Business Law 2 - Test 2 Flashcards
1
Q
. A trust for the dissemination of a particular political doctrine cannot be a charitable trust.
a. True
b. False
A
False
2
Q
An express trust may be found if the intent of the grantor to create a trust is unmistakable.
a. True
b. False
A
True
3
Q
A trust may serve any purpose that is not against the law or public policy.
a. True
b. False
A
True
4
Q
. A totten trust is revocable by the creator.
a. True
b. False
A
True
5
Q
Constructive trusts are generally found where the creator clearly intended a trust to be formed.
a. True
b. False
A
False
6
Q
The powers of a trustee are determined solely by the trust instrument.
a. True
b. False
A
False
7
Q
. Consideration is necessary in order to enforce a trust.
a. True
b. False
A
False
8
Q
A minor’s declaration of trust is voidable.
a. True
b. False
A
True
9
Q
Creditors of the beneficiary of a spendthrift trust can attach the income of the trust before or after the beneficiary receives it, but they cannot reach the trust fund itself.
a. True
b. False
A
False
10
Q
A person’s written statement that he is leaving property “to Margaret in full confidence and with hope she will take care of Tina” is too indefinite to create a trust.
a. True
b. False
A
False
11
Q
The courts may not create implied trusts.
a. True
b. False
A
False
12
Q
A trust is presumed to be irrevocable unless the grantor reserves the power of revocation.
a. True
b. False
A
True
13
Q
. The death of the beneficiary will generally terminate the trust.
a. True
b. False
A
False
14
Q
There is no such thing as an irrevocable will.
a. True
b. False
A
True
15
Q
A resulting trust depends on a contract or agreement as evidenced by the parties’ acts.
a. True
b. False
A
False
16
Q
A witness to a will who is “interested” will be disinherited or disqualified.
a. True
b. False
A
True
17
Q
. In most states, there is no lower age limit for testators as long as they understand the extent of their property.
a. True
b. False
A
False
18
Q
A codicil to the will must be executed with all the formal requirements of a will.
a. True
b. False
A
True
19
Q
If a will was burned in an electrical fire that destroyed the testator’s home, it will be presumed to be revoked.
a. True
b. False
A
False
20
Q
A second will automatically revokes an earlier will if it is wholly inconsistent.
a. True
b. False
A
True
21
Q
Divorce or marriage will result in a revocation of a will.
a. True
b. False
A
False
22
Q
Renunciation is a statutory right of a surviving spouse to give up her statutory share in the estate.
a. True
b. False
A
False
23
Q
A completely handwritten will is valid only if witnessed.
a. True
b. False
A
False
24
Q
Rayshawn served as a witness to Samuel’s will, but died before Samuel. When Samuel’s will is probated, proof of Rayshawn’s handwriting is necessary unless there are enough other witnesses to meet the statutory requirements without Rayshawn.
a. True
b. False
A
True
25
A photocopy of a will or a will written in pencil would not be valid for probate.
a. True
b. False
False
26
A stepchild will not ordinarily inherit under intestacy statutes unless legally adopted.
a. True
b. False
True
27
A totten trust may also be referred to as a savings account trust.
a. True
b. False
True
28
A court will require witnesses' signatures to be proven before a formal decree will be issued allowing the will.
a. True
b. False
True
29
The executor or administrator does not occupy a fiduciary relationship with regard to the estate.
a. True
b. False
False
30
A trust for the establishment and maintenance of a museum would be a charitable trust.
a. True
b. False
True
31
As long as a decedent’s wishes are clear, the formalities of a will need not be strictly met in order for the will to be valid.
a. True
b. False
False
32
A totten trust involves a bank account opened by the settlor of the trust.
a. True
b. False
True
33
Once a trust is validly created, it is revocable.
a. True
b. False
False
34
A will entirely in the handwriting of the testator is called what type of will?
a. Nuncupative.
b. Holographic.
c. Conditional.
d. Codicil.
b. Holographic
35
If a person dies intestate, his property will be:
a. given to his beneficiaries.
b. passed to his children.
c. kept by the state.
d. distributed as prescribed by the state.
d. distributed as prescribed by the state
36
The owner of legal title to the property in a trust is the:
a. grantor.
b. settlor.
c. beneficiary.
d. trustee.
d. trustee
37
. An attorney receives a check from the defendant in settlement of a lawsuit brought by his client, the plaintiff. Even if the check is made out in the name of the attorney, it will belong to the client as a:
a. resulting trust.
b. constructive trust.
c. totten trust.
d. spendthrift trust.
a. resulting trust
38
An express trust is a trust:
a. established by law through the courts when the parties' conduct seems to warrant the creation of a trust.
b. established by voluntary action.
c. created only by an oral statement.
d. All of these.
b. established by voluntary action
39
Of the following elements, which one is NOT required to create an enforceable trust?
a. Consideration.
b. Legal capacity.
c. Specific property.
d. A beneficiary.
a. Consideration
40
Taxes imposed at death include:
a. income tax that the estate must pay on income received during estate administration.
b. federal estate tax on the transfer of property at death.
c. state inheritance tax on the privilege of an heir or beneficiary to receive the property.
d. All of these.
d. All of these
41
Testamentary capacity refers to:
a. the age of the testator.
b. the same capacity as required to contract.
c. the ability to understand the nature and extent of one's property, to appreciate the natural objects of one's bounty, and the ability to formulate an orderly plan of disposition.
d. the influence of others over the testator.
c. the ability to understand the nature and extent of one's property, to appreciate the natural objects of one's bounty, and the ability to formulate an orderly plan of disposition.
42
In order to be valid, a will must generally include all but which one of the following?
a. Signature of the testator.
b. A written document.
c. Signatures of witnesses.
d. Signature of the executor.
d. Signature of the executor
43
Which of the following will be acceptable as a witness to a will?
a. The testator's spouse.
b. The administrator of the estate.
c. The beneficiary of a testamentary trust.
d. The spouse of a beneficiary.
b. The administrator of the estate.
44
. All of the following may, in general, revoke a will by operation of law EXCEPT:
a. subsequent marriage.
b. subsequent divorce.
c. birth of a child.
d. all of these will revoke a will by operation of law.
b. subsequent divorce
45
The characteristics of a totten trust include:
a. it is a joint bank account opened by the settlor of the trust.
b. it is tentative.
c. transfer of ownership is complete only on the depositor's death.
d. All of these.
d. all of these
46
A trust created by will and effective after the death of a testator is called a(n):
a. charitable trust.
b. cy pres trust.
c. inter vivos trust.
d. testamentary trust.
d. testamentary trust
47
Almost all jurisdictions require that:
a. express trusts of real property be in writing.
b. trusts have at least four witnesses.
c. an inter vivos trust have at least two trustees.
d. a charitable trust have at least two trustees.
a. express trusts of real property be in writing.
48
In most states, a trustee's investment decisions are usually governed by:
a. the prudent person rule.
b. judiciary determination.
c. the beneficiary's intent.
d. The Uniform Principal and Income Act.
a. the prudent person rule
49
Megan, who has no heirs or next of kin, makes a will leaving her estate to her best friend, Pat. If Megan’s will is witnessed by only two instead of three people as required by her state statute, upon her death her estate will:
a. go to Pat without court involvement.
b. escheat to the state.
c. go through probate, at which time the court will try to determine Megan’s intent as to disposition and follow that intent.
d. be given to a charity as determined by the probate court.
b. escheat to the state.
