Chapter 19 - Sales Agreements

MULTIPLE CHOICE QUESTIONS

1. Fran pays Great Electronics $1,600 for a new computer. For purposes of the UCC, this is

a. a gift.
b. a lease.
c. a sale.
d. a gift, a lease, and a sale.

ANSWER: C PAGE: 358 TYPE: N

2. National Electronics, Inc., contracts to sell six computers to Office Leasing, which contracts to lease the computers to Peak Finance Company. Quinn, the owner of National Electronics, gives a computer to Rita. Article 2 of the UCC is generally held to apply to

a. the gift only.
b. the lease only.
c. the sale only.
d. the gift, the lease, and the sale.

ANSWER: C PAGE: 358 TYPE: +

3. Eve agrees to sell a pump on her ranch to Farm & Ranch Equipment Corporation. The pump can be removed by disconnecting two pipes. This deal is governed by

a. real property law only.
b. the UCC only.
c. real property law and the UCC.
d. none of the above.

ANSWER: B PAGE: 358 TYPE: N


4. Northwest Wood Products Company agrees to buy the timber on Owen's land. Northwest is to cut and haul away the timber. This deal is governed by

a. real property law only.
b. the UCC only.
c. real property law and the UCC.
d. none of the above.

ANSWER: A PAGE: 360 TYPE: +

5. Alpha Distribution Company hires Beta Engineering Corporation to adapt existing software for use in a new computer system. This is most likely

a. a bailment of goods.
b. a lease of goods.
c. a sale of goods.
d. a service contract.

ANSWER: C PAGE: 360 TYPE: N

6. Central Manufacturing Corporation hires Delta Visuals, Inc., to convert twelve job-training and on-the-job safety videos to DVDs and deliver the DVDs to Central's plant. This is most likely

a. a bailment of goods.
b. a lease of goods.
c. a sale of goods.
d. a service contract.

ANSWER: C PAGE: 360 TYPE: N

7. In a dispute over a sales contract involving shoes, Tina argues that as to this deal, Ursula is a merchant. A court may determine whether Ursula is a merchant by assessing whether she

a. enjoys wearing shoes.
b. has sold anything within the last year.
c. holds herself out by occupation as having knowledge or skill unique to the shoes in the transaction.
d. subscribes to Shoes, a biweekly trade magazine.

ANSWER: D PAGE: 362 TYPE: N


8. Fred, the owner of Fred's Bicycle Store, sells a preowned motorcycle to Gail. Fred is a merchant for purposes of the UCC if he

a. enjoys riding motorcycles on weekends.
b. has sold bicycles for at least one year.
c. holds himself out by occupation as having knowledge and skill unique to motorcycles.
d. subscribes to Motorcycle Monthly magazine.

ANSWER: C PAGE: 362 TYPE: =

9. Uptown Office Systems pays Tech Products $100 to use a Tech computer for a month. For purposes of the UCC, this is

a. a bailment.
b. a consignment.
c. a lease.
d. a sale.

ANSWER: C PAGE: 363 TYPE: =

10. National Vehicles contracts to sell ten sport utility vehicles (SUVs) to Imperial Leasing, which contracts to lease the SUVs to Recreation Rentals. Don, the owner of National Vehicles, gives an SUV to Paula. Article 2A of the UCC applies to

a. the sale only.
b. the lease only.
c. the sale and the lease only.
d. the sale, the lease, and the gift.

ANSWER: B PAGE: 363 TYPE: =

11. ABC Motors, Inc., sells the right to the possession and use of a motor vehicle under a lease. As defined in the UCC, ABC is

a. a bailor.
b. a dealer.
c. a lessor.
d. a seller.

ANSWER: C PAGE: 363 TYPE: =


12. Bart and Paula enter into a sales contract. As seller and buyer, Bart and Paula

a. are bound to the specific contractual provisions set out in the UCC.
b. may alter the specific contractual provisions set out in the UCC only to a reasonable degree.
c. may alter the specific contractual provisions set out in the UCC to whatever degree they wish as long as they don't get caught.
d. may establish whatever terms they wish.

ANSWER: D PAGE: 364 TYPE: =

13. Amy and Builders Corporation enter into a contract in which Amy agrees to deliver cement to Builders at a construction site. They neglect to include a price in the agreement. A court will

a. determine a reasonable price for the cement and insert it into the contract.
b. leave the parties in the position in which it found them.
c. refuse to enforce the agreement.
d. select the lowest quoted price for cement and insert it into the contract.

