Module 2- Contract and Agency Flashcards
Which of the following contract subject matters would be covered by the Sales Article 2 of the Uniform Commercial Code?
A loan from a credit union for the purchase of a mobile home
A financing agreement with Ford Motor Credit for the purchase of an Expedition SUV
A contract for the purchase and installation of four tires for a car
A security interest in consumer’s financed purchase of a refrigerator
A contract for the purchase and installation of four tires for a car
Correct! Since the tires are the major part of the cost in the contract, the contract would be under UCC Article 2.
On March 13, Ike contracted with Turner for Turner to perform in Ike’s club, exclusively, for four weeks beginning June 2 for $10,000 per week. Which of the following statements is correct?
The contract is governed by the UCC.
The contract is governed by common law.
Turner’s services are governed by common law, and the payment is governed by the UCC.
Because the contract does not begin immediately, it is governed by the UCC.
The contract is governed by common law.
Correct. Contracts for services are governed by common law.
Janice Gwinn is having an in-floor vacuum system put in her new home. The cost of the components for the system and installation is $22,000. She has signed a contract with Jill’s Permanent Vacuum Systems for that amount with installation to be completed as the phases of construction of the home proceed and allow. Which of the following statements is correct about this contract?
Because the contract is one for the purchase of a vacuum, it is the sale of a good and is governed by the UCC.
Because the contract involves real estate, it is governed by common law.
Because the contract is a sale by a merchant, it is governed by the UCC.
Because the contract is one predominantly for installation, it is governed by common law.
Because the contract is one predominantly for installation, it is governed by common law.
Correct. Where there are mixed contracts (sale of both goods and services), we look to the price and the intent of the parties. The parts for such a system are small in comparison to the labor required for its installation throughout the construction process. Also, Janice does not just want vacuum parts. She wants the system installed.
Gwyneth’s grandmother asks Gwyneth to come to her house on Tuesday evening for a visit and promised that Gwyneth would be glad that she came. Gwyneth did go to her grandmother’s house on Tuesday evening, but she arrived late. Gwyneth’s grandmother said, “Well, I was going to give you my car since I can’t drive anymore, but since you cannot even show up on time, I have changed my mind.”
Which of the following statements is correct?
There is no contract between Gwyneth and her grandmother for the car.
There is a contract between Gwyneth and her grandmother, and it is governed by the UCC.
There was a contract, but Gwyneth did not perform properly, so the grandmother can refuse to honor the contract.
The contract is for Gwyneth’s services in coming over and is governed by common law.
There is no contract between Gwyneth and her grandmother for the car.
Correct. A contract requires consideration, and this is a promise to make a gift, which cannot be consideration because there is love and affection underlying the gift but no detriment on Gwyneth’s side.
Which of the following subject matters in a contract would result in the contract being governed by the UCC?
Consulting agreement to address sales of goods
Mortgage on a mobile home
Lease on a mobile home
Sale of an airplane on credit
Sale of an airplane on credit
Correct! The sale of a large good is still a sale of a good. The fact that a credit arrangement is involved does not change the nature of the contract—the buyer is buying goods.
Which of the following contract subject matters would be governed by common law?
A student loan
A sale of gravel with delivery
Sale of oil recovered by drilling
All of the above would be governed by common law.
A student loan
Correct! A loan is a service and would be governed by common law.
Which of the following is a true statement about the UCC?
It applies in all situations in which goods are part of the contract.
It allows for more flexibility than common law.
The UCC applies only to sales of goods by merchants.
All of the above.
It allows for more flexibility than common law.
Correct! The UCC was written to help sales transaction be conducted more simply and uniformly.
Which of the following subject matters would be governed by the UCC?
Dentures fitted by a dentist
Growing crops
Purchase of a partnership interests
The lease of a rototiller
Growing crops
Correct! Crops, whether harvested or growing, are governed by UCC Article 2 Sale of Goods.