50
Which of the following is/are considered to be conduct to invalidate a will?
a. Duress.
b. Undue influence.
c. Fraud.
d. All of these.
d. All of these.
51
A statement signed by the required number of witnesses who observe the execution of a valid will is called a(n):
a. validity clause.
b. ambulatory clause.
c. attestation clause.
d. fiduciary clause.
c. attestation clause.
52
The characteristics of a spendthrift trust include which of the following?
a. Spendthrift provisions are not valid in most states.
b. Trust creditors can never seize income from a spendthrift trust.
c. A settlor may provide, in a spendthrift trust, that the beneficiary cannot, by assignment or otherwise, impair her rights to receive principal or income.
d. All of these.
c. A settlor may provide, in a spendthrift trust, that the beneficiary cannot, by assignment or otherwise, impair her rights to receive principal or income.
53
An amendment to a will is called a(n):
a. stipulated addition.
b. statutory adjustment.
c. codicil.
d. attestation.
c. codicil.
54
Which of the following is true about a constructive trust?
a. It normally contains detailed instructions for the trustee to follow.
b. The court imposes it to redress an injustice.
c. It is revocable by the trustee.
d. It carries out the intentions of the trustee.
b. The court imposes it to redress an injustice.
55
A living will is a document that:
a. is videotaped.
b. contains the maker's wishes regarding extraordinary medical treatment.
c. is capable of being changed from time to time, unlike other wills.
d. cannot be revoked.
b. contains the maker's wishes regarding extraordinary medical treatment.
56
Probate is the:
a. reading of a will by a lawyer.
b. actual property given away in a will.
c. process of declaring a person dead.
d. process of managing the distribution of a deceased person's property.
d. process of managing the distribution of a deceased person's property.
57
Which of the following statements about wills is correct?
a. A will must be written on one piece of paper.
b. Another writing may be incorporated by reference into a will.
c. The testator must sign his or her full name.
d. The testator cannot have any "help" in signing a will.
b. Another writing may be incorporated by reference into a will.
58
A valid will must be witnessed. Which of the following statements about witnesses is correct?
a. Most states require only one witness to a will.
b. The witnesses must see the testator write the will.
c. The witnesses must sign the will.
d. Under the law in all states, witnesses lose any bequests to them in a will they witness.
c. the witnesses must sign the will.
59
A trustee has a duty to make proper allocation of benefits and burdens between income beneficiaries and remaindermen. Which of the following statements is true concerning this allocation?
a. Current expenses are chargeable to the remaindermen.
b. Extraordinary expenses are chargeable to the remaindermen.
c. Money paid for the use of trust property is chargeable to the remaindermen.
d. Any profit from the use of trust property is allocated to the remaindermen.
b. Extraordinary expenses are chargeable to the remaindermen.
60
A trust will fail for lack of:
a. consideration.
b. a trustee.
c. definite and specific property forming the trust corpus.
d. All of these.
c. definite and specific property forming the trust corpus.
61
. Rules for the distribution of property in a situation involving intestate succession:
a. do not apply to property held in joint tenancy.
b. apply where the testator has failed to name an administrator.
c. prevent disposition of property by a valid will.
d. have no application to real estate owned by the decedent.
a. do not apply to property held in joint tenancy
62
Dan, a widower, dies intestate. He leaves two surviving children, Joe and Carrie, and two grandchildren who are children of his deceased daughter, Debra. If Joe and Carrie each take one-third of his estate and the grandchildren each take one-sixth of the estate, this is described legally by the statement that:
a. lineal descendants of predeceased children take property per stirpes.
b. lineal descendants take the property per capita.
c. collateral heirs take the property per stirpes.
d. lineal descendants and collateral heirs take the property per capita.
a. lineal descendants of predeceased children take property per stirpes.
63
Which of the following is untrue regarding the revocation of a will?
a. There can be a partial revocation.
b. An inadvertent destruction of a will acts as a revocation.
c. The execution of a second will does not of itself constitute a revocation of an earlier will.
d. Divorce does not ordinarily revoke a will.
b. an inadvertent destruction of a will acts as a revocation
64
Which of the following would be charged to the life tenant's interest in the course of administering a trust?
a. Expenses of selling a trust investment.
b. The costs of establishing the trust.
c. Ordinary repairs to trust property.
d. Permanent improvements to the trust property.
c. Ordinary repairs to trust property
65
Curtis, a trustee, fraudulently purchases property with trust funds and puts title in his own name. What type of trust will a court create?
a. Constructive trust.
b. Implied trust.
c. Express trust.
d. Resulting trust.
a. Constructive trust.
66
Gail dies intestate leaving two children, Benjamin and Christopher. Her daughter, Anna, died two years earlier. Anna had three children, Carolyn, Jeffrey and Scott. If Gail leaves an estate of $150,000, how much will Jeffrey's share be under the usual statutes of descent and distribution?
a. $0.
b. $30,000.
c. $16,667.
d. $50,000.
c. $16,667
67
Each trust has which of the following?
a. Executor.
b. Corpus.
c. Testator.
d. All of these.
b. Corpus
68
The duties of a trustee are:
a. to carry out the purposes of the trust.
b. to act with prudence and care in the administration of the trust.
c. to exercise a high degree of loyalty toward the beneficiary.
d. All of these.
d. All of these
69
For a memorandum to be incorporated into a will, which of the following conditions must be met? The memorandum must be:
a. in writing.
b. in existence when the will is executed.
c. adequately described in the will.
d. All of these.
d. All of these
70
Which of the following is true regarding property distribution upon a person's death intestate?
a. At common law, property lineally ascended to parents if there was no surviving spouse and there were no children.
b. Today, in all states, if there is a surviving spouse, he or she gets the entire estate.
c. Rules of descent vary widely from state to state.
d. All of these.
c. Rules of descent vary widely from state to state.
71
In the case of Keeney v. Keeney, the court found:
a. a constructive trust is created by equity regardless of the intention of the parties to create a trust where legal title to property is obtained through fraud or undue influence rendering it unconscionable for the holder of legal title to retain the property.
b. intention of the parties is the sole consideration in determining the existence of a trust.
c. the existence of a confidential relationship prohibits the trustee from seeking any personal benefit.
d. a totten trust is a tentative trust and the transfer of ownership becomes complete only upon the depositor’s death.
a. a constructive trust is created by equity regardless of the intention of the parties to create a trust where legal title to property is obtained through fraud or undue influence rendering it unconscionable for the holder of legal title to retain the property.
