Blaw 5392 Exam 1 (Part 1)

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    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.

    • The purchaser, because risk of loss passes when the goods are delivered to the carrier.
    • The purchaser, because title to the goods passes at the time of shipment.
    • The seller, because risk of loss passes only when the goods reach the purchaser's loading dock.
    • The seller, because risk of loss remains with the seller until the goods are accepted by the purchaser.
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Blaw 5392 Exam 1 (Part 1) - Quiz

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  • 2. 

    8.063 With respect to the sale of goods, the warranty of title

    • Applies only if the seller is a merchant.

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

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

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

    Correct Answer
    A. Provides that the seller deliver the goods free from any lien of which the buyer lacked knowledge when the contract was made.
    Explanation
    The warranty of title in the sale of goods provides that the seller must deliver the goods without any liens that the buyer was unaware of at the time of the contract. This means that the seller is responsible for ensuring that there are no legal claims or encumbrances on the goods that would prevent the buyer from obtaining clear ownership. This warranty applies regardless of whether the seller is a merchant or if the sale is made in writing and signed by the seller. It also cannot be disclaimed by the seller if the goods are sold to a bona fide purchaser for value.

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  • 3. 

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

    • Buyer may use the goods but NOT sell them.

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

    • Title to the goods remains with the seller.

    • Risk of loss for the goods passed to the buyer.

    Correct Answer
    A. Risk of loss for the goods passed to the buyer.
    Explanation
    In a sale or return contract, the buyer has the right to return the goods if they are unsatisfied. However, until the goods are returned, the buyer assumes the risk of any loss or damage that may occur to the goods. This means that if the goods are lost or damaged while in the possession of the buyer, they are responsible for the loss. Therefore, the correct answer is that the risk of loss for the goods passed to the buyer.

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  • 4. 

    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...

    • Pass to Parco when they are identified in the contract.

    • Pass to Parco when they are shipped.

    • Remain with Parco until the goods are returned to Lace.

    • Revert to Lace when they are rejected by Parco.

    Correct Answer
    A. Revert to Lace when they are rejected by Parco.
    Explanation
    If Lace inadvertently ships the wrong appliances to Parco and Parco rejects them two days after receipt, title to the goods will revert to Lace when they are rejected by Parco. This is because under the Uniform Commercial Code (UCC), when goods are rejected by the buyer, the title to the goods goes back to the seller. In this case, Parco's rejection of the wrong appliances would trigger the reversion of title to Lace.

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  • 5. 

    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...

    • Unenforceable because it is too indefinite.

    • Unenforceable because it lacks mutuality of obligation.

    • Unenforceable because of lack of consideration.

    • Valid and enforceable.

    Correct Answer
    A. Valid and enforceable.
    Explanation
    The agreement between Bass Electric Co. and Seymour Metal Wire Company is valid and enforceable because it states that Bass will buy its actual requirements of copper wiring for six months from Seymour Metal, and Seymour Metal has agreed to sell all the copper wiring Bass will require. This agreement shows a clear intention from both parties to enter into a contract and fulfill their obligations. Additionally, the agreement does not lack mutuality of obligation or consideration, as both parties have agreed to specific terms and conditions. Therefore, the agreement is valid and enforceable.

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  • 6. 

    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?

    • The method of shipping the goods.

    • The contract's shipping terms.

    • Title to the goods.

    • How the goods were lost.

    Correct Answer
    A. The contract's shipping terms.
    Explanation
    The contract's shipping terms are the most important factor in determining who bears the risk of loss in a sale of goods contract. The shipping terms typically outline the responsibilities and obligations of both the buyer and the seller regarding the transportation of the goods. These terms determine at what point the risk of loss transfers from the seller to the buyer. Therefore, understanding and agreeing upon the shipping terms in the contract is crucial in determining who ultimately bears the risk of loss.

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  • 7. 

    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?

    • The warranty must be in writing.

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

    • The warranty cannot be disclaimed.

