Sales & Lease Contracts

Question 1

Roy’s Chick’n Shack orders chicken from Standard Food Supplier, but Standard does not deliver. Roy’s will probably be unable to enforce the agreement if the parties

a. did not limit the duration of the deal.
b. did not specify a payment term.
c. did not specify a quantity term.
d. have not begun to perform.

Answer 1

c. did not specify a quantity term.

Question 2

FlavorBean Coffee Company agrees to buy an unspecified quantity of coffee beans from Global AgriCorp. Global breaches the contract. In FlavorBean’s suit to obtain relief, the court will most likely

a. award a reasonable quantity of beans to FlavorBean.
b. award FlavorBean all the beans that it requires.
c. award Global’s output of coffee beans to FlavorBean.
d. have no basis for determining a remedy.

Answer 2

d. have no basis for determining a remedy

Question 3

Peter, an agent for Zippy Cars, Inc., writes a letter to Cassandra on March 1 stating that he will sell her a 2011 Suburu Outback for $20,000 between March 1 and April 30. Peter’s letter to Cassandra is

a. a firm offer.
b. an acceptance.
c. a bilateral contract.
d. a breach.

Answer 3

a. a firm offer.

Question 4

Community Construction Corporation offers to buy from Solid Cement Company a certain quantity of cement for a certain price. Solid can ac¬cept the offer by

a. doing nothing.
b. promising to ship or promptly shipping the cement.
c. promising to ship the cement only.
d. promptly shipping the cement only.

Answer 4

b. promising to ship or promptly shipping the cement.

Question 5

Perfect Potato Chip Company makes an offer that Snack Foods Corporation would like to accept. Under the “mirror image rule” relating to offer and acceptance, an acceptance

a. may include additional terms not contained in the offer so long as they do not materially alter the agreement.
b. may include additional terms not contained in the offer that will be-come part of the agreement if the offeror does not object within a reasonable period of time.
c. must include only those terms and conditions contained in the offer.
d. may contain additional terms as long as all parties agree to the additional terms.

Answer 5

c. must include only those terms and conditions contained in the offer.

Question 6

Mountaineer Sales, Inc., is the offeror and Camping Goods Corporation is the offeree under a unilateral sales contract in which Forest Recreation Products Company is also interested. Mountaineer is not notified of Camping’s performance within a rea¬son¬able time. Mountaineer

a. may treat the offer as having lapsed.
b. must assume that Camping has started to perform.
c. must contact Camping.
d. must contract with Forest.

Answer 6

a. may treat the offer as having lapsed.

Question 7

Nature’s Products, Inc., sends its standard order form to Interbusiness Distribution Corporation (IDC) to evidence a sale of packing materials. IDC responds with its own standard purchase order form. Additional terms in the purchase order automatically become part of the contract unless

a. the terms materially alter the original contract.
b. the original offer expressly required acceptance of its terms.
c. the offeror objects to the new terms within a reasonable time.
d. any of the choices.

Answer 7

d. any of the choices.

Question 8

Trend-Rite Clothiers, Inc., sells t-shirts to Brand Name Stores, Inc., under an existing con¬tract. When textile costs increase, Brand agrees to a price increase, but later wants to cancel the con¬tract. Brand may

a. cancel the contract immediately.
b. cancel the contract only after accepting a final shipment.
c. cancel the contract only on reasonable notice.
d. not cancel the contract.

Answer 8

d. not cancel the contract

Question 9

Quinn enters into a series of agreements with Reba involving a sale of a Suite Dreams Motel, including the land, building, furnishings, shares of stock in Suite Dreams Company, and a contract with Trudy to create an ad campaign. Reba suspects that Quinn may be misrepresenting the facts. The UCC Statute of Frauds governs

a. the sale of any of the property evidenced by a writing.
b. the entire deal, including the marketer’s services.
c. the sale of the furnishings priced at $500 or more.
d. the sale of the land and the building.

Answer 9

c. the sale of the furnishings priced at $500 or more.

Question 10

Jackson owns an antiques store. He sells a grand piano to Fred for $5,000, a old jukebox to Sam for $499, an antebellum chest of drawers to Josephine for $659 and a gold ring to Wendy for $999. Which of Jackson’s sales must be in writing to be enforceable?

a. The grand piano only
b. The grand piano and the gold ring only
c. The grand piano, the chest of drawers and the gold ring only
d. The grand piano, the chest of drawers, the jukebox and the gold ring

Answer 10

c. The grand piano, the chest of drawers and the gold ring only

Question 11

Equipment Rental Corporation and Floodlights, Inc., are parties to an oral agreement for a lease of goods with payments in excess of $10,000. They may satisfy the Statute of Frauds by

a. mutually agreeing not to commit fraud.
b. restating the terms in a phone call.
c. setting out the terms in an e-mail.
d. shaking hands on the deal.

