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BUL3350 Bailey Exam 1

Terms in this set (56)

A sheep rancher agreed, in writing, to sell all the wool shorn during the shearing season to a weaver. The contract failed to establish the price and a minimum quantity of wool. After the shearing season, the rancher refused to deliver the wool. The weaver sued the rancher for breach of contract. Under UCC Article 2, will the weaver win?
Yes, because this was an output contract.
An oral agreement concerning the sale of goods entered into without consideration is binding if the agreement
Modifies the price in an existing, enforceable contract from $525 to $475
Article 2A of the Uniform Commercial Code governs leases of goods, including consumer and finance leases. Under Article 2A,
The lessee's promises in a finance lease that is not a consumer lease must be performed even if the lessor breaches the contract.
Casassa, a merchant in San Francisco, under the terms of a nonshipment contract, agrees to sell 50 cases of packaged macaroni to Paoli, a restaurant owner whose business is in San Jose. At the time of contracting for the sale, both parties are aware that these identified goods are in a warehouse in Fresno. The place for delivery is not specified in the agreement. On the basis of these facts, the place for delivery is
Fresno
Cookie Co. offered to sell Distrib Markets 20,000 pounds of cookies at $1.00 per pound, subject to certain specified terms for delivery. Distrib replied in writing as follows:

"We accept your offer for 20,000 pounds of cookies at $1.00 per pound, weighing scale to have valid city certificate."

Under the UCC,
A contract was formed between the parties.
Doral, Inc., contacted Ace Lumber Company to acquire a 75-day option (firm offer) to buy the lumber it needed to expand its building. Doral supplied a form contract that included the option. Ace Lumber signed at the physical end of the contract but did not sign elsewhere. The price of lumber has risen drastically and Ace wants to avoid its obligation. Which of the following is best defense?
The promise of irrevocability was contained in a form supplied by Doral and was not separately signed by Ace.
EG Door Co., a manufacturer of custom exterior doors, verbally contracted with Art Contractors to design and build a $2,000 custom door for a house that Art was restoring. After EG had completed substantial work on the door, Art advised EG that the house had been destroyed by fire and Art was canceling the contract. EG finished the door and shipped it to Art. Art refused to accept delivery. Art contends that the contract cannot be enforced because it violated the statute of frauds by not being in writing. Under UCC Article 2, is Art's contention correct?
No, because the goods were specially manufactured for Art and cannot be resold in EG's regular course of business
Filmore purchased a TV set from Allison Appliances, an authorized dealer, for $499. The written contract contained the usual 1-year warranty as to parts and labor as long as the set was returned to the manufacturer or one of its authorized dealers. The contract also contained an effective disclaimer of any express warranty protection, other than that included in the contract. It further provided that the contract represented the entire agreement and understanding of the parties. Filmore claims that during the bargaining process Surry, Allison's agent, orally promised to service the set at Filmore's residence if anything went wrong within the year. Which of the following would be Allison's best defense?
The parol evidence rule.
I. M. Cruck sold refrigerators door to door. Cruck called on Ms. Kalik, a welfare recipient with four small children. Convinced by the sales talk, Kalik signed a form contract that clearly stated the terms of the agreement. After adding credit charges, insurance, and tax, the total price came to more than $1,200. The retail value of the appliance was $300. After paying $600, Ms. Kalik defaulted. Ms. Kalik then sued and prevailed on the theory of
Unconscionability.
Mayker, Inc., and Oylco contracted for Oylco to be the exclusive provider of Mayker's fuel oil for 3 months. The stated price was subject to increases of up to a total of 10% if the market price increased. The market price rose 25% and Mayker tripled its normal order. Oylco seeks to avoid performance. Oylco's best argument in support of its position is that
Mayker ordered amounts of oil unreasonably greater than its normal requirements.
Patch, a frequent shopper at Soon-Shop Stores, received a rain check for an advertised sale item after Soon-Shop's supply of the product ran out. The rain check was in writing and stated that the item would be offered to the customer at the advertised sale price for an unspecified period of time. A Soon-Shop employee signed the rain check. When Patch returned to the store one month later to purchase the item, the store refused to honor the rain check. Under UCC Article 2, will Patch win a suit to enforce the rain check?
