National American University

BUSINESS L 3100

Chapter 23-NATURE AND FORM OF SALES

TRUE/FALSE

1)A sale of goods is defined under UCC Article 2 as transfer of title to intangible property for a price.

 

                                           

 

2. UCC Article 2 applies not only to contracts for the sale of familiar items of personal property, such as automobiles or chairs, but also to the transfer of commodities, such as oil, gasoline, milk, and grain.

 

                                           

 

3. Goods physically existing and owned by a seller at the time of a transaction are called existing goods.

 

                                           

 

4. A bailment is a special form of sale in which possession is transferred to a bailee.

 

                                           

 

5. A gift is a free transfer of the title to property.

 

                                           

 

6. A contract that has elements of both goods and services is always classified as a contract for the sale of goods.

 

                                           

 

7. If a contract calls for both rendering services and supplying materials to be used in performing the ser- vices, the contract is classified according to its dominant element.

 

                                           

 

8. A firm offer is effective only if the merchant receives consideration to keep the offer open.

 

                                           

 

9. Sales law includes special rules that apply to merchants.

 

                                           

 

10. An offer to buy or sell goods may be accepted in any manner that is reasonable under the circum- stances.

 

                                           

 

11. When a term of an acceptance conflicts with a term of an offer but it is clear that the parties intended to be bound by a contract, the UCC still recognizes the formation of a contract, and the conflicting terms cancel each other and are ignored.

                                           

 

12. The UCC permits a court to refuse to enforce a sales contract that it finds to be unconscionable.

 

                                           

 

13. A contract for the sale of goods is not enforceable unless the contract clearly expresses the price.

 

                                           

 

14. An output or requirement contract is not enforceable unless the parties include an estimate of prospec- tive amounts.

 

                                           

 

15. A contract of indefinite duration may be terminated by notice from either party to the other party.

 

                                           

 

16. Any modification of a sales contract must be supported by some form of consideration.

 

                                           

 

17. The parol evidence rule does not apply to the sale of goods.

 

                                           

 

18. The term “course of dealing” refers to the language and customs of an industry.

 

                                           

 

19. Defenses raised in a suit based on a sales contract differ greatly from defenses used in regard to any other type of contract.

 

                                           

 

20. A merchant is about to transfer his entire inventory as part of an annual clearance action. This transfer is called a bulk transfer.

 

                                           

 

21. The provisions of Article 6 concerning bulk transfers are designed to protect creditors.

 

                                           

 

22. To satisfy the statute of frauds, the writing must be signed and must include the price of the goods.

 

                                           

 

23. With regard to transactions between merchants, failure to repudiate a confirming letter within ten (10) days after receipt binds the non-signing merchant, just as if he had signed the letter or a contract.

 

                                           

24. A writing that is offered to satisfy the statute of frauds must have been written for that purpose.

 

                                           

 

25. When the price of the goods is $500 or more, a writing signed by the defendant is required in all cases.

 

                                           

 

26. An oral contract to sell custom-made goods to a buyer is binding if the goods are not suitable for sale to anyone else in the ordinary course of the seller's business, and the seller has made a substantial be- ginning in manufacturing or procuring the goods.

 

                                           

 

27. When an oral contract is made to sell a 75-inch LED LCD TV for $6,800, payment and acceptance of part of the purchase price avoids the bar of the statute of frauds.

 

                                           

 

28. Consumer protection statutes may require a writing that is more detailed than the writing required by the statute of frauds provision of the Uniform Commercial Code.

 

                                           

 

29. A bill of sale can be used as proof of an otherwise oral agreement.

 

                                           

 

30. The CISG governs all contracts between parties in the countries that have ratified it.

 

                                           

 

MULTIPLE CHOICE

 

1. Article 2 of the Uniform Commercial Code applies to the sale of:
   1. corporate stocks.
   2. U.S. Treasury bonds.
   3. goods.
   4. insurance policies.

                                           

 

2. All goods other than those existing and owned by a seller at the time of a transaction are called:
   1. existing goods.
   2. tangible goods.
   3. future goods.
   4. intangible goods.

                                           

 

3. Which of the following is not a sale of goods?
   1. a bailment
   2. an option to purchase

1. 3. a gift
   4. all of the above

                                           

 

4. A transfer of possession, but not title, is called:
   1. a bailment.
   2. an option to purchase.
   3. a gift
   4. all of the above.

                                           

 

5. A contract involving both services and goods is classified as a contract for the sale of goods if:
   1. the services are to be performed upon the goods.
   2. the services cannot be performed unless the goods are supplied.
   3. no charge is made for the services.
   4. the sale of goods is the dominant aspect of the transaction.

