The Legal Environment of Business and Online Commerce, 7e (Cheeseman)
Chapter 12 UCC Sales and Lease Contracts and Warranties
1) Article 2 of the Uniform Commercial Code is also applied by federal courts to sales contracts
governed by federal law.
2) Article 2 of the UCC applies to sales contracts for the sale of intangible goods.
3) If a person buys a computer, the sale of contract for it would be subject to Article 2 of the
UCC.
4) Only movable goods come under the scope of Article 2 of the UCC.
5) Contracts for the provision of services are not covered by Article 2 of the UCC.
6) Sales that contain provisions of services and goods in the same transaction are not covered by
Article 2 of the UCC.
7) Article 2A of the UCC deals with lessors and lessees.
8) In a lease contract, the title of goods is passed from the lessor to the lessee.
9) Revised Article 2A (Leases) includes provisions that recognize the importance of electronic
lease contracts.
10) A finance lease involves a lessor leasing money to a lessee.
11) In a finance lease, the lessor manufactures and supplies the goods of the contract.
12) If the parties to a sales contract do not agree to the time, place, and manner of delivery of the
goods, the place for delivery is the seller’s place of business.
13) The firm offer rule allows the offeror to revoke an offer at any point of time prior to the
acceptance.
14) A contract is only created when the offeror receives the offeree‘s acceptance.
15) As per the Statute of Frauds provisions, all contracts for the sale of goods costing $500 or
more must be in writing.
16) In a destination contract, the seller is required to replace any goods lost in transit.
17) In a case in which a buyer purchases goods from a thief who has stolen them, the purchaser
does not acquire title to the goods.
18) A person with voidable title to goods can transfer the goods title to a good faith purchaser for
value.
19) If the receipt of an electronic communication has a legal effect, it has that effect even if no
individual is aware of its receipt.
20) Receipt of an electronic acknowledgment of an electronic communication establishes that the
communication was received and establishes that the content sent corresponds to the content
received.
21) The right to withhold delivery is available to the seller if the buyer or lessee wrongfully
rejects or revokes acceptance of the goods.
22) Only written express warranties are valid.
23) A seller’s or lessor’s statement of opinion or commendation of the goods does not create an
express warranty.
24) An implied warranty requires that the quality of the goods must pass without objection in the
trade.
25) The implied warranty of fitness for a particular purpose applies only to merchants.
26) Implied warranties of quality cannot be disclaimed.
27) A disclaimer of the implied warranty of merchantability must specifically mention the term
merchantability for the implied warranty of merchantability to be disclaimed.
28) The ________ is a model act passed in 1949 that includes comprehensive laws that cover
most aspects of commercial transactions.
A) Gramm-Leach Bliley Act
B) Sarbanes-Oxley Act
C) Uniform Sales Act
D) Uniform Commercial Code
29) Which of the following articles in the UCC deals with the sale of goods?
A) Article 2
B) Article 4
C) Article 5
D) Article 8
30) In which of the following does the title to the goods pass from the seller to the buyer?
A) option contract
B) rental agreement
C) lease
D) sale of goods
31) A ________ is defined as the passing of title of goods from a seller to a buyer for a price.
A) lease
B) sale
C) loan
D) gift
32) Which of the following sales would be covered by Article 2 of the UCC?
A) the sale of intangible goods
B) the sale of tangible goods
C) the sale of real estate
D) the sale of stocks
33) Which of the following describes a mixed sale?
A) a sale that involves two or more intangible goods
B) a sale that involves the passing of title of goods from a seller to a buyer for a price
C) a sale that involves the possession and use of named goods for a set
D) a sale that involves the provision of a service and a good in the same transaction
34) A ________ is a transfer of the right to the possession and use of named goods for a set term
in return for certain consideration.
A) trade
B) gift
C) lease
D) sale
35) A person who transfers the right of possession and use of goods under a lease is known as
the ________.
A) lessor
B) lessee
C) seller
D) consignee
36) Which of the following does Article 2A of the Uniform Commercial Code govern?
A) mixed sales
B) sale of goods
C) leases
D) letters of credit
37) Whistle Cabs, a taxi service company, has been ordered by the traffic department to update
their taximeters to digital ones. Whistle Cabs decides to contract with Running Electricals, who
provide digital taximeters. But to acquire it on such short notice, Whistle Cabs approaches
Goldmint Bank. Goldmint Bank purchases the taximeters, and the taximeters are delivered to
Whistle Cabs. The contract between Whistle Cabs and Goldmint Bank allows the taxi service
company to use the taximeters for a period of time by providing monthly rentals till that period is
completed. What is the nature of the contract made between Goldmint, Whistle Cab, and
Running Electricals?
A) counteroffer
B) lease
C) sale of goods
D) option contract
38) Under the UCC, if the time, place, and manner of delivery of goods are not mentioned in a
contract, ________.
