SALE

Question 1

If goods have been delivered to buyer pursuant to sale or return contract, the

Answer 1

Risk of loss for the goods passed to the buyer.

Question 2

Bell Co. owned 20 engines which it deposited in a public warehouse on May 5, receiving a negotiable warehouse receipt in its name. Bell sold the engines to Spark Corp. On which of the following dates did the risk of loss transfer from Bell to Spark?

June 13 - Bell negotiated the warehouse receipt to Spark.

June 11 - Saprk signed a contract to buy the engines from Bell for $19,000. delivery was to be at the warehouse.

June 14 - Spark received delivery of the engines at the warehouse.

June 12 - Spark paid for the engines.

Answer 2

June 13-Bell negotiated the warehouse receipt to Spark.

Question 3

An oral agreement concerning the sale of goods entered without consideration is binding if the agreement

Answer 3

Modifies the price in an existing, enforceable contract from $525 to $475.

Question 4

Ace Auto Sales, Inc. sold Williams a secondhand car for $9,000. One day Williams parked the car in a shopping center parking lot. When Williams returned to the car, Montrose and several policemen were waiting. It turned cut that the car had been stolen from Montrose who was rightfully claiming ownership. Subsequently, the car was returned by Williams to Montase. Williams seeks recourse against Ace Auto Sales who had sold him the car with the disclaimer of “any and all warranties” of the following is correct?

a. Since Ace Auto Salas’ contract of sale disclaimed “any and all warranties” arising in connection with its sale to Williams, Williams must bear the loss.
b. Since Ace Auto and Williams were both innocent of any wrongdoing in connection with the theft of the auto, the loss will rest upon the party ultimately in possession.
c. Ace Auto will bear the loss since a warranty of title in Williams’ favor aase upon the sale of the auto.
d. Had Williams litigated the question of Montrose’s ownership to the auto, he would have won since possession is nine-tenths of the law.

Answer 4

Ace Auto will bear the loss since a warranty of title in Williams’ favor aase upon the sale of the auto.

Question 5

Calvin Poultry Co. offered to sell Chickenshop 20,000 pounds of chicken at 40 cents per pound under specified delivery terms. Chickenshop accepted the offer as follows: “We accept your offer for 20,000 pounds of chicken at 40 cents per pound per city scale weight certificate.” Which of the following is correct?

a. Chickenshop’s reply constitutes a conditional acceptance, but not counteroffer.
b. A contract was formed on Chickenshop’s terms.
c. A contract was formed on Calvin’s terms.
d. Chickenshop’s reply constitutes a counteroffer and no contract was formed.

Answer 5

A contract was formed on Chickenshop’s terms.

Question 6

Under the UCC Sales Article, firm offer will be created only if the

Answer 6

Offer is made by merchant in signed writing.

Question 7

Marvin contracted to purchase goods from Ling. Subsequently, Marvin breached the contract and Ling is seeking to recover the contract price. Ling can recover the price if

Answer 7

Ling has identified the goods to the contract and the circumstances indicate that a reasonable effort to resell the goods at a reasonable price would be to no avail.

Question 8

Thorn purchased a used entertainment system from Sound Corp. The sales contract stated that the entertainment system was being sold “as is.” Under the Sales Article of the UCC, which of the following statements is(are) correct regarding the seller’s warranty of title and against infringement?

I. Including the term “as is” in the sales contract is adequate communication that the seller is conveying the entertainment system without warranty of title and against infringement.

II. The seller’s warranty of title and against infringement may be disclaimed at any time after the contract is formed.

Answer 8

Neither I or II

Question 9

To establish a cause of action based on strict liability in tort for personal injuries resulting from using defective product, one of the elements the plaintiff must prove is that the seller (defendant)

Answer 9

Was engaged in the business of selling the product.

Question 10

Which of the following factors is least important in determining whether manufacturer is strictly liable in tort for defective product?

a. Whether the product caused injuries.
b. The negligence of the manufacturer.
c. Modifications to the product by the wholesaler.
d. The contributory negligence of the plaintiff.

Answer 10

The negligence of the manufacturer.

