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Chapter 20 - Formation of Sales Contracts


1. Suzy pays Triple-A Office Supply Company $1,500 for a new laptop computer. According to the UCC, this is

a. a gift.

b. a lease.

c. a sale.

d. not a gift, a lease, or a sale.


2. Omega Systems, Inc., contracts with Petro Oil Corporation to make special pipe and install it in Petro’s refinery. There is no separate price in the contract for the installation. This contract is

a. equally for a sale of goods and a sale of services.

b. neither for a sale of goods nor a sale of services.

c. predominantly for a sale of goods.

d. predominantly for a sale of services.


3. Normal Assembly Company agrees to sell a storage tank on its premises to Owen. The tank can be removed by disconnecting a pipe. This deal is governed by

a. neither real property law nor the UCC.

b. real property law and the UCC.

c. real property law only.

d. the UCC only.


4. Alpha Café, which is moving to a new location, sells its used tables and chairs to Beta Furnishings Corporation. This is most likely

a. a bailment of goods.

b. a lease of goods.

c. a sale of goods.

d. a service contract.


5. In a dispute over a sales contract involving skis, Dave argues that as to this deal, Elle is a merchant. A court may determine whether Elle is a merchant by assessing whether she

a. enjoys skiing.

b. has sold any skis within the last year.

c. holds herself out by occupation as having knowledge or skill unique to the skis in the transaction.

d. subscribes to Skis, a biweekly trade magazine.


6. Cleo sells kitchen appliances, and occasionally cleaning supplies, to persons who come into her store, Discount Appliances. One afternoon, Cleo sells a used display shelf to Earl. Under the UCC, Cleo is a merchant of

a. cleaning supplies and kitchen appliances only.

b. cleaning supplies, display shelves, and kitchen appliances.

c. cleaning supplies only.

d. kitchen appliances only.


7. Standard Office Corporation pays Tech Products $1,000 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.


8. 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.


9. Metro Daily and New City Newsstand enter into a contract under which Metro agrees to deliver a certain quantity of newspapers to New City each day. The contract does not include a price term. In a suit between the parties over the price, a court will

a. determine a reasonable price.

b. impose the lowest market price.

c. refuse to enforce the agreement.

d. return the parties to the positions they held before the contract.


10. Regional Products, Inc., agrees to sell to Quantity Dealers Corporation a certain amount of goods but no mention is made of where the goods are to be delivered. In general, the UCC requires that the delivery take place at

a. a neutral place of business halfway between the parties’ locations..

b. a UCC-designated warehouse.

c. Regional’s place of business.

d. Quantity’s place of business.


11. Fine Coffee Company agrees to buy an unspecified quantity of coffee beans from Global AgriCorp. Global breaches the contract. Fine can most likely

a. enforce the agreement to the extent of a reasonable quantity.

b. enforce the agreement to the extent of Fine’s requirements.

c. enforce the agreement to the extent of Global’s output of coffee beans.

d. not enforce the agreement.


12. 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.


13. 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.


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

a. an acceptance of the offer and a breach of the parties’ contract.

b. an acceptance of the offer and a fulfillment of the parties’ contract.

c. a refusal of the offer and a breach of the parties’ contract.

d. a refusal of the offer and a fulfillment of the parties’ contract.


15. United Farms offers to sell Value Bakeries, Inc., fifty bushels of wheat. Value’s representative Wendy responds, “We agree to buy fifty bushels only if the wheat is Grade A quality.” Wendy’s statement is

a. a breach of the parties’ contract.

b. a counteroffer.

c. a fulfillment of the parties’ contract.

d. an acceptance.


16. All-Rite Clothiers, Inc., sells t-shirts to Brand Name Stores, Inc., under an existing contract. When textile costs increase, Brand agrees to a price increase, but later wants to cancel the contract. 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.


17. 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 substantial 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.


18. Tasty Pastries, Inc., and other bakers refer to a “baker’s dozen” as consisting of a collection of thirteen baked goods. This is an example of

a. course of dealing.

b. course of performance.

c. square dealing.

d. usage of trade.


19. Gail enters into a contract with Hi-Price Appliances, Inc. In a suit between 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.


20. Overseas Corporation, an American firm, orally agrees to sell six large freezers to Pisa Pizza, Ltd., in Italy. Overseas fails to deliver. Under the CISG, Pisa Pizza can

a. enforce the agreement.

b. not enforce the agreement because it is not in writing.

c. not enforce the agreement because the price term is not specified.

d. not enforce the agreement because there is no consideration.



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