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BLAW 5392 Exam 1 (Part 1)

63 Questions
Blaw 5392 Exam 1 (part 1)
Questions and Answers
  • 1. 
    8.001 Under the Sales Article of teh UCC, which of the following statements is correct regarding a seller's obligation under a FOB destination contract?
    • A. 

      The seller is required to arrange for the buyer to pick up the conforming goods at a specified destination.

    • B. 

      The seller is required to tender delivery of conforming goods at a specified destination.

    • C. 

      The seller is required to tender delivery of conforming goods at the buyer's place of business.

    • D. 

      The seller is required to tender delivery of conforming goods to a carrier who delivers to a destination specified by the buyer.

  • 2. 
    8.002 Under the Sales Article of the UCC, and unless otherwise agreed to, the seller's obligation to the buyer is to...
    • A. 

      Deliver the goods to the buyer's place of business.

    • B. 

      Hold conforming goods and give the buyer whatever notification is reasonably necessary to enable the buyer to take delivery.

    • C. 

      Deliver all goods called for in the contract to a common carrier.

    • D. 

      Set aside conforming goods for inspection by the buyer before delivery.

  • 3. 
    8.003 Smith contracted in writing to sell Peters a used personal computer for $600.00.  The contract did not specifically address the time for payment, place of delivery, or Peters' right to inspect the computer.  Which of the following statements is correct?
    • A. 

      Smith is obligated to deliver the computer to Peters' home.

    • B. 

      Peters is entitled to inspect the computer before paying for it.

    • C. 

      Peters may NOT pay for the computer using a personal check unless Smith agrees.

    • D. 

      Smith is NOT entitled to payment until 30 days after Peters receives the computer.

  • 4. 
    8.004 If a contract for the sale of goods includes a C. & F. shipping term and the seller has fulfilled all of its obligations, the
    • A. 

      Title to the goods will pass to the buyer when the goods are received by the buyer at the place of destination.

    • B. 

      Risk of loss will pass to the buyer upon delivery of the goods to the carrier.

    • C. 

      Buyer retains the right to inspect the goods prior to making payment.

    • D. 

      Seller must obtain an insurance policy at its own expense for the buyer's benefit.

  • 5. 
    8.005 Wilson Corporation entered into a contract to sell goods to Marvin who has a place of business in the same town as Wilson.  The contract was clear with respect to price and quantity, but failed to designate the place of delivery.  Which of the following statements is correct?
    • A. 

      The contract is unenforceable because of indefiniteness.

    • B. 

      The place for delivery must be designated by the parties within five days or the contract is voidable.

    • C. 

      The seller's place of business is the proper place for delivery.

    • D. 

      The buyer's place of business is the proper place for delivery.

  • 6. 
    8.006 In connection with risk and expense associated with the delivery of goods to a carrier for shipment under a sales contract, the term FOB the place of shipment means that...
    • A. 

      The seller bears the risk but NOT the expense.

    • B. 

      The buyer bears the risk but NOT the expense.

    • C. 

      The seller bears the risk and expense.

    • D. 

      The buyer bears the risk and the expense.

  • 7. 
    8.007 In connection with risk and expense associated with the delivery of goods to a destination under a sales contract, the term FOB the place of destination means that...
    • A. 

      The seller bears the risk but NOT the expense.

    • B. 

      The buyer bears the risk but NOT the expense.

    • C. 

      The seller bears the risk and expense.

    • D. 

      The buyer bears the risk and the expense.

  • 8. 
    8.008 In connect with a contract for the sale of goods, the term CIF means that the price includes...
    • A. 

      The cost of the goods exclusive of insurance and freight.

    • B. 

      The cost of the goods plus freight but exclusive of insurance.

    • C. 

      The cost of the goods plus insurance but exclusive of freight.

    • D. 

      The cost of the goods, freight, and insurance.

  • 9. 
    8.009 Suggs Company agreed to sell certain goods to Barr Corporation pursuant to a written contract.  NO shipment or delivery date was specified in the contract.  Based on these facts...
    • A. 

      The time for shipment is within a reasonable time.

    • B. 

      The time for shipment must be agreed upon.

    • C. 

      The time for shipment is within 3 months.