Yes, because the rain check met the requirements of a merchant's firm offer even though no effective time period was stated.
Regarding the scope of Article 2 of the UCC, when a contract involves a mixed transaction, such as a sale of goods combined with the rendition of services, which of the following statements is true?
The courts ordinarily will apply Article 2 when the contract's focus or predominant feature is the sale of goods
Regarding the scope of Article 2 of the UCC, when a contract involves a mixed transaction, such as a sale of goods combined with the rendition of services, which of the following statements is true?
May be accepted by either a prompt promise to ship or prompt shipment.
The UCC provides rules of construction that allow unclear contracts to be read in the context of commercial practices and other surrounding circumstances. When the application of these rules results in a conflict, what hierarchy does the UCC establish with regard to the following?

1. Course of performance
2. Course of dealing
3. Usage of trade
4. Express terms
4, 1, 2, 3
The distinction between contracts that are covered by the UCC and those that are not is
Basically dependent upon whether the subject matter of the contract involves the purchase or sale of goods.
To satisfy the UCC statute of frauds, a written agreement for the sale of goods must
Be sufficient to show that a contract for sale has been made
Under UCC Article 2, and unless otherwise agreed to, the seller's obligation to the buyer is to
Hold conforming goods and give the buyer whatever notification is reasonably necessary to enable the buyer to take delivery.
Which of the following is excluded from the UCC's definition of goods?
Investment securities.
Which of the following statements is true with regard to an auction of goods?
The auctioneer may withdraw the goods at any time prior to completion of the sale unless the goods are put up without reserve.
A proper tender of delivery requires that the seller
Put and hold conforming goods at the buyer's disposition and give any necessary notice
In September, Cobb Company contracted with Thrifty Oil Company for the delivery of 100,000 gallons of heating oil at the price of $.75 per gallon at regular specified intervals during the forthcoming winter. Because of an unseasonably warm winter, Cobb took delivery of only 70,000 gallons. In a suit against Cobb for breach of contract, Thrifty will
Win, because the change of circumstances could have been contemplated by the parties.
Smith contracted in writing to sell Peters a used personal computer for $600. The contract did not specifically address the time for payment, place of delivery, or Peters' right to inspect the computer. Which of the following statements is true?
Peters is entitled to inspect the computer before paying for it.
The buyer's general obligation under a contract for the sale of goods is to accept and pay according to the contract. Unless the parties have agreed otherwise, the UCC states that
If the seller demands payment in cash, (s)he must give any reasonably necessary extension of time.
Under a contract governed by UCC Article 2, which of the following statements is true?
The seller may be excused from performance if the goods are accidentally destroyed before the risk of loss passes to the buyer.
Unless otherwise agreed in a contract for the sale of goods, the buyer is obligated to pay at the time and place at which the buyer receives the goods. The duty of the buyer, however, is subject to a right of inspection. If the sale is a "documentary sale," the
Buyer has no right of inspection prior to payment
Which of the following is a true statement about the general obligations of the parties to a sale of goods?
Tender of delivery is a condition of the buyer's duty to accept the goods.
Yost Corp., a computer manufacturer, contracted to sell 15 computers to Ivor Corp., a computer retailer. The contract specified that delivery was to be made by truck to Ivor's warehouse. Instead, Yost shipped the computers by rail. When Ivor claimed that Yost did not comply with the contract, Yost told Ivor that there had been a trucker's strike when the goods were shipped. Ivor refused to pay for the computers. Under these circumstances, Ivor
Is obligated to pay for the computers because Yost made a valid substituted performance
Assume that the parties have entered into a contract for the sale of goods. Which of the following is a false statement under the UCC?
Title to goods may pass under a contract for sale prior to identification to the contract.