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

    Correct Answer
    A. The warranty arises as a matter of law when the seller ordinarily sells the goods purchased.
    Explanation
    The correct answer is that the warranty arises as a matter of law when the seller ordinarily sells the goods purchased. This means that when a merchant seller sells goods, there is an implied warranty of merchantability, which guarantees that the goods are fit for their ordinary purpose and are of at least average quality. This warranty does not need to be in writing, can be disclaimed, and does not require the buyer to rely on the seller's skill in selecting the goods. It is automatically implied by law when a merchant sells goods.

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  • 8. 

    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?

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

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

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

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

    Correct Answer
    A. No, because Grill is a merchant to whom goods had been entrusted.
  • 9. 

    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.

    • I only.

    • II only.

    • Both I and II.

    • Neither I nor II.

    Correct Answer
    A. I only.
    Explanation
    An express warranty is created when the seller's description of the goods becomes part of the basis of the bargain. This means that the buyer relies on the seller's description when deciding to purchase the goods. In this case, factor I satisfies this requirement as the seller's description is considered in the sale. Factor II, on the other hand, does not result in an express warranty as it does not involve the seller's description of the goods. Therefore, the correct answer is I only.

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  • 10. 

    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?

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

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

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

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

    Correct Answer
    A. The description language (5,000 kilowatt) contained in the specifications is an express warranty and has NOT been effectively disclaimed.
    Explanation
    The contract included specifications that stated the generator should have a 5,000 kilowatt capacity. This specification can be considered as an express warranty, which is a specific promise made by the seller about the product. The contract also had a disclaimer clause, but it did not effectively disclaim this express warranty. Therefore, the statement that the description language (5,000 kilowatt) contained in the specifications is an express warranty and has not been effectively disclaimed is correct.

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  • 11. 

    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

    • The saw is of an average fair quality.

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

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

    • Is unenforceable because it is NOT in writing.

    Correct Answer
    A. The saw is capable of cutting the trees in Rita's backyard.
    Explanation
    Wally's assurance to Rita that the saw "would do the job" implies that the saw is capable of cutting down the trees in Rita's backyard. This creates an implied warranty that the saw is fit for the ordinary purposes for which it is used, specifically cutting down trees with an average diameter of five feet. Therefore, the correct answer is that the saw is capable of cutting the trees in Rita's backyard.

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  • 12. 

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

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

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

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

    • Applies only if the seller is a merchant.

    Correct Answer
    A. Provides that the seller deliver the goods free from any lien of which the buyer lacked knowledge when the contract was made.
    Explanation
    The correct answer is "Provides that the seller deliver the goods free from any lien of which the buyer lacked knowledge when the contract was made." This means that the seller is responsible for ensuring that the goods being sold are not subject to any liens or encumbrances that the buyer is unaware of at the time of the contract. The seller must deliver the goods without any legal claims or restrictions that could affect the buyer's ownership or possession of the goods. This warranty of title protects the buyer from any potential legal issues or disputes regarding the ownership of the goods.

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  • 13. 

    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.

    • I only.

    • III only.

    • I and III only.

    • I, II, and III.

    Correct Answer
    A. I and III only.
    Explanation
    The implied warranty of merchantability would result because Ram Industries, as a merchant, is selling goods in the ordinary course of business. This warranty ensures that the goods are reasonably fit for their ordinary purpose and of average quality. The implied warranty of title would also result because Ram Industries is selling goods and therefore implies that they have the right to sell them. The implied warranty of fitness for a particular purpose would not result in this situation because there is no indication that Handy Hardware communicated a particular purpose for the socket sets to Ram Industries.

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  • 14. 

    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...

    • There was NO meeting of the minds.

    • The contract was unconscionable.

    • The quantity was NOT definite and certain enough.

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

    Correct Answer
    A. Mayker ordered amounts of oil unreasonably greater than its normal requirements.
  • 15. 

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

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

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

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

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

    Correct Answer
    A. Hold conforming goods and give the buyer whatever notification is reasonably necessary to enable the buyer to take delivery.
    Explanation
    The correct answer is "Hold conforming goods and give the buyer whatever notification is reasonably necessary to enable the buyer to take delivery." This answer is correct because under the Sales Article of the UCC (Uniform Commercial Code), unless otherwise agreed to, the seller's obligation is to hold the goods that conform to the contract and provide the buyer with any necessary notification to facilitate the delivery of the goods. This means that the seller must keep the goods in their possession until the buyer is ready to take delivery and inform the buyer of any relevant information regarding the delivery process.

