37 terms

CH 20

STUDY
PLAY

Terms in this set (...)

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.
False
Uncle Brandon promises to give his motorcycle to you at the end of the month. This transaction is governed by UCC, Article 2, because a motorcycle is within the definition of "goods."
False
The UCC has abolished the common law requirement of consideration in all contracts involving the sale of goods.
False
Elizabeth worked as a salesperson in a carpet store. She was in the process of divorcing her husband and needed some money. Elizabeth sold her wedding ring. Elizabeth is considered a merchant with regard to the sale of the ring.
False
The UCC does not apply to contracts for the sale of goods if the value of the goods is less than $500.
Fales
If the seller has made a substantial beginning in manufacturing custom-ordered goods, then an oral contract may be enforceable regardless of the amount of money involved in the contract.
True
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.
True
The UCC is federal legislation enacted by Congress.
False
Megan agrees to sell Neff her quartz 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.
False
Leasing goods is an insignificant part of business, so its rules are governed by extensions of the UCC Article related to sales rather than having a separate article of the Code to cover leasing.
False
Under the UCC, a merchant is frequently held to a higher standard of conduct than a non-merchant.
True
Lian contracted for financial services from E-wise. This contract is governed by Article 2 of the UCC.
False
Zubair, Inc. leased the 34th floor in an office building in downtown Pittsburgh. This contract is governed by Article 2A of the UCC.
False
In a mixed contract involving goods and services, Article 2 of the UCC will govern if the predominant purpose is the sale of goods.
True
The UCC imposes a duty of good faith in the performance of all contracts.
True
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. In all of the above situations the seller is a merchant.
C
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 does not cover computer CDs.
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.
C
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.
B
Tri, a full-time college student, sold his car to Don, another student. In the performance of this contract, Tri:
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.
B
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.
C
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.
C
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. Jeremy, 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.
C
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.
D
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.
A
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:
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.
A
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.
B
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.
C
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.
D
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.
B
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 of 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.
C
Under the UCC statute of frauds, the writing for a sale of goods must:
a. state quantity.
b. state price.
c. be signed by both parties.
d. be notarized.
A
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.
B
18. 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.
A
Price's Department Store contracted to buy 1,000 drop-waist velour dresses in heather gray from TriColor. Subsequently, TriColor called and asked to ship mink-colored dresses instead of heather gray. Price 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.
C
The stated purpose(s) of Article 2 of the UCC is/are:
a. to simplify the law governing sales.
b. to permit the continued development of business practices through custom and usage.
c. to make the laws governing sales uniform among the various states.
d. All of the above are correct.
D
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 service being sold cannot be a gift or a bailment.
C
UCC Section 2-204 provides three important rules that enable parties to make a contract quickly and informally. These include all but which of the following?
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.
B