1. UCC Article 2 applies to sales transactions between all buyers and
sellers.
1. A lessee is a party who transfers a right to the possession and use
of goods under a lease.
1. Under the UCC, a firm offer for a sale or lease of goods made by a
merchant can be revoked at any time before acceptance.
1. In a contract between merchants, additional terms in the parties’
separate standard forms always automatically become part of the
contract.
1. All oral contracts are enforceable under the UCC.
1. Under a shipment contract, the risk of loss passes to the buyer when
the goods are delivered to the carrier.
1. If a buyer accepts a shipment of goods and later discovers a defect,
acceptance can be revoked.
1. A seller has an insurable interest in goods as long as the goods are in
existence.
1. If goods or tender of delivery fail in any respect to conform to a
contract, the buyer or lessee loses the right to accept the goods.
1. If performance is commercially impracticable, the perfect tender rule no
longer applies.
1. If a buyer breaches a contract and the seller resells the goods to
another party, the seller cannot hold the breaching buyer liable for any
loss.
1. If the parties to a sales contract state that a certain remedy is
exclusive, then it is the sole remedy.
1. A buyer or lessee who has accepted nonconforming goods may keep
the goods and recover for any loss resulting in the ordinary course of
events.
1. Express warranties can be found in a seller’s brochure
1. In most sales, sellers warrant that they have good and valid title to the
goods sold.
1. Goods that are merchantable are fit for any purpose.
1. Implied warranties can arise as a result of a course of dealing.
1. A forum–selection clause indicates the forum in which contract
disputes will be resolved.
1. Browse-wrap terms are expressed inside the box in which goods are
packaged.
1. Under federal law, an electronic signature can be as valid as a
signature on paper.
1. Over the course of a year, Retail Market, Inc., sells goods from its
inventory and one of its warehouses. In exchange, Retail receives
checks and other items that substitute for cash, which Retail uses to
repay a loan from Savers Bank. Article 2 of the UCC governs
a. the checks.
b. the payment of the loan.
c. the sale of the buildings.
d. the sale of the goods.
1. Fresh Harvest, Inc., agrees to sell to Gina’s Bed & Breakfast Inn a
certain amount of locally grown produce each week but no mention is
made of where the goods are to be delivered. In general, the UCC
requires that the delivery take place at
a. a neutral place of business halfway between the parties’
locations.
b. a “reasonable” place of delivery.
c. Fresh Harvest’s place of business.
d. Gina’s place of business.
1. Five Star Flooring orders carpet from Textile Mills Corporation, but
Textile does not deliver. Five Star will probably be unable to enforce
the agreement if the parties omitted
a. a delivery term.
b. a payment term.
c. a quantity term.
d. a price term.
1. Pop Culture Clothiers, Inc., sells t-shirts to Trendwell Stores, Inc., under
an existing contract. When textile costs increase, Trendwell agrees to a
price increase, but later wants to cancel the contract. Trendwell may
a. cancel the contract immediately.
b. cancel the contract only after accepting a final shipment.
c. cancel the contract only on reasonable notice.
d. not cancel the contract.
1. Quinn enters into a series of agreements with Reba involving a sale of
a Suite Dreams Motel, including the land, building, furnishings, shares
of stock in Suite Dreams Company, and a contract with Trudy to create
an ad campaign. Reba suspects that Quinn may be misrepresenting the
facts. The UCC Statute of Frauds governs the sale of
a. any of the property evidenced by a writing.
b. any of the property that may involve fraud.
c. the furnishings priced at $500 or more.
d. the land and the building.
1. Inst-ee Gadgets, Inc., and Jolly Outlets Corporation enter into a contract
for a sale of kitchenware. The contract requires Inst-ee to deliver the
goods to Ladle Carrier Company for transport to Jolly’s warehouse in
Metro City. Risk of loss passes to Jolly when
a. Inst-ee delivers the goods to Ladle.
b. Inst-ee identifies the goods to the contract.
c. Ladle transports the goods to Jolly’s warehouse.
d. the goods arrive in Metro City.
1. Mitchell buys 100 bales of hay from New Grain Fields. The parties
agree that the hay will be transported “F.O.B. New Grain Fields” via
Farm County Trucking Company. Farm County’s truck and the hay are
lost in a fire following an accident. The loss is suffered by
a. Mitchell.
b. New Grain Fields.
c. Farm County Trucking.
d. all of the parties in equal measure.
1. Town Style Stores orders Hidebound-brand leather jackets from
Cowhide & Cotton Company (CCC). CCC mistakenly ships denim
jackets, which Town rejects and returns via Valu Transport, Inc. During
the return, the jackets are lost. The loss is suffered by
a. Town.
b. Hidebound.
c. Valu.
d. CCC.
1. Recycle Packaging, Inc., agrees to sell 50,000 6-ounce yogurt
containers to Organic Dairy Company. Recycle can obtain only 20,000
of the 6-ounce containers, but also ships 30,000 more expensive 8-
ounce containers for the same price. Organic rejects the 8-ounce
containers. With time for performance not yet expired, Recycle can
a. attempt to cure the defect.
b. cancel the contract.
c. recover the purchase price plus incidental damages.
d. resell or dispose of the goods and hold Organic liable for any
loss.
