Q&A Hero

Q: Requirements contracts are common in the business world and normally are enforceable.

Q: Under the UCC, a contract for a sale of goods that does not include the quantity will not fail for indefiniteness.

Q: When no delivery terms are specified in a contract for a sale of goods, there is no basis for determining a remedy.

Q: Under the UCC, good faith means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.

Q: Under the UCC, parties to sales and lease contracts are not free to establish whatever terms they wish.

Q: If the parties to a contract for a sale of goods have not agreed on a price, a court will determine a reasonable price at the time for delivery.

Q: Under the UCC, a sales or lease contract will fail for indefiniteness if one or more terms are left open.

Q: Certain provisions of UCC Article 2A apply only to consumer leases.

Q: A lessor is a party who transfers the right to the possession and use of goods under a lease.

Q: Article 2 of the UCC covers any transaction that creates a lease of goods.

Q: The UCC imposes some different rules on merchants.

Q: A merchant is a person who deals in goods of the kind involved in the sales contract or who holds herself or himself out as having skill or knowledge peculiar to the practices or goods being purchased or sold.

Q: Even if a contract in which goods and services are mixed is primarily a goods contract, any dispute over the services portion will not be decided under the UCC.

Q: A contract for the sale of minerals is considered to be a contract for the sale of goods if the severance is to be made by the seller.

Q: For an item to be characterized as a "good" under the UCC, it must be intangible.

Q: Under the UCC, a sale is the passing of title from a seller to a buyer for a price.

Q: Article 2 of the UCC sets forth the requirements for sales contracts and Article 2A covers similar issues for lease contracts.

Q: The UCC views the entire commercial transaction for the sale and payment for goods as a single legal occurrence.

Q: Real estate transactions are always governed by Article 2 of the UCC.

Q: Key of G Products, Inc., offers to sell to Harmony Company one hundred MP3 players at $50 a piece, subject to certain specific delivery dates. Harmony replies with a signed purchase order that reads, "Accept your offer for 100 I-appliances at $50 each. Must be delivered to our warehouse." Key of G does not respond or deliver the goods. Harmony files a suit for breach of contract, to which Key of G answers that there is no contract because Harmony's purchase order contained additional terms and is not signed by Key of G. Can Harmony recover? Explain.

Q: Secure Courier, Inc., has a requirements contract with Petro Distribution Corporation that obligates Petro to supply Secure with all the gasoline it needs for its delivery vehicles for one year at $2.30 per gallon. A clause inserted in small print in the contract by Secure, and not noticed by Petro, states, "The buyer reserves the right to reject any shipment for any reason without liability." For six months, Secure orders and Petro delivers under the contract without any controversy. Then, because of a war in the Middle East, the price of gasoline to Petro increases substantially. Petro tells Secure it cannot possibly fulfill their contract unless Secure agrees to pay $2.50 per gallon. Secure, in need of the gasoline, agrees in writing to modify the contract. Later that month, Secure learns it can buy gasoline at $2.40 per gallon from Refined Oil Company. Secure refuses delivery of its most recent order from Petro, claiming, first that the contract allows it to do so without liability, and second, that it is required to pay only $2.30 per gallon if it accepts the delivery. Discuss Secure's contentions.

Q: Toro, S.A., which is based in Mexico, enters into a contract for the purchase of portable livestock fencing from United Fencing Company, which is based in the United States. This contract is governed by a. Mexican law. b. the provisions in the laws of both countries that are similar. c. the Uniform Commercial Code. d. the United Nations Convention on Contracts for the International Sale of Goods.

Q: Olga enters into a contract to buy a refrigerator from a Prairie States Appliance store with the price to be paid in monthly installments. After thirty-six months of payments, Olga has paid more than twice the price of a similar stove. Eighteen payments remain due under the contract. Under the UCC, the court can evaluate the contract to determine whether it was unreasonably unfair and one sided a. at the time it was made. b. at the end of its term. c. in the middle of its performance. d. at the time of Olga's suit.

Q: Olga enters into a contract to buy a refrigerator from a Prairie States Appliance store with the price to be paid in monthly installments. After thirty-six months of payments, Olga has paid more than twice the price of a similar stove. Eighteen payments remain due under the contract. Olga files a suit against Prairie States, claiming that their contract is so unfair and one sided that it would be unreasonable to enforce it. Olga is asserting a. the concept of good faith. b. the principle of fair trade. c. the predominant-factor test. d. the doctrine of unconscionability.