72
A merchant buyer of goods receives nonconforming goods. The merchant buyer rightfully rejects and appropriately notifies the seller, but the seller has no agent in the buyer's city. The goods are perishable and threaten to decline in value speedily. The merchant buyer has no further duty to the seller other than to await the seller's instructions.
a. True
b. False
False
73
The delivery terms "ex-ship" and "no arrival, no sale" indicate that the contract is a shipment contract.
a. True
b. False
False
74
A buyer’s or lessee’s right to reject nonconforming goods depends on the size or extent of the breach of the seller’s or lessor’s duty to tender conforming goods.
a. True
b. False
False
75
In a sale of goods, the seller's tender of performance does not have to conform to the Code's perfect tender rule.
a. True
b. False
False
76
In the absence of agreement, payment is due at the time and place the buyer is to receive the goods, even though the place of shipment is the place of delivery.
a. True
b. False
True
77
Whitley ordered 800 Christmas trees from North Pines Tree Farm to be delivered on November 24. When the trees arrive, the North Pines must accept tender of payment by any means or in any manner current, such as a check, in the ordinary course of business unless North Pines demands cash and allows Whitley a reasonable time within which to obtain it..
a. True
b. False
True
78
If no place of tender is indicated by the contract, delivery is presumed to be made at seller's place of business.
a. True
b. False
True
79
In most sales, the buyer has the right to inspect the goods before he pays.
a. True
b. False
True
80
Payment of a C.O.D. shipment constitutes an acceptance of the goods.
a. True
b. False
False
81
After passage of a week, the buyer of six crates of strawberries will be deemed to have accepted the goods.
a. True
b. False
True
82
Rejection is ineffective unless the buyer notifies the seller.
a. True
b. False
True
83
Where goods are in the possession of a bailee and are to be delivered without being moved, in most instances the seller may either tender to the buyer a document of title or obtain an acknowledgment by the bailee of the buyer's right to possess the goods.
a. True
b. False
True
84
On April 18, Marco bought a sailboat from a local marina. The boat was defective and did not turn about properly. Marco used the boat extensively all summer and the boat was no longer in the same condition as when it was bought. By September 30, Marco had waived his right to revoke acceptance.
a. True
b. False
True
85
Revocation and rejection give the buyer the same rights and duties with respect to the goods.
a. True
b. False
True
86
A buyer is obliged to accept conforming goods and to pay for them according to the contract terms.
a. True
b. False
True
87
Tender can be made any time of the day or night, when it is most convenient for the seller to deliver the goods.
a. True
b. False
False
88
The Code does not excuse performance based upon commercial impracticability.
a. True
b. False
False
89
In an installment contract, if the contract is silent about payment, the Code provides that the seller may demand the price, if it can be apportioned, for each lot.
a. True
b. False
True
90
The buyer's rejection of nonconforming goods or tender is rightful under the perfect tender rule.
a. True
b. False
True
91
Under the CISG, a party may suspend performance of his obligations if, after the conclusion of the contract, it becomes apparent that the other party will not perform a substantial part of his obligations.
a. True
b. False
True
92
Les contracts to the sell and deliver to Chan 300 rolls of insulation. Unless the parties agree otherwise, Les must tender all 300 rolls in a single delivery, and Chan’s payment is due at the time of the tender.
a. True
b. False
True
93
A "commercial unit" is a unit of goods that by commercial usage is a single unit and that, if divided, would be materially impaired in character or value.
a. True
b. False
True
94
Acceptance of goods, which disallows any later rejection of them, is accomplished only through express words.
a. True
b. False
False
95
A carpenter ordered 500 sheets of 1/2-inch plywood from her supplier, but received 498 sheets of 1/4-inch plywood. If she rejects these goods, she has no further obligation to her supplier regarding these nonconforming goods.
a. True
b. False
False
96
. In their contract for the sale of window shades, Lela Window Treatments, Inc. and Shane agree that Lela will have the right to replace any defective goods that are delivered to Shane. This contractual provision will not have any effect because the perfect tender rule of the UCC will control in a sale of goods transaction.
a. True
b. False
False
97
Revocation of acceptance is effective without notice to the seller.
a. True
b. False
False
98
Revocation of acceptance must be done as soon as the buyer discovers the grounds for the revocation.
a. True
b. False
False
99
In the case of partial destruction of identified goods before risk of loss passes to the buyer, the buyer has the option to avoid the contract or to accept the goods with due allowance from the contract price for the deterioration or deficiency.
a. True
b. False
True
100
Increased production costs will allow the seller to avoid a contract based upon commercial impracticability.
a. True
b. False
False
101
A buyer who sells rejected goods on behalf of the seller is entitled to reasonable expenses and a reasonable selling commission not to exceed ten percent of the gross proceeds.
a. True
b. False
True
102
Revocation of acceptance requires notice to the seller, whereas rejection does not.
a. True
b. False
False
103
Ryan is interested in purchasing two dozen L.E.D. signs from Superior Sign Co. If the signs are damaged:
a. and destroyed before Ryan’s offer to buy them is accepted, Superior must create new signs to replace the ones Ryan wanted.
b. after the contract of sale is formed and after the risk of loss passed to Ryan, then Ryan has no option but must pay the entire contract price of the signs.
c. without fault of either party before the risk of loss passes to Ryan and the goods were identified when the contract was made, the contract is avoided whether the signs are totally or partially destroyed.
d. All of these.
b. after the contract of sale is formed and after the risk of loss passed to Ryan, then Ryan has no option but must pay the entire contract price of the signs.
104
. If an anticipatory repudiation substantially impairs the value of the contract, the aggrieved party may:
a. await performance for a commercially reasonable time.
b. resort to any appropriate remedy for breach.
c. Both are correct.
d. None of these.
c. Both are correct
105
Which of the following illustrates a shipment contract?
a. Ex-ship.
b. F.O.B. place of shipment.
c. No arrival, no sale.
d. All of these are shipment contracts.
b. F.O.B. place of shipment
106
Tender of delivery requires:
a. only that the seller put and hold goods that conform to the contract at the buyer’s disposition.
b. that the goods be made available to the buyer for at least one week if they are not perishable.
c. that the seller give the buyer reasonable notice of the tender.
d. that tender occur during the buyer’s normal business hours.
c. that the seller give the buyer reasonable notice of the tender.
107
A buyer in Atlanta enters into a sales contract with a seller in Chicago. If the contract does not mention the place for delivery of the goods, the place of delivery will be:
a. at the seller's business or residence in Chicago.
b. as stated in all destination contracts.
c. at the buyer's business or residence in Atlanta.
d. irrelevant since the contract is void.
a. at the seller's business or residence in Chicago.
108
If the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may:
a. reject the whole.
b. accept the whole.
c. accept any unit(s) and reject the rest.
d. Any of these.
d. any of these.
109
The court in Furlong v. Alpha Chi Omega Sorority held that:
a. the UCC did not apply to this situation.
b. the design specifications were part of the basis of the bargain and as such became an express warranty.
c. rejection of the goods was not rightful even though the sorority seasonably notified the seller within a reasonable time since notice was by phone.
d. the law required the sorority to accept Furlong’s offer of compromise.
b. the design specifications were part of the basis of the bargain and as such became an express warranty.
110
. The CISG:
a. does not follow the perfect tender rule.
b. provides that the seller must, in all cases, deliver the goods within a reasonable time after the conclusion of the contract.
c. provides that in most instances the buyer must pay the contract price before examining the goods.
d. provides no right of “cure.”
a. does not follow the perfect tender rule.
111
Which of the following terms would indicate a destination contract?
a. F.O.B. city of buyer.
b. F.O.B. city of seller.
c. C.I.F.
d. F.A.S. seller's port.
a. F.O.B. city of buyer
112
When is a buyer deemed to have accepted goods that are delivered pursuant to a contract?
a. If he fails to reject the goods after he has had a reasonable opportunity to inspect them.
b. Immediately upon delivery.
c. Only when he pays for them.
d. Only after an express acceptance.
a. If he fails to reject the goods after he has had a reasonable opportunity to inspect them.
