Business Law Chpt 19 Formation of Sales and Lease Contracts

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Bild-Rite, Inc., is a Colorado-based firm that does business with clients throughout North America. Bild-Rite oversees construction projects, and buys and sells commercial buildings, undeveloped land, and construction supplies and other goods. Bild-Rite has had to deal with work-site theft and vandalism. With respect to these circumstances, the Uniform Commercial Code (UCC) provides a framework for

a. commercial transactions for the sale of and payment for goods.
b. international construction contracts.
c. domestic and foreign transactions in real estate.
d. prosecuting crimes against business interests.

a. commercial transactions for the sale of and payment for goods.

Stardust Coffee Company is a Texas-based firm that does business throughout the world. Stardust manages retail and wholesale operations, buys and sells commercial venues, undeveloped land, and coffee beans, and other goods. Stardust has had to deal with employee and customer theft. With respect to these circumstances, the Uniform Commercial Code (UCC) provides a framework for

a. commercial transactions for the sale of and payment for goods.
b. international distribution agreements.
c. domestic and foreign transactions in real estate.
d. prosecuting crimes against business interests.

a. commercial transactions for the sale of and payment for goods.

Omni Corporation is a Pennsylvania-based firm that does business throughout the United States. With respect to this circumstance, the UCC has been adopted by, and applies in,

a. a few of the states.
b. all of the states, in whole or in part.
c. half of the states.
d. none of the states, to date.

b. all of the states, in whole or in part.

High n' Mighty Mart, Inc., is an Illinois-based firm that does business throughout the United States. With respect to this circumstance, the UCC has been adopted by, and applies in,

a. all of the states, in whole or in part.
b. most of the states on the Atlantic and Pacific coasts.
c. none of the states, to date.
d. only the states on the Mississippi, Missouri, and Ohio Rivers.

a. all of the states, in whole or in part.

Over the course of a year, Retail Marketers, 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 Savings 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.

d. the sale of the goods.

Over the course of a year, Real Deal Corporation sells appliances to customers to whom it extends credit. Real Deal orders the appliances from Superior Appliance Company's warehouse, from which the items are shipped via common carrier to Real Deal's customers. Article 2 of the UCC governs

a. all of the parties' sales of the goods.
b. Real Deal's extension of credit.
c. Superior's storage of the goods.
d. the common carrier's delivery of the goods.

a. all of the parties' sales of the goods.

Nemo pays Office Supply Company $1,500 for a laptop computer. Under the UCC, this is

a. a gift.
b. a lease.
c. a sale.
d. not a gift, a lease, or a sale.

c. a sale.

Expert Stitching Corporation enters into a contract to sell denim clothing to Fine Fashion Company, which in turn sells a pair of jeans to Grady, a consumer. In contrast to standards that apply to consumers, the UCC imposes on merchants

a. less strict legal standards.
b. special business standards.
c. stricter ethical standards.
d. the same overall standards.

b. special business standards.

In a dispute over a sale involving a bicycle, Dain argues that as to this deal Elle's Hobby Shop, where Dain bought the bike, is a merchant. A court may determine whether Elle's is a merchant by assessing whether

a. it has sold any bikes within the last year.
b. it holds itself out by occupation as having knowledge or skill unique to the bike in the transaction.
c. its owner enjoys biking.
d. it subscribes to Bike, a biweekly trade magazine.

b. it holds itself out by occupation as having knowledge or skill unique to the bike in the transaction.

Rikki and Sid enter into a sales contract. 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.

c. agree to whatever terms they wish.

Cleo sells kitchen appliances, and occasionally cleaning supplies, to persons who come into her store, Discount Appliances. One afternoon, Cleo sells a used display shelf to Earl. Under the UCC, Cleo is a merchant of

a. cleaning supplies and kitchen appliances only.
b. cleaning supplies, display shelves, and kitchen appliances.
c. cleaning supplies only.
d. kitchen appliances only.

a. cleaning supplies and kitchen appliances only.

Excel Autos & Trucks, Inc., contracts to sell five trucks to First Leasing Corporation, which contracts to lease the trucks to General Delivery Company. Article 2A of the UCC applies to

a. neither the lease nor the sale.
b. the lease and the sale.
c. the lease only.
d. the sale only.

c. the lease only.