Answer 11

c. setting out the terms in an e-mail.

Question 12

Raul agrees to ship to Ben one hundred ceil¬ing fans for $5,000. Raul ini¬tials his notes of the deal, which in¬clude the terms, and files the notes in his office. Ben initials his own notes of the deal, which include the terms, and files the notes in his office. Raul fails to ship the fans. Against Raul, as a contract, the deal is

a. enforceable, because under the UCC a contract need not written.
b. enforceable, because Raul’s initialed notes are a sufficient writing.
c. enforceable, because Ben’s initialed notes are a sufficient writing.
d. not enforceable.

Answer 12

b. enforceable, because Raul’s initialed notes are a sufficient writing.

Question 13

Rita, the manager of the State University (SU) soccer team, orally agrees to lease a certain number of specially made SU banners from Top Banners, Inc. This lease is enforceable only if Top has made a substan¬tial start on making the banners and

a. Rita agreed to the lease on behalf of the SU soccer team.
b. SU does not have other, similar banners available.
c. the banners are not suitable for others in the course of Top’s business.
d. the soccer season has not ended and SU goes to the finals.

Answer 13

c. the banners are not suitable for others in the course of Top’s business.

Question 14

Fresh Produce, Inc., and Great Grocery Stores dispute the interpretation of an ambiguous phrase in their contract. In a suit between the parties to con-strue the contract, a court may accept evidence of

a. consistent additional terms only.
b. consistent additional terms and contradictory terms only.
c. contradictory terms only.
d. anything extrinsic to the contract.

Answer 14

a. consistent additional terms only.

Question 15

Gail enters into a contract with Hi-Price Appliances, Inc. In a suit be¬tween the parties over payment under the contract, Gail claims that a certain clause is unconscionable. If the court agrees, it may

a. enforce, limit, or refuse to enforce the contract or the disputed clause.
b. enforce the contract without the disputed clause only.
c. limit the application of the disputed clause only.
d. refuse to enforce the entire contract only.

Answer 15

a. enforce, limit, or refuse to enforce the contract or the disputed clause.

Question 16

Jason contracts with Golf Carts Unlimited, Inc. to buy five golf carts. The contract lists the five carts as GC001, GC002, GC003, GC004, GC005. Identification

a. requires that Jason verify his identity to take possession of the carts.
b. has taken place.
c. cannot take place until the contract is reviewed by a court.
d. will take place only when Jason pays for the golf carts.

Answer 16

b. has taken place

Question 17

Big Beef, Inc. raises calves to sell. Big Beef breeds its cows in April, and the cows calve in February of the following year. In January Andrea contracts with Big Beef to buy fifty calves. Identification takes place in

a. January, when the contract is signed.
b. April, when the calves are conceived.
c. February, when the calves are born.
d. a reasonable period of time.

Answer 17

b. April, when the calves are conceived.

Question 18

Bill orders 1,000 nails from Super Hardware, Inc. Super Hardware keeps its nails in packages of 100,000. Bill and the agent for Super Hardware both sign the contract for the sale of the nails on Monday. The agent separates 1,000 nails on Wednesday. The agent delivers the nails to Bill on Thursday morning, and Bill pays for the nails on Friday. Identification of the nails took place on

a. Monday.
b. Wednesday.
c. Thursday.
d. Friday.

Answer 18

b. Wednesday

Question 19

Megan, an agent for a department store, orders one hundred dresses from Sal’s Clothing Shop for the Spring Blossom Sale. There is no specific agreement in the sale contract indicating when title will pass to the department store. The title will pass to the department store when

a. Megan signs the contract.
b. Megan and the Sal’s Clothing Shop agent sign the contract.
c. Sal’s Clothing Shop physically delivers the dresses to the department store.
d. Megan pays Sal’s Clothing Shop for the dresses.

Answer 19

c. Sal’s Clothing Shop physically delivers the dresses to the department store.

Question 20

A contract between Fresh Fruit Corporation and Green Grocer, Inc., re-quires Fresh Fruit to deliver goods to Green Grocer’s place of business. This is

a. a bill of lading.
b. a destination contract.
c. a shipment contract.
d. a warehouse receipt.

Answer 20

b. a destination contract.

Question 21

Big Red Drinks, Inc. contracts to buy two tons of cranberries from Super Fruits, Inc. The contract states that Super Fruits is required to ship the cranberries to Big Red Drinks by Speedy Wind Air Freight. The contract is

a. a bill of lading.
b. a destination contract.
c. a shipment contract.
d. a warehouse receipt.