113
The perfect tender rule requires that the seller's tender of performance must conform exactly to the contract subject to:
a. installment contracts.
b. cure by the seller.
c. Both of these.
d. Neither of these.
c. both of these.
114
. A manifestation by the buyer of his unwillingness to become the owner of the goods is:
a. cure.
b. revocation.
c. rejection.
d. tender.
c. rejection
115
Under the __________, a buyer may reject goods for even the slightest defect.
a. revocation of acceptance rule
b. perfect tender rule
c. rules for inspection
d. excuses for nonperformance
b. perfect tender rule
116
In which of the following situations does the seller have the right to cure?
a. Where the time for performance under the contract has not yet expired.
b. After the time for performance has expired if the seller had reasonable grounds for believing the buyer would accept a nonconforming tender with or without monetary adjustment.
c. Where the buyer has revoked acceptance.
d. Two of these are correct but not all three.
d. Two of these are correct but not all three.
117
Vernon is an accountant for a major accounting firm. One day at work, he is discussing his collection of rare coins with one of his co-workers. Vernon tells his co-worker that he keeps his collection at home and that he has recently purchased several Chinese gold Panda coins at an exceptional price. The co-worker expresses an interest in buying two of the coins at a price of $250, and a contract is duly formed. If no place for delivery is expressed, where are the coins to be delivered?
a. At the office of the major accounting firm where the parties to the contract work.
b. At Vernon's home.
c. At the co-worker's home.
d. In the parking lot of the major accounting firm.
b. At Vernon's home.
118
Goods are to be sent from Buffalo, NY to Raleigh, NC by UPS using the delivery terms F.O.B. Buffalo, NY. Where does tender occur?
a. Where the goods are identified.
b. Where the goods are shipped.
c. Where the goods are delivered and picked up by the buyer.
d. Where the goods are taken by the buyer.
b. Where the goods are shipped.
119
The concept of the "right to cooperation" includes that:
a. where one party's required cooperation is not timely, the other party is excused from any resulting delay in her own performance.
b. where one party's required cooperation is untimely, the other party is required to tender performance as if the first party had tendered in a timely manner.
c. where neither party is at fault and the agreed manner of delivery becomes impracticable, both parties are required to negotiate a new price.
d. None of these.
a. where one party's required cooperation is not timely, the other party is excused from any resulting delay in her own performance.
120
Sam agrees to sell Bill one 18-cubic-foot, yellow refrigerator for $700. It is to be delivered to Bill's home on July 7. Under the perfect tender rule, which one of the following cases would permit Bill to rightfully reject the goods?
a. Sam delivered an 18-cubic-foot, silver refrigerator on July 7, and Bill calls Sam to complain.
b. Sam sent an 18-cubic-foot, yellow refrigerator with a small dent in it on July 7. Bill refuses delivery but never bothers to call Sam.
c. Sam sent his truck to Bill's home with the 18-cubic-foot, yellow refrigerator on July 7, but Bill was not home.
d. Sam sent 18-cubic-foot, yellow refrigerator without ice cube trays on July 5 and notifies Bill of the defect.
a. Sam delivered an 18-cubic-foot, silver refrigerator on July 7, and Bill calls Sam to complain.
121
J & J Co. offers a "subscription" for baby toys to be delivered every two months from the birth of a child. Payment must be made within two weeks of delivery. The Markham family accepted the J & J plan when their son, Timmy, was born. When Timmy was four months old, one J & J toy arrived smashed to pieces. Markham:
a. can treat the whole contract as breached and refuse to pay for past installments as well as future installments.
b. can reject the installment and cancel the contract immediately.
c. can reject the installment and refuse to pay for it if J & J cannot cure it.
d. cannot reject the installment since it is part of a series.
c. can reject the installment and refuse to pay for it if J & J cannot cure it.
122
Bill orders a custom-made suit from Rooks to be delivered by Friday at 5 p.m. When the suit is delivered to his office on Friday afternoon, he is in conference with a client. He accepts delivery and hangs the suit in his closet. When Bill tries on the suit Saturday evening, he discovers that the pants are cuffed. He had ordered cuffless trousers. What can he do?
a. He cannot revoke acceptance since the cuffs are not difficult to discover.
b. He can revoke acceptance if the cuffs substantially impair the value of the goods to him and Rooks will not remove the cuffs.
c. He can reject the goods since he had not yet accepted them prior to inspection.
d. He cannot reject the goods because the cuffs are curable.
b. He can revoke acceptance if the cuffs substantially impair the value of the goods to him and Rooks will not remove the cuffs.
123
If Mary allows the seller, Sellmart Co., four weeks to repair the defects in her kitchen set and they have tried but have not done a good job at it, she may revoke her acceptance if she:
a. notifies Sellmart of revocation.
b. does not use the table and chairs.
c. could not discover the defects easily.
d. inspected the goods herself.
a. notifies Sellmart of revocation
124
A buyer's cancellation of a contract based on the seller's anticipatory repudiation is effective:
a. only if the buyer expressly notifies the seller of the cancellation.
b. if the cancellation precedes the seller's attempt to retract her repudiation.
c. only if bond has been obtained.
d. All of these are correct.
b. if the cancellation precedes the seller's attempt to retract her repudiation
125
Which of the following is correct with respect to the Code's approach to impossibility of performance?
a. A significant drop in demand for the goods will excuse the buyer’s performance.
b. Increased production costs will excuse performance by the seller.
c. Performance will be excused when it is impractical as a result of one or more unforeseen supervening events that are more than mere hardship or increased cost of performance.
d. All of these are correct.
c. Performance will be excused when it is impractical as a result of one or more unforeseen supervening events that are more than mere hardship or increased cost of performance.
126
On June 1, Supertread Tire Company entered into a contract to provide 100 tires per month to ZYX Cycle Company at $30 per tire for the next two years. The October shipment consisted of 100 badly defective tires. ZYX Cycle Company:
a. can treat the whole contract as breached.
b. can reject the October shipment if it cannot be cured in a timely manner by Supertread.
c. cannot reject the October shipment since it is part of the installment series.
d. must pay for the defective tires, but Supertread must provide 200 tires in November.
b. can reject the October shipment since it is part of the installment series.
127
The Code's remedies are cumulative, therefore, a seller may both withhold delivery of the goods and identify goods to the contract. T/F
True
128
A company may be considered insolvent under the Code only if it is unable to pay its debts as they are due T/F
False
129
. Robert paid William $1,000 for a rare first edition of an Edgar Allen Poe novel. The sales contract states that the book is to be delivered within ten days. William, however, refused to deliver the book as promised. In order to sue for specific performance under the UCC, Robert must prove that money damages will not be adequate compensation for his loss. T/F
False
130
Landview Appliances sells a stove to Evan for his home. The contract of sale excludes liability for consequential damages. When Evan turns on the stove, it catches fire, burning Evan severely. Evan cannot recover for his injuries because of the exclusion of damages clause. T/F
False
131
Since the purpose of remedies under the Code is compensation, punitive damages are generally available.
a. True
b. False
False
132
The recovery for a lessee's wrongful repudiation of a lease is the difference between the present values of the old rent due under the original lease and the market rent.
a. True
b. False
True
133
A buyer who does not cover is precluded from consequential damages that could have been prevented if the buyer did obtain cover.
a. True
b. False
True
134
One hundred crystal flower vases have been identified to the contract and a down payment of $1,000 of the $10,000 purchase price has been paid. If the seller becomes insolvent, the buyer may still pay $9,000 and get the goods.
a. True
b. False
True
135
If the seller has the right to cancel, he may recover damages for breach without having to tender any further performance.
