Exam 20: Formation of Sales and Lease Contracts

Intangible property has conceptual existence and thus comes under Article 2.

Under the UCC,an offeror must be notified within a reasonable time that the offeree has accepted.

Under the UCC,good faith means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.

Under the UCC,a firm offer for a sale or lease of goods made by a merchant without consideration can be revoked at any time before acceptance.

Fact Pattern 20-B1 (Questions B16-B18 apply) Ripe Produce,Inc.,and Southeast Asian Bistro & Market enter into a contract for the delivery of locally grown fruits and vegetables.The parties use a standard Ripe Produce form that contains some of the terms the parties agree on but not others.Some of the produce spoils before it can be cooked,served,and eaten,or sold.Southeast Asian refuses to pay for the spoiled goods. -Refer to Fact Pattern 20-B1.Ripe Produce files a suit against Southeast Asian,claiming that the buyer assumed the risk of the spoilage of the unsold goods.The court may allow evidence of this term if it finds that the parties' contract is

Perfect Poultry Company agrees to sell chicken,turkey,and other meats to Quik Markets,Inc.,to sell to its customers.Normally,their contract would not be enforceable unless it includes

The UCC views the entire commercial transaction for the sale and payment for goods as a single legal occurrence.

La-Z Days Motels,Inc.,and Beds R Us Corporation enter into a contract that does not specify the payment terms.Payment may be made in

Under the UCC,an offeree can accept an offer to buy goods by a prompt shipment of conforming goods.

Great Gear,Inc.,enters into a contract to sell sports clothing and equipment to Healthways Workout store,which in turn sells a pair of bike shorts to Ilene,a consumer.In comparison to standards that apply to consumers,the UCC imposes on merchants

Article 2A of the UCC covers any transaction that creates a lease of goods or a sublease of goods.

The UCC applies only to the extent that it has been adopted a state.

NationPoints Trucking,Inc.,has a requirements contract with Oil & Gas Corporation that obligates Oil & Gas to supply NationPoints with all the gasoline it needs for its vehicles for one year at $2.30 per gallon.A clause inserted in small print in the contract by NationPoints,and not noticed by Oil & Gas,states,"The buyer reserves the right to reject any shipment for any reason without liability." For six months,NationPoints orders and Oil & Gas delivers under the contract without any controversy.Then,because of a war in the Middle East,the price of gasoline to Oil & Gas increases substantially.Oil & Gas tells NationPoints it cannot possibly fulfill their contract unless NationPoints agrees to pay $2.50 per gallon.NationPoints,in need of the gasoline,agrees in writing to modify the contract. Later that month,NationPoints learns it can buy gasoline at $2.40 per gallon from Purified Fuel Company.NationPoints refuses delivery of its most recent order from Oil & Gas,claiming,first that the contract allows it to do so without liability,and second,that it is required to pay only $2.30 per gallon if it accepts the delivery.Discuss NationPoints's contentions.

A contract for a sale of real property or services is a contract for a sale of goods.

On May 1,Newtown Motors,a used-car dealer,wrote a letter to O'Reilly,which stated,"We have a 1969 Pontiac Firebird in mint condition that we will sell you for $12,500 at any time before June 1.[Signed] Newtown Motors." By May 15,having heard nothing from O'Reilly,Newtown Motors sold the Firebird to another party.On May 25,O'Reilly told Newtown Motors that he accepted the offer and tendered $12,500.When Newtown Motors told O'Reilly it had sold the car to another party,O'Reilly claimed Newtown Motors had breached their contract.Is Newtown Motors in breach Explain.

Fresh Dairy,Inc.,is the offeror and Gelato Ice Cream Company is the offeree under a unilateral sales contract in which Hector's Helado Corporation is also interested.Gelato is not notified of Fresh Dairy's performance within a reasonable time.Gelato

Stop n' Gas Convenience Stores,Inc.,is an East Coast-based firm that does business throughout the United States.With respect to this circumstance,the UCC has been adopted by,and applies in,

Under a finance lease,the lessee can stop performing and making lease payments if the leased equipment turns out to be defective.

Toro,S.A.,a company based in Mexico,enters into a contract for the purchase of portable livestock fencing from United Fencing Company,which is based in the United States.This contract is governed by

County Dentists Clinic offers to buy from Dental & Medical Supplies Company a certain quantity of floss and other items for a certain price.Dental & Medical can accept the offer by