                                           

 

6. A merchant cannot revoke a firm offer to buy or sell goods if the merchant has:
   1. promised to keep the offer open.
   2. declared in the presence of two or more reputable witnesses that the offer will be kept open.
   3. received consideration to keep the offer open.
   4. stated in a signed letter that the offer would not be revoked for a specified period of time.    
7. Additional terms in acceptance of an offer for non-merchants:
   1. automatically result in rejection of the offer.
   2. forms a contract based on the original offer
   3. forms a contract that includes the additional terms.
   4. none of the above.

                                           

 

8. Under Article 2 of the UCC, in a situation where it is clear that the parties intended a contract, but a term in the acceptance conflicts with a term in the offer:
   1. there is no contract.
   2. the acceptance is viewed entirely as a counteroffer.
   3. there is a contract for the terms of the offer and acceptance that are consistent, but the con- flicting terms cancel out.
   4. there is a contract, and the conflicting term in the offer is part of the contract.

                                           

 

9. As a general rule, courts will                           in recovering money or property transferred under an illegal agreement.
   1. assist a commercial buyer
   2. assist a non-commercial buyer
   3. assist an institutional buyer
   4. not aid either party

                                           

10. If a contract for the sale of goods does not state the price to be paid, the:
    1. contract is void because it is too indefinite to be enforced.
    2. buyer is required to pay a reasonable price for the goods.
    3. buyer can pay whatever price the buyer in good faith believes is a proper price.
    4. seller can rightfully charge whatever price the seller in good faith believes is a proper price.

                                           

 

11. An agreement to periodically deliver home-heating oil to a residential customer that does not indicate the duration of the contract
    1. is enforceable for a reasonable period of time.
    2. lasts for one delivery only.
    3. is not a legally-enforceable contract.
    4. constitutes a bulk transfer.

                                           

 

12. An agreement to modify a contract for the sale of goods:
    1. is only binding if supported by consideration.
    2. has to be voluntary in order to be enforceable.
    3. is only binding if the original contract is invalid.
    4. all of the above.

                                           

 

13.                           represents a pattern of performance between the parties to a contract.
    1. Course of dealing
    2. Usage of trade
    3. Course of trade
    4. Usage of dealing

                                           

 

14. A sales contract must be evidenced by a writing if the sales price of goods is equal to or more than: a.        $100.

b. $1,000.

c.     $500.

d. $5,000.

                                           

 

15. Which term is not required in a writing in order to satisfy the statute of frauds?
    1. language indicating that a sale or contract to sell has been made
    2. the price of the goods
    3. the quantity of goods involved in the transaction
    4. the signature of the defendant

                                           

 

16. Which of the following can satisfy the statute of frauds writing requirement?
    1. bills of sale
    2. Letters
    3. Telegrams
    4. all of the above

                                           

 

17. A sales agreement that does not satisfy the statute of frauds is:
    1. a quasi contract.
    2. criminal.
    3. unenforceable.
    4. unlawful.

                                           

 

18. Which of the following situations create(s) an exception to the statute of frauds writing requirement?
    1. non-resellable goods
    2. receipt and acceptance
    3. Payment
    4. all of the above

                                           

 

19. The CISG:
    1. governs all contracts between parties in countries that have ratified it.
    2. applies only to goods bought for personal, family or household uses.
    3. applies to contracts in which the predominant part of the obligation is the supply of labor or other services.
    4. none of the above.

                                           

 

20. Consumer leases:
    1. must always be evidenced by a writing.
    2. are always three- party transactions.
    3. require the lessor to make all usual warranties made by a seller in a sale of goods..
    4. all of the above.

                                           

 

CASE

 

1. Janet Durham orally agreed to purchase certain computer hardware priced at $10,000 from Ted Stallings. The sale of the hardware also included a one-time setup service visit priced at $100. The to- tal contract price amounted to $10,100. The computer hardware was delivered and set up, and Durham paid $10,100. Afterwards, Durham discovered that she could obtain the same goods and services from another seller for a total contract price of $9,100. She now seeks rescission of the contract, based on the fact that more than $500 in goods were involved in the sales transaction, that the contract between her and Stallings was subject to the statute of frauds as a result, and that the oral agreement between them was therefore unenforceable. Durham wants to return the computer hardware to Stallings, and receive reimbursement of $10,000 (She is willing to waive her claim to reimbursement for the $100 setup service visit.) Evaluate Durham’s legal position in this matter.