Rally Corporation enters into a contract to sell ski gear to SnoSportz Company, which sells a pair of the skis to Tyra, a consumer, who later sells them to Uli, another consumer. Article 2 of the UCC applies to the sales transactions between

a. all of the buyers and sellers.
b. Rally and SnoSportz only.
c. SnoSportz and Tyra only.
d. Tyra and Uli only.

a. all of the buyers and sellers.

American Products Company and Best Manufacturing, Inc. (BMI), enter into a contract for the sale of a certain quantity of machine parts, with BMI to determine the price. The price must be fixed according to the concept of

a. good faith.
b. square dealing.
c. the mere image rule.
d. unconscionability.

a. good faith.

Curtis enters into a contract with Drive-Away Lease Company for a three-year lease of a car. This contract is subject to

a. Article 2 of UCC.
b. Article 2A of the UCC.
c. Article 11 of the CISG.
d. the common law only.

b. Article 2A of the UCC.

Cathy and Dave sign a contract for a sale of goods. Cathy is to set the price for the goods at the time of delivery, but on delivery, refuses to do so. Dave may only

a. fix a reasonable price.
b. fix a reasonable price or treat the contract as canceled.
c. treat the contract as canceled.
d. wait for Cathy to set the price.

b. fix a reasonable price or treat the contract as canceled.

Standard Office Corporation pays Tech Products $1,000 to use a Tech computer for a month. For purposes of the UCC, this is

a. a bailment.
b. a consignment.
c. a lease.
d. a sale.

c. a lease.

Variety Goods, Inc., and World Sales Corporation enter into a contract that does not specify the payment terms. Payment may be made in

a. any commercially acceptable means except cash.
b. cash only.
c. cash or any commercially acceptable substitute.
d. cash or check only.

c. cash or any commercially acceptable substitute.

Metro Daily and New City Newsstand enter into a contract under which Metro agrees to deliver a certain quantity of newspapers to New City each day. The contract does not include a price term. In a suit between the parties over the price, a court will

a. determine a reasonable price.
b. impose the lowest market price.
c. refuse to enforce the agreement.
d. return the parties to the positions they held before the contract.

a. determine a reasonable price.

NuTech Company agrees to sell computer equipment to Office Stores, Inc. (OSI) for OSI to market to its customers. Their contract will not be enforceable unless it includes

a. the duration of the deal.
b. the price of the goods.
c. the quantity of the goods.
d. the requirements of OSI's customers.

c. the quantity of the goods.

Regional Products, Inc., agrees to sell to Quantity Dealers Corporation a certain amount of goods 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 UCC-designated warehouse.
c. Regional's place of business.
d. Quantity's place of business.

c. Regional's place of business.

Doctors Medical Clinic orders 1,000 bandages from Emergency Supplies Company but fails to specify the sizes. The bandages are delivered in an assortment of sizes. Doctors Medical Clinic may

a. accept the bandages "as is" only.
b. accept the bandages "as is" or reject the entire shipment only.
c. accept only the bandages that it wants and reject the rest.
d. reject the entire shipment only.

c. accept only the bandages that it wants and reject the rest.

Roy's Chick'n Shack orders chicken from Standard Food Supplier, but Standard does not deliver. Roy's will probably be unable to enforce the agreement if the parties

a. did not limit the duration of the deal.
b. did not specify a payment term.
c. did not specify a quantity term.
d. have not begun to perform.

c. did not specify a quantity term.

Contractors Construction Corporation offers to buy from Dandy Cement Company a certain quantity of cement for a certain price. Dandy can accept the offer by

a. doing nothing.
b. promising to ship or promptly shipping the cement.
c. promising to ship the cement only.
d. promptly shipping the cement only.

b. promising to ship or promptly shipping the cement.

Desktop Company offers to sell eRetail, Inc., 1,000 computers for a $500,000, states that the offer will be open for six days, and asks for a response by fax. On the fourth day, eRetail sends an acceptance to Desktop via the mail, which is received on the sixth day. In this deal

a. a contract is formed.
b. no contract is formed, because Desktop asked for a response by fax.
c. no contract is formed, because Desktop received the acceptance late.
d. no contract is formed, because eRetail sent the acceptance late.

a. a contract is formed.

Best Sales, Inc., is the offeror and City Goods Corporation is the offeree under a unilateral sales contract in which Delta Products Company is also interested. Best is not notified of City's performance within a reasonable time. Best

a. may treat the offer as having lapsed.
b. must assume that City has started to perform.
c. must contact City.
d. must contract with Delta.

a. may treat the offer as having lapsed.

