Law 1-Tests

 

Chapter 20 - Formation of Sales and Lease Contracts

MULTIPLE CHOICE QUESTIONS

 

1. Stardust Coffee Company is a Texas-based firm that does business

throughout the world. Stardust manages retail and wholesale

operations, buys and sells commercial venues, undeveloped land, and

coffee beans, and other goods. Stardust has had to deal with employee

and customer theft. With respect to these circumstances, the Uniform

Commercial Code (UCC) provides a framework for

a. commercial transactions for the sale of and payment for goods.

b. international distribution agreements.

c. domestic and foreign transactions in real estate.

d. prosecuting crimes against business interests. 

 

2. High n’ Mighty Mart, Inc., is an Illinois-based firm that does business

throughout the United States. With respect to this circumstance, the

UCC has been adopted by, and applies in,

a. all of the states, in whole or in part.

b. most of the states on the Atlantic and Pacific coasts.

c. none of the states, to date.

d. only the states on the Mississippi, Missouri, and Ohio Rivers. 

 

3. Over the course of a year, Real Deal Corporation sells appliances to

customers to whom it extends credit. Real Deal orders the appliances

from Superior Appliance Company’s warehouse, from which the items

are shipped via common carrier to Real Deal’s customers. Article 2 of the

UCC governs

a. all of the parties’ sales of the goods.

b. Real Deal’s extension of credit.

c. Superior’s storage of the goods.

d. the common carrier’s delivery of the goods. 

 

4. Expert Stitching Corporation enters into a contract to sell denim

clothing to Fine Fashion Company, which in turn sells a pair of jeans to

Grady, a consumer. In contrast to standards that apply to consumers,

the UCC imposes on merchants

a. less strict legal standards.

b. special business standards.

c. stricter ethical standards.

d. the same overall standards. 

 

5. Rikki and Sid enter into a sales contract. With respect to the specific

contractual provisions set out in the UCC, Rikki and Sid may

a. agree to different terms only to a reasonable extent.

b. agree to different terms unless they “get caught.”

c. agree to whatever terms they wish.

d. not agree to different terms. 

 

6. Excel Autos & Trucks, Inc., contracts to sell five trucks to First Leasing

Corporation, which contracts to lease the trucks to General Delivery

Company. Article 2A of the UCC applies to

a. neither the lease nor the sale.

b. the lease and the sale.

c. the lease only.

d. the sale only. 

 

7. American Products Company and Best Manufacturing, Inc. (BMI), enter

into a contract for the sale of a certain quantity of machine parts, with

BMI to determine the price. The price must be fixed according to the con-

cept of

a. good faith.

b. square dealing.

c. the mere image rule.

d. unconscionability. 

 

8. Cathy and Dave sign a contract for a sale of goods. Cathy is to set the

price for the goods at the time of delivery, but on delivery, refuses to do

so. Dave may only

a. fix a reasonable price.

b. fix a reasonable price or treat the contract as canceled.

c. treat the contract as canceled.

d. wait for Cathy to set the price. 

 

9. Variety Goods, Inc., and World Sales Corporation enter into a contract

that does not specify the payment terms. Payment may be made in

a. any commercially acceptable means except cash.

b. cash only.

c. cash or any commercially acceptable substitute.

d. cash or check only. 

 

10. NuTech Company agrees to sell computer equipment to Office Stores,

Inc. (OSI) for OSI to market to its customers. Their contract will not be

enforceable unless it includes

a. the duration of the deal.

b. the price of the goods.

c. the quantity of the goods.

d. the requirements of OSI’s customers. 

 

11. Doctors Medical Clinic orders 1,000 bandages from Emergency Supplies

Company but fails to specify the sizes. The bandages are delivered in an

assortment of sizes. Doctors Medical Clinic may

a. accept the bandages “as is” only.

b. accept the bandages “as is” or reject the entire shipment only.

c. accept only the bandages that it wants and reject the rest.

d. reject the entire shipment only. 

 

12. Contractors Construction Corporation offers to buy from Dandy Cement

Company a certain quantity of cement for a certain price. Dandy 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. 

 

13. Best Sales, Inc., is the offeror and City Goods Corporation is the offeree

under a unilateral sales contract in which Delta Products Company is

also interested. Best is not notified of City’s performance within a reason-

able time. Best

a. may treat the offer as having lapsed.

b. must assume that City has started to perform.

c. must contact City.

d. must contract with Delta. 

 

14. Equipment Rental Corporation and Family Farm, 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. 

 

15. Kelly offers to buy cooking oil from Jim. Jim believes Kelly asks for

10,000 gallons and orally agrees to the sale. When the parties later

dispute the deal in court, Jim’s claim of 10,000 gallons and Kelly’s

testimony that she ordered only 1,000 gallons

a. prevents the enforcement of any contract between these parties.

b. supports an enforceable contract for 10,000 gallons.

c. supports an enforceable contract for 5,500 gallons.

d. supports an enforceable contract for 1,000 gallons. 

 

16. Recreation Supplies, Inc. (RSI), and Sam, the owner of a Tourist Time

shop, orally agree to a sale of beach balls and seashells for $1,000. Sam

gives RSI a check for $400 as a partial payment. This contract is

a. enforceable to the extent of $400.

b. fully enforceable because it is for specially made goods.

c. fully enforceable because it is oral.

d. not enforceable. 

 

17. Fruits & Vegetables, Inc., and Great Grocery Stores dispute the

interpretation of an ambiguous phrase in their contract. In a suit

between the parties to construe 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. 

 

18. Timber Products, Inc., and Walt, a consumer, enter into a contract for a

sale of plywood. If the contract includes a clause that is perceived as

grossly unfair to Walt, its enforcement may be challenged under the doc-

trine of

a. good faith.

b. square dealing.

c. the mere image rule. 

 

19. In  Jones v. Star Credit Corp., which of the following factors

was not considered by the court when it declared a contract for the pur-

chase of a freezer unconscionable

a. The price the plaintiffs were charged was more than four times the

freezer’s retail value.

b. The credit charges alone exceeded the freezer’s retail value.

c. The seller knew of the buyers’ limited resources.

d. The freezer was not merchantable. 

 

20. Rodeo, S.A., which is based in Spain, enters into a contract for the sale of

seven hydraulic lifts to Tonnage Shipping Company, which is based in

the United States. This contract is governed by

a. Spanish law.

b. the provisions in the laws of both countries that are similar.

c. the UCC.

d. the United Nations Convention on Contracts for the International

Sale of Goods.