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  • 16. 

    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?

    • Yes, because this was an output contract.

    • Yes, because both price and quantity terms were omitted.

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

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

    Correct Answer
    A. Yes, because this was an output contract.
    Explanation
    The weaver will win because this was an output contract. In an output contract, the seller agrees to sell all of their output to a particular buyer. The UCC recognizes output contracts as valid and enforceable, even if the price and quantity terms are omitted. Therefore, the rancher's refusal to deliver the wool constitutes a breach of contract, and the weaver is entitled to sue for damages.

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  • 17. 

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

    • Both the buyer and seller must be merchants.

    • The buyer must be purchasing the goods for resale.

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

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

    Correct Answer
    A. Risk of loss for the goods passes to the buyer when the goods are accepted after the trial period.
    Explanation
    In a sale on approval under the UCC Sales Article, the buyer has the option to return the goods after a trial period. During this trial period, the risk of loss for the goods remains with the seller. It is only after the buyer accepts the goods, indicating their intention to keep them, that the risk of loss transfers to the buyer. This means that if the goods are damaged or lost during the trial period, the seller is responsible for any losses.

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  • 18. 

    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?

    • The agreement of the parties.

    • Whether the goods are perishable.

    • Who has title at the time of the loss.

    • The terms of applicable insurance policies.

    Correct Answer
    A. The agreement of the parties.
    Explanation
    The most important factor in deciding who bears the risk of loss between merchants when goods are destroyed during shipment is the agreement of the parties. This means that the merchants can come to a mutual understanding and determine who will be responsible for the loss. This agreement can be based on various factors such as the nature of the goods, the value of the goods, and the terms of their contract. The agreement of the parties allows for flexibility and customization in determining the allocation of risk in case of loss during shipment.

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  • 19. 

    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?

    • Bell, since Bell has title to the goods.

    • Major, because the order was NOT a signed writing.

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

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

    Correct Answer
    A. Major, since they shipped goods which failed to conform to the contract.
    Explanation
    Under the given circumstances, Major bears the risk of loss because they shipped goods that did not meet the specifications of the contract. Although Major informed Bell about the mix-up and offered a discounted price for the fabric, the fact remains that they sent a shipment that did not conform to the agreed-upon terms. Therefore, Major is responsible for any loss or damage that may occur during transportation.

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  • 20. 

    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?

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

    • Union, because both parties are merchants.

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

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

    Correct Answer
    A. Quick, because the risk of loss passes when the typewriters are delivered to the carrier.
    Explanation
    Quick bears the risk of loss during shipment because the contract states that the typewriters are to be shipped "FOB Union Suppliers, Inc. Loading Dock." FOB stands for "Free on Board," which means that the seller (Union) is responsible for the goods until they are delivered to the carrier (the common carrier in this case). Once the goods are delivered to the carrier, the risk of loss transfers to the buyer (Quick). Therefore, Quick is responsible for any loss or damage that may occur during shipment.

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  • 21. 

    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...

    • Passed to Bond at Wool's tender of delivery.

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

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

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

    Correct Answer
    A. Passed to Bond at Wool's tender of delivery.
    Explanation
    The risk of loss passed to Bond at Wool's tender of delivery. This means that once Wool delivered the painting to Bond, the risk of any damage or loss to the painting became Bond's responsibility. Even though Bond was unable to take possession of the painting immediately, the risk still transferred to him at the time of delivery.

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  • 22. 

    8.017 Which of the following statements is correct with regard to an auction of goods?

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

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

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

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

    Correct Answer
    A. The auctioneer may withdraw the goods at any time prior to completion of the sale unless the goods are put up without reserve.
    Explanation
    The correct answer is that the auctioneer may withdraw the goods at any time prior to completion of the sale unless the goods are put up without reserve. This means that the auctioneer has the right to remove the goods from the auction before the sale is finalized, unless the goods are being sold without a minimum price. This gives the auctioneer flexibility in managing the auction and ensures that they can control the availability of the goods being sold.

