REG 2 Flashcards Preview

REG > REG 2 > Flashcards

Flashcards in REG 2 Deck (20):
1

Which of the following statements is true with regard to the Statute of Frauds?

The Statute of Frauds sets forth requirements that must be met in order for a writing to be sufficient.
These elements may be present in more than one document, with some in one document and some in another, so long as there is evidence that all documents are related to the same agreement.

2

Bond and Spear orally agreed that Bond would buy a car from Spear for $475. Bond paid Spear a $100 deposit. The next day, Spear received an offer of $575, the car's fair market value.
Spear immediately notified Bond that Spear would not sell the car to Bond and returned Bond's $100.
If Bond sues Spear and Spear defends on the basis of the Statute of Frauds, Bond will probably

This is correct because for the sale of goods under the Statute of Frauds, contracts for goods priced at $ 500 or more require a writing to be enforceable. This oral contract for a good (car) is $475, under $500, and thus enforceable.

3

To prevail in a common law action for fraud in the inducement, a plaintiff must prove that the

A common law fraud action requires four proofs: a false statement of fact or misrepresentation by the defendant, knowledge of the false statement by the defendant, reliance by the plaintiff, and a loss suffered by the plaintiff. If these elements are present, the plaintiff is a winner.

4

For a purchaser of land to avoid a contract with the seller based on duress, it must be shown that the seller's improper threats

This answer is correct because duress are threats that overcome one's free will inducing that person to assent to the contract. It is the threat, and its influence on the plaintiff, which caused the purchaser to assent to the contract that determines whether duress has taken place.

5

Kaye contracted to sell Hodges a building for $310,000. The contract required Hodges to pay the entire amount at closing. Kaye refused to close the sale of the building. Hodges sued Kaye.
To what relief is Hodges entitled?

This answer is correct because Hodges has a choice of these remedies. Because the subject of the contract (realty) is unique (no two pieces of property with the same legal description) and damages are really inadequate because performance is more valuable than money damages, Hodges can file a petition for specific performance requiring Kaye to deed the property to Hodges. Hodges could elect instead to file a lawsuit for breach of contract and seek damages (for the loss of the bargain) actually sustained.

6

Graham contracted with the City of Harris to train and employ high school dropouts residing in Harris. Graham breached the contract. Long, a resident of Harris and a high school dropout, sued Graham for damages.
Under the circumstances, Long will

Lose, because Long is merely an incidental beneficiary of the contract.

7

West, Inc., and Barton entered into a contract. After receiving valuable consideration from Egan, West assigned its rights under the Barton contract to Egan. In which of the following circumstances would West not be liable to Egan?

Egan has all the rights of West based on the assignment. Thus, Egan can release Barton, discharging the Barton contract, and West has no further liability to Egan.

8

What sales does the UCC govern?

The UCC governs ANY SALE OF GOODS, whatever the value. The sale of a gumball is governed by the UCC. It is the Statute of Frauds that governs only sales contracts of at least $500.

9

To satisfy the UCC Statute of Frauds regarding the sale of goods, which of the following must generally be in writing?

The Statute of Frauds under the UCC requires only the signature of the person to be charged, the quantity of goods ordered, and written evidence of an agreement. The Statute itself does not require anything else to be in writing in order for the oral contract to be enforceable.

10

Ram received Handy's purchase order on May 4. On May 5, Ram discovered that it had only 200 Model A-X socket sets and 100 Model W-Z socket sets in stock. Ram shipped the Model A-X and Model W-Z sets to Handy without any explanation concerning the shipment. The socket sets were received by Handy on May 8.

Which of the following statements concerning the shipment is correct?

Under the UCC when a buyer orders (unilateral offer to buy) goods to be shipped by a seller, a seller can accept that offer by (1) shipment of conforming goods, (2) by a prompt promise to ship conforming goods, or (3) by the shipment of nonconforming goods without notice of accommodation. Here Ram, in response to Handy's offer, shipped nonconforming goods without notice ("explanation") of accommodation resulting in Ram's acceptance (and breach of contract).

