UCC

Question 1

Under the UCC Sales Article, which of the following conditions will prevent the formation of an enforceable sale of goods contract

Answer 1

Open Acceptance

Question 2

oral modification is valid

Answer 2

If less than $500, no need writing

Question 3

Under the UCC when a buyer orders (offers to buy) goods to be shipped by a seller, a seller can accept that offer by (1) shipment of conforming goods, (2) by a prompt promise to ship conforming goods, or (3) by the shipment of nonconforming goods without notice of accommodation.

Answer 3

If Ram had notified Handy that the shipment was sent only as an accommodation, the shipment would constitute a counter offer.

Question 4

When do title and risk of loss for conforming goods pass to the buyer under a shipment contract covered by the Sales Article of the UCC?

Answer 4

When the goods are given to a common carrier.

Question 5

On September 10, Bell Corp. entered into a contract to purchase 50 lamps from Glow Manufacturing to be used in Bell Corp’s executive company offices. Bell prepaid 40% of the purchase price. Glow became insolvent on September 19 before segregating, in its inventory, the lamps to be delivered to Bell. Bell will not be able to recover the lamps because

Answer 5

The lamps were not identified to the contract.

Question 6

The contract required Union to ship the typewriters to Quick by common carrier, “F.O.B. Union Suppliers, Inc. Loading Dock.”
Which of the parties bears the risk of loss during shipment?

Answer 6

Quick, because the risk of loss passes when the typewriters are delivered to the carrier

Question 7

Under the Sales Article of the UCC, which of the following events will release the buyer from all its obligations under a sales contract?

Answer 7

Refusal of the seller to give written assurance of performance when reasonably demanded by the buyer.

Question 8

Under a contract governed by the UCC Sales Article, seller may be excused from performance if the goods are accidentally destroyed before the risk of loss passes to the buyer

Answer 8

If the goods were identified to the contract at the time of contract formation, and the goods are destroyed before risk of loss has passed to the buyer, if the loss is total the seller is excused form liability due to nonperformance.

Question 9

Green pays ABC the purchase price and starts using the stationery. Green, two days later, on inspection discovers the delivered stationery is slightly below quality. Which of the following is correct?

Answer 9

Failure of Green to reject after inspection would constitute acceptance

Question 10

Sky had completed a 200,000 unit run of parts similar to those under contract for Eagle and various other customers. Sky had not identified the parts to specific contracts. on June 1, Sky refused to deliver claiming the contract price was too low. Eagle was unable to cover in a reasonable time. Its production lines were in danger of shutdown because the parts were not delivered.

Eagle would probably

Answer 10

Have as its only remedy the right to recover dollar damages.
The remedies of replevin and specific performance are not available here because the units were not identified to the contract, nor are the units unique (200,000 run included units for various other customers).

Question 11

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

Answer 11

The seller is a merchant of the product involved.
implied warranty of merchantability can be disclaimed orally or in writing.
warranty arises as a matter of law when the seller ordinarily sells the goods purchased.

Question 12

promissory note & CD is a promise made between only two parties

Answer 12

A draft is an instrument with three parties.

Question 13

Under the Negotiable Instruments Article of the UCC, an instrument will be precluded from being negotiable if the instrument

Answer 13

Is made subject to another agreement.

Question 14

Failure of a holder to give a general blank indorser proper notice of a maker’s dishonor of a note is a complete discharge of the indorser’s contract signature liability to the holder.

Answer 14

True

Question 15

There are no time limits for presentment of a check

Answer 15

False

Question 16

A seller and buyer enter into an international contract for the sale of goods involving a large amount of money. They agree to finance the sale by a letter of credit. Which of the following is correct?

Answer 16

Domestic letters of credit are revocable, but, unless agreed, international letters of credit are irrevocable.

Question 17

Under a nonnegotiable bill of lading, a carrier who accepts goods for shipment must deliver the goods to

Answer 17

consignee of the bill of lading.
When a seller places goods with a common carrier for delivery, a bill of lading is issued which represents title to the goods and the right of the holder to take possession of the goods. The seller who is issued a bill of lading is the consignor and does not get the right to receive the shipment. That right goes to the consignee, the party to whom the carrier has promised to deliver the goods in the bill of lading.

Question 18

Under the Documents of Title Article of the UCC, which of the following statements is(are) correct regarding a common carrier’s duty to deliver goods subject to a negotiable, bearer bill of lading?

I. The carrier may deliver the goods to any party designated by the holder of the bill of lading.
II. A carrier who, without court order, delivers goods to a party claiming the goods under a missing negotiable bill of lading is liable to any person injured by the misdelivery.

