1. Under the UCC, a modification to a contract for the sale of goods needs no consideration to be binding.
a.
True
b.
False
2. The UCC does not apply to a contract for the sale of goods if the value of the goods is less than $500.
a.
True
b.
False
False
Easy
3. The UCC is federal legislation enacted by Congress.
a.
True
b.
False
False
Easy
4. If the seller has made a substantial beginning in manufacturing customized goods, then an oral contract may be
enforceable regardless of the amount of money involved in the contract.
a.
True
b.
False
True
Moderate
5. In a mixed contract involving both goods and services, Article 2 of the UCC will govern if the predominant purpose is
the sale of goods.
a.
True
b.
False
True
Moderate
6. Under the UCC, a merchant is frequently held to a higher standard of conduct than a non-merchant.
a.
True
b.
False
True
True
Moderate
7. The UCC imposes a duty of good faith in the performance of all contracts.
a.
True
b.
False
True
Easy
8. Lorene, an artist, orally agrees to sell Sabrina a painting for $600. While Lorene is busy talking on the phone, Sabrina
writes her a note on the back of an envelope she finds in her purse. The signed note states that she will stop by the studio
to pick up the painting within the week. Sabrina changes her mind about the painting, and when Lorene sues to enforce
the contract, Sabrina defends on the basis of the statute of frauds. Sabrina will succeed with this defense.
a.
True
b.
False
9. Rachel Retailer sends a preprinted purchase order offering to buy goods from Snidley Supplier. Snidley acknowledges
Rachel’s offer with a preprinted acceptance form. The terms of the two forms do not mirror each other. To analyze
whether an enforceable contract exists, one must first determine whether the new language in the acceptance is an
additional term or a different term.
a.
True
b.
False
True
Moderate
10. Uncle Brandon promises to give his motorcycle to you for free at the end of the month. This transaction is governed
by UCC, Article 2, because a motorcycle is within the definition of “goods.”
a.
True
b.
False
False
Moderate
11. Megan agrees to sell Nancy her Rolex watch but they do not specify a price. In such a case, the court would not
enforce the agreement because all of the essential terms are not present.
a.
True
b.
False
Easy
12. A court is much more likely to find a contract unconscionable when one party is a consumer than if the two
parties are businesses.
a.
True
b.
False
True
Moderate
Bloom’s: Comprehension
13. Elizabeth worked as a salesperson in a carpet store. She was in the midst of divorce proceedings and needed some
money. Elizabeth sold her wedding ring. Elizabeth is considered a merchant with regard to the sale of the ring.
a.
True
b.
False
False
Easy
Bloom’s: Knowledge
14. Lian contracted for financial services from E-wise. This contract is governed by Article 2 of the UCC.
a.
True
b.
False
False
Easy
Bloom’s: Knowledge
15. Pizazz, Inc. sold a condo on the 34th floor in a building in downtown Chicago. This contract is governed by Article 2A
of the UCC.
a.
True
b.
False
16. In which of the following situations is the seller a merchant under Article 2 of the UCC?
a.
Paul, a full-time college student, sold his textbooks to State Bookstore.
b.
Randall, a part-time college student and full-time father, sold his textbooks to a friend.
c.
Zompa Inc., a toy manufacturer, contracted to sell dolls to TonTon Department Store.
d.
Mabel, a stay-at-home mom, sold her car to her friend Gloria.
False
Moderate
Bloom’s: Comprehension
17. Office Plus, an office supply store, ordered 600 blank CDs from Curtis Co., a manufacturer of computer products.
Office Plus placed the order using a preprinted purchase order form; Curtis acknowledged the order by sending a
preprinted acceptance form back to Office Plus. Unlike Office Plus’ form, which says nothing about packaging, Curtis’s
form specifies that the CDs will be packaged in cases of 10 CDs per box, 10 boxes per case. Which statement is correct?
a.
The UCC will classify this as a specialty goods exception and will reform the contract.
b.
Curtis’s packaging term is a different term which materially changes the offer. There is no contract.
c.
Curtis’s packaging term is an additional term and therefore a part of the contract unless Office Plus promptly
objects to the term.
d.
The UCC does not cover the contract because both parties are merchants.