True
136
. Breach of one installment of an installment contract never gives rise to breach under the whole contract.
a. True
b. False
False
137
Powers sells 5,000 insulators to Falconbury and issues a negotiable document of title for the goods. The insulators are stored in the Southside Warehouse. When Powers discovers that Falconbury is insolvent, he may effectively stop delivery of the goods by notifying Southside not to deliver the goods to Falconbury.
a. True
b. False
False
138
Replevin is an action at law to recover specific goods in the possession of the defendant which are being unlawfully withheld from the plaintiff.
True
139
An aggrieved seller who resells wrongfully rejected goods is accountable to the original buyer for any profit made on the resale.
a. True
b. False
False
140
The right of the buyer to recover from an insolvent seller the goods in which he has a special property interest and for which he has paid, existed at common law before being included in the Code.
a. True
b. False
False
141
Vandehal Company’s total liabilities are $520,000 and its total assets are $460,000, and the company is unable to pay debts as they become due. Vandehal’s situation falls within the bankruptcy meaning, but not the Code’s definition, of insolvency.
a. True
b. False
False
142
Article 2A authorizes liquidated damages payable by either party for default or any other act or omission.
a. True
b. False
True
143
If the seller has failed to comply with Code requirements in making a resale of goods that were wrongfully rejected, a good faith purchaser at the resale takes the goods subject to rights of the original buyer.
a. True
b. False
False
144
On July 30 Christina, in Knoxville, agrees to sell machine-stitched quilts to Deanna, in Los Angeles for $2,500 C.O.D., with delivery by October 1. When Christina fails to deliver the quilts, Deanna suffers incidental damages of $400 and consequential damages of $300. Deanna may recover:
a. damages equal to the difference between the market price on July 30 in Knoxville and $2,500 in addition to the remedy of cover.
b. the difference between the market price on October 1 in Knoxville and $2,500, plus $400 and $300, less expenses saved because of Christina’s breach.
c. the difference between the market price on July 30 and October 1 in Los Angeles, plus $400 and $300, less expenses saved because of Christina’s breach.
d. only through the equitable remedy of specific performance.
b. the difference between the market price on October 1 in Knoxville and $2,500, plus $400 and $300, less expenses saved because of Christina's breach.
145
A seller’s remedies upon the buyer’s default:
a. may be goods oriented, money oriented, or obligation oriented.
b. are subject to the doctrine of election of remedies.
c. are, under the UCC, the same as a buyer’s remedies for the seller’s breach.
d. All of these.
a. may be goods oriented, money oriented, or obligation oriented.
146
Which of the following is not a remedy of the buyer?
a. The buyer has the right of cover and to receive damages.
b. The buyer has the right to stop delivery of the goods.
c. The buyer may have the right to obtain specific performance.
d. The buyer may have the right to recover incidental and consequential damages.
b. The buyer has the right to stop delivery of the goods.
147
The seller may resell the goods identified to a contract:
a. only at a public sale.
b. only if the goods are sold as a unit.
c. at a public or private sale.
d. only if the goods are perishable.
c. at a public or private sale.
148
Which of the following would not be a remedy available to the seller on account of buyer's breach?
a. Stop delivery of the goods by the carrier.
b. Require the financially sound buyer to return the goods.
c. Recover the price.
d. Cancel the contract.
b. Require the financially sound buyer to return the goods.
149
In the Bigelow-Sanford, Inc. v. Gunny Corp. case, the court found:
a. the buyer did not purchase substitute goods in good faith and without unreasonable delay.
b. the Code permits a buyer to cover by buying substitute goods if the buyer acts in good faith and without unreasonable delay.
c. since the buyer did not specifically allocate the spot market replacements to the individual sellers’ accounts, the cost of cover could not be determined in this case.
d. the buyer was required to obtain cover and its failure to do so bars other Code remedies.
b. the Code permits a buyer to cover by buying substitute goods if the buyer acts in good faith and without unreasonable delay.
150
. Which of the following is correct with respect to consequential damages under the Code?
a. Consequential damages include damages for destruction of a warehouse caused by the explosion of nonconforming goods.
b. Consequential damages include damages for lost profits from a contract to resell goods which the seller never delivers.
c. Particular needs of the buyer need to be made known to the seller before the seller can be held responsible for consequential damages relating to those needs.
d. All of these are correct.
d. All of these are correct
151
. A seller’s incidental damages for a buyer’s breach would include all but which one of the following?
a. Cost to store the widgets in buyer's city after breach.
b. Cost to ship widgets back to seller.
c. Cost to initially ship the widgets to buyer.
d. Cost to reload widgets onto seller's truck at buyer's city.
c. Cost to initially ship the widgets to buyer.
152
Damages a buyer may recover for loss resulting from requirements, the needs of which the seller had reason to know at the time of contracting and which could not reasonably be prevented by cover, are:
a. incidental.
b. consequential.
c. punitive.
d. liquidated.
b. consequential
153
The buyer's incidental damages resulting from the seller's breach include:
a. expenses reasonably incurred in inspection of rightfully rejected goods.
b. any commercially reasonable charges or commissions in connection with obtaining cover.
c. any reasonable expenses connected to the delay.
d. All of these.
e. None of these.
d. All of these.
154
A buyer's right to purchase, in good faith and without unreasonable delay, substituted goods from Seller B when Seller A breaches a sales contract is:
a. cover.
b. specific performance.
c. replevin.
d. reclamation.
a. cover
155
The amount of liquidated damages included in a contract that would be upheld by a court:
a. must be reasonable in light of the inconveniences or lack of feasibility of obtaining an adequate remedy.
b. may be so high as to be punitive to the breaching party.
c. may be regarded as a penalty.
d. All of these.
e. None of these.
a. must be reasonable in light of inconveniences or lack of feasibility of obtaining an adequate remedy.
156
Which type of contractual provision affects remedies?
a. Cover.
b. Liquidation or limitation of damages.
c. Modification or limitation of remedy.
d. Both limitation of damages and limitation of remedy are correct.
d. Both limitation of damages and limitation of remedy are correct.
157
Which of the following is not a remedy available to an unpaid seller against the buyer?
a. Recovery of the price.
b. Cover and sue for damages.
c. Recovery of incidental damages.
d. Cancellation of the contract.
b. Cover and sue for damages.
158
Under what circumstances may the buyer seek the remedy of replevin?
a. Where the buyer has been unable to obtain cover.
b. Where the goods have been shipped under reservation of a security interest in the seller and that interest has been satisfied.
c. Where the goods are specially manufactured but can be purchased from another source.
d. Both if the buyer has been unable to obtain cover and where the goods have been shipped under reservation of a security interest in the seller and that interest has been satisfied.
d. Both if the buyer has been unable to obtain cover and where the goods have been shipped under reservation of a security interest in the seller and that interest has been satisfied.
