Question 1

Brooke is an art collector and hires a broker to buy and sell artworks on her behalf. Under the UCC, in those transactions, Brooke has the status of

Accepted Answer

A)   a consumer.
B)   an agent or other intermediary.
C)   a merchant.
D)   an employer and manager. C

Question 2

Rice Farm Corporation offers to sell Sushi Restaurants, Inc., five hundred bushels of rice. Sushi responds, "We agree to buy five hundred bushels only if the rice is Grade A quality." Without more, their contract is formed according to

Accepted Answer

A)   the new terms of the acceptance.
B)   whatever is reasonable.
C)   the terms of the original offer.
D)   none of the terms. A

Question 3

Clean Machines Company makes washing machines. Over the phone, Clean offers to sell Dealers Appliance Outlet one hundred model EZ2000 washers at a price of $150 per unit. Clean says that it will keep the offer open for ninety days. Dealers responds that within two or three weeks it will decide whether to accept. One week later, Clean faxes, and Dealer receives, notice that the offer is withdrawn. Dealer immediately phones Clean to accept the $150-per-unit offer. When Clean refuses to deliver at that price, Dealer files a suit. Clean asserts, first, that there is no contract and, second, that if there is a contract, it is unenforceable. Discuss Clean's assertions.

Accepted Answer

Clean's contention that there is no contract between it and Dealer is correct. An offeror can revoke an offer at any time before acceptance without liability unless the offer is irrevocable. For this offer to be considered irrevocable, Dealer would have to prove that it had an option, which requires consideration, or that the offer was irrevocable under the UCC provision that applies to merchants' firm offers. Neither of these applies. Dealer gave no consideration for the offer to be kept open, and thus no option was created. And, for the offer to be irrevocable without consideration, Clean-a merchant-would have had to give assurance that the offer would remain open for ninety days in a signed writing. Because the assurance was made orally, the offer was revocable. Thus, Dealer's receipt of Clean's revocation (withdrawal) of the offer before Dealer's acceptance terminated the offer, and no contract was formed.
Clean's contention that even if a contract was created, the contract is unenforceable is also correct. Under the UCC's Statute of Frauds, any contract for the sale of goods priced at $500 or more must be in writing, be supported by written evidence such as a memorandum, or be the object of an applicable exception (such as written confirmation between merchants, specially ordered or manufactured goods, admission under oath, or partial performance completed) to be enforceable. The contract in this question is for a sale of goods (washing machines) priced at $500 or more ($15,000). It was not in writing; nor is there a writing signed by Clean that an oral contract was formed. Also, none of the exceptions apply. Thus, even if Dealer could prove that an oral contract had been made, the contract could not be enforced against Clean's defense of the Statute of Frauds.

Question 4

When a sales contract contemplates shipment of the goods but does not specify the arrangements, either party can make those arrangements.

Accepted Answer

A) True 
 B)False

Question 5

Aaron offers to sell Babe a collection of baseball cards. For their transaction to be a sale under the UCC, title to the collection must be passed from the seller to the buyer for

Accepted Answer

A)   cash.
B)   services.
C)   a price.
D)   goods.

Question 6

Generally, when an acceptance to a sales contract between merchants includes terms additional to those in the offer, the terms automatically become part of the deal.

Accepted Answer

A) True 
 B)False

Question 7

Bert's Bagels Inc. and other bakeries refer to a "baker's dozen" as consisting of a collection of thirteen baked goods. According to the UCC, this is

Accepted Answer

A)   a course of dealing.
B)   a course of performance.
C)   none of the choices.
D)   a usage of trade.

Question 8

Life Products Inc. enters into a contract to sell medical supplies to Med Clinic, which later sells some of the items to Nina, a patient and consumer. Article 2 of the UCC applies to

Accepted Answer

A)   both transactions.
B)   the sale from Life Products to Med Clinic only.
C)   the sale from Med Clinic to Nina only.
D)   none of the transactions.

Question 9

Tune Products, Inc., offers to sell to Unlimited Sales Company one hundred MP3 players at $50 a piece, subject to certain specific delivery dates. Unlimited replies with a signed purchase order that reads, "Accept your offer for 100 I-appliances at $50 each. Must be delivered to our warehouse." Tune does not respond or deliver the goods. Unlimited files a suit for breach of contract, to which Tune answers that there is no contract because Unlimited's purchase order contained additional terms and is not signed by Tune. Can Unlimited recover? Explain.

Accepted Answer

The answer of Tune Products, Inc., offers to sell to...

Question 10

Joel sells a violin to Key for $5,000, a cello to Leda for $400, and five music stands to Mica for $50. A writing is required to enforce the sale of

Accepted Answer

A)   the violin only.
B)   the violin and the cello only.
C)   the violin, the cello, and the music stands.
D)   none of the choices.

Question 11

Auto Body & Paint Company orders custom paint from Best Hues Inc., but Best does not deliver. Auto Body will probably be unable to enforce the agreement if the parties omitted

Accepted Answer

A)   a price term.
B)   a delivery date.
C)   a quantity term.
D)   shipping arrangements.