1. Consuelo and Gabriela enter into a contract for a sale of saxophones
and other brass instruments. Consuelo delivers, but Gabriela does not
pay. Consuelo can normally recover as damages
a. any profit lost minus any loss avoided.
b. whatever amount the seller wishes to claim.
c. the purchase price plus incidental damages.
d. the market price at the place at which the seller delivered the
goods.
1. Cheesy Pizza Company contracts to sell 1,000 cases of frozen pizzas
to Roller Rinks, Inc., but refuses to deliver. Due to a spice shortage,
Roller Rinks cannot obtain pizza elsewhere. Roller Rinks’s right to
recover the goods from Cheesy is the right of
a. cover.
b. cure.
c. replevin.
d. specific performance.
1. Nature’s Foods, Inc., orders “Grade A” oil from Olive Grove Farms to
process and sell to Pic ‘N Pay Grocers. Olive Grove ships “Grade B”
oil, which Nature’s Foods accepts. To recover damages for the
nonconformity, Nature’s Foods must give notice of the breach within a
reasonable time to
a. Olive Grove.
b. Pic ‘N Pay.
c. no one.
d. the appropriate government agency.
1. Sari buys a new sport utility vehicle (SUV) from ‘Tastic Cars & Trucks,
Inc. The most important factor in determining whether an express war–
ranty is created is whether
a. Sari expresses to ‘Tastic what she wants warranted.
b. Sari’s desire for the SUV becomes part of her motivation to deal.
c. ‘Tastic expresses to Sari what it expects of its customers.
d. ‘Tastic’s promise becomes part of the basis of the bargain.
1. Concrete Products, Inc., assures Deepwater Construction Company
(DCC) that Concrete’s cement will not crack within a certain range of
pressure. This “assurance” is
a. puffery.
b. an express warranty.
c. an implied warranty.
d. a warranty of title.
1. Olga, a salesperson for Pre-owned Cars & Trucks, Inc., tells Quincy,
“This is the best car I’ve ever seen.” This statement is
a. an express warranty.
b. an implied warranty.
c. a warranty of title.
d. puffery.
1. Woodgrain Products Company and Sylvia enter into a contract for a
sale of lumber. Woodgrain knows the purpose for which Sylvia will use
the goods. Under the UCC, an implied warranty of fitness of a
particular purpose arises
a. if the buyer is relying on the seller to select suitable goods.
b. if the buyer asks for it.
c. if the seller is a merchant who deals in goods of the kind sold.
d. in conjunction with lease contracts, not sales contracts.
1. Rachel enters into a contract with State University over the Internet to
take an online course titled “Online Law.” This is an e-contract because
a. the contract involves an online course.
b. the contract was formed online.
c. the contract will be performed online.
d. the subject matter of the contract is “Online Law.”
1. Flem, a user of GameCenter.com’s Web site, can download gaming
software if he first clicks on “I accept” after viewing certain terms. If
Flem clicks and downloads, this is
a. a contract that does not include the terms.
b. a contract that includes the terms only if Flem read them.
c. a contract that includes the terms whether or not Flem read
them.
d. not a contract.
1. Howe enters into a contract with Ida over the Internet to buy soybeans
as a hedge against falling prices in corn. Neither party prints out a
hard copy. Under the federal Electronic Signatures in Global and
National Commerce Act (E-SIGN Act), this contract can
a. be denied effect if it falls under the UCC’s Statute of Frauds.
b. be denied effect unless a hard copy is printed.
c. be denied effect until it is executed.
d. not be denied effect because it is only in electronic form.
1. Overseas Corporation (OC), a U.S. firm, orally agrees to sell six
freezers to Pisa Pizza, Ltd., in Italy. OC fails to deliver. Under the
CISG, Pisa Pizza can
a. enforce the agreement.
b. not enforce the agreement because it is not in writing.
c. not enforce the agreement because the price term is not
specified.
d. not enforce the agreement because there is no consideration.
1. Tune Products, Inc., offers to sell to Unlimited Sales Company one
hundred MP3 players at $50 a piece, subject to certain specific delivery
dates. Unlimited replies with a signed purchase order that reads,
“Accept your offer for 100 I-appliances at $50 each. Must be delivered
to our warehouse.” Tune does not respond or deliver the goods.
Unlimited files a suit for breach of contract, to which Tune answers that
there is no contract because Unlimited’s purchase order contained
additional terms and is not signed by Tune. Can Unlimited recover?
Explain.
1. Signal Sets Company contracts to deliver one hundred 55-inch 3D HD
television sets to a new retail customer, Tuner TV Store, on May 1,
with payment to be made on delivery. Signal tenders delivery in its own
truck. Tuner’s manager notices that some of the cartons have scrape
marks. Tuner’s owner phones Signal’s office and asks whether the sets
might have been damaged as they were being loaded. Signal assures
Tuner that the sets are in perfect condition. Tuner tenders Signal a
check, which Signal refuses, claiming that the first delivery to new
customers is always for cash. Tuner promises to pay the cash within
two days. Signal leaves the sets with Tuner, which stores them in its
warehouse pending its “Grand Opening Sale” on May 15. Two days
later, Tuner’s stocker opens some of the cartons and discovers that a
number of the sets are damaged beyond ordinary repair. Signal claims
Tuner has accepted the sets and is in breach by not paying on
delivery. Will Signal succeed on these claims? Explain.
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