Cey Corp. entered into a contract to sell parts to Deck, Ltd. The contract provided that the goods would be shipped "FOB Cey's warehouse." Cey shipped parts different from those specified in the contract. Deck rejected the parts. A few hours after Deck informed Cey that the parts were rejected, they were destroyed by fire in Deck's warehouse. Cey believed that the parts were conforming to the contract. Which of the following statements is true?
If the parts were nonconforming, Cey will bear the risk of loss, even though the contract was a shipment contract.
If a contract for the sale of goods includes a C&F shipping term and the seller has fulfilled all of its obligations, the
Risk of loss will pass to the buyer upon delivery of the goods to the carrier.
On May 2, Lace Corp., an apparel wholesaler, offered to sell clothing worth $3,000 to Parco, Inc., a clothing retailer. The offer was signed by Lace's president and provided that it would not be withdrawn before June 1. It also included the shipping terms: "FOB -- Parco's warehouse." Parco accepted Lace's offer. If Lace inadvertently ships the wrong apparel to Parco and Parco rejects them two days after receipt, title to the goods will
Revert to Lace when they are rejected by Parco.
On Monday, Gullible George is induced to sell a computer to Fraudulent Freddy on the basis of Freddy's misrepresentation that he is Wealthy Walter. That same day, Freddy resells the computer to Innocent Ivan, a good faith purchaser for value. On Tuesday, Gullible George sells an electronic typewriter to Dishonest David who pays for the goods with a check that is later dishonored by the payor (drawee) bank. Before the check is dishonored, David sells the typewriter to Innocent Irene, a good faith purchaser for value. On the basis of these facts
George's best remedy is to recover the value of the goods from Freddy and David in a tort action for deceit.
On Monday, Wolfe paid Aston Co., a retailer, $300 for a table. On Thursday, Aston notified Wolfe that the table was ready to be picked up. On Saturday, while Aston was still in possession of the table, it was destroyed in a fire. Who bears the loss of the table?
Aston, because Wolfe had not yet taken possession of the table.
Pulse Corp. maintained a warehouse where it stored its manufactured goods. Pulse received an order from Star. Shortly after Pulse identified the goods to be shipped to Star, but before moving them to the loading dock, a fire destroyed the warehouse and its contents. With respect to the goods, which of the following statements is true?
Pulse has title and an insurable interest
Under UCC Article 2, when a contract for the sale of goods stipulates that the seller ship the goods by common carrier, "FOB purchaser's loading dock," which of the parties bears the risk of loss during shipment?
The seller, because risk of loss passes only when the goods reach the purchaser's loading dock.
Which of the following factors is most important in deciding who bears the risk of loss between merchants when goods are destroyed during shipment?
The agreement of the parties.
Which of the following is a true statement concerning a contract for the sale of goods which contains no express provision on passage of title?
If the contract requires the seller to deliver the goods at a named destination, title will pass to the buyer on tender there.
Which of the following statements applies to a sale on approval under UCC Article 2?
Risk of loss for the goods passes to the buyer when the goods are accepted after the trial period.
A manufacturer who fails to exercise due care in the manufacture or handling of a product may be held liable for negligence. A defendant manufacturer will prevail, however, when the
Product was designed to be safe for proper use but not for an unforeseeable improper use.
A retailer of a defective product that causes injury to the plaintiff will most likely prevail in an action based on negligence when the
Fault was in the design or construction of the product.
A warranty imposes upon the seller of goods a duty that the goods conform to the promise in the warranty. If they do not, the buyer has an action for breach of warranty. Under the UCC
Express and implied warranties are treated separately from the warranty of title.
Julia rented a new automobile from Mack's Auto Leasing Service. While operating the vehicle in a lawful manner and wearing her shoulder harness, Julia was injured when a defective steering mechanism caused her to lose control. To recover under a strict liability in tort theory, Julia
May be able to recover even though no sale was made.
Landon Motor Company sells minibikes for off-the-road use. The owner's manual and a sticker on each bike sold state in bold print that the bike should not be used on public roads. A child riding a Landon minibike was injured on a public road after being told by her parents not to ride in the street. Did Landon breach an ethical duty to the consumer?