159
A buyer’s commercially reasonable charges for the care and custody of goods that a buyer has rightfully rejected are known as:
a. incidental damages.
b. liquidated damages.
c. consequential damages.
d. cover charges.
a. incidental damages
160
Under the CISG, if the contract is avoided and the seller has resold the goods in a reasonable manner and within a reasonable time after avoidance, the seller may recover:
a. the difference between the contract price and the resale price.
b. incidental damages only.
c. consequential damages.
d. Both the difference between the contract price and the resale price and consequential damages.
d. Both the difference between the contract price and the resale price and consequential damages.
161
On February 21, Cara wrote to Pandora Mfg. asking for shipment of 100 swimsuits on 90-day credit. In the letter, she gave references that indicated that her store was financially sound. Actually she had bills that she could not pay and hoped to turn the business around with the summer swimsuit sales. Pandora shipped the suits on April 2; they were received April 15. Cara immediately put them on display and 27 were sold by April 30 when Pandora discovered that Cara had lied. Pandora could:
a. recover 73 suits plus incidental damages.
b. recover 10 suits provided that Pandora acted within 10 days of discovering the misrepresentation.
c. recover no suits since it had been more than 10 days since delivery.
d. recover 73 suits.
d. recover 73 suits.
162
Perry is building his house and orders a hot water heater from Jones Co. to be installed by them. The hot water heater they sent has a 45-gallon capacity, but Perry had ordered a 60-gallon capacity. Jones cannot provide a 60-gallon heater for two months, so Perry cancels the contract and gets a heater from another company. Jones Co. says it must be allowed to install the replacement heater. What result?
a. Jones wins; Perry can only cancel the portion of the contract regarding the goods.
b. Jones wins; Perry can only cancel if installation is also delayed two months.
c. Perry wins since the contract breach concerns the whole contract.
d. Perry can cancel the whole contract, but he is then limited in his recovery of damages.
c. Perry wins since the contract breach concerns the whole contract.
163
After a breach by the seller, buyer may replevy the goods after identification if:
a. he acts within 30 days.
b. he cannot, after a reasonable effort, buy replacement goods.
c. the seller is insolvent.
d. he cannot buy replacement goods or the seller is insolvent.
b. he cannot, after a reasonable effort, buy replacement goods.
164
The fair market value of a 10-foot fishing boat is $1,000. In a special promotion, J's Marina purchases a 10-foot fishing boat for $900. The boat is badly scratched when it arrives. J's Marina, however, accepts the shipment and notifies the seller of the defect. The boat as delivered has a value of $800. If the damaged boat is a breach of warranty by the seller, the buyer may recover from the seller:
a. $100.
b. $100 plus incidental and consequential damages.
c. $200.
d. $200 plus incidental and consequential damages.
d. $200 plus incidental and consequential damages.
165
Which of the following remedies are mutually exclusive and could not be obtained simultaneously?
a. Cover, incidental and consequential damages.
b. Identification of the goods and withholding delivery.
c. Withholding delivery and suit to recover incidental and consequential damages.
d. None of these. The Code's remedies are cumulative unless under the facts of an individual case one remedy bars another.
d. None of these. The Code's remedies are cumulative unless under the facts of an individual case one remedy bars another.
166
Amy agrees to buy goods from Van for a contract price of $2,000 payable on delivery. Amy repudiates the contract and refuses to pay anything. Van resells the goods in compliance with the Code for $1,700, incurring $200 in sales commissions but saving $250 in shipping costs. Van would recover from Amy:
a. the contract price of $2,000.
b. $500.
c. $350.
d. $250.
d. $250
167
An express warranty requires that the warranty be expressed in words.
a. True
b. False
False
168
Fitness for a particular purpose and merchantability are implied warranties that apply only to sales by commercial vendors.
a. True
b. False
False
169
Bradley buys a television set that turns out to be stolen. He can sue the seller for breach of warranty.
a. True
b. False
True
170
The Code requires that the affirmations, promises, or descriptions the seller makes be relied on by the buyer to be an express warranty.
a. True
b. False
False
171
Jennifer purchased a used refrigerator from her next-door neighbor. When she took it home and plugged it in, the refrigerator burst into flames. The seller in this case is in breach of the implied warranty of merchantability.
a. True
b. False
False
172
The warranty of merchantability is found in Section 402A of the Restatement of the Law of Torts.
a. True
b. False
False
173
Contributory negligence is a defense to a warranty of merchantability cause of action.
a. True
b. False
False
174
Section 402A of the Restatement applies only if the defective product is unreasonably dangerous.
a. True
b. False
True
175
Oral warranties made before the execution of a written agreement containing an express disclaimer are subject to the parol evidence rule.
a. True
b. False
True
176
Ed buys a car from a friend "as is." The friend tells him, "In my opinion, this car is in excellent mechanical condition." The friend has made an express warranty.
a. True
b. False
False
177
The Magnuson-Moss Warranty Act is administered by the Federal Trade Commission.
a. True
b. False
True
178
Despite 402A's bar of contributory negligence in strict liability cases, some courts apply comparative negligence to strict liability cases.
a. True
b. False
True
179
Few obstacles to recovery in warranty cases present serious problems to plaintiffs in strict liability actions brought pursuant to Section 402A because this section was drafted largely to avoid such obstacles.
a. True
b. False
True
180
Comment (m) to Section 402A provides that the basis of strict liability rests solely in tort and, therefore, is not subject to contractual defenses.
a. True
b. False
True
181
Under comparative negligence, the court apportions damages between parties in proportion to the degree of fault or negligence it finds against them.
a. True
b. False
True
182
Implied warranties may be excluded by course of performance, course of dealing, or usage of trade.
a. True
b. False
True
183
Horizontal privity pertains to remote sellers within the chain of distribution.
a. True
b. False
False
184
Statutes of repose were enacted to give consumers more rights against large manufacturers.
a. True
b. False
False
185
Misuse or abuse of the product is a defense to an action brought under 402A of the Restatement (Second) of Torts.
a. True
b. False
True
186
The liability of manufacturers and sellers of goods for a defective product or for its failure to perform adequately may be based on one or more of the following: negligence, misrepresentation, violation of a statutory duty, warranty, and strict liability in tort.
a. True
b. False
True
187
Under the CISG, if at the time of entering into the sales contract, the buyer knew or could not have been unaware of the lack of conformity, the seller is not liable for the warranty of particular purpose, ordinary purpose, or sale by sample or model.
a. True
b. False
True
188
. The use of a sample or model is another means of creating an implied warranty.
a. True
b. False
False
189
An implied warranty is found in the language of a sales contract.
a. True
b. False
False
190
A warranty of title may be included only by specific language or by certain circumstances.
a. True
b. False
False
191
As of the writing of the textbook, the Restatement (Third) of Torts: Products Liability had replaced the Second Restatement in all but four of the states.
a. True
b. False
False
192
The main provision of the Restatement (Third) of Torts, Section 2, recognizes three types of product defects: manufacturing defects, design defects, and failure to warn, but it imposes strict liability only for manufacturing defects.
a. True
b. False
True
193
Terrell asks a salesperson what size of water heater he should buy for a twenty-unit motel. If Terrell purchases a tank based on the salesperson’s suggestion, the salesperson’s recommendation is:
a. an express warranty of merchantability regarding the water heater.
b. an implied warranty of merchantability regarding the water heater.
c. an implied warranty of fitness for a particular purpose.
d. no warranty, but only a statement of opinion.
c. an implied warranty of fitness for a particular purpose.