Question 12

Under the UCC, the meaning of any agreement must be interpreted in light of commercial practices, so a court will not assume that the usage of trade was taken into account when the agreement was phrased.

Accepted Answer

A) True 
 B)False

Question 13

Grass Farm LLC offers to sell fifty bales of hay at a certain price to Horse Stable Inc. The owner of the stable responds, "We agree if you agree to make it sixty bales for the price." Their contract is formed according to

Accepted Answer

A)   the new terms of the acceptance.
B)   whatever is reasonable.
C)   the terms of the original offer.
D)   none of the terms.

Question 14

Miko owns a lake house that she rents to vacationers. Miko gives her son Ninh a trip to Omaha on his graduation from community college. Miko sells her car to her neighbor Pye for $4,500. UCC Article 2 covers

Accepted Answer

A)   the lake house rentals.
B)   the gift to Ninh.
C)   the sale to Pye.
D)   none of the choices.

Question 15

Under the law that governs the international sale of goods, when the parties to a contract do not specify a price term, or at least provide for its specification, normally no contract will exist.

Accepted Answer

A) True 
 B)False

Question 16

Except for an option contract, a firm offer by a merchant is irrevocable once it has been made.

Accepted Answer

A) True 
 B)False

Question 17

Ed sells his car to Fran for $5,000, his bike to Gwen for $600, his game player to Holly for $200, and three shares of stock to Inez for $100. Article 2 of the UCC does not apply to the sale of

Accepted Answer

A)   the car.
B)   the bike.
C)   the game player.
D)   the patent.

Question 18

Interstate Transport Company pays Trucks & Trailers Inc. a stated price for the use of seven tractor-trailer rigs for a year. Under the UCC, this is

Accepted Answer

A)   a contract for services.
B)   a sublease.
C)   a lease.
D)   a sale.

Question 19

An auto dealer is a merchant when selling or leasing a new car but not when selling or leasing a pre-owned vehicle.

Accepted Answer

A) True 
 B)False

Question 20

Dona offers to sell her used sofa, chair, coffee table, end table, and lamp to Erma for $700. Erma responds that she will pay that price if Dona's TV set is included. Neither party is a merchant. Their contract is formed according to

Accepted Answer

A)   the new terms of the acceptance.
B)   whatever is reasonable.
C)   the terms of the original offer.
D)   none of the terms.

Exam 19: The Formation of Sales and Lease Contracts

Brooke is an art collector and hires a broker to buy and sell artworks on her behalf. Under the UCC, in those transactions, Brooke has the status of

Rice Farm Corporation offers to sell Sushi Restaurants, Inc., five hundred bushels of rice. Sushi responds, "We agree to buy five hundred bushels only if the rice is Grade A quality." Without more, their contract is formed according to

When a sales contract contemplates shipment of the goods but does not specify the arrangements, either party can make those arrangements.

Aaron offers to sell Babe a collection of baseball cards. For their transaction to be a sale under the UCC, title to the collection must be passed from the seller to the buyer for

Generally, when an acceptance to a sales contract between merchants includes terms additional to those in the offer, the terms automatically become part of the deal.

Bert's Bagels Inc. and other bakeries refer to a "baker's dozen" as consisting of a collection of thirteen baked goods. According to the UCC, this is

Life Products Inc. enters into a contract to sell medical supplies to Med Clinic, which later sells some of the items to Nina, a patient and consumer. Article 2 of the UCC applies to

Joel sells a violin to Key for $5,000, a cello to Leda for $400, and five music stands to Mica for $50. A writing is required to enforce the sale of

Auto Body & Paint Company orders custom paint from Best Hues Inc., but Best does not deliver. Auto Body will probably be unable to enforce the agreement if the parties omitted

Under the UCC, the meaning of any agreement must be interpreted in light of commercial practices, so a court will not assume that the usage of trade was taken into account when the agreement was phrased.

Grass Farm LLC offers to sell fifty bales of hay at a certain price to Horse Stable Inc. The owner of the stable responds, "We agree if you agree to make it sixty bales for the price." Their contract is formed according to

Miko owns a lake house that she rents to vacationers. Miko gives her son Ninh a trip to Omaha on his graduation from community college. Miko sells her car to her neighbor Pye for $4,500. UCC Article 2 covers

Under the law that governs the international sale of goods, when the parties to a contract do not specify a price term, or at least provide for its specification, normally no contract will exist.

Except for an option contract, a firm offer by a merchant is irrevocable once it has been made.

Ed sells his car to Fran for $5,000, his bike to Gwen for $600, his game player to Holly for $200, and three shares of stock to Inez for $100. Article 2 of the UCC does not apply to the sale of

Interstate Transport Company pays Trucks & Trailers Inc. a stated price for the use of seven tractor-trailer rigs for a year. Under the UCC, this is

An auto dealer is a merchant when selling or leasing a new car but not when selling or leasing a pre-owned vehicle.

Dona offers to sell her used sofa, chair, coffee table, end table, and lamp to Erma for $700. Erma responds that she will pay that price if Dona's TV set is included. Neither party is a merchant. Their contract is formed according to