No. The bold print in the owner's manual was sufficient to satisfy the duty to warn.
Merton Morgan is suing the manufacturer, wholesaler, and retailer for bodily injuries caused by a power saw Morgan purchased. Under the Restatement (Second) of Torts, which of the following statements is true under the theory of strict liability?
Morgan may recover even if he cannot show any negligence was involved.
Olsen purchased a used van from Super Sales Co. for $350. A clause in the written contract in boldface type provided that the van was being sold "as is." Another clause provided that the contract was intended as the final expression of the parties' agreement. After driving the van for 1 week, Olsen realized that the engine was burning oil. Olsen telephoned Super and requested a refund. Super refused but orally gave Olsen a warranty on the engine for 6 months. The engine exploded 3 weeks later. Super's oral warranty
Is valid and enforceable.
Parks furnished specifications and ordered 1,000 specially constructed folding tables from Metal Manufacturing Company, Inc. The tables were unique in design and had not appeared in the local market. Metal completed the job and delivered the order to Parks. Parks sold about 600 of the tables when Unusual Tables, Inc., sued both Parks and Metal for patent infringement. If Unusual wins, what is the status of Parks and Metal?
Parks is liable to Metal for damages resulting from an infringement claim.
Purchaser informed Storekeeper that she wanted to buy a reconditioned paper shredder for use in her business. The reconditioned shredder had been manufactured by Power Shredder Company. The week after the shredder was purchased, Employee, who works for Purchaser, was injured while shredding paper when the shaft holding the shredder blade came loose after a bearing gave way. Employee asserts a claim based on strict liability in tort against Power Shredder. Under the Restatement (Second) of Torts, Employee will probably
Not recover because the shredder had been rebuilt by Storekeeper.
Pure Food Company packed and sold quality food products to wholesalers and fancy food retailers. One of its most popular items was "southern style" baked beans. Charles purchased a can of the beans from the Superior Quality Grocery. When Joan, the mother of Charles, bit into a heaping spoonful of the beans at a family outing, her teeth were damaged. Evidence revealed that the beans contained a brown stone. In a subsequent lawsuit by Joan, which of the following is true?
Privity will not be a bar in a lawsuit against either Pure Food or Superior Quality.
Sklar, CPA, purchased two computers from Wiz Corp. Sklar discovered material defects in the computers 10 months after taking delivery. Sklar commenced an action for breach of warranty against Wiz 3 years later. Wiz has raised the statute of limitations as a defense. The original contract between Wiz and Sklar contained a conspicuous clause providing that the statute of limitations for breach of warranty actions would be limited to 18 months. Under the circumstances, Sklar will
Lose because the clause providing that the statute of limitations would be limited to 18 months is enforceable.
The Uniform Commercial Code implies a warranty of merchantability to protect buyers of goods. To be subject to this warranty, the goods need not be
Fit for all the purposes for which the buyer intends to use the goods.
Under UCC Article 2, the implied warranty of merchantability
May be disclaimed by a seller's oral statement that mentions merchantability.
Under UCC Article 2, the warranty of title may be excluded by
The seller's statement that it is selling only such right or title as it has.
Under the Restatement (Second) of Torts, to establish a cause of action based on strict liability in tort for personal injuries resulting from using a defective product, one of the elements the plaintiff must prove is that the seller (defendant)
Was engaged in the business of selling the product.
Vick bought a used boat from Ocean Marina that disclaimed "any and all warranties" in connection with the sale. Ocean was unaware the boat had been stolen from Kidd. Vick surrendered it to Kidd when confronted with proof of the theft. Vick sued Ocean. Who is likely to prevail and why?
Vick, because the warranty of title has been breached.
Which of the following conditions must be met for an implied warranty of fitness for a particular purpose to arise in connection with a sale of goods?

I. The warranty must be in writing.
II. The seller must know that the buyer was relying on the seller in selecting the goods.
II only
Which of the following factors is least important in determining whether a manufacturer is strictly liable in tort for a defective product?
The negligence of the manufacturer.
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