    • D. 

      The contract fails for indefiniteness.

  • 10. 
    8.010 Martin, a wholesale distributer, made a contract for the purchase of 10,000 gallons of gasoline from the Wilberforce Oil Company.  The price was to be determined in accordance with the refinery price as of the close of business on the delivery date.  Credit terms were net/30 after delivery.  Under these circumstances which of the following statements is true?
    • A. 

      If Martin pays upon delivery, he is entitled to a 2% discount.

    • B. 

      The contract being silent on the place of delivery, Martin has the right to expect delivery at his place of business.

    • C. 

      Although the price has some degree of uncertainty, the contract is enforceable.

    • D. 

      Because the goods involved are tangible, specific performance is a remedy available to Martin.

  • 11. 
    8.011 A sheep rancher agreed, in writing, to sell all the wool shorn during the shearing season to a weaver.  The contract failed to establish the price and a minimum quantity of wool.  After the shearing season, the rancher refused to deliver the wool.  The weaver sued the rancher for breach of contract.  Under the Sales Article of the UCC, will the weaver win?
    • A. 

      Yes, because this was an output contract.

    • B. 

      Yes, because both price and quantity terms were omitted.

    • C. 

      No, because quantity cannot be omitted for a contract to be enforceable.

    • D. 

      No, because the omission of price and quantity terms prevents the formation of a contract.

  • 12. 
    8.012 Mayker, Inc. and Oylco contracted to have Oylco be the exclusive provider of Mayker's fuel oil for three months.  The stated price was subject to increases of up to a total of 10% if the market price increased.  The market price rose 25% and Mayker tripled its normal order.  Oylco seeks to avoid performance.  Oylco's best argument in support of its position is that...
    • A. 

      There was NO meeting of the minds.

    • B. 

      The contract was unconscionable.

    • C. 

      The quantity was NOT definite and certain enough.

    • D. 

      Mayker ordered amounts of oil unreasonably greater than its normal requirements.

  • 13. 
    8.013 Bass Electric Co. has entered an agreement to buy its actual requirements of copper wiriting for six months from the Seymour Metal Wire Company and Seymour Metal has agreed to sell all the copper wiring Bass will require for six months.  The agreement between the two companies is...
    • A. 

      Unenforceable because it is too indefinite.

    • B. 

      Unenforceable because it lacks mutuality of obligation.

    • C. 

      Unenforceable because of lack of consideration.

    • D. 

      Valid and enforceable.

  • 14. 
    8.014 Mara Oil, Inc. had a contract with Gotham Apartments to supply it with its fuel oil needs for the year, approximately 10,000 gallons.  The price was fixed at ten cents above the price per gallon that Mara paid for its oil.  Due to an exceptionally cold winter, Mara found that its capacity to fulfill this contract was doubtful.  Therefore, it contracted Sands Oil Company and offered to assign the contract to it for $100.00.  Sands agreed.  Which of the following is correct as a result of the above assignment?
    • A. 

      The contract with Gotham was neither assignable nor delegable.

    • B. 

      Mara is now released from any further obligation to perform the Gotham contract.

    • C. 

      Mara has effectively assigned to Sands its rights and delegated its duties under the terms of the contract with Gotham.

    • D. 

      In the event Sands breached the contract with Gotham, Mara has NO liability.

  • 15. 
    8.015 Major Steel Manufacturing, Inc. signed a contract on October 2, 1978, with the Hard Coal & Coke Company for its annual supply of coal for three years commencing on June 1, 1979, at a price to be determined by taking the average monthly retail price per ton, less a ten cent per ton quantity discount. On March 15, 1979, Major discovered that it could readily fulfill is requirements elsewhere at a much greater discount.  Major is seeking to avoid its obligation.  Which of the following is correct?
    • A. 

      The pricing term is too indefinite and uncertain hence there is NO contract.

    • B. 

      Since the amount of coal required is unknown at the time of the making of the contract, the contract is too indefinite and uncertain to be valid.

    • C. 

      Major is obligated to take its normal annual coal requirements from Hard or respond in damages.

    • D. 

      There is NO contract since Major could conceivably require NO coal during the years in question.