18. Stanziano Construction needs a backhoe to complete a project. If it pays Hofmann Rentals for temporary use of the
equipment, the transaction will be governed by
a.
Article 2 of UCC.
b.
Article 2A of the UCC.
c.
Article 3 of the UCC.
d.
bulk transfer law.
Bloom’s: Knowledge
19. Trey, a full-time college student, sold his car to Don, another student. In the performance of this contract, Trey
a.
has a duty of good faith which means honesty in fact and the exercise of good judgment.
b.
has a duty of good faith which means honesty in fact.
c.
has a duty of good faith which means honesty in fact and the exercise of reasonable commercial standards of
fair dealing.
d.
does not have a duty of good faith.
Bloom’s: Comprehension
20. Which of the following types of property would be classified as “goods” under Article 2 of the UCC?
a.
Cash in hand
b.
A stock certificate
c.
A computer
d.
A membership to a health club
Bloom’s: Comprehension
21. In a “mixed contract,” one involving a sale of both goods and services, the court will
a.
apply the UCC to the provisions of the contract involving the sale of goods and the common law to the
provisions involving the sale of services.
b.
apply the lex mercatoria to the contract.
c.
first determine the dominant purpose of the contract. If the sale of goods dominates the contract, then the court
will apply the law of the UCC, Article 2. If the sale of services dominates the contract, the court will apply the
common law.
d.
apply UCC Article 2A.
Bloom’s: Comprehension
22. Which of the following contracts requires a writing under the UCC, Article 2?
a.
Jeremy, a full-time student, sold his snow blower to a friend for $450.
b.
Kayla, a full-time student, purchased a used computer from Office Plus for $300.
c.
A toy manufacturer contracted to sell dolls valued at $10,000 to a department store.
d.
Tobias Department Store contracted to sell Jenny a $400 doll.
Bloom’s: Comprehension
23. Newt, a gun dealer, offers to sell a rare civil war musket to Rush, another dealer, for “$15,000, insurance and shipping
paid by buyer.” Rush responds, “I accept. Insurance and shipping costs divided equally between seller and buyer.” The
parties
a.
do not have a contract since the acceptance violated the mirror image rule.
b.
do not have a contract since Rush’s response was a counteroffer.
c.
have a contact and, in the majority of states, the terms of the offeree control.
d.
have a contract and, in the majority of states, the different terms will cancel each other out.
24. Which of the following contracts is most likely to be declared unconscionable?
a.
A consumer sales contract which charges 300 times the fair market value of the goods.
b.
A consumer sales contract which limits the consumer’s remedies to repair or replacement.
c.
A contract between wholesaler and retailer which adds delivery charges at 15% of the costs of the goods.
d.
A sales contract between wholesaler and retailer which limits remedies such as consequential damages.
Bloom’s: Comprehension
Bloom’s: Knowledge
25. If Edmund and Kaylin have a writing mistakenly showing a sale and purchase of goods for $10,000 when the price
should have been $1,000, a court will most likely
a.
enforce the agreement, relying on oral testimony to determine the correct price.
b.
only enforce the agreement as written.
c.
not hear the case unless both parties are merchants.
d.
not enforce the agreement since the writing did not reflect a meeting of the minds of the parties.
26. The difference between the UCC requirement of good faith and doctrine of unconscionability is that
a.
good faith prohibits shockingly one-sided terms in a contract.
b.
good faith focuses on the parties’ behavior as they perform the contract.
c.
unconscionability looks at the parties’ attempt to carry out the terms of the contract in a reasonable manner.
d.
unconscionability focuses on whether a party is honest in fact and exercises reasonable commercial standards
of fair dealing.
Moderate
Bloom’s: Comprehension
27. Which of the following is TRUE regarding an open price term?
a.
It makes the contract unenforceable.
b.
The price may be fixed by the seller.
c.
The price is the “reasonable” price at the time of delivery.
d.
The price is set by the buyer.
Easy
Bloom’s: Knowledge
28. To simplify, clarify, and modernize the law governing commercial transactions, the UCC permits the use of “open
terms” in sales contracts. In the use of “open terms,” which of the following is TRUE?
a.
The court will use market value and other comparable sales to determine what a reasonable price would have
been at the time of delivery if the parties have not settled the price in the contract.
b.