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  • 23. 

    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...

    • Tendered to the buyer.

    • Identified to the contract.

    • Accepted by the buyer.

    • Paid for.

    Correct Answer
    A. Identified to the contract.
    Explanation
    Under the Sales Article of the UCC, before title to goods can pass from a seller to a buyer, the goods must be identified to the contract. This means that the specific goods that are being sold must be designated or specified in the contract. This is important because it ensures that both parties are clear on which goods are being transferred and avoids any confusion or disputes. It also allows for the buyer to inspect the goods and make sure they conform to the contract before accepting them.

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  • 24. 

    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?

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

    • When the goods are tendered to the buyer.

    • At the conclusion of the execution of the contract.

    • At the time the goods are identified to the contract.

    Correct Answer
    A. When the goods are delivered to the first carrier for transmission to the buyer.
    Explanation
    According to the Sales Article of the UCC and the United Nations Convention for the International Sale of Goods (CISG), the risk of loss passes to the buyer when the goods are delivered to the first carrier for transmission to the buyer. This means that once the goods are in the possession of the carrier and are being transported to the buyer, the buyer assumes the risk of any loss or damage that may occur during transit. This is the default rule in the absence of any specific terms in the sales shipment contract.

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  • 25. 

    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...

    • Are identified to the contract.

    • Are placed on the seller's loading dock.

    • Are delivered to the carrier.

    • Reach the buyer's loading dock.

    Correct Answer
    A. Are delivered to the carrier.
    Explanation
    In an FOB place of shipment contract, the risk of loss passes to the buyer when the goods are delivered to the carrier. This means that once the seller hands over the goods to the carrier, the buyer becomes responsible for any loss or damage that may occur during transit. The seller's responsibility ends once the goods are in the possession of the carrier, and from that point onwards, it is the buyer's responsibility to ensure the safe delivery of the goods to their destination.

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  • 26. 

    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?

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

    • Aston, unless Wolfe is a merchant.

    • Wolfe, unless Aston breached the contract.

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

    Correct Answer
    A. Aston, because Wolfe had NOT yet taken possession of the table.
    Explanation
    The correct answer is Aston, because Wolfe had NOT yet taken possession of the table. Since the table was still in Aston's possession at the time of the fire, Aston bears the risk of loss. According to the principle of risk of loss, the party who has possession of the goods at the time of the loss is responsible for any damage or destruction. Since Wolfe had not yet taken possession of the table, he is not liable for the loss.

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  • 27. 

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

    • The shipping terms.

    • The agreement of the parties.

    • Who has title to the goods.

    • Who has possession of the goods.

    Correct Answer
    A. The agreement of the parties.
    Explanation
    The agreement of the parties is the most important factor in determining who bears the risk of loss in a sale of goods contract. This is because the parties involved can negotiate and specify the terms and conditions regarding the transfer of risk in the contract. The shipping terms, who has title to the goods, and who has possession of the goods are all relevant factors, but they are secondary to the agreement of the parties.

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  • 28. 

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

    • Reasonable implication based upon the seller's acts.

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

    • Expression of the value of the goods.

    • Statement of seller's opinion.

    Correct Answer
    A. Description of the goods which is made part of the basis of the contract.
    Explanation
    Express warranties in a contract for the sale of goods are created when the seller includes a description of the goods as part of the basis of the contract. This means that if the seller provides a specific description of the goods being sold, and this description is relied upon by the buyer in entering into the contract, then the seller is warranting that the goods will conform to that description. This creates an express warranty, which is a guarantee by the seller that the goods meet certain standards or specifications.

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  • 29. 

    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.

    • Both I and II.

    • Neither I nor II.

    • I only.

    • II only.