Answer 18

Both I and II.
Because, if the bill of lading is a bearer document, the carrier can deliver the goods to any holder of the document or to any person whom the holder designates to receive the goods. The holder, however, must surrender the document to the carrier. If the bill of lading is negotiable and the document is not surrendered, in this case it is missing, the carrier is liable for any misdelivery (to someone other than the legal holder of the document) to any person injured thereby.

Question 19

Which of the following statements is correct concerning a bill of lading in the possession of Major Corp. that was issued by a common carrier and provides that the goods are to be delivered “to bearer”?

Answer 19

The bill of lading can be negotiated by Major by delivery alone and without endorsement.

Question 20

To the extent that a holder of a negotiable promissory note is a holder in due course, the holder takes the note free of which of the following defenses?

Answer 20

Nonperformance of a condition precedent.

Question 21

Under the Secured Transactions Article of the UCC, which of the following statements is correct regarding a security interest that has not attached?

Answer 21

It is not effective against either the debtor or third parties
For a security interest to attach, the following must be present:
Underlying debt/obligation;
Either a security agreement or possession of the collateral by the creditor; and
Debtor must have interest in the property

Question 22

Jones lives in Oklahoma and is the owner of a large number of valuable antiques. Treasures Delight, located in Arkansas, is a seller of antiques. Treasures Delight is owned by Sally Delight. Delight offers to purchase all of the antiques owned by Jones paying 60% of the agreed price and, by agreement, signs a security agreement for the balance putting up her entire inventory as security. The security agreement provides for monthly payments. Which of the following is correct?

Answer 22

Although this is a purchase money security interest, Jones must file to have a perfected security interest in debtor’s state.
The antiques are classified as inventory (collateral to be held for resell). Thus, although a purchase money security interest was created, being inventory, a filing is required for perfection.

Question 23

Under the Secured Transactions Article of the UCC, which of the following items can usually be excluded from a filed original financing statement?

Answer 23

The amount of the obligation secured

Question 24

The location for filing a financing statement on fixtures is the same as perfection filing for inventory.

Answer 24

False

Question 25

A purchase money security interest in a debtor’s equipment is automatically perfected upon creation of the security interest (called by attachment) without the secured party having to take possession of the collateral or file.

Answer 25

False

Question 26

One of the requirements for perfection by filing is that the filing must state the names of both the debtor and secured party, but neither is required to sign the financing statement.

Answer 26

True

Question 27

INK is a Texas chartered oil and gas corporation with oil and gas leases in Alaska. INK secures a loan from a New York bank with the bank taking a security interest in the oil and gas to be extracted from the Alaskan leases. To properly perfect, the New York bank will perfect a financing statement in Texas.

Answer 27

False

Question 28

Noninventory goods were purchased and delivered on June 15. Several security interests exist in these goods.
Which of the following security interests has priority over the others?

Answer 28

Usually, the first security interest to be perfected has top priority.
There is an exception, though, for a purchase money security interest, or a purchase money security interest. A purchase money security interest in noninventory collateral has priority if it is perfected before the debtor takes possession or within 20 days thereafter.

Question 29

Pix Co., which is engaged in the business of selling appliances, borrowed $18,000 from Lux Bank. Pix executed a promissory note for that amount and pledged all of its customer installment receivables as collateral for the loan. Pix executed a security agreement that described the collateral, but Lux did not file a financing statement. With respect to this transaction

Answer 29

Attachment of the security interest took place when the loan was made and Pix executed the security agreement

Question 30

With regard to a prior perfected security interest in goods for which a financing statement has been filed, which of the following parties is most likely to have a superior interest in the same collateral?

Answer 30

A buyer in the ordinary course of business who purchased the goods from a merchant.
takes the goods free from any prior perfected security interest.

Question 31

Nancy is asserting rights as a third-party donee beneficiary on a contract made by Johnson and Harding. In order to prevail, Nancy must prove that

Answer 31

The terms of the contract and surrounding circumstances manifest a clear intent to benefit her
The donee beneficiary need not prove that the contract specifically named her as beneficiary.

Question 32

Sand sold a warehouse he owned to Quick Corp. The warehouse was encumbered by an outstanding mortgage securing Sand’s note to Security Bank. Quick assumed Sand’s note and mortgage at the time it purchased the warehouse from Sand. Within 3 months, Quick defaulted on the note and Security Bank commenced a mortgage foreclosure action. The proceeds of the resulting foreclosure sale were less than the outstanding balance on the note.

As to the contract between Sand and Quick, Security is

Answer 32

A third-party creditor beneficiary.

the contracting parties enter into an agreement intended to benefit a third party.