  • 16. 
    8.016 Under the Sales Article of the UCC, in an auction announced in explicit terms to be without reserve, when may an auctioneer withdraw the goods put up for sale? I.  At any time until the auctioneer announces completion of the sale. II.  If NO bid is made within a reasonable time.
    • A. 

      I only.

    • B. 

      II only.

    • C. 

      Either I and II.

    • D. 

      Neither I nor II.

  • 17. 
    8.017 Which of the following statements is correct with regard to an auction of goods?
    • A. 

      The auctioneer may withdraw the goods at any time prior to completion of the sale unless the goods are put up without reserve.

    • B. 

      A bidder may retract his bid before the completion of the sale only if the auction is without reserve.

    • C. 

      A bidder's retraction of his bid will revive the prior bid if the sale is with reserve.

    • D. 

      In a sale with reserve, a bid made while the hammer is falling automatically reopens the bidding.

  • 18. 
    8.018 Grill deals in the repair and sale of new and used clocks.  West brought a clock to Grill to be repaired.  One of Grill's clerks mistakenly sold West's clock to Hone, another customer.  Under the Sales Article of teh UCC, will West win a suit against Hone for the return of the clock?
    • A. 

      No, because the clerk was NOT aware that the clock belonged to West.

    • B. 

      No, because Grill is a merchant to whom goods had been entrusted.

    • C. 

      Yes, because Grill could NOT convey good title to the clock.

    • D. 

      Yes, because the clerk was negligent in selling the clock.

  • 19. 
    8.019 Baker fraudulently induced Able to sell Baker a painting for $200.00.  Subsequently, Baker sold the painting for $10,000.00 to Gold, a good faith purchaser.  Able is entitled to...
    • A. 

      Rescind the contract with Baker.

    • B. 

      Recover the painting from Gold.

    • C. 

      Recover damages from Baker.

    • D. 

      Rescind Baker's contract with Gold.

  • 20. 
    8.020 A claim has been made by Donnegal to certain goods in your client's possession.  Donnegal will be entitled to the goods if it can be shown that Variance, the party from whom your client purchased the goods, obtained them by...
    • A. 

      Deceiving Donnegal as to his identity at the time of the purchase.

    • B. 

      Giving Donnegal his check which was later dishonored.

    • C. 

      Obtaining the goods from Donnegal by fraud, punishable as larceny under criminal law.

    • D. 

      Purchasing goods which had been previously stolen from Donnegal.

  • 21. 
    8.021 Under the Sales Article of the UCC, unless a contract provides otherwise, before title to goods can pass from a seller to a buyer, the goods must be...
    • A. 

      Tendered to the buyer.

    • B. 

      Identified to the contract.

    • C. 

      Accepted by the buyer.

    • D. 

      Paid for.

  • 22. 
    8.022 Pulse Corp. maintained a warehouse where it stored its manufactured goods.  Pulse received an order from Star.  Shortly after Pulse identified the goods to be shipped to Star, but before moving them to the loading dock, a fire destroyed the warehouse and its contents.  With respect to the goods, which of the following statements is correct?
    • A. 

      Pulse has title but NO insurable interest.

    • B. 

      Star has title and an insurable interest.

    • C. 

      Pulse has title and an insurable interest.

    • D. 

      Star has title but NO insurable interest.

  • 23. 
    8.023 Mammoth Furniture, Inc. is in the retail furniture business and has stores located in principal cities in the United States.  Its designers created a unique coffee table.  After obtaining prices and schedules, Mammoth ordered 2,000 tables to be made to its design and specification for sale as a part of its annual spring sales promotion campaign.  Which of the following represents the earliest time Mammoth will have an insurable interest in the tables.
    • A. 

      Upon shipment of conforming goods by the seller.

    • B. 

      When the goods are marked or otherwise designated by the seller as the goods to which the contract refers.

    • C. 

      At the time the contract is made.

    • D. 

      At the time the goods are in Mammoth's position.

  • 24. 
    8.024 Under the Sales Article of the UCC, which of the following statements is correct regarding risk of loss and title to the goods under a sale or return contract?
    • A. 

      Title and risk of loss are shared equally between the buyer and the seller.

    • B. 