Question 11

In general, the UCC Sales Article applies to the sale of

Answer 11

Consumer goods by a nonmerchant

Question 12

On February I, Nugent Manufacturing, Inc. contracted with Costello Wholesalers to supply Costello with 1,000 integrated circuits. Delivery was called for on May I. On March 15, Nugent notified Costello that it would not perform and that Costello should look elsewhere. Nugent had received a larger and more lucrative contract on February 27, and its capacity was such that it could not fulfill both orders. The facts

Answer 12

Will permit Costello to sue immediately after March 15, even though the performance called for under the contract was not until May 1.

Question 13

Tint is suing the manufacturer, the wholesaler, and the retailer for bodily injuries caused by snowblower Tint purchased. Under the theory of strict liability

Answer 13

Tint may recover despite the fact that he cannot show that any negligence was involved.

Question 14

Under the UCC Sales Article, the warranty of title may be excluded by

Answer 14

The seller’s statement that it is selling only such right or title that it has.

Question 15

Under the UCC, an action for breach of the implied warranty of merchantability by party who sustained personal injuries may be successful against the seller of the product only when

Answer 15

The seller is a merchant with respect to the product involved.

Question 16

Baker fraudulently induced Able to sell Baker painting for $200. Subsequently, Baker sold the painting for $10,000 to Gold, good-faith purchaser. Able is entitled to

Answer 16

Recover damages from Baker.

Question 17

Under the UCC Sales Article, which of the following warranties requires the seller to be merchant with respect to the goods being sold in order for the warranty to apply?

a. Implied warranty of fitness for a particular purpose and Implied warranty of merchantability.
b. Neither
c. Implied warranty of fitness for a particular purpose.
d. Implied warranty of merchantability

Answer 17

Implied warranty of merchantability

Question 18

Gibbeon Manufacturing shipped 300 designer navy blue blazers to Custom Clothing Emporeum. The blazers arrived on Friday, earlier than Custom had anticipated and on an exceptionally busy day for its receiving department. They were perfunctorily examined and sent to a nearby warehouse for storage until needed. On Monday of the following week, upon closer examination, it was discovered that the quality of the linings of the blazers was inferior to that specified in the sales contract. Which of the following is correct insofar as Custom’s rights are concerned?

Answer 18

Custom can reject the blazers upon subsequent discovery of the defects

Question 19

Moreno Company contracted with a common carrier to have goods transported that she had sold to a customer FOS destination. The contract between the common carrier and Moreno specified in clear terms that liability of the common carrier is limited to $100 per shipment unless a higher limit is chosen by paying more. Moreno did not select a higher limit. The goods, worth $900, were destroyed in transit. Which of the following is not true?

Answer 19

The clause limiting liability to a $100 limit is invalid as against public policy.

Question 20

Weston Co. offered to sell Distrib Markets 20,000 pounds of Westons at $1.00 per pound, subject to certain specified terms for delivery. fDistrib replied in writing as follows:

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

Under the UCC

Answer 20

A contract was formed between the parties

Question 21

The Uniform Commercial Code implies warranty of merchantability to protect buyers of goods. To be subject to this warranty the goods need not be

Answer 21

Fit for all of the purposes for which the buyer intends to use the goods.

Question 22

On May 1, Fast entered into a signed contract for the sale of 5,000 pounds of sugar to Kemp Co. at $.30 per pound. Delivery was to be made on June 10. Due to a sudden rise in sugar prices, Frost sent Kemp a letter stating that it would not sell the sugar to Kemp. Kemp received the letter on May 15 at which time the market price of sugar was $.40 per pound. Although Kemp could have reasonably purchased sugar elsewhere in the market, it chose not to do so. On June 10, the market price of sugar was $.50 per pound. In addition to incidental damages, Kemp is entitled to damages of

Answer 22

$500

Question 23

Which of the following factors will be most important in determining if an express warranty has been created?

a. Whether the sale was made by a merchant in the regular course of business.
b. Whether the promises made by the seller became part of the basis of the bargain.
c. Whether the statements made by the seller were in writing.
d. Whether the seller intended to create warranty.

Answer 23

Whether the promises made by the seller became part of the basis of the bargain.