    Correct Answer
    A. II only.
    Explanation
    The correct answer is II only. Under the UCC Sales Article, the implied warranty of merchantability requires the seller to be a merchant with respect to the goods being sold in order for the warranty to apply. This means that the seller must be someone who deals in goods of that kind, which ensures that the goods are fit for their ordinary purpose, are adequately packaged and labeled, and conform to any promises or affirmations made by the seller. On the other hand, the implied warranty of fitness for a particular purpose does not require the seller to be a merchant, as it applies when the seller knows or has reason to know of the buyer's particular purpose for the goods and that the buyer is relying on the seller's skill or judgment to select suitable goods.

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  • 30. 

    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?

    • The contract is unenforceable because of indefiniteness.

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

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

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

    Correct Answer
    A. The seller's place of business is the proper place for delivery.
    Explanation
    The correct answer is that the seller's place of business is the proper place for delivery. In contracts, unless otherwise specified, the default rule is that the seller's place of business is considered the proper place for delivery. Since the contract failed to designate the place of delivery, the default rule applies in this case.

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  • 31. 

    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...

    • Usage of trade.

    • Fitness for a particular purpose.

    • Merchantability.

    • Conformity of goods to sample.

    Correct Answer
    A. Conformity of goods to sample.
    Explanation
    An express warranty is a guarantee or promise made by the seller regarding the quality, condition, or performance of the goods being sold. It can be created through statements, advertisements, or descriptions of the goods. In this case, a warranty of conformity of goods to sample means that the goods being sold will match the sample shown or provided to the buyer. This means that the buyer can expect the goods to be identical or similar to the sample in terms of quality, appearance, and specifications.

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  • 32. 

    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?

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

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

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

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

    Correct Answer
    A. The seller is required to tender delivery of conforming goods at a specified destination.
    Explanation
    In a FOB (Free on Board) destination contract, the seller is obligated to deliver the goods to a specified destination. This means that the seller is responsible for arranging and covering the costs of transportation to the agreed-upon location. The buyer does not need to pick up the goods; instead, the seller must ensure that the goods are delivered to the specified destination. This ensures that the seller bears the risk of loss or damage to the goods until they are delivered to the buyer's chosen location.

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  • 33. 

    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?

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

    • 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.

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

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

    Correct Answer
    A. Title and risk of loss rest with the buyer until the goods are returned to the seller.
    Explanation
    In a sale or return contract under the Sales Article of the UCC, the correct statement regarding risk of loss and title to the goods is that title and risk of loss rest with the buyer until the goods are returned to the seller. This means that the buyer is responsible for any damage or loss that occurs to the goods during the period they have possession of them. The seller retains ownership of the goods until they are returned, at which point the title and risk of loss transfer back to the seller.

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  • 34. 

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

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

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

    • Statements made by the seller were in writing.

    • Seller intended to create a warranty.

    Correct Answer
    A. Statements made by the seller became part of the basis of the bargain.
    Explanation
    The correct answer is "Statements made by the seller became part of the basis of the bargain." This means that for an express warranty to be created, the statements made by the seller must have influenced the buyer's decision to enter into the contract. In other words, the buyer relied on the seller's statements when making the purchase. This is an important factor because it shows that the seller made specific promises or guarantees about the product, which can be legally enforceable.

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  • 35. 

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

    • The cost of the goods exclusive of insurance and freight.

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

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

    • The cost of the goods, freight, and insurance.

    Correct Answer
    A. The cost of the goods, freight, and insurance.
    Explanation
    CIF stands for Cost, Insurance, and Freight. In a contract for the sale of goods, if the term CIF is used, it means that the price includes the cost of the goods, the cost of freight, and the cost of insurance. This means that the seller is responsible for arranging and paying for the transportation and insurance of the goods to the agreed-upon destination. The buyer is only responsible for the payment of the goods themselves, as the price already includes the freight and insurance costs.

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  • 36. 

    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...

    • The time for shipment is within a reasonable time.

    • The time for shipment must be agreed upon.

    • The time for shipment is within 3 months.

    • The contract fails for indefiniteness.