194
Which of the following would constitute a defect within the meaning of 402A of the Restatement?
a. A chair with legs designed to be attached with screws and glue but lacking the screws.
b. A small car designed to have the fuel tank next to the rear axle.
c. A flammable liquid bottled in a container without a warning label to warn users of the flammability.
d. All of these are defects within the meaning of 402A.
d. All of these are defects within the meaning of 402A.
195
An express warranty within the meaning of the Code is created by which of the following?
a. A sample.
b. A description.
c. A promise.
d. All of these.
d. All of these.
196
Which of the following is generally NOT a defense to a claim against a manufacturer under 402A?
a. Contributory negligence on the part of the plaintiff.
b. Express voluntary assumption of the risk.
c. Misuse or abuse of the product.
d. Subsequent alteration of the product by the plaintiff.
a. Contributory negligence on the part of the plaintiff.
197
Implied warranties under the Code:
a. depend on the type of contract or sale entered into.
b. are a result of specific language in the sales contract.
c. continue the common law rule of caveat emptor.
d. are intended to protect the seller rather than the buyer.
a. depend on the type of contract or sale entered into.
198
In the In Re L. B. Trucking, Inc. case:
a. warranty provisions of the UCC did not apply because the sale of goods was merely incidental to the service aspect of the contract.
b. Thomas’s statements were found by the court to be mere puffing or sales talk.
c. Southern States was found to have breached both express and implied warranties.
d. Durham did not rely on Thomas’s statements, so they could not be considered warranties.
c. Southern States was found to have breached both express and implied warranties.
199
Whether an implied warranty arises out of the circumstances under which the parties enter into a contract may depend on:
a. the type of contract entered into.
b. the seller's merchant or non-merchant status.
c. applicability of other statutes.
d. All of these.
e. None of these.
d. All of these
200
Karen decided to sell her stair step exerciser, because she wasn't using it as much as she thought she would. Her friend Lydia bought it from Karen for $100. The first day that Lydia used the exerciser, it fell apart, injuring Lydia's ankle. Lydia:
a. can sue Karen for breach of the warranty of merchantability, because the exerciser is not fit for the ordinary purpose intended.
b. cannot sue Karen for breach of the warranty of merchantability, because Karen did not expressly warrant the quality of the exerciser.
c. cannot sue Karen for the warranty of merchantability because this warranty was not implied in this situation.
d. cannot sue Karen, because they are not in privity of contract.
c. cannot sue Karen for the warranty of merchantability because the warranty was not implied in this situation.
201
Geoff's fiancée, Susan, comes to meet his parents for the weekend. On Saturday morning, while using Geoff's mother's hair dryer, the blower short-circuits sending sparks across the guest room. Susan's angora sweater and her hands are covered with tiny burns. Susan's mother is a lawyer and wants her to sue the seller of the dryer for breach of warranty. Can she?
a. No, because horizontal privity would extend only to members of the family.
b. No, because privity would require that Geoff's mother sue.
c. Yes, since she is a guest in the home of the buyer, the warranties would extend to her in most states.
d. Yes, since under the Code all reasonable users are protected from injury.
c. Yes since she is a guest in the home of the buyer, the warranties would extend to her in most states.
202
. Greg has been in the business of selling collectible figurines for twenty years. Margaret agreed to buy a set if Greg would also bring her a display case for them. Greg bought one and sold it to Margaret along with the figurines. While placing the figurines in the display case, she ran her hand over the back edge of one of its shelves and cut herself severely. The wood was not finished on that side and nails were protruding through the shelf. Can Margaret sue Greg under strict liability?
a. Yes, because the display case was in an unreasonably dangerous condition.
b. Yes, because the display case was defective.
c. No, because she was not a true consumer under Sec. 402A.
d. No, because Greg is not a seller under Sec. 402A.
d. No because Greg is not a seller under Sec. 402A
203
In the Womco, Inc. v. Navistar International Corporation case, the court stated the disclaimer of the warranty of:
a. merchantability must be written and mention the word “merchantability.”
b. merchantability may be oral.
c. fitness for a particular purpose may be oral or written.
d. merchantability or fitness for a particular purpose must be conspicuous, which requires that the disclaimer be in a larger type and a different color.
b. merchantability may be oral.
204
The UCC permits a seller to limit or modify the buyer’s remedies for breach of warranty:
a. in all cases.
b. except for unconscionable limitations or exclusions of consequential damages.
c. in no cases, as this would be contrary to public policy.
d. except when the seller seeks to limit the time within which the warranty is effective.
b. except for unconscionable limitations or exclusions of consequential damages.
205
Article 2A carries over the warranty provisions of Article 2 with relatively minor revisions that reflect differences in:
a. style.
b. leasing terminology.
c. leasing practices.
d. All of these.
e. leasing terminology but not leasing practices
d. All of these
206
The distinction between a void and voidable title is not important in determining the rights of good faith purchasers of goods.
a. True
b. False
False
207
The UCC "risk of loss" rules assign the loss according to who has ownership of the goods.
a. True
b. False
False
208
Jerry bought a stereo from SX Company "on approval." The risk of loss passed to Jerry when he took possession of the stereo.
a. True
b. False
False
209
If the owner of goods entrusts them to a merchant, the merchant can transfer good title to the goods to a buyer in the ordinary course of business even if the original owner does not want to sell the goods.
a. True
b. False
True
210
If the owner of goods entrusts them to a merchant, the merchant can transfer good title to the goods to a buyer in the ordinary course of business even if the original owner does not want to sell the goods.
a. True
b. False
False
211
Fungible goods are goods for which one unit is the equivalent of any other unit.
a. True
b. False
True
212
Duncan Supply has consigned goods to Huffman Hardware. Huffman’s creditors may not take possession of the consigned goods to satisfy their claims against Huffman.
a. True
b. False
False
213
Future goods can be the subject of a present sale.
a. True
b. False
False
214
. In a contract where the buyer is to pick up the goods at the seller's place of business and the seller is a merchant, the risk of loss passes to the buyer when the goods are tendered to the buyer.
a. True
b. False
False
215
The Code has expanded the rights of good faith purchasers with respect to sales by minors.
a. True
b. False
True
216
When goods have been damaged without the fault of either the seller or buyer, if the risk of loss is placed on the seller, the seller has no right to recover the purchase price from the buyer and has no right to the return of the damaged goods.
a. True
b. False
False
217
A void title may allow good title to pass in special circumstances.
a. True
b. False
False
218
Security interests, defined by the Code as interests in personal property or fixtures that ensure payment or performance of obligations, are governed by Article 6 of the UCC.
a. True
b. False
False
219
Kevin delivers to Zach nonconforming goods. Zach accepts, but later discovers the defect and rightfully revokes acceptance. If the goods are destroyed through no fault of Kevin or Zach:
a. if Zach’s insurance is adequate, it will cover the loss and Kevin would not bear any of the loss.
b. Kevin would bear the loss of these nonconforming goods, whether or not Zach has insurance.
c. Zach will bear the loss, whether he has insurance or not.
d. Kevin and Zach will equally share the loss.
a. if Zach's insurance is adequate, it will cover the loss and Kevin would not bear any of the loss.