      Title remains with the seller until the buyer approves or accepts the goods, but risk of loss passes to the buyer immediately following delivery fo the goods to the buyer.

    • C. 

      Title and risk of loss remain with the seller until the buyer pays for the goods.

    • D. 

      Title and risk of loss rest with the buyer until the goods are returned to the seller.

  • 25. 
    8.025 Under the Sales Article of the UCC, when a contract for the sale of goods stipulates that the seller ship the goods by common carrier "FOB purchaser's loading dock," which of the parties bears the risk of loss during shipment.
    • A. 

      The purchaser, because risk of loss passes when the goods are delivered to the carrier.

    • B. 

      The purchaser, because title to the goods passes at the time of shipment.

    • C. 

      The seller, because risk of loss passes only when the goods reach the purchaser's loading dock.

    • D. 

      The seller, because risk of loss remains with the seller until the goods are accepted by the purchaser.

  • 26. 
    8.026 Under the Sales Article of the UCC and the United Nations Convention for the International Sale of Goods (CISG), absent specific terms in an international sales shipment contract, when will risk of loss pass to the buyer?
    • A. 

      When the goods are delivered to the first carrier for transmission to the buyer.

    • B. 

      When the goods are tendered to the buyer.

    • C. 

      At the conclusion of the execution of the contract.

    • D. 

      At the time the goods are identified to the contract.

  • 27. 
    8.027 Under the Sales Article of the UCC, which of the following factors is most important in determining who bears the risk of loss in a sale of goods contract?
    • A. 

      The method of shipping the goods.

    • B. 

      The contract's shipping terms.

    • C. 

      Title to the goods.

    • D. 

      How the goods were lost.

  • 28. 
    8.028 Under the Sales Article of the UCC, in an FOB place of shipment contract, the risk of loss passes to the buyer when the goods...
    • A. 

      Are identified to the contract.

    • B. 

      Are placed on the seller's loading dock.

    • C. 

      Are delivered to the carrier.

    • D. 

      Reach the buyer's loading dock.

  • 29. 
    8.029 Under the Sales Article of the UCC, which of the following events will result in the risk of loss passing from a merchant seller to a buyer? I. Tender of the goods at the seller's place of business. II. Use of the seller's truck to deliver the goods.
    • A. 

      Both I and II.

    • B. 

      Only I.

    • C. 

      Only II.

    • D. 

      Neither I nor II.

  • 30. 
    8.030 Quick Corp. agreed to purchase 200 typewriters from Union Suppliers, Inc. Union is a wholesaler of appliances and Quick is an appliance retailer.  The contract required Union to ship the typewriters to Quick by common carrier, "FOB Union Suppliers, Inc. Loading Dock."  Which of the parties bears the risk of loss during shipment?
    • A. 

      Union, because the risk of loss passes only when Quick receives the typewriters.

    • B. 

      Union, because both parties are merchants.

    • C. 

      Quick, because title to the typewriters passed to Quick at the time of shipment.

    • D. 

      Quick, because the risk of loss passes when the typewriters are delivered to the carrier.

  • 31. 
    8.031 Which of the following statements applies to a sale on approval under the UCC Sales Article?
    • A. 

      Both the buyer and seller must be merchants.

    • B. 

      The buyer must be purchasing the goods for resale.

    • C. 

      Risk of loss for the goods passes to the buyer when the goods are accepted after the trial period.

    • D. 

      Title to the goods passes to the buyer on delivery of the goods to the buyer.

  • 32. 
    8.032 Bond purchased a painting from Wool, who is not in the busines of selling art.  Wool tendered delivery of the painting after receiving payment in frull from Bond.  bond informed Wool that Bond would be unable to take possession of the painting until later in the day. Thieves stold the painting before Bond returned.  The risk of loss...
    • A. 

      Passed to Bond at Wool's tender of delivery.

    • B. 

      Passed to Bond at hte time the contract was formed and payment was made.

    • C. 

      Remained with Wool, because the parties agreed on a later time of delivery.

    • D. 

      Remained with Wool, because Bond had not yet received the painting.