    Correct Answer
    A. The time for shipment is within a reasonable time.
    Explanation
    The answer "The time for shipment is within a reasonable time" is correct because when a contract does not specify a shipment or delivery date, the Uniform Commercial Code (UCC) provides that the goods must be shipped within a reasonable time. What constitutes a "reasonable time" may vary depending on the circumstances of the contract, such as the nature of the goods, industry practices, and any prior agreements or course of dealing between the parties. Therefore, without a specific timeframe mentioned in the contract, the default rule is that the goods should be shipped within a reasonable time.

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  • 37. 

    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?

    • The contract with Gotham was neither assignable nor delegable.

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

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

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

    Correct Answer
    A. Mara has effectively assigned to Sands its rights and delegated its duties under the terms of the contract with Gotham.
    Explanation
    The passage states that Mara offered to assign the contract to Sands Oil Company, and Sands agreed. This means that Mara has effectively transferred its rights and delegated its duties under the contract to Sands. Therefore, the correct answer is that Mara has effectively assigned to Sands its rights and delegated its duties under the terms of the contract with Gotham.

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  • 38. 

    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?

    • Pulse has title but NO insurable interest.

    • Star has title and an insurable interest.

    • Pulse has title and an insurable interest.

    • Star has title but NO insurable interest.

    Correct Answer
    A. Pulse has title and an insurable interest.
    Explanation
    Pulse has title and an insurable interest because they owned the goods and had the right to transfer ownership to Star. Even though the goods were destroyed in the fire, Pulse still had the right to be compensated for their loss through insurance because they had an insurable interest in the goods. Star also had title to the goods, but they did not have an insurable interest since they did not own the goods at the time of the fire.

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  • 39. 

    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

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

    • Adequately packaged and labeled.

    • Sold by a merchant.

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

    Correct Answer
    A. Fit for all purposes for which the buyer intends to use the goods.
    Explanation
    The UCC implies a warranty of merchantability to protect buyers of goods. This warranty does not require the goods to be fit for all purposes for which the buyer intends to use them. The warranty ensures that the goods are adequately packaged and labeled, sold by a merchant, and in conformity with any promises or affirmations of fact made on the container or label.

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  • 40. 

    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?

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

    • Ram's shipment is a counteroffer.

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

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

    Correct Answer
    A. Ram's shipment is an acceptance of Handy's offer.
    Explanation
    Ram's shipment is an acceptance of Handy's offer because Ram shipped the requested Model A-X socket sets to Handy without any explanation. This indicates that Ram intended to fulfill the order as specified in Handy's purchase order. The terms of the purchase order, including the delivery date and the quantity of sets, were met by Ram's shipment, confirming their acceptance of Handy's offer.

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  • 41. 

    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?

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

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

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

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

    Correct Answer
    A. Peters is entitled to inspect the computer before paying for it.
    Explanation
    The contract did not specify the time for payment, place of delivery, or Peters' right to inspect the computer. Therefore, Peters has the right to inspect the computer before making the payment.

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  • 42. 

    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?

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

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

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

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

    Correct Answer
    A. Although the price has some degree of uncertainty, the contract is enforceable.
    Explanation
    The contract between Martin and Wilberforce Oil Company is enforceable despite the uncertainty in the price. The contract states that the price will be determined based on the refinery price on the delivery date. While this introduces some degree of uncertainty, it does not render the contract unenforceable. The parties have agreed on the method of determining the price, and as long as it is determined in accordance with this agreed-upon method, the contract remains valid.

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  • 43. 

    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 contract was formed on May 2.

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

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

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

    Correct Answer
    A. Lace's revocation was ineffective because the offer could NOT be revoked before June 1.
    Explanation
    The correct answer is Lace's revocation was ineffective because the offer could NOT be revoked before June 1. This is because the offer clearly stated that it would not be withdrawn before June 1. Therefore, Lace's attempt to revoke the offer on May 25 was not valid and the offer remained open.

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  • 44. 

    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?

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

    • 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.

    • 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.

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

    Correct Answer
    A. If the parts were nonconforming, Cey will bear the risk of loss, even though the contract was a shipment contract.
    Explanation
    If the parts were nonconforming, Cey will bear the risk of loss, even though the contract was a shipment contract. This means that even though Deck had the