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1. UCC Article 2A covers any transaction that creates a lease of goods.
1. Under the UCC, a sales or lease contract will fail for indefiniteness if
one or more terms are left open.
1. When an offeror does not specify a means of acceptance, acceptance
can be made by any means of communication that is reasonable.
1. Under the UCC, an agreement modifying a contract needs no
consideration to be binding.
1. Generally, a contract is assumed to be a destination contract if
nothing to the contrary is stated in the contract.
1. Under the UCC, the risk of loss necessarily passes with title.
1. Under a shipment contract, the risk of loss passes to the buyer when
the goods are tendered to the buyer at a specified destination.
1. A seller has an insurable interest in goods as long as he or she
retains title to the goods.
1. A destination contract requires or authorizes a seller to ship
goods by a carrier but does not require delivery of goods at a
particular destination.
1. If goods identified to a contract are destroyed through no fault of either
party, both parties are excused from performance.
1. Acceptance of goods is presumed when a buyer or lessee fails to
reject the goods within a reasonable time.
1. If a buyer breaches a contract, the seller can choose to simply cancel
the contract.
1. The parties to a sales or lease contract can vary their respective rights
and obligations by contractual agreement.
1. To constitute an express warranty, a representation must be in writing.
1. A seller who makes a statement that relates to the value or worth of
the goods creates an express warranty.
1. Merchants are absolute insurers against all accidents arising in
connection with the goods.
1. Merchants are required to warrant that the goods they sell or lease are
fit for the particular purpose for which a buyer or lessee will use the
goods.
1. An e-contract must meet the same basic requirements as a paper
contract.
1. Under federal law, an electronic document can be as enforceable as a
paper one.
1. Like the UCC, the United Nations Convention on Contracts for the
International Sale of Goods (CISG) applies to consumer sales.
1. Rikki and Sid enter into a sales contract for tennis equipment. With
respect to the specific contractual provisions set out in the UCC, Rikki
and Sid may
a. agree to different terms only to a reasonable extent.
b. agree to different terms unless they “get caught.”
c. agree to whatever terms they wish.
d. not agree to different terms.
1. Radiant Phone Company and Precision Works, Inc. (PWI), enter into a
contract for the sale of a certain quantity of cell-phone parts, with PWI
to determine the price. The price must be fixed according to
a. the concept of good faith.
b. the principle of fair trade.
c. the predominant-factor test.
d. the doctrine of unconscionability.
1. Readymade Construction Corporation offers to buy from Set-Still
Cement Company a certain quantity of cement for a certain price. Set-
Still can accept the offer by
a. a material alteration of the terms within a reasonable time.
b. a promise to ship or a prompt shipment of the cement.
c. a prompt shipment of the cement only.
d. a shipment of nonconforming goods with a notice of
accommodation.
1. Equipment Rental Corporation and Family Farm, Inc., are parties to an
oral agreement for a lease of farm equipment with payments in excess
of $10,000. They may satisfy the Statute of Frauds by
a. mutually agreeing not to commit fraud.
b. repeating the terms in a phone call.
c. setting out the terms in a memo.
d. shaking hands on the deal.
1. Lou’s Bicycle Store contracts to buy fifty bicycles from Mountain Bikes,
Inc. Unless the contract states otherwise, this is
a. a bill of lading.
b. a destination contract.
c. a shipment contract.
d. a warehouse receipt.
1. Juice Café buys 25 bags of Florida navel oranges from Sweet Citrus
Company. The parties agree to ship the oranges “F.O.B. Juice Café”
via Fresh Harvest Truckline. The oranges rot in transit. The loss is suf-
fered by
a. Juice.
b. Fresh Harvest.
c. Florida.
d. Sweet Citrus.
1. Jim’s Jewelry Store orders Sho-Off-brand display racks from Kino’s
Merchandise Presentation, Inc. Kino’s mistakenly ships racks of the
wrong size and color, which Jim’s rejects and returns via Longroad
Shipping Company. During the return, the racks are lost. The loss is
suffered by
a. Jim’s.
b. Longroad.
c. Sho-Off.
d. Kino’s.
1. Commercial Storage (CS), a bailee, holds goods for Delta Distributors,
Inc., which has contracted to sell them to Eagle Company. The goods
are to be delivered without being moved. The risk of loss will pass to
Eagle when Eagle receives
a. a copy of Delta’s contract with CS.
b. a copy of Delta’s contract with Eagle.
c. a negotiable document of title.
d. a notice that Eagle’s payment for the goods has cleared.
1. Elegant Carpets, Inc., and Fantastic Floors Stores enter into a contract
for a sale of carpeting. Under a shipment contract, the seller must
a. allow the buyer to reject the goods for any reason.
b. deliver the goods to a particular destination.
c. inspect the goods before shipping them.
d. place the goods into the hands of a carrier.
1. Gleaming Gem Corporation agrees to sell Jewelry Outlets, Inc. (JOI),
fifty new diamonds, but the contract does not specify a place of
delivery. JOI is expected to pick up the goods. The place of delivery is
a. Gleaming’s place of business.
b. JOI’s place of business.
c. the Annual Gems and Jewels Convention.
d. the U.S. Postal Service office nearest to JOI’s place of business.