Question 24

Kirk Corp. sold Nix an Ajax freezer, Model 24, for $490. The contract required delivery to be made by June 23. On June 12, Kirk delivered an Ajax freezer, Model 52, to Nix. Nix immediately notified Kirk that the wrong freezer had been delivered and indicated that the delivery of a correct freezer would not be acceptable. Kirk wishes to deliver an Ajax freezer, Model 24, on June 23. Which of the following statements is correct?

a. Nix must accept the nonconforming freezer but may recover damages.
b. Kirk may deliver the freezer on June 23 without further notice to Nix.
c. Nix always may reject the nonconforming freezer and refuse deliver,’ of a conforming freezer on June 23.
d. Kirk may deliver the freezer on June 23 if it first seasonably notifies Nix of its intent to do so.

Answer 24

Kirk may deliver the freezer on June 23 if it first seasonably notifies Nix of its intent to do so.

Question 25

Under the UCC Sales Article, if buyer wrongfully rejects goods, the aggrieved seller may

a. Resell the goods and sue for damages and Cancel the agreement
b. Resell the goods and sue for damages
c. Cancel the agreement
d. Neither

Answer 25

Resell the goods and sue for damages and Cancel the agreement

Question 26

Cain and Zen Corp. orally agreed that Zen would specially manufacture a machine for Cain at a price of $40,000. After Zen completed the work at cost of $30,000, Cain notified Zen that it no longer needed the machine. Zen is holding the machine for Cain and has requested payment from Cain. Despite making reasonable efforts, Zen has been unable to resell the machine for any price. Zen has incurred warehouse fees of $500 for storing the machine. If Cain refuses to pay Zen and Zen sues Cain, the most Zen will be entitled to recover is

Answer 26

$40,500

Question 27

Stubble sold some office furniture to Darwin, who gave Stubble a check for the purchase price, and immediately resold the furniture to Hernandez. Darwin’s check was subsequently returned due to insufficient funds. Hernandez had purchased this furniture in good faith, not knowing that Darwin had insufficient funds in his checking account. Which of the following is correct?

a. Stubble may repossess the furniture from Hernandez.
b. Hernandez has good title to the furniture.
c. Hernandez may recover damages from Darwin for fraud.
d. Stubble has title to the furniture.

Answer 27

Hernandez has good title to the furniture.

Question 28

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 I 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. Three weeks later the engine exploded. Super’s oral warranty

Answer 28

Is valid and enforceable.

Question 29

Wally, a CPA and a neighbor of Rita’s, offered to sell Rita his power chain saw for $400. Rita stated that she knew nothing about chain saws but would buy the saw if it were capable of cutting down the trees in her backyard, which had an average diameter of five feet. Wally assured Rita that the saw “would do the job.” Relying on Wally’s assurance, Rita purchased the saw. Wally has created a warranty that

Answer 29

The saw is capable of cutting the trees in Rita’s backyard.

Question 30

Flax telephoned Sky Corp. and ordered a specially manufactured air conditioner for $1,900. Subsequently, Flax realized that he miscalculated the area which was to be cooled and concluded that the air conditioner would not be acceptable. Sky had already completed work on the air conditioner, demanded payment, and was unable to resell the unit at a reasonable price. If Flax refuses to pay and Sky brings an action seeking as damages the price plus reasonable storage charges of $50, Sky will recover

Answer 30

The full $1,950.

Question 31

Sand Corp. sold and delivered a photocopier to Barr for use in Barr’s business. According to their agreement, Barr may return the copier within 30 days. During the 30-day period, if Barr has not returned the copier or indicated acceptance of it, which of the following statements is correct with respect to risk of loss and title?

a. Risk of loss and title passed to Barr.
b. Risk of loss remains with Sand but title passed to Barr.
c. Risk of loss and title remain with Sand.
d. Risk of loss passed to Barr but title remains with Sand.

Answer 31

Risk of loss and title remain with Sand.