Q: 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.

Q: Bert's Bagels & Nosh, Inc., and other bakeries 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. none of the choices. d. usage of trade.

Q: Fresh Produce, 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.

Q: 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.

Q: Raul agrees to ship to Ben one hundred ceiling fans for $5,000. Raul initials his notes of the deal, which include 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.

Q: 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.

Q: 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

Q: 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.

Q: Trend-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.

Q: 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.

Q: 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 reasonable 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.

Q: 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 become 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.

Q: Community Construction Corporation offers to buy from Solid Cement Company a certain quantity of cement for a certain price. Solid can accept 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.

Q: Delany & Sons, Inc., owes Evermore Bank $50,000. Delany enters into a contract with Floyd under which Delany promises to manage and oversee Floyd's Seaside Marina. Under the contract, Floyd promises to pay Evermore the amount that will be due Delany until his debt to Evermore is paid. Delany performs as promised, but Floyd does not pay the bank. Can Evermore succeed in a suit against Floyd? Why or why not?

Q: Pam borrows $5,000 from Quality Auto Sales to buy a car. When Pam does not pay the loan or return the car, Quality wants to transfers the right to the payment to Rapid Collection Agency. Rapid agrees to pay Quality for this right, but for a price that is less than the amount owed. Can Quality transfer this right to Rapid without Pam's consent? If so, and Quality committed fraud in the deal with Pam, could Pam legitimately refuse to pay Rapid? Explain.

Q: App Developers, Inc. (ADI), enters into a contract with Carmen, the chief executive officer of SalesCorp, to create an app for the firm. To fulfill the contract, ADI hires Max and ten other student interns. With respect to the contract, Max is a. an intended beneficiary. b. an incidental beneficiary. c. a delegatee. d. an assignee.

Q: Mai is a third party beneficiary under a contract between Novia and Otis. Novia and Otis can modify or rescind their contract without Mai's consent a. at any time. b. at no time. c. after Mai's rights have vested. d. before Mai's rights have vested.

Q: Lyle and Miranda agree that Lyle will fix the refrigeration unit in Miranda's Buns n" Burgers in exchange for her payment of a debt that Lyle owes to New Credit Corporation. New Credit is a. a delegate. b. an intended beneficiary. c. an incidental beneficiary. d. an assignor.

Q: Bea takes out a life insurance policy with Vida Insurance Corporation that names her spouse Wendell as the beneficiary. This is a. a delegation. b. an assignment. c. a third party incidental beneficiary contract. d. a third party intended beneficiary contract.

Q: Ozzie contracts for the sale of 500 shares of stock in Premium Quality, Inc., to Ray, with payment to go to Scholar University to pay Thalia's tuition. The contract reserves to Ozzie and Ray the right to modify its terms. Scholar's right to payment is a. not affected by the reservation. b. subject to any change that Ozzie and Ray make. c. limited only if Thalia agrees to any changes. d. terminated by the reservation.

Q: Hilda signs a contract with Indemnity Insurance Company that intentionally confers a benefit on Hilda's daughter Jackie as the designated beneficiary. Jackie's rights under the contract will vest a. automatically. b. if she demonstrates her consent to the promise at Hilda's request. c. if Indemnity attempts to modify the terms of the contract. d. on the occurrence of the event for which the insurance was procured.

Q: Tristan promises to paint Katy's house in exchange for Lila's promise to plant trees on Tristan's property. This is a. a delegation. b. an assignment. c. a third party beneficiary contract. d. none of the choices.

Q: Four-Square Construction Company enters into a contract with Ben to remodel Carol's Home Store, using products from Delta Building Supplies. Eatery Caf is next to Carol's Home Store. The remodeling is a gift from Ben to Carol. Delta will realize a profit from the sale of products to Four-Square to remodel Carol's store. Delta is a. a delegatee. b. an assignee. c. an incidental beneficiary. d. an intended beneficiary.