  • 33. 
    8.033 On May 2, Lace Corp., an appliance wholesaler, offered to sell appliances worth $3,000.00 to Parco, Inc., a hosehold appliances retailer.  The offer was signed by Lace's president, and provided that it would not be withdrawn before June 1.  It also included the shipping terms: "FOB--Parco's warehouse."  on May 29, Parco mailed an acceptance of Lace's offer.  Lace received the acceptance on June 2. Which of the following statements is correct if Lace sent Parco a telegram revoking its offer, and Parco received the telegram on may 25?
    • A. 

      A contract was formed on May 2.

    • B. 

      Lace's revocation effectively terminated its offer on May 25.

    • C. 

      Lace's revocation was ineffective because the offer could NOT be revoked before June 1.

    • D. 

      No contract was formed because lace received Parco's acceptance after June 1.

  • 34. 
    8.034 On May 2, Lace Corp., an appliance wholesaler, offered to sell appliances worth $3,000.00 to Parco, Inc., a hosehold appliances retailer.  The offer was signed by Lace's president, and provided that it would not be withdrawn before June 1.  It also included the shipping terms: "FOB--Parco's warehouse."  on May 29, Parco mailed an acceptance of Lace's offer.  Lace received the acceptance on June 2. Risk of loss for the appliances will pass to Parco when they are...
    • A. 

      Identified to the contract.

    • B. 

      Shipped by Lace.

    • C. 

      Tendered at Parco's warehouse.

    • D. 

      Accepted by Parco.

  • 35. 
    8.035 On May 2, Lace Corp., an appliance wholesaler, offered to sell appliances worth $3,000.00 to Parco, Inc., a hosehold appliances retailer.  The offer was signed by Lace's president, and provided that it would not be withdrawn before June 1.  It also included the shipping terms: "FOB--Parco's warehouse."  on May 29, Parco mailed an acceptance of Lace's offer.  Lace received the acceptance on June 2. If Lace inadvertently ships the wrong appliances to Parco and Parco rejects them two days after receipt, title to the goods will...
    • A. 

      Pass to Parco when they are identified in the contract.

    • B. 

      Pass to Parco when they are shipped.

    • C. 

      Remain with Parco until the goods are returned to Lace.

    • D. 

      Revert to Lace when they are rejected by Parco.

  • 36. 
    8.036 Cey Corp. entered into a contract to sell parts to Deck, Ltd.  The contract provided that the goods would be shipped "FOB Cey's warehouse."  Cey shipped parts different from those specified in the contract.  Deck rejected the parts.  A few hours after Deck informed Cey that the parts were rejected, they were destroyed by a fire in Deck's warehouse.  Cey believed that the parts were conforming to the contract.  Which of the following statements is correct?
    • A. 

      Regardless of whether the parts were conforming, Deck will bear the loss because the contract was a shipment contract.

    • B. 

      If the parts were nonconforming, Deck had the right to reject them, but the risk of loss remains with Deck until Cey takes possession of the parts.

    • C. 

      If the parts were conforming, risk of loss does NOT pass to Deck until a reasonable period of time after they are delivered to Deck.

    • D. 

      If the parts were nonconforming, Cey will bear the risk of loss, even though the contract was a shipment contract.

  • 37. 
    8.037 Which of the following factors is most important in deciding who bears the risk of loss between merchants when goods are destroyed during shipment?
    • A. 

      The agreement of the parties.

    • B. 

      Whether the goods are perishable.

    • C. 

      Who has title at the time of the loss.

    • D. 

      The terms of applicable insurance policies.

  • 38. 
    8.038 On Monday, Wolfe paid Aston Co., a furniture retailer, $500.00 for a table.  On Thursday, Aston notified Wolfe that the table was ready to be picked up.  on Saturday, while Aston was still in possession of the table, it was destroyed in a fire.  Who bears the risk of loss of the table?
    • A. 

      Wolfe, because Wolfe had title to the table at the time of the loss.

    • B. 

      Aston, unless Wolfe is a merchant.

    • C. 

      Wolfe, unless Aston breached the contract.

    • D. 

      Aston, because Wolfe had NOT yet taken possession of the table.

  • 39. 
    8.039 If goods have been delivered to a buyer pursuant to a sale or return contract, the...
    • A. 

      Buyer may use the goods but NOT sell them.

    • B. 

