Commercial Law

Question 1

UCC Article 2

Answer 1

Defines “goods” as property that is tangible and movable, other than money

Question 2

Sale on approval

Answer 2

Sale to a consumer who wants to try the goods before buying them

Title and risk of loss remain with seller until acceptance

Question 3

Sale or return

Answer 3

Buyer has right to return if they do not sell

Seller retains title until payment or resale

Return of goods at buyer’s risk

Question 4

Under UCC, minimum sale requiring written contract

Answer 4

$500

Exclusions: partial receipt of goods

Question 5

FOB place of shipment

Answer 5

Ownership shifts to buyer once delivered to carrier

Question 6

FOB place of destination

Answer 6

Ownership passes to buyer when carrier delivers goods

Question 7

FAS vessel

Answer 7

Ownership psses when seller delivers goods alongside vessel for loading

Question 8

FOB vessel

Answer 8

Ownership passes once goods are loaded on board the vessel

Question 9

CIF (cost-insurance-freight)

Answer 9

Seller obligated to pay for insurance and freight charges for delivery

Question 10

CAF (cost and freight)

Answer 10

Seller is obligated to pay for freight but not insurance for delivery

Question 11

Two situations with no right to inspect

Answer 11

1. When carrier delivers goods COD
2. When contract requires buyer to pay at time of delivery of document of title

Question 12

Express warranty

Answer 12

If a statement forms the basis of the sale

Question 13

Three kinds of express warranties

Answer 13

1. An affirmation of fact about the goods
2. Any description of the goods in a contract
3. A contract based on sample or model must conform to that sample or model

Question 14

Implied warranty of merchantability

Answer 14

Only when seller is a merchant

Product deemed fit for ordinary purpose for which it is used

Question 15

Implied warranty of fitness for a particular purpose

Answer 15

Product is fit for particular purpose and applies if the seller knows about the buyer’s purpose for the product

Question 16

Implied warranty of title

Answer 16

Promise that the seller has legal ownership of goods and has no knowledge of any security interest or other lien on the goods

Question 17

Revocation of acceptance

Answer 17

Buyer assumed defect would be cured but it was not

Buyer accepted goods before discovering nonconformity

Buyer accepted goods because it would have been difficult to discover defect and seller gave assurances

Question 18

Excuses for nonperformance

Answer 18

Loss of identified goods

Substituted performance

Failure of a presupposed condition

Question 19

Four types of commercial paper

Answer 19

Draft (check)

CD

Promissory note

Trade acceptance

Question 20

Warehouse receipt

Answer 20

Legal document providing title to goods in storage and assurace delivery to the holder of the receipt

Question 21

Bill of lading

Answer 21

Document acknowledging receipt of goods from shipper, given by carrier which includes terms of the contract of carraige for goods

Question 22

Bailment

Answer 22

Temporary transfer of property’s custody

Question 23

Bailor

Answer 23

Owner of personal property in bailment

Question 24

Bailee

Answer 24

Party temporarily possessing personal property in bailment

Question 25

Necessary elements to be considered a title

Answer 25

Created by bailee as receipt for goods received

Contract to ship or store goods

If negotiable, contains statement that holder has right to receive, hold, and dispoes of both goods and title, and purchaser of title does so free of claims and defenses to prior parties

Question 26

UCC Article 7

Answer 26

Addresses shipment, storage, and delivery procedures and requirements involved in the sale of goods

Question 27

UCC Article 9

Answer 27

Unified, comprehensive process for regulating security interests in personal property and fixtures

Question 28

Three forms of secured transactions

Answer 28

Pledge

Chattel mortgage

Conditional sale

Question 29

Pledge

Answer 29

Debtor delivers goods for creditor to hold as security until payment has been made

Question 30

Chattel mortgage

Answer 30

Debtor is allowed to retain possession of property while creditor retains right to take ownership of the property

Question 31

Five forms of collateral

Answer 31

Consumer goods

Equipment

Farm products

Inventory

Property on paper

Question 32

Three requirements for attachment

Answer 32

Consenual security aggreement

Creditor must give value

Debtor must have rights to the attachment

Question 33

Perfection

Answer 33

Process of validating an attachment

Occurs when (1) security interest has attached and executed and (2) the financing statement has been filed

Question 34

Federal Trade Commission Act

Answer 34

Prohibits unfair methods of competition and unfair or deceptive acts or practices that affect interstate commerce

Does not apply to insurance

Question 35

Magnuson-Moss Warranty Act

Answer 35

If a producer provides a written warranty, it must conform to certain standards

Question 36

Lemon provision

Answer 36

Promise to remedy a product defect within a reasonable time

Question 37

EFT Act

Answer 37

Buyers do not have right to stop payment on electronic fund transfers

Question 38

Chapter 7 Bankruptcy

Answer 38

Last resort chapter

Nonexempt assets are distributed to creditors and balance of obligations are forgiven or discharged

Question 39

Chapter 13 Bankruptcy

Answer 39

Permits consumer to set up a plan for paying a portion (or possibly all) debt without threat of lawsuit

Question 40

Holder in due course

Answer 40

Person to whom a negotiable instrument has been issued and who possesses it for value