Q: Four-Square Construction Company enters into a contract with Ben to remodel Carol's Home Store, using products from Delta Building Supplies. Eatery Caf is next to Carol's Home Store. The remodeling is a gift from Ben to Carol. The value of Eatery's property will increase after Carol's store is remodeled. Eatery is a. a delegatee. b. an assignee. c. an incidental beneficiary. d. an intended beneficiary.

Q: Four-Square Construction Company enters into a contract with Ben to remodel Carol's Home Store, using products from Delta Building Supplies. Eatery Caf is next to Carol's Home Store. The remodeling is a gift from Ben to Carol. Carol is a. a delegatee. b. an assignee. c. an incidental beneficiary. d. an intended beneficiary.

Q: Bonita and Chad enter into a contract for Chad to plant trees on Bonita's property for which she agrees to pay $500. When Chad's schedule conflicts, he contacts Dirk, to whom he "assigns all rights under the contract." Chad is a. absolved of any liability under the contract. b. in breach of the contract with Bonita. c. liable to Bonita if Dirk does not perform. d. liable to Dirk for inducing a prohibited contract.

Q: Jack contracts to provide lawn-mowing services to Lee. Jack cannot delegate this duty a. because it is a personal service contract. b. without continuing to be liable. c. without Lee's consent. d. without providing lawn-mowing services to Kim.

Q: Leonardo contracts to install automatic watering troughs in Kendall's dairy barn. Leonardo then becomes seriously ill and contracts with Jake to install the troughs. Jake is unreliable and never shows up to install the troughs. Kendall can sue a. no one. b. Jake only. c. Leonardo only. d. Jake or Leonardo.

Q: Ilene and Jerry enter into a contract under which Ilene agrees to provide groundskeeping services for Jerry's Family Fun Center. Under an antidelegation clause, the contract can prohibit and prevent the transfer of a. only duties that are personal in nature. b. only duties that are impersonal in nature. c. no duties under the contract. d. all duties under the contract.

Q: Devon and Edmond enter into a contract for the closing of a sale of Devon's recording studio. When Edmond's schedule conflicts, he asks Ferdie to perform his duties at the closing. This transfer of duties is a. a delegation. b. an assignment. c. prohibited. d. a negotiation.

Q: Animal Feed Corporation and Beneficial Trucking, Inc., enter into a contract for Beneficial to transport a truckload of hay for which Animal Feed agrees to pay. Due to schedule conflicts, Beneficial contacts Crop Transport Company, to which Beneficial "assigns all rights under the contract." This transfer is a. an assignment and a delegation. b. an alienation and a negotiation. c. an obligation and a cancelation. d. prohibited.

Q: Bill and Charlene enter into a contract for the clearing, plowing, and preparing of Charlene's 100-acre tract for which she agrees to pay $1,000. Bill transfers his duty under this contract to Dewey. Dewey is a. a delegatee. b. an assignee. c. an obligee. d. a delegator.

Q: Pat, a world famous musician and composer, agrees to give ten piano lessons to Quinn in exchange for $1,000. Pat's attempt to delegate his contract to Ruth, an inexperienced pianist, will probably be a. permitted because contracts may be freely delegated. b. permitted because the contract is concerned with music lessons. c. prohibited because contracts may not be freely delegated. d. prohibited because Pat and Ruth have very different skill levels.

Q: Opportunity Market Company (OMC) and Pierce enter into a contract for Pierce to cut and trim the landscaping around OMC's building before a meeting of the company's sales staff. When Pierce's schedule conflicts, he asks Rachel to do the cutting and trimming. This transfer of duties is a. a delegation. b. an assignment. c. a third party beneficiary contract. d. prohibited.

Q: Phillip assigns his rights under a contract with Maria to his college roommate, John. Neither Phillip nor John notifies Maria of the assignment. The assignment a. will not be effective until notice is given to Maria. b. will become effective after thirty days even if no notice is given to Maria. c. is immediately effective. d. can be circumvented.

Q: Eli owes Martin $10,000. Martin assigns the claim to Jack. Jack does not notify Eli of the assignment. A week later, Martin assigns the same claim to Allen. Allen immediately notifies Eli of the assignment. Jack a. has priority to payment in all states. b. has priority to payment in states that follow the English rule. c. does not have priority to payment in any state. d. has priority to payment in most states.