Question 32

Park purchased from Derek Truck Sales a truck which had serious mechanical problems. Park learned of the defects 6 months after the date of sale. Five years after the date of sale Park commenced an action for breach of warranty against Derek. Derek asserts the statute of limitations as a defense. Which of the following statements made by Derek is correct?

a. Park is precluded from asserting under any circumstances that the statute of limitations stopped running.
b. A clause in the original contract reducing the statute of limitations to g months is enforceable.
c. Park was required to bring the action within the statute of limitations as measured from the time the breach was discovered or should have been discovered.
d. Park was required to bring the action within the statute of limitations as measured from Derek’s tender of delivery.

Answer 32

Park was required to bring the action within the statute of limitations as measured from Derek’s tender of delivery.

Question 33

Lazur Corp. agreed to purchase 100 radios from Wizard Suppliers, Inc. Wizard is a wholesaler of small home appliances and Lazur is an appliance retailer. The contract required Wizard to ship the radios to Lazur by common carrier, “FOS Wizard Suppliers, Inc. Loading Dock.”

Risk of loss for the radios during shipment to Lazur would be on

Answer 33

Lazur, because the risk of loss passes when the radios are delivered to the carrier.

Question 34

On April 5, Anker, Inc. furnished Bold Corp. with Anker’s financial statements dated March 31. The financial statements contained misrepresentations which indicated that Ankar was solvent when in fact it was insolvent. Based on Anker’s financial statements, Bold agreed to sell Anker 90 computers, “FOB-Bold’s loading dock.” On April 14, Anker received 60 of the computers. The remaining 30 computers are in the possession of the common carrier and in transit to Anker.

If on April 28, Sold discovered that Anker was insolvent, then with respect to the computers delivered to Anker on April 14, Bold may

Answer 34

Reclaim the computers upon making a demand.

Question 35

Frey Products, Inc. leased 10 lathes from Tri Corp., a manufacturer of lathes. The lease provided for monthly payments of $2,000 per month for 60 months. Frey has an option to purchase the 10 lathes for $200 upon completion of the 60 payments. Tri has accounted for this lease as a sales-type lease and Frey has accounted for this lease as a capital lease. Assuming Frey exercises the option, which of the following statements is correct?

a. In order to have an enforceable lease Tri must file a security agreement.
b. Title to the lathes passed to Frey prior to the time Frey exercised the option.
c. The lease agreement represents a purchase money security interest which is automatically perfected without the necessity of filing financing statement
d. Frey lacks an insurable interest in the lathes until it exercises the option to purchase them.

Answer 35

Title to the lathes passed to Frey prior to the time Frey exercised the option.

Question 36

On April 5, Anker, Inc. furnished Bold Corp. with Anker’s financial statements dated March 31. The financial statements contained misrepresentations which indicated that Ankar was solvent when in fact it was insolvent. Based on Anker’s financial statements, Bold agreed to sell Anker 90 computers, “FOB-Bold’s loading dock.” On April 14, Anker received 60 of the computers. The remaining 30 computers are in the possession of the common carrier and in transit to Anker.

With respect to the remainging 30 computers in transit, which of the following statements is correct if Anker refuses to pay Bold in cash and Anker is not in possession of a negotiable document of the title covering the computers?

a. Bold may stop delivery of the computers to Anker since their contract is void due to Anker’s furnishing of the false financial statements.
b. Bold may stop delivery of the computers to Anker despite the fact that the title had passed to Anker.
c. Bold must deliver the computers to Anker since the risk of loss passed to Anker.
d. Bold must deliver the computers to Anker on credit since Anker has not breached the contract.

Answer 36

Bold may stop delivery of the computers to Anker despite the fact that the title had passed to Anker.

Question 37

On Monday, Wolfe paid Aston Co., a furniture retailer, $500 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?

Answer 37

Aston, because Wolfe had not yet taken possession of the table.

Question 38

Lazur Corp. agreed to purchase 100 radios from Wizard Suppliers, Inc. Wizard is a wholesaler of small home appliances and Lazur is an appliance retailer. The contract required Wizard to ship the radios to Lazur by common carrier, “FOS Wizard Suppliers, Inc. Loading Dock.”

Under the UCC Sales Article,

Answer 38

Title to the radios passes to Lazur at the time they are delivered to the carrier, even if the goods are nonconforming.