      Seller is liable for the expenses incurred by the buyer in returning the goods to the seller.

    • C. 

      Title to the goods remains with the seller.

    • D. 

      Risk of loss for the goods passed to the buyer.

  • 40. 
    8.040 Sand Corp. sold and delivered a photocopier to Barr for use in Barr's business.  According to their agreement, Barr may return the copier within 30 days.  During the 30-day period, if Barr has NOT returned the copier or indicated acceptance of it, which of the following statements is correct with respect to the risk of loss and title?
    • A. 

      Risk of loss and title passed to Barr.

    • B. 

      Risk of loss and title remain with Sand.

    • C. 

      Risk of loss passed to Barr but title remains with Sand.

    • D. 

      Risk of loss remains with Sand but title passed to Barr.

  • 41. 
    8.041 Which of the following is most important in determining who bears the risk of loss in a sale of goods contract?
    • A. 

      The shipping terms.

    • B. 

      The agreement of the parties.

    • C. 

      Who has title to the goods.

    • D. 

      Who has possession of the goods.

  • 42. 
    8.042 Bell Co. owned 20 engines which it deposited in a public warehouse on May 5, receiving a negotiable warehouse receipt in its name.  Bell sold the engines to Spark Corp.  On which of the following dates did the risk of loss transfer from Bell to Spark?
    • A. 

      June 11--Spark signed a contract to buy the engines from Bell for $19,000.00. Delivery was to be at the warehouse.

    • B. 

      June 12--Spark paid for the engines.

    • C. 

      June 13--Bell negotiated the warehouse receipt to Spark

    • D. 

      June 14--Spark received delivery of the engines at the warehouse.

  • 43. 
    8.043 Bell by telegram to Major Corp. ordered 10,000 yards of fabric, first quality, 50% wool and 50% cotton.  THe shipping terms were FOB Bell's factory in Akron, Ohio.  Major accepted the order and packed the fabric for shipment.  In the process it discovered that one-half of the fabric packed had been commingled with fabric which was 30% wool and 70% cotton.  Since Major did not have any additional 50% wool fabric, it decided to send the shipment to Bell as an accomodation.  The goods were shipped and later the same day Major wired Bell its apology informing Bell of the facts and indicating that the 5,000 yards of 30% wool would be priced at $2.00 per yard less.  The carrier delivering the goods was destroyed on the way to Akron.  Under the circumstances, who bears the risk of loss?
    • A. 

      Bell, since Bell has title to the goods.

    • B. 

      Major, because the order was NOT a signed writing.

    • C. 

      Bell, since the shipping terms were FOB Bell's place of business.

    • D. 

      Major, since they shipped goods which failed to conform to the contract.

  • 44. 
    8.044 A dispute has arisen between two merchants over the question of who has the risk of loss in a given sales transaction.  The contract does not specifically cover the point.  The goods were shipped to the buyer who rightfully rejected them.  Which of the following factors will be the most important factor in resolving their dispute?
    • A. 

      Who has title to the goods.

    • B. 

      The shipping terms.

    • C. 

      The credit terms.

    • D. 

      The fact that a breach has occurred.

  • 45. 
    8.045 Buyer ordered goods from Seller.  The contract required Seller to deliver them FOB Buyer's place of business.  Buyer inspected the goods, discovered they failed to conform to the contract, and rightfully rejected them.  In the event of loss of the oods, which of the following is a correct statement?
    • A. 

      Seller initially had the risk of loss and it remains with him after delivery.

    • B. 

      Risk of loss passes to Buyer upon tender of the goods FOB Buyer's place of business.

    • C. 

      Buyer initially had the risk of loss, but it is shifted to SEller upon rightful rejection.

    • D. 

      If Seller used a public carrier to transport the goods to Buyer, risk of loss is on Buyer during transit.

  • 46. 
    8.046 Duval Liquor Wholesalers, Inc. stored its inventory of goods in the Reliable Warehouse Company.  Duval's shipments would arrive by truck and be deposited with Reliable who would in turn issue negotiable warehouse receipts to Duval.  Duval would resell the liquor by transferring the negotiable warehouse receipts to the buyer who was responsible for transporting it to his place of business.  In one of the sales of liquor to a retailer, the liquor was badly damaged and a question has arisen as to who has the risk of loss, Duval or the retailer.  If the contract is silent on this point, when did the risk of loss pass to the retailer?
    • A. 