Answer 21

c. a shipment contract.

Question 22

Grace purchases three tons of fine merino wool on behalf of Woolen Creations. Woolen Creations wants the wool to remain in the warehouse where it is being stored until it is needed. Grace makes an offer for the wool on Monday. The offer is accepted on Tuesday. The warehouser gives Woolen Creations a warehouse receipt on Wednesday. Woolen Creations picks up the wool from the warehouse three months after the sale. Title for the wool passed to Woolen creations

a. on Monday.
b. on Tuesday.
c. on Wednesday.
d. three months after the sale.

Answer 22

c. on Wednesday.

Question 23

Southern Distribution, Inc., signs a receipt for goods that will also serve as a contract for the goods’ transport. This is

a. a bill of lading.
b. a destination contract.
c. a shipment contract.
d. a warehouse receipt.

Answer 23

a. a bill of lading.

Question 24

Elizabeth buys a car from Silas, who is sixteen years old. Elizabeth then wants to sell the car to her neighbor, John. Elizabeth’s title to the car is

a. valid.
b. voidable.
c. void.
d. good.

Answer 24

b. voidable.

Question 25

Levi, a well-known lumber dealer with a good reputation, buys a load of lumber and pays for it with a check that is later dishonored. Sam, who is unaware of the bad check, buys the lumber from Levi. Sam is a(n)

a. good faith purchaser.
b. bad faith purchaser.
c. insolvent purchaser.
d. bailee.

Answer 25

a. good faith purchaser.

Question 26

Sweets Store buys chocolate from Tasty Candies, Inc. The parties agree that the chocolate will be shipped “F.O.B. Sweets” via United Railroad Corporation. The chocolate is lost in transit. The loss is suffered by

a. Sweets and Tasty, but not United.
b. Sweets only.
c. Sweets, Tasty, and United.
d. Tasty only.

Answer 26

d. Tasty only.

Question 27

Fay pays $800 for a new iPad to Global Goods, Inc. Global holds the iPad until Fay picks it up. Global is

a. a bailee.
b. a consignee.
c. a lessee.
d. a seller.

Answer 27

d. a seller.

Question 28

Thorpe buys an HD TV from Viewpoint Electronics store, which agrees to keep the TV for Thorpe until he picks it up. Before Thorpe gets the TV, a fire destroys the store and the set. The loss is suffered by

a. neither Thorpe nor Viewpoint
b. Thorpe and Viewpoint.
c. Thorpe only.
d. Viewpoint only.

Answer 28

d. Viewpoint only.

Question 29

A-1 Furnishings, Inc., agrees to lease a desk to Business Resources, Inc. (BRI), which requests that the desk be left outside City Warehouse for BRI to pick up. Before BRI retrieves the desk, it is stolen. The loss is suf¬fered by

a. A-1 Furnishings and BRI, but not City Warehouse.
b. A-1 Furnishings, BRI, and City Warehouse.
c. A-1 Furnishings only.
d. BRI only.

Answer 29

d. BRI only.

Question 30

Sweetwater Café orders five gallons of transfat-free cooking oil from Restaurant Supply, Inc. The seller mistakenly ships the wrong oil, which the buyer keeps, despite the nonconform¬ity. The oil is destroyed in a kitchen fire. The loss is suffered by

a. Sweetwater and Restaurant Supply, but not Sweetwater customers.
b. Sweetwater, Restaurant Supply, and Sweetwater customers.
c. Sweetwater only.
d. Restaurant Supply only.

Answer 30

c. Sweetwater only.

Question 31

Good Food Corporation buys from Home Farms, Inc., a rice crop that Home Farms plans to plant and harvest during the next growing season. Good Food plans to sell the rice to Interstate Grocery Stores. After the rice is planted, but before it is harvested, an insurable interest in the rice ex¬ists in

a. Good Food and Home Farms, but not Interstate Grocery.
b. Good Food, Home Farms, and Interstate Grocery.
c. Good Food only.
d. Home Farms only.

Answer 31

a. Good Food and Home Farms, but not Interstate Grocery.

Question 32

Summit Sales Corporation orders goods from OverStock Company. Summit plans to market the goods to consumers generally. OverStock identifies the goods. Before they are shipped to Summit, an insurable interest in the goods exists in

a. Summit and OverStock, but not consumers generally.
b. Summit, OverStock, and consumers generally.
c. Summit only.
d. OverStock only.

Answer 32

a. Summit and OverStock, but not consumers generally.