ANSWER: A PAGE: 365 TYPE: +

14. Carl and Donna sign a contract for a sale of goods. Carl is to set the price for the goods at the time of delivery, but on delivery, refuses to do so. Donna may

a. fix a reasonable price only.
b. treat the contract as canceled only.
c. fix a reasonable price or treat the contract as canceled.
d. none of the above.

ANSWER: C PAGE: 365 TYPE: N

15. Folger contracts to purchase coffee from Max but does not specify the payment terms. Max subsequently breaches the contract. Folger will probably be

a. unable to enforce the agreement under any circumstances.
b. unable to enforce the agreement if Max has not begun to perform his obligations.
c. able to enforce the agreement against Max.
d. none of the above.

ANSWER: C PAGE: 365 TYPE: =

16. Fine Goods Company and Global Sales Corporation enter into a contract that does not specify the payment terms. Payment may be made in

a. cash only.
b. cash or check only.
c. cash or any commercially acceptable substitute.
d. none of the above.

ANSWER: C PAGE: 365 TYPE: N

17. Ron and Wolf form a contract in which no mention is made of how the goods are to be delivered. In general, the UCC will require that the delivery take place at

a. the seller's place of business.
b. the buyer's place of business.
c. either the seller's or the buyer's place of business.
d. none of the above.

ANSWER: A PAGE: 365 TYPE: =

18. Crawford orders 10,000 ink pens from Perfect Pens Corporation but fails to specify the colors that she wants. The pens are delivered in an assortment of colors. Crawford

a. has the right to pick and choose only those colors that she wants.
b. must accept the shipment "as is" due to her failure to specify the colors that she preferred at the time the contract was formed.
c. must accept the shipment "as is" due to her failure to specify the colors that she preferred prior to the time the pens were shipped to her.
d. none of the above

ANSWER: A PAGE: 365 TYPE: =

19. Kate contracts to buy tea from Tasty Tea Company but does not specify an exact amount of tea. Tasty later breaches the contract. Kate will probably be

a. able to enforce the agreement against Tasty for failing to sell Kate its output.
b. able to enforce the agreement against Tasty for failing to supply Kate's requirements.
c. unable to enforce the agreement only if Tasty's breach is material.
d. unable to enforce the agreement under any circumstances.

ANSWER: D PAGE: 365 TYPE: +

20. Digital Computer Company agrees to sell Office Supplies, Inc. (OSI), computers for OSI to sell in its stores. A contract between these parties will be rendered unenforceable if it does not include

a. the location for delivery of the goods.
b. the method of payment for the goods.
c. the price of the goods.
d. the quantity of the goods.

ANSWER: D PAGE: 365 TYPE: =

21. Alpha Company offers to sell Beta, Inc., 1,000 computers for a $1 million, states that the offer will be open for six days, and asks for a response by fax. On the fourth day, Beta sends an acceptance to Alpha via the mail, which is received on the sixth day. In this deal

a. a contract is formed.
b. no contract is formed, because Alpha asked for a response by fax.
c. no contract is formed, because Alpha received the acceptance late.
d. no contract is formed, because Beta sent the acceptance late.

ANSWER: A PAGE: 366 TYPE: N

22. Fine Art Corporation offers to buy from Faber Pencil Company 100,000 pencils for a total of $10,000. Faber can accept the offer by

a. promising to ship the pencils.
b. promptly shipping the pencils.
c. both a and b.
d. none of the above.

ANSWER: C PAGE: 367 TYPE: =

23. Best Music, Inc., offers to buy from Sound Products Corporation (SPC) 1,000 blank CDs of a certain brand. Without notifying Best, SPC timely ships CDs of a different brand. This shipment is

a. an acceptance of Best's offer.
b. a breach of the parties' contract.
c. an acceptance and a breach.
d. none of the above.

ANSWER: C PAGE: 367 TYPE: N


24. Bob is the offeror and Carol is the offeree under a unilateral sales contract. Bob is not notified of Carol's performance within a reasonable time. Bob may

a. consider Carol to be in breach of contract.
b. file a suit against Carol for damages.
c. treat the offer as having lapsed.
d. none of the above.

ANSWER: C PAGE: 367 TYPE: +

25. Lois offers to sell Clark fifty bushels of corn. Clark responds, "I agree to purchase fifty bushels only if the corn is Grade A quality." In these circumstances

a. a contract is formed.
b. a contract is formed only if Lois can secure fifty bushels of Grade A corn quickly.
c. Clark's statement is a counteroffer.
d. Clark's statement is an acceptance.

ANSWER: C PAGE: 367 TYPE: =