Q: A contract between Laser Maintenance, Inc., and Medical Vision Operation Corporation contains a clause stating that any assignment is "void." This ordinarily prohibits a. any assignment. b. no assignment. c. only an assignment of contract rights to personal services. d. only an assignment that would change the obligor's risk.

Q: Grady and Hannah contract with Isaac to transfer the ownership of Grady and Hannah's Mesa Ranch to Isaac. This is a. a delegation. b. an assignment. c. a third party beneficiary contract. d. an alienation.

Q: Michel, the owner of Nature's Refuge Caf, and Olin enter into a contract under which Olin agrees to design an outdoor addition to the caf for which Michel agrees to pay $3,000. This contract may not be assigned if a. the assignment will significantly change the risk of nonperformance. b. the assignment is expressly prohibited by the terms of the contract. c. the contract is uniquely personal in nature. d. any of the choices.

Q: Marco and Fred enter into a contract for the sale of Marco's apartment for which Fred agrees to pay him $100,000. Marco cannot prohibit Fred from transferring his right to the ownership of the apartment because such a prohibition is a. against public policy. b. immoral. c. unconscionable. d. a crime.

Q: A contract between Slim and Goldie may not be assigned if it a. does not expressly permit assignment. b. involves a sale of goods. c. involves personal services. d. is oral.

Q: Richly Merchandise, Inc., contracts with Stand-Rite Contractors to build a store. Stand-Rite assigns the contract to Town Builders, which has a poor record of completing projects. Richly could most successfully argue that the contract cannot be assigned because a. Richly did not consent to the assignment. b. Richly did not receive adequate consideration for the assignment. c. the assignment will materially increase the risk of nonperformance. d. Town Builders was not an original party to the deal.

Q: Merry Music Inc. and Nayda enter into a contract for Nayda to write six songs for which Merry Music agrees to pay her. Nayda transfers her right to payment under the contract to Omni Artists Agency. In the transfer of rights, Nayda is a. a delegator. b. an assignor. c. an obligor. d. an alien.

Q: Forrest makes and sells furniture. Forrest and Glenda enter into a contract for the delivery of Forrest 's products to Glenda's Gear retail locations for which she agrees to pay the invoiced price. Forrest transfers the right to payment under the contract to Haulers Trucks & Trailers. This transfer is a. a delegation. b. an assignment. c. a third party beneficiary contract. d. prohibited.

Q: Will owes Jenny $1,000. Brad owes Will $1,000. Will unconditionally assigns his rights to Jenny. Will's right to the $1,000 is then a. unchanged. b. extinguished. c. incidental. d. assigned to a court.

Q: Revenue & Sales Corporation and Software Solutions, Inc., enter into a contract for the design of custom software for which Revenue & Sales agrees to pay $4,500. Software Solutions transfers the right to payment under the contract to Creditline Company. Creditline is a. an assignor. b. an assignee. c. an obligee. d. a delegate.

Q: Stephanie's sale of rights she has under a contract with Runway Retail, Inc., to buy the retailer's clothing overstock is a. a delegation. b. an assignment. c. a third party beneficiary contract. d. none of the choices.

Q: Jayson and MaryElise enter into a contract. Jayson agrees to mow MaryElise's yard every week for the summer. MaryElise is the a. obligor. b. obligee. c. assignee. d. assignor.

Q: Robert enters into a contract with Claire. Claire agrees to paint Robert's living room for $500. Claire is the a. obligor. b. obligee. c. assignee. d. assignor.

Q: Regional Steel, Inc., and Overland Transport Company enter into a contract. Smooth Oil Corporation, which will indirectly benefit from the deal, is prevented from having rights under the contract by the principle of a. assignment. b. delegation. c. privity. d. vesting.

Q: If a contract does not require that performance be rendered directly to a third party, the third party is an intended beneficiary.

Q: Any beneficiary who is not deemed an intended beneficiary is considered incidental.

Q: An incidental beneficiary can sue directly to enforce a promisor's promise.

Q: A life insurance contract involves an intended beneficiary.

Q: Vested is the condition in which rights have taken effect and cannot be taken away.

Q: The rights of a third party beneficiary under a contract vest if the third party materially changes his or her position in justifiable reliance on the promise.