M4-Contracts: Part 3

Question 1

The UCC does not follow the mirror image rule; instead, generally anything that looks like an acceptance will operate as an acceptance, even if it contains new terms. In such a case, a contract generally is formed even if the offeror fails to agree to the new terms. (true or false)

Answer 1

true

Question 2

In a sale or return, the buyer has title and risk of loss unless and until the goods are returned to the seller. (true or false)

Answer 2

true

Question 3

A buyer may reject goods if they do not conform to the contract in any way. This is known as the ___________

Answer 3

perfect tender doctrine

Question 4

The UCC imposes an obligation of good faith on both parties to a contract. For merchants, this includes the duty to observe reasonable commercial standards. (true or false)

Answer 4

true

Question 5

Under an FOB destination contract, the seller has the risk of loss until he places conforming goods into the buyer’s hands at the named destination, not necessarily the buyer’s place of business. (true or false)

Answer 5

true

Question 6

A merchant’s firm offer can be irrevocable for up to three months. (true or false)

Answer 6

true

If a merchant’s firm offer does not indicate how long the offer will be kept open, it is irrevocable for a reasonable time, not to exceed three months.

Question 7

The statute of Frauds requires contracts involving the sales of goods to be in writing if they exceed $500 (MYLEGS). However if any of these exceptions apply, an oral contract will be enforceable:

Answer 7

S Specially manufactured (custom) goods
W Written confirmation between merchants
A Admission in court
P Performance

Question 8

The warranty of title is a guarantee from the seller that the goods are delivered free of all liens of which the buyer is unaware. (true or false)

Answer 8

true

The warranty of title can be disclaimed by specific language or circumstance.

The warranty of title arises automatically in every sale of goods; it need not be in writing.

The warranty of title arises automatically in every sale of goods; even when the seller is not a merchant.

Question 9

On an anticipatory breach of contract (or repudiation) the nonbreaching party has a right to demand assurance of performance or to cancel the contract. There is no right to punitive damage under contract law in general, even on anticipatory breach. (true or false)

Answer 9

true

Question 10

Absent an agreement otherwise, the seller is not obligated to deliver the conforming goods to the buyer, but merely needs to hold them for the buyer’s disposition. (true or false)

Answer 10

true

Question 11

The warranty of merchantability is implied whenever a merchant (one who ordinarily sells goods of the kind sold) sells goods. (true or false)

Answer 11

true

Question 12

To be an express warranty, the language must be part of the basis of the bargain. (true or false)

Answer 12

true

An express warranty arises from any statement of fact or promise made by the seller, any description of the goods made by the seller, or any sample or model shown by the seller at a time when it could have become part of the basis of the bargain.

An express warranty may be made orally, in writing or by conduct (e.g., the showing of a model)

Express warranties can arise from any description of the goods given to the buyer before the contract is executed.

Question 13

Failure to give adequate assurances when reasonably demanded is a form of anticipatory repudiation. It constitutes a breach and discharges the buyer. (true or false)

Answer 13

true

Question 14

In a sale on approval, risk of loss passes to the buyer on approval of the goods. (true or false)

Answer 14

true

Question 15

Where the seller is not a merchant, risk of loss passes to the buyer upon tender of delivery of the goods. (true or false)

Answer 15

true

Question 16

Under the UCC (article 2) a written contract for the sale of goods must contain some indication of the quantity of the goods being sold. (true or false)

Answer 16

true

Question 17

A buyer may recover goods from an insolvent seller if the goods are “identified to the contract” and the buyer made a payment within 10 days before insolvency. (true or false)

Answer 17

true

Question 18

The contract “FOB seller’s loading dock” requires that the buyer pay the freight expense. (true or false)

Answer 18

true

Question 19

Under the UCC, any affirmation of fact or promise constitutes an express warranty. (true or false)

Answer 19

true

Any model, sample, or description also gives rise to an express warranty that the goods will be in conformity with the sample, model, or description.

Question 20

The implied warranty of fitness for particular purpose arises when the seller knows the particular purpose for which the buyer will use the goods and that the buyer is relying on the seller to choose suitable goods. (true or false)

Answer 20

true