Question 39

Which of the following terms generally must be included in writing which would otherwise satisfy the UCC Statute of Frauds regarding the sale of goods?

a. The designation of the parties as buyer and seller.
b. The warranties to be granted.
c. The quantity of the goods.
d. The price of the goods.

Answer 39

The quantity of the goods.

Question 40

In deciding contaversy involving the question of who has the risk of loss, the court will look primarily to

Answer 40

The intent of the parties manifested in the contract.

Question 41

Jerry saw a watch at a shop that both sells and repairs used watches. Jerry knows that this watch was left at the shop by Brett for repairs. Jerry then buys the watch from an employee of the shop who mistakenly thought it was for sale. Which of the following is true?

a. Jerry does not obtain title to the watch since the shop made the mistake.
b. Jerry obtains title to the watch since the shop mistakenly sold the watch.
c. Jerry does not obtain title to the watch since he is not a good-faith purchaser.

D. Jerry obtains title to the watch since he paid for the watch.

Answer 41

Jerry does not obtain title to the watch since he is not a good-faith purchaser.

Question 42

Grill deals in the repair and sale of new and used clocks. West brought a clock to Grill to be repaired. One of Grill’s clerks mistakenly sold West’s clock to Hone, another customer. Under the Sales Article of the UCC, will West win a suit against Hone for the return of the clock?

Answer 42

No, because Grill is a merchant to Whom goods had been entrusted.

Question 43

Kent suffered an injury due to a malfunction of a chain saw he had purchased from Grey Hardware. The saw was manufactured by Dill Tool Corp. Kent has commenced an action against Grey and Dill based upon strict liability. Which of the following is a correct statement?

a. The lawsuit will be dismissed since strict liability has not been applied in product liability cases in the majority of jurisdictions.
b. Privity will not be a valid defense against Kent’s suit.
c. Kent’s suit against Grey will be dismissed since Grey was not at fault.
d. Dill will not be liable if it manufactured the saw in nonnegligent manner.

Answer 43

Privity will not be a valid defense against Kent’s suit.

Question 44

The Uniform Commercial Code provides for warranty against infringement. Its primary purpose is to patect the buyer of goods from infringement of the rights of third parties. This warranty

Answer 44

Protects the seller if the buyer furnishes specifications which result in an infringement.

Question 45

Dill purchased a computer from Park, who regularly sells computers to the general public. After receiving payment in full, Park tendered delivery of the computer to Dill. Rather than take immediate delivery, Dill stated that he would return later that day to pick up the computer. Before Dill returned, thieves entered Park’s store and stole Dill’s computer. The risk of loss

Answer 45

Remained with Park since Dill had not yet received the computer.

Question 46

Which of the following contracts is not governed by Article 2 of the Uniform Commercial Code and is thus governed by the Common Law Rules?

a. Ran buys an old painting from a private party for $10,000.
b. Ran purchases an elegant chess set that was carved out of wood 100 years ago.
c. Ran buys a portable radio for $50.
d. Ran hires a contractor to remodel her home using expensive materials.

Answer 46

Ran hires a contractor to remodel her home using expensive materials.

Question 47

Doral Inc. wished to obtain an adequate supply of lumber for its factory extension which was to be constructed in the spring. It contacted Ace Lumber Company and obtained a 75-day written option (firm offer) to buy its estimated needs for the building. Doral supplied a form contract which 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 wishes to avoid its obligation. Which of the following is Ace’s best defense against Doral’s assertion that Ace is legally bound by the option?

a. The option is not supported by any consideration on Doral’s part.
b. The promise of irrevocability was contained in a form supplied by Doral and was not separately signed by Ace.
c. Such an option is invalid if its duration is for more than 2 months.
d. Doral is not merchant.

Answer 47

The promise of irrevocability was contained in a form supplied by Doral and was not separately signed by Ace.

Question 48

If contract for the sale of goods includes C&F shipping term and the seller has fulfilled all of its obligations, the

Answer 48

Risk of loss will pass to the buyer upon delivery of the goods to the carrier.

Question 49

Yost Corp., a computer manufacturer, contracted to sell 15 computers to 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

Answer 49

Is obligated to pay for the computers because Yost made a valid substituted performance.