Retail Music, Inc., offers to buy from Super Products Corporation (SPC) 1,000 blank CDs of a certain brand. Without notifying Retail, SPC timely ships CDs of a different brand. This shipment is

a. an acceptance of the offer and a breach of the parties' contract.
b. an acceptance of the offer and a fulfillment of the parties' contract.
c. a refusal of the offer and a breach of the parties' contract.
d. a refusal of the offer and a fulfillment of the parties' contract.

a. an acceptance of the offer and a breach of the parties' contract.

Equipment Rental Corporation and Family Farm, Inc., are parties to an oral agreement for a lease of goods with payments in excess of $10,000. They may satisfy the Statute of Frauds by

a. mutually agreeing not to commit fraud.
b. restating the terms in a phone call.
c. setting out the terms in an e-mail.
d. shaking hands on the deal.

c. setting out the terms in an e-mail.

United Farms offers to sell Valu Bakeries, Inc., fifty bushels of wheat. Valu's representative Wendy responds, "We agree to buy fifty bushels only if the wheat is Grade A quality." Wendy's statement is

a. a breach of the parties' contract.
b. a counteroffer.
c. a fulfillment of the parties' contract.
d. an acceptance.

b. a counteroffer.

Kelly offers to buy cooking oil from Jim. Jim believes Kelly asks for 10,000 gallons and orally agrees to the sale. When the parties later dispute the deal in court, Jim's claim of 10,000 gallons and Kelly's testimony that she ordered only 1,000 gallons

a. prevents the enforcement of any contract between these parties.
b. supports an enforceable contract for 10,000 gallons.
c. supports an enforceable contract for 5,500 gallons.
d. supports an enforceable contract for 1,000 gallons.

d. supports an enforceable contract for 1,000 gallons.

Rite Clothiers, Inc., sells t-shirts to Brand Name Stores, Inc., under an existing contract. When textile costs increase, Brand agrees to a price increase, but later wants to cancel the contract. Brand 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.

d. not cancel the contract.

Recreation Supplies, Inc. (RSI), and Sam, the owner of a Tourist Time shop, orally agree to a sale of beach balls and seashells for $1,000. Sam gives RSI a check for $400 as a partial payment. This contract is

a. enforceable to the extent of $400.
b. fully enforceable because it is for specially made goods.
c. fully enforceable because it is oral.
d. not enforceable.

a. enforceable to the extent of $400.

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.

c. the furnishings priced at $500 or more.

Fruits & Vegetables, Inc., and Great Grocery Stores dispute the interpretation of an ambiguous phrase in their contract. In a suit between the parties to construe the contract, a court may accept evidence of

a. consistent additional terms only.
b. consistent additional terms and contradictory terms only.
c. contradictory terms only.
d. anything extrinsic to the contract.

a. consistent additional terms only.

Tasty Pastries, Inc., and other bakers refer to a "baker's dozen" as consisting of a collection of thirteen baked goods. This is an example of

a. course of dealing.
b. course of performance.
c. square dealing.
d. usage of trade.

d. usage of trade.

Timber Products, Inc., and Walt, a consumer, enter into a contract for a sale of plywood. If the contract includes a clause that is perceived as grossly unfair to Walt, its enforcement may be challenged under the doctrine of

a. good faith.
b. square dealing.
c. the mere image rule.
d. unconscionability.

d. unconscionability.

ail enters into a contract with Hi-Price Appliances, Inc. In a suit between the parties over payment under the contract, Gail claims that a certain clause is unconscionable. If the court agrees, it may

a. enforce, limit, or refuse to enforce the contract or the disputed clause.
b. enforce the contract without the disputed clause only.
c. limit the application of the disputed clause only.
d. refuse to enforce the entire contract only.

a. enforce, limit, or refuse to enforce the contract or the disputed clause.

In Case 20.3, Jones v. Star Credit Corp., which of the following factors was not considered by the court when it declared a contract for the purchase of a freezer unconscionable

a. The price the plaintiffs were charged was more than four times the freezer's retail value.
b. The credit charges alone exceeded the freezer's retail value.
c. The seller knew of the buyers' limited resources.
d. The freezer was not merchantable.

d. The freezer was not merchantable.

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.

a. enforce the agreement.

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 UCC.
d. the United Nations Convention on Contracts for the International Sale of Goods.

d. the United Nations Convention on Contracts for the International Sale of Goods.

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