1. Nu-Tec Company contracts to sell fiber optic cable to Online Services,
Inc. Nu-Tec ships the cable, which Online accepts but does not pay
for. Nu-Tec can
a. sue to recover the purchase price plus incidental damages.
b. sue to recover the purchase price minus incidental damages.
c. resell the cable to any buyer willing to reclaim it from Online.
d. require Online to revoke its acceptance of the cable.
1. Rugged Boats, Inc., and Whitewater Rafting enter into a contract for a
sale of six custom-made rubber rafts. Whitewater pays for the goods,
but Rugged does not deliver. Whitewater can use replevin as a remedy
if
a. Rugged is lawfully withholding the goods.
b. Whitewater cannot effectively cure the defect.
c. Whitewater is unable to cover for the goods.
d. the goods have not been identified to the contract.
1. Gunmakers Pride Corporation contracts for the sale of twelve hunting
rifles to Hunters Supply store. Gunmakers delivers nonconforming
goods. Acceptance will be presumed unless Hunters Supply rejects the
goods
a. within a reasonable time after delivery.
b. within a reasonable time after ordering the goods.
c. within any time, since hunting rifles are not perishable.
d. before the last day of the current hunting season.
1. Parker, a salesperson for Quality Textiles, Inc., shows Rosa, a fabric
buyer for Style Clothing Company, samples of cloth, stating that any
shipment will match the samples. This statement is
a. an express warranty.
b. an implied warranty.
c. a warranty of title.
d. puffery.
1. Merchant Supply Company and National Discount Stores enter into a
contract for a lease of cash registers. Merchant assures National that it
has valid title to the goods. Under the UCC, this type of title warranty
arises
a. automatically in most lease contracts.
b. only if the lessee asks for such a warranty.
c. only if the lessor expresses such a warranty.
d. only in conjunction with sales contracts, not lease contracts.
1. Dorothy eats a candy bar made and sold by Eastwich Candy
Corporation and becomes ill. Dorothy files a suit against Eastwich,
alleging that the candy bar was not merchantable. Merchantable food is
food that is fit to eat on the basis of
a. consumer expectations.
b. what constitutes a perfect condition.
c. its maker’s intentions.
d. its producer’s experience.
1. Good Tire Company and Hiway Auto Service enter into a contract for a
sale of tires. Good Tire is a merchant who deals in goods of the kind
sold. Under the UCC, an implied warranty of merchantability arises
a. automatically in sales contracts.
b. only if the buyer asks for it.
c. only if the seller does not expressly disclaim it.
d. only in conjunction with lease contracts, not sales contracts.
1. Mica buys “Nature,” a movie, through Open View, an online
entertainment vendor. Before completing the purchase and downloading
“Nature,” Mica is asked to review a warning not to make and sell a
copy of it but is not required to click “I agree.” This warning is
a. a browse-wrap term.
b. a click-on agreement.
c. a shrink-wrap agreement.
d. none of the choices.
1. Ghangzhou, Ltd., in China and Hot Togs, Inc., in the United States
enter into a contract for a sale of casual clothing. Under the United
Nations Convention on Contracts for the International Sale of Goods
(CISG), on a breach of the contract, the nonbreaching party can
normally recover as damages the difference between
a. any loss avoided and any profit gained.
b. the actual price and the hoped-for price.
c. the contract price and the market price.
d. the current prices in the parties’ two countries.
1. Rodeo, S.A., which is based in Spain, enters into a contract for the
sale of seven hydraulic lifts to Tonnage Shipping Company, which is
based in the United States. This contract is governed by
a. Spanish law.
b. the provisions in the laws of both countries that are similar.
c. the Uniform Commercial Code.
d. the United Nations Convention on Contracts for the International
Sale of Goods.
1. Secure Courier, Inc., has a requirements contract with Petro Distribution
Corporation that obligates Petro to supply Secure with all the gasoline
it needs for its delivery vehicles for one year at $2.30 per gallon. A
clause inserted in small print in the contract by Secure, and not noticed
by Petro, states, "The buyer reserves the right to reject any shipment
for any reason without liability." For six months, Secure orders and
Petro delivers under the contract without any controversy. Then,
because of a war in the Middle East, the price of gasoline to Petro
increases substantially. Petro tells Secure it cannot possibly fulfill their
contract unless Secure agrees to pay $2.50 per gallon. Secure, in need
of the gasoline, agrees in writing to modify the contract. Later that
month, Secure learns it can buy gasoline at $2.40 per gallon from
Refined Oil Company. Secure refuses delivery of its most recent order
from Petro, claiming, first that the contract allows it to do so without
liability, and second, that it is required to pay only $2.30 per gallon if it
accepts the delivery. Discuss Secure’s contentions.
1. Creative Solutions Corporation (CSC) agrees to sell software to Drew
from CSC’s Web site. To complete the deal, Drew clicks on a button
that, with reference to certain terms, states, “I agree.” What is this sort
of agreement called? Do the parties have a binding, enforceable
contract that includes the terms? Explain.
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