respond to electronic records or performances in whole or in part without review or action by an individual

letter of credit

document that is issued by a bank on behalf of a buyer who purchases goods on credit form a seller that guarantees that if the buyer doesn't pay for the goods, then the bank will pay the seller

A "firm offer" may be made by a nonmerchant seller.

false

A finance lease is a three-party transaction comprised of the lessor, the lessee, and the offeror.

false

A party that is a merchant in one transaction is a merchant for all transactions in which he/she is involved.

false

An agreement modifying a sales or lease contract needs consideration to be binding.

false

Article 2 of the UCC applies to real estate, because real estate generally has severable things that are goods according to Article 2 of the UCC.

false

If a homeowner sells a used lawn mower to his neighbor, Article 2 of the UCC does not apply

false

In a contract for the sale of goods, if the seller does not have a place of business and the contract does not mention delivery in any way, delivery is to be made at the buyer's house.

false

In order for title to pass from a seller to a buyer, the purchase of the good must be by cash.

false

Sales of stocks and bonds are covered by Article 2 of the UCC.

false

The "battle of the forms" is a reference to the insistence by many merchant sellers that customers sign the seller's standard form contract without modification.

false

The UCC applies only to sales between merchants.

false

The UCC applies to contracts for services as well as to contracts for the sale of goods.

false

The formation of sales and lease contracts requires no consideration.

false

The installation of a pacemaker by a hospital is a sale of goods subject to Article 2 of the UCC.

false

The lessee is the party who holds himself or herself out as having knowledge or skill peculiar to the goods involved in the transaction.

false

Under Article 2 of the UCC, there are detailed rules for the proper methods of acceptance in various situations.

false

Under the UCC, a court can find that a contract exists as long as the moment of its making is determined.

false

Under the UCC, the mirror-image rule applies in the same manner as under common law.

false

Under the UCC, if an offer is received by mail, the acceptance:

if both parties are merchants, there is a contract and the additional terms may or may not become part of the contract

The UCC applies to a mixed sale:

if the sale of the goods is the predominant part of the transaction

additional terms

in certain circumstances, the UCC permits an acceptance of a sales contract to contain additional terms and still to act as an acceptance rather than a counteroffer

Under the UCC, firm offers can be made:

in writing by merchants

Under UCC 2-206(1)(b), an accommodation:

is a shipment that is offered to the buyer as a replacement for the original shipment when the original shipment cannot be filled

A newly opened retailer contracted with a computer component manufacturer for the purchase of some accessory keyboards. The contract was very detailed, specifying all aspects of the contract except for the quantity. Under these circumstances, a court would most likely:

not enforce the contract because it would be impossible to determine the number of keyboards that would be a reasonable quantity