      When the goods have been placed on the warehouseman's delivery dock awaiting pick up by the retailer.

    • B. 

      When the goods have been identified to the contract.

    • C. 

      On his receipt of the negotiable warehouse receipts covering the goods.

    • D. 

      When the goods have been properly loaded upon the retailer's carrier.

  • 47. 
    8.047 Under the Sales Article of the UCC, most goods sold by merchants are covered by certain warranties.  An example of an express warranty would be a warranty of...
    • A. 

      Usage of trade.

    • B. 

      Fitness for a particular purpose.

    • C. 

      Merchantability.

    • D. 

      Conformity of goods to sample.

  • 48. 
    8.048 Which of the following factors result(s) in an express warranty with respect to a sale of goods? I.  The seller's description of the goods is part of the basis of the bargain. II.  The seller selects goods knowing the buyer's intended use.
    • A. 

      I only.

    • B. 

      II only.

    • C. 

      Both I and II.

    • D. 

      Neither I nor II.

  • 49. 
    8.049 An important fator in determining if an express warranty has been created is whether the...
    • A. 

      Statements made by the seller became part of the basis of the bargain.

    • B. 

      Sale was made by a merchant in the regular course of business.

    • C. 

      Statements made by the seller were in writing.

    • D. 

      Seller intended to create a warranty.

  • 50. 
    8.050 Which of the following factors will be most important in determining whether an express warranty has been created concerning goods sold?
    • A. 

      The seller gave a description of the goods that is part of the basis of the bargain.

    • B. 

      The buyer or seller is a merchant with respect to the goods being sold.

    • C. 

      Whether the seller intended to create the express warranty.

    • D. 

      Whether the buyer relied on the seller's statements.

  • 51. 
    8.051 Target Company, Inc. ordered a generator from Maximum Voltage Corporation.  A dispute has arisen over the effect of a provision in the specifications that the generateor have a 5,000 kilowatt capacity.  THe specifications were attached to the contract and were incorporated by reference in the main body of the contract.  The generateor did NOT have this capacity but instead had a maximum capacity of 4,800 kilowatts.  The contract had a disclaimer clause which effectively negated both the implied warranties of quality.  Target is seeking to avoid the contracted based upon breach of warranty and Maximum is relying on its disclaimer.  Which of the following is a correct statement?
    • A. 

      The 5,000 kilowatt term contained in the specifications does NOT constitute a warranty.

    • B. 

      The disclaimer effectively negated any and all warranty protection claimed by Target.

    • C. 

      The description language (5,000 kilowatt) contained in the specifications is an express warranty and has NOT been effectively disclaimed.

    • D. 

      The parol evidence rule will prevent Target from asserting the 5,000 kilowatt term as a warranty.

  • 52. 
    8.052 Marco Auto, Inc. made many untrue statements in the course of inducing Rockford to purchase a used auto for $3,500.00.  The car in question turned out to have some serious faults.  Which of the following untrue statements made by Marco should Rockford use in seeking recovery from Marco for breach of warranty?
    • A. 

      "I refused a $3,800 offer for this very same auto from another buyer last week."

    • B. 

      "This auto is one of the best autos we have for sale."

    • C. 

      "At this price the auto is a real steal."

    • D. 

      "I can guarantee that you will never regret this purchase."

  • 53. 
    8.053 In a contract for teh sale of goods, express warranties by the seller are created by any
    • A. 

      Reasonable implication based upon the seller's acts.

    • B. 

      Description of the goods which is made part of the basis of the contract.

    • C. 

      Expression of the value of the goods.

    • D. 

      Statement of seller's opinion.

  • 54. 
    8.054 Under the Sales Article of the UCC, which of the following statements is correct regarding the warranty of merchantability arising when there has been a sale of goods by a merchant seller?
    • A. 

      The warranty must be in writing.

    • B. 

      The warranty arises when the buyer relies on the seller's skill in selecting the goods purchased.

    • C. 

      The warranty cannot be disclaimed.

    • D. 