11

Webstar Corp. orally agreed to sell Northco, Inc. a computer for $20,000. Northco sent a signed purchase order to Webstar confirming the agreement. Webstar received the purchase order and did not respond. Webstar refused to deliver the computer to Northco, claiming that the purchase order did not satisfy the UCC Statute of Frauds because it was not signed by Webstar. Northco sells computers to the general public, and Webstar is a computer wholesaler.
Under the UCC Sales Article, Webstar's position is

The Statute of Frauds generally requires contracts for a sale of goods of $500 or more to be in writing and signed by the person refusing performance. However, there are several exceptions, and this scenario illustrates one of them. If between merchants a confirmatory memorandum is sent and is not objected to in writing within 10 days by the merchant receiving it, then the Statute of Frauds is satisfied. Webstar must, therefore, honor this valid oral contract.

12

On September 10, Bell Corp. entered into a contract to purchase 50 lamps from Glow Manufacturing to be used in Bell Corp's executive company offices. Bell prepaid 40% of the purchase price. Glow became insolvent on September 19 before segregating, in its inventory, the lamps to be delivered to Bell. Bell will not be able to recover the lamps because

The seller is the one who must identify goods by segregating them from general inventory and associating them with a specific contract before title would pass to the buyer. Since this has not yet been done, the buyer will have no rights in the goods under the contract.

13

Under the UCC Sales Article, the warranty of title may be excluded by

A specific disclaimer that the seller is only passing what right or title seller has disclaims the implied warranty of title.

14

Under the Sales Article of the UCC, the warranty of title

The implied warranty of title protects purchasers who do not know of a lien that exists on a purchase. A seller may sell an item with a lien on it, so long as the buyer is aware of the lien.

15

Which of the following factors result(s) in an express warranty with respect to a sale of goods?

Express warranties arise when the seller as part of the bargain sells goods by description. When the seller selects goods knowing of the buyer's intended use, it is an implied warranty (of fitness for a particular purpose) that arises and not an express warranty.

16

Which of the following conditions must be met for an implied warranty of fitness for a particular purpose to arise in connection with a sale of goods?

An implied warranty of fitness for a particular purpose can be created without a written contract. It arises if a buyer relies on a seller's expertise in selecting goods that the seller knows of the buyer's particular purpose or use.

17

Under the Sales Article of the UCC, which of the following statements is correct regarding the creation of express warranties?

Express warranties must be part of the basis of the bargain between buyer and seller.

18

Maco Corp. contracted to sell 1,500 bushels of potatoes to LBC Chips. The contract did not refer to any specific supply source for the potatoes. Maco intended to deliver potatoes grown on its farms. An insect infestation ruined Maco's crop but not the crops of other growers in the area. Maco failed to deliver the potatoes to LBC. LBC sued Maco for breach of contract. Under the circumstances, Maco will

The potatoes were not specifically identified goods at the time of contract formation and risk of loss had not passed to LBC. Thus, their destruction does not discharge Maco from its obligations. They still have a duty to provide substitute potatoes since some are available. If the goods had been specifically identified to come from Maco's farms in the contract, then they could escape their obligations.

19

Gray Fabricating Co. and Pine Corp. agreed orally that Pine would custom manufacture a processor for Gray at a price of $80,000.
After Pine completed the work at a cost of $60,000, Gray notified Pine that the processor was no longer needed. Pine is holding the processor and has requested payment from Gray. Pine has been unable to resell the processor for any price. Pine incurred storage fees of $1,000.

If Gray refuses to pay Pine and Pine sues Gray, the most Pine will be entitled to recover is

The point of contractual damages is to give the wronged party the "benefit of the bargain." In this case, Gray expected $80,000 as that benefit in exchange for the processor. It did not get any of that expectation, and incurred an extra $1000 in expenses. To make it realize its expected benefit of $80,000, Gray must give Pine $81,000, as it is currently out $1000 after paying the storage. It will get $81,000.

20

What factors make a note negotiable?

For a note to be negotiable, the following must apply: it must be in writing and signed by the maker, be an unconditional promise to pay a sum certain in money, and be payable either to the bearer (or to the order of a specific person) and payable on demand or at a definite time. A maker's right to extend a time instrument for a definite period meets the test of an instrument payable at a definite time. These requirements are met in the above example.