A) the place of delivery is the buyer’s place of business
B) the contract is void for lack of definiteness
C) the place of delivery is the seller’s place of business
D) the seller is obligated to pay for shipping to the buyer’s place of business
39) The rule states that a merchant who offers to buy, sell, or lease goods and gives a written and
signed assurance on a separate form that the offer will be held open cannot revoke the offer for
the time stated or, if no time is stated, for a reasonable time is referred to as ________.
A) gap-filling rule
B) firm-offer rule
C) mirror image rule
D) open term rule
40) A contract is created when ________.
A) the acceptance has been received by the offeror
B) an acknowledgement is sent by the offeror to the offeree of receiving an acceptance
C) the offeree dispatches the acceptance
D) a written acceptance has been passed between the offeror and the offeree
41) Which of the following is true of additional terms being added under the UCC?
A) They are considered to be counteroffers.
B) It can be added when the sale is between two merchants.
C) It can be added into the contract without the consent of the offeror.
D) It can be added in a sale that involves one or both parties being a nonmerchant.
42) The ________ requires all contracts for the sale of goods costing $500 or more and lease
contracts involving payments of $1,000 or more to be in writing.
A) parol evidence rule
B) open price term
C) firm offer rule
D) Statute of Frauds
43) Kimberley, a merchant-seller in Kansas, had an oral contract to sell goods to Jane, a
merchant-buyer in Memphis for $100,000. Two days after contracting, Kimberley sends a
sufficient written confirmation to Jane of the agreed-upon transaction. Jane, who has reason to
know the contents of the written confirmation, fails to object to the contents of the confirmation
immediately. Two weeks after receiving the written confirmation, Jane receives a delivery of the
goods from Kimberley. Jane immediately sends an objection to the confirmation to Kimberley.
Which of the following is true of the contract between Kimberley and Jane?
A) The Statute of Frauds can be raised against the contract because a letter of objection was sent
to the offeror.
B) The offer is valid as the offeree knew the contents of the confirmation and did not object
within 10 days.
C) The contract is void as the offeror did not receive a letter of confirmation from the offeree for
delivery.
D) The Statute of Frauds can be raised because the offeree did not sign the contract.
44) A computer program or an 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, is known as a(n) ________.
A) electronic agent
B) electronic record
C) firewall
D) operating system
45) Which of the following parties to a shipping contract bears the risk of loss of goods during
transport?
A) the seller
B) the carrier
C) the buyer
D) the seller and the carrier
46) The ________ bears the risk of loss during transportation in a destination contract.
A) buyer
B) seller
C) carrier
D) shipper
47) Which of the following would contain the term “no-arrival, no-sale” in their contract?
A) shipment contract
B) destination contract
C) a contract to sell real estate
D) consignment contract
48) Larry, a merchant seller, had contracted with Simon, to buy welding equipment. The contract
stipulated that Larry would pick up the equipment from Simon’s warehouse on the 14th day from
the date of the contract. But Larry could not make the pick up on that date and before he could
do so on the 15th day, the warehouse was burned down by miscreants. In this situation, who
bears the risk of loss of the goods that were to be received by Larry?
A) The risk of loss lies with Larry for delaying the pick-up.
B) The risk of loss lies with Simon for not protecting the goods.
C) The risk of loss is equally shared by Larry and Simon.
D) The risk of loss is shifted to the persons responsible for the fire.
49) A title for goods obtained by a seller through fraud, impersonation, or a dishonored check is
referred to as a ________.
A) unenforceable title
B) voidable title
C) conditional title
D) unequivocal title
50) Steve brings his watch to Knell Watches to be repaired. Knell Watches sells and repairs
watches. Steve entrusts his watch at Knells’ until it is repaired. The watch store repairs the watch,
but then sells it to Kevin, who buys the watch with a fraudulent check that bounced. Kevin then
resells the watch to his friend Jonathan, who is unaware of the stolen nature of the watch. Who
can legally claim ownership over the watch in court?
A) Jonathan
B) Steve
C) Knell Watches
D) Kevin
51) Who among the following is a good faith purchaser?
A) a person who buys goods from a person with a voidable title
B) a person who buys stolen goods without being aware of it
C) a buyer who agrees to hold goods for a person till the delivery of the goods is made
D) a buyer to whom goods are delivered by a seller to sell on the seller’s behalf
52) In which of the following does a seller have the right to stop delivery of goods in transit
regardless of the size of the shipment?
A) if the buyer repudiates the contract
B) if the buyer has payments due
C) if the seller learns of the buyer’s insolvency
D) if the seller has been ordered for specific performance
53) Klint Microsystems, a microprocessor manufacturer, was contracted by Zeitar Studios to
manufacture specially designed microchips to be used in an audio engineering process. Zeitar
was to pay Klint $300,000 as per the contract. Klint decided to redesign their existing microchips
and make them suitable for Zeitar. While the finished microchips were being shipped via a
carrier, Klint was informed of Zeitar’s insolvency. Klint cancelled the shipment before it was
delivered. Klint then resold the chips to another Studio where they had to settle for $150,000, as
the chips were now only suitable for specific audio engineering processes.
What right to remedy did Klint exercise when they stopped shipment to Zeitar?
A) right to dispose of goods
B) right to stop goods in transit
C) right to obtain specific performance
D) right to recover purchase rent
54) Pollard entered into a sales contract to purchase a specific Picasso painting from Jenson for
$15 million. When Pollard tenders payment, Jenson refuses to sell the painting to the buyer.
Which of the following legal rights to remedy can Pollard exercise to retrieve the Picasso
painting from Jenson?
A) right to cover
B) right to recover damages for nondelivery
C) right to obtain specific performance
D) right to cancel the contract
55) Blue Rorschach Inc. has an immediate requirement for 80 laptops and contracts with Zenzo
Electronics 80 Dell laptops at $550 each. But Zenzo Electronics breaches the contract and fails to
deliver the laptops. Blue Rorschach then immediately contracts Dell Computers, buys 100
laptops at $600 per laptop, and then sues Zenzo Electronics for the breach of contract.
What legal right to remedy did Blue Rorschach exercise when contracting Dell Computers and
suing Zenzo for failure of delivery of goods?
A) right to replevy goods
B) right to cover
C) right to recover damages for accepted nonconforming goods
D) right to obtain specific performance
56) A ________ is a seller’s or lessor’s express or implied assurance to a buyer or lessee that the
goods sold or leased meet certain quality standards.
A) bond
B) caveat emptor
C) warranty
D) collateral
57) A warranty that is created when a seller or lessor makes an affirmation that the goods he or
she is selling or leasing meet certain standards of quality, description, performance, or condition
is known as a(n) ________ warranty.
A) implied
B) conditional
C) closed
D) express
58) Which of the following would constitute the creation of an express warranty for goods?
A) description of the goods
B) commendation of the goods
C) prior experience with the goods
D) affirmation of the value of the goods
59) Sam expressed interest in buying a painting from Jasper, who claimed that the painting was a
family heirloom. Jasper’s asking price was $15,000, but Sam was only willing to offer $13,000.
Jasper told him that it was a very old painting worth a fortune and that others would gladly pay
$20,000 for it. He also told him that he was only selling it under its market value because he
needed the money immediately. He then implied that Sam could sell it for a higher rate if he
wanted. Sam decided to buy the painting for $15,000 on the condition that if he found that the
painting was worth less than $15,000, Jasper would have to take the painting back and refund
Sam. Which of the following warranties did this sales contract have?
A) an implied warranty of merchantability
B) an express warranty
C) a statement of opinion
D) an implied warranty of fitness
60) Unless properly disclosed, a warranty that is implied that sold or leased goods are fit for the
ordinary purpose for which they are sold or leased, as well as other assurances is known as
________.
A) implied volatility
B) implied cause of action
C) implied assertion
D) implied warranty of merchantability
61) Which of the following would constitute an implied warranty?
A) affirmation of the facts of the goods
B) description of the goods
C) model or sample of the goods
D) adequate packaging and labeling of the goods
62) What of the following is true of an “as is” disclaimer?
A) It disclaims all implied warranties.
B) It disclaims all express warranties.
C) It is a type of implied warranty.
D) It cannot be replaced by another warranty.
63) What type of transaction is covered under the Magnuson-Moss Warranty Act?
A) consumer transactions
B) commercial transactions
C) industrial transactions
D) governmental transactions
64) What are the provisions for contracts with services under Article 2 of the UCC?
65) What is the passage of title to goods?
66) How does the UCC treat goods that were fraudulently obtained?
67) Give an account of express warranties.
68) What is the difference between a full warranty and a limited warranty?
69) The ________ refers to a model act that includes comprehensive laws that cover most
aspects of commercial transactions
70) Article 2 of the UCC governs ________.
71) Article ________ of the UCC governs leases of goods.
72) A transfer of the right to the possession and use of named goods for a set term in return for
certain consideration is known as ________.
73) The ________ rule permits certain open terms to be “read into” a sales or lease contract.
74) If the parties to a sales contract do not agree to the time, place, and manner of delivery of the
goods, the place for delivery is ________.
75) In a destination contract, the ________ bears the risk of loss of the goods during their
transportation.
76) The term ________ refers to a situation in which a thief acquires no title to goods he or she
steals.
77) A seller or lessor has ________ if he obtained the goods through fraud, if his check for the
payment of the goods or lease is dishonored, or if he impersonated another person.
78) ________ are damages that will be paid upon a breach of contract that are established in
advance.
79) The doctrine of ________ governed the law of sales and leases for centuries, before the UCC
was adopted.
80) A(n) ________ is a warranty created when a seller or lessor makes an affirmation that the
goods he or she is selling or leasing meet certain standards of quality, description, performance,
or condition.
81) ________ refers to a warranty that arises where a seller or lessor warrants that the goods will
meet the buyer’s or lessee’s expressed needs.
82) A statement that negates express and implied warranties is known as a ________.
83) The ________ is a federal statute that regulates written warranties on consumer products.