      The warranty arises as a matter of law when the seller ordinarily sells the goods purchased.

  • 55. 
    8.055  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? I.  The warranty must be in writing. II.  The seller must know that the buyer was relying on the seller in selecting the goods.
    • A. 

      I only.

    • B. 

      II only.

    • C. 

      Both I and II.

    • D. 

      Neither I nor II.

  • 56. 
    8.056  Which of the following is necessary in order for the warranty of merchantability to arise where there has been a sale of goods? I. The seller must be a merchant with respect to the goods of that kind. II.  The warranty must be in writing. III.  The buyer must have relied on the seller's skill or judgment in selecting the goods.
    • A. 

      I and III only.

    • B. 

      I, II, and III only.

    • C. 

      II and III only.

    • D. 

      I only.

  • 57. 
    8.057 Under the UCC Sales Article, which of the following warranties requires the seller to be a merchant with respect to the goods being sold in order for the warranty to apply? I. Implied warranty of fitness for a particular purpose. II. Implied warranty of merchantability.
    • A. 

      Both I and II.

    • B. 

      Neither I nor II.

    • C. 

      I only.

    • D. 

      II only.

  • 58. 
    8.058 Wally, a CPA and a neighbor of Rita's, offered to sell Rita his power chain saw for $400.00.  Rita stated that she knew nothing about chain saws but would buy the saw if it were capable of cutting down the trees in her backyard, which had an average diameter of five feet.  Wally assured Rita that the saw "would do the job."  Relying on Wally's assurance, Rita purchased the saw.  Wally has created a warranty that
    • A. 

      The saw is of an average fair quality.

    • B. 

      The saw is fit for the ordinary purposes for which it is used.

    • C. 

      The saw is capable of cutting the trees in Rita's backyard.

    • D. 

      Is unenforceable because it is NOT in writing.

  • 59. 
    8.059  The UCC implies a warranty of merchantability to protect buyers of goods.  To be subject to this warranty the goods need NOT be
    • A. 

      Fit for all purposes for which the buyer intends to use the goods.

    • B. 

      Adequately packaged and labeled.

    • C. 

      Sold by a merchant.

    • D. 

      In conformity with any promises or affirmations of fact made on the container or label.

  • 60. 
    8.060 Under the Sales Article of the UCC, the warranty of title
    • A. 

      Provides that the seller cannot disclaim the warranty if the sale is made to a bona fide purchaser for value.

    • B. 

      Provides that the seller deliver the goods free from any lien of which the buyer lacked knowledge when the contract was made.

    • C. 

      Applies only if it is in writing and signed by the seller.

    • D. 

      Applies only if the seller is a merchant.

  • 61. 
    8.061 On May 2, Handy Hardware sent Ram Industries a signed purchase order that stated, in part, as follows:  "Ship for May 8 delivery 300 Model A-X socket sets at current dealer price.  Terms 2/10/net 30."  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?
    • A. 

      Ram's shipment is an acceptance of Handy's offer.

    • B. 

      Ram's shipment is a counteroffer.

    • C. 

      Handy's order must be accepted by Ram in writing before Ram ships the socket sets.

    • D. 

      Handy's order can only be accepted by Ram shipping conforming goods.

  • 62. 
    8.062  On May 2, Handy Hardware sent Ram Industries a signed purchase order that stated, in part, as follows:  "Ship for May 8 delivery 300 Model A-X socket sets at current dealer price.  Terms 2/10/net 30."  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. Assuming a contract exists between Handy and Ram, which of the following implied warranties would result? I. Implied warranty of merchantability. II. Implied warranty of fitness for a particular purpose. III. Implied warranty of title.
    • A. 

      I only.

    • B. 

      III only.

    • C. 

      I and III only.

    • D. 

      I, II, and III.

  • 63. 
    8.063 With respect to the sale of goods, the warranty of title
    • A. 

      Applies only if the seller is a merchant.

    • B. 

      Applies only if it is in writing and signed by the seller.

    • C. 

      Provides that the seller deliver the goods free from any lien of which the buyer lacked knowledge when the contract was made.

    • D. 

      Provides that the seller cannot disclaim the warranty if the sale is made to a bona fide purchaser for value.