If time of payment is not mentioned in the contract, payment within a commercially reasonable time is
presumed.
c.
If the contract permits the buyer or seller to determine the price during contract performance, the UCC
requires the party to do so in good faith.
d.
All of the above are true.
Moderate
Bloom’s: Comprehension
Moderate
Bloom’s: Comprehension
29. Harriett raises and sells hippos. In order to keep her hippos happy and healthy, she feeds them Hippo Chow, which she
buys from the local pet store. Under the UCC, Harriett is
a.
a merchant of both hippos and Hippo Chow.
b.
a merchant of hippos, but not of Hippo Chow.
c.
a merchant of Hippo Chow, but not of hippos.
d.
not a merchant of either hippos or Hippo Chow.
30. Dean Builders agrees to purchase all of its sump pump requirements for the new houses it builds from Satisfactory
Sump Pump, Inc. These two business have had similar agreements the last three years and Dean’s requirements have
averaged 100 sump pumps per year. This year there was an unusually wet spring and Dean’s requirements doubled to 200
sump pumps. Because of the high demand for sump pumps, the market price of the pumps tripled. Satisfactory Sump
Pump, Inc. delivers 100 pumps at $75, the contract price. Satisfactory has exhausted its inventory and cannot deliver any
more, so Dean buys the other 100 pumps from other suppliers at $225 each. Dean sues Satisfactory Sump Pump, Inc. for
the additional expense. What is the most likely result?
a.
Satisfactory Sump Pump, Inc. wins; output and requirements contracts are not enforceable since no quantity is
stated.
b.
Dean wins; Satisfactory Sump Pump, Inc. agreed to meet the needs of Dean and did not do so, which is a
breach.
c.
Satisfactory Sump Pump, Inc. wins; requirements contracts are governed by a good faith standard, and it was
unreasonable for Dean to demand so many additional pumps.
d.
Dean wins; the requirement of good faith applies only between merchants, and Dean is not a merchant.
31. Under the UCC statute of frauds, the writing for a sale of goods must
a.
state the quantity.
b.
state the price.
c.
be signed by both parties.
d.
be notarized.
Easy
Bloom’s: Knowledge
32. A requirements contract is a contract
a.
in restraint of trade.
b.
in which the seller provides all of the goods that the buyer needs.
c.
in which the buyer purchases all of the goods that the seller produces.
d.
in which a party must buy a product it does not want in order to be allowed to buy a product it requires.
Easy
Moderate
Bloom’s: Comprehension
33. Betty’s BBQ orally contracts with Denny’s Design House for 10,000 matchbooks at the price of 10 cents per
matchbook. The matchbooks are to be embossed with a logo to be designed by Denny’s Design promoting Betty’s BBQ.
Price, payment terms, delivery terms are agreed upon between the parties. Denny’s Design creates the logo, gets Betty’s
BBQ’s approval of the design and begins applying the logo on the matchbook covers. Denny’s Design has almost finished
the order when Betty’s BBQ calls to say it has decided to make the eatery a smoke-free restaurant and cancels the order.
Denny’s Design sues, but Betty’s BBQ states that the agreement is unenforceable under the statute of frauds. Who wins?
a.
Denny’s Design House wins. This situation falls under an exception to the statute of frauds.
b.
Denny’s Design House wins. This is a service contract for design of a logo. Therefore, the UCC, including the
statute of frauds provisions of Article 2, does not apply.
c.
Betty’s BBQ wins. This is a contract for $1000. The statute of frauds requires all sales contracts in excess of
$500 be in writing.
d.
Betty’s BBQ wins. The statute of frauds only applies to merchants. Betty’s BBQ is not a merchant in this
instance because it intended to give the matchbooks away and not sell them.
34. Long’s Department Store contracted to buy 1,000 drop-waist velour dresses in heather gray from Durham.
Subsequently, Durham called and asked to ship mink-colored dresses instead of heather gray. Long agreed, in writing, to
the change. Which statement is correct?
a.
The modification is not enforceable since there was no consideration for the change.
b.
The modification is not enforceable since the parties are merchants.
c.
The modification is enforceable.
d.
Whether the modification is enforceable depends on the gap-filler rule.