220
Which of the following is true regarding identification of the goods under Article 2?
a. Only the buyer can identify the goods.
b. Identification of existing goods gives the buyer a special property right.
c. Identification of fungible goods occurs when the seller separates the contracted units from the whole.
d. All of these are correct.
b. Identification of existing goods gives the buyer a special property right.
221
A sale exists after the buyer takes:
a. the title to the goods.
b. the risk of loss on the goods.
c. an insurable interest in the goods.
d. a special property interest in the goods.
a. the title to the goods.
222
Article 6 of the Code does not:
a. apply to sales of goods in the ordinary course of business.
b. define "bulk transfer" as any transfer in bulk and not in the ordinary course of business.
c. apply to merchants whose principal business is the sale of merchandise from stock.
d. include the transfer of a substantial part of equipment as a bulk transfer under any circumstances.
e. All of the answers are correct.
a. apply to sales of goods in the ordinary course of business.
223
Under the CISG:
a. loss of, but not damage to, the goods after the risk of loss has passed to the buyer discharges the buyer from the obligation to pay the purchase price.
b. if the sales contract involves the carriage of the goods and the seller is not obligated to hand them over at a particular destination, risk of loss passes to the buyer when the goods are handed over to the first carrier.
c. if the sales contract does not involve carriage of the goods, the risk of loss passes to the buyer when the goods are tendered to him.
d. All of the answers are correct.
b. if the sales contract involves the carriage of the goods and the seller is not obligated to hand them over at a particular destination, risk of loss passes to the buyer when the goods are handed over to the first carrier.
224
Alex sees Mona’s ring, and he thinks it is very valuable. He uses physical duress to cause her to give him the ring, and he quickly sells it to unsuspecting Hanna's Antique Jewelry Shop for $5,000. A month later, Mona discovers her ring on sale at Hanna's. Can Mona get the ring back?
a. Yes, since a true owner can always recover her own property.
b. Yes, since Alex had voidable title to the ring.
c. Yes, since Alex had void title to the ring.
d. No, since Hanna was a good faith purchaser for value.
c. Yes, since Alex had void title to the ring.
225
With regard to Article 6 of the Uniform Commercial Code, which of the following is accurate?
a. The National Conference of Commissioners on Uniform State Laws and the American Law Institute jointly issued a recommendation stating "that changes in the business and legal contexts in which sales are conducted have made regulation of bulk sales necessary."
b. Nearly all of the states have repealed Article 6 of the UCC.
c. Article 60 is a revision of Article 6.
d. All of these are accurate.
e. None of these are accurate.
b. nearly all of the states have repealed Article 6 of the UCC.
226
Jack is a guest at Harry's home. While there, he goes into the library and picks up a music box that is part of Harry's collection. Jack overwinds the stem and it breaks. Hoping Harry won't notice, Jack takes the music box for repair to a jeweler who sells similar ones. The jeweler fixes it, but forgets to tag it and an unsuspecting clerk sells it to Robert. Jack is frantic. Can Harry get the music box from Robert?
a. No, the jeweler gives good title to a bona fide purchaser for value.
b. No, the jeweler was not a merchant with regard to music boxes.
c. Yes, Robert was not a buyer in the ordinary course of business.
d. Yes, Robert has assumed only Jack's title, which is no title at all.
d. Yes, Robert has assumed only Jack's title, which is no title at all.
227
Tom makes pottery in his spare time. Jackie asks if he'd sell her a covered bowl. Later that day, he telephones her and says she can have it for $50. She agrees, so he tells her he'll wrap it up for her and it will be ready in half an hour. Six days later, Jackie had not yet come for the bowl when a dog knocks the box off the shelf and breaks the bowl. Who is liable?
a. Tom, because Jackie had not yet received the bowl.
b. Tom, because the bowl was in his possession when the dog broke it.
c. Jackie, because she had identified the bowl.
d. Jackie, because Tom had tendered the bowl to her nearly a week earlier.
a. Tom, because Jackie had not yet received the bowl.
228
In Robinson v. Durham, the court found:
a. the Robinsons were good faith purchasers for value when they bought the car for their business, and they had good title which they passed to Durham.
b. the Robinsons had a voidable title, and they passed good title to Durham, who was a good faith purchaser for value.
c. there was a breach of warranty of title between the Robinsons and Durham.
d. the Robinsons obtained no title from the thief, but they passed good title to Durham since he was a good faith purchaser for value.
c. there was a breach of warranty of title between the Robinsons and Durham.
229
When delivery is to be made without moving the goods, unless otherwise agreed, title passes:
a. at the time and place of contracting under all circumstances.
b. when a document of title is created if a negotiable document of title is involved.
c. when the goods are identified if they were not identified at the time of contracting.
d. at the time the seller completes performance.
c. when the goods are identified if they were not identified at the time of contracting.
230
Mary orders a dress for $1,000. The designer sends the wrong size. Mary doesn't inspect the dress on arrival and therefore doesn't discover the nonconformity until the day before she is to wear it to her first board meeting as president of Tri-State Engineering. She calls the designer and sends the dress back, but it is lost in the mail. Mary's insurance would cover $400 of the loss. The designer's insurance would cover $900. Who is liable?
a. Mary will bear the whole loss because she accepted the goods.
b. The designer will bear the whole loss because Mary returned the nonconforming goods.
c. Mary will owe $100, the designer $900.
d. The risk is Mary's to the extent of $400.
d. The risk is Mary's to the extent of $400.
231
Amanda ordered fifty personalized sweatshirts from King Manufacturing Company. After the shirts were specially imprinted, but before they were mailed, Amanda called King Manufacturing to disavow the contract. The next day the sweatshirts were stolen. In this case:
a. Amanda must pay the entire purchase price, because she breached the contract.
b. King Manufacturing will have to bear the entire loss, because it had not yet mailed the shirts.
c. Amanda must bear the entire loss, because the shirts were identified to the contract.
d. King must first seek payment from its insurance carrier, and then collect from Amanda for any amount not covered by insurance.
d. King must first seek payment from its insurance carrier, and then collect from Amanda for any amount not covered by insurance.
232
In a sale on approval:
a. possession, but not title, is transferred to the buyer for a stated period of time.
b. possession and title are transferred to the buyer for a stated period of time.
c. title, but not possession, is transferred to the buyer for a stated period of time.
d. neither title nor possession is transferred to the buyer for a stated period of time.
a. possession, but not title, is transferred to the buyer for a stated period of time.
233
The Heinrich v. Titus-Will Sales, Inc. case stands for the principle that:
a. the UCC requires proper state licensing for a company claiming to be a merchant to actually have merchant status.
b. a buyer in the ordinary course of business acquires good title when buying from a merchant seller who was entrusted with possession of the goods.
c. risk of loss depends on who has title to the goods at the time the goods are damaged or destroyed.
d. a void title is no title.
b. a buyer in the ordinary course of business acquires good title when buying from a merchant seller who was entrusted with possession of the goods.