35. Which of the following is a stated purpose of Article 2 of the UCC?
a.
to simplify the law governing real estate transactions
b.
to free up the courts from having to decide on contract issues
c.
to make the laws governing sales uniform among the various jurisdictions
d.
to come up with a boilerplate form to be used in all sales transactions
Bloom’s: Knowledge
36. By definition, a sale under Article 2 of the UCC requires
a.
that the parties involved be merchants.
b.
that the product involved be goods, services, or a mixture; that the sale be between or among merchants; and
that the sale take place in the normal course of business for that industry.
c.
that title to the goods pass between the seller and the buyer and that a price be paid for the goods.
d.
that the product involved be an item that can be sold or leased.
Bloom’s: Knowledge
37. UCC Section 2-204 provides three important rules that enable parties to make a contract quickly and informally.
Which of the following is NOT one of these rules?
a.
The parties may make a contract in any manner sufficient to show that they reached an agreement.
b.
A writing sufficient under the statute of frauds may be a simple memo, a letter, or informal note, but need not
itself be a contract.
c.
The UCC will enforce a deal even though it is difficult to say exactly when it was formed.
d.
A court may enforce a bargain even though one or more terms were left open.
Bloom’s: Comprehension
38. During the development of commercial law centuries ago, businessmen throughout England and Europe
a.
began to rely on the same set of laws used to govern land transactions.
b.
began to rely on a body of rules called lex mercatoria.
c.
had little need for laws to resolve commercial disputes.
d.
had a vast body of rules governing contracts.
Bloom’s: Knowledge
39. ABC Siding, Inc. manufactures aluminum siding. ABC enters into a contract to deliver siding to Slippery Siding, Ltd.,
a retailer of aluminum siding. The written agreement insists that all modifications to the agreement be in writing and
signed by both parties. This prohibition against oral modifications is
a.
valid regardless of whether the clause is signed separately.
b.
invalid unless the clause is signed separately by Slippery Siding, Ltd.
c.
invalid unless the clause is signed separately by ABC Siding, Inc.
d.
invalid unless new consideration is supplied by the parties when the modification agreement is made.
Bloom’s: Comprehension
40. Patsy is shopping for a used car. She finds a car she likes at Morley Motors. Discuss how the UCC views each party
and the standard of conduct it imposes on the parties in performing the sales transaction.
plus the exercise of reasonable commercial standards of fair dealing. Patsy is not a merchant in cars and
Bloom’s: Comprehension
41. Jasmine agrees to purchase 1500 tons of recycled glass from Louie, the price to be determined at the time of delivery.
Is such an agreement enforceable? Compare the common law with Article 2 of the UCC.
Challenging
Bloom’s: Analysis
42. Oxtren, Inc. is a tools wholesaler. Oxtren sent M&E Tools a purchase order offering to buy 200 Model 308 milling &
drilling machines with R-8 spindles. The purchase order stated the credit term to be 2% discount if payment was made in
10 days, with the full amount due in 30 days. M&E responded with an acceptance form accepting the offer. The
acceptance form, however, stated that full payment was due on delivery and that disputes under the contract would be
settled by arbitration.
(A)
Do the parties have an agreement?
(B)
What is the payment term?
(C)
Is the arbitration clause part of the agreement?
Challenging
Bloom’s: Analysis
43. Sean of Sean’s Shrimp House was enjoying a cup of cappuccino while visiting with Ollie at Ollie’s Ocean Front Bar &
Grill. During the course of their conversation, Sean agreed to supply 100 pounds of shrimp per month for the next year to
Ollie’s restaurant at the price of $2.50 per pound. When Sean got back to his office, he sent a written confirmation of the
agreement to Ollie. Six weeks after receiving the confirmation Ollie wrote back, stating that he had not agreed to the price
of $2.50 per pound. Is Ollie bound to the confirmation?
refuted the memo within 10 days. Six weeks is an unreasonable time to wait to respond.
Challenging
Morley must also act as fairly as the business community routinely expects.
Challenging
Bloom’s: Analysis
44. Jones contracts to buy a computer from Martin for $1500. The contract calls for Martin to service the computer
quarterly for the first year and to tutor Jones on how to use the software. Is this contract covered by the UCC or common
law?
45. Discuss the importance of the UCC to the law of sales. Include who created the UCC, how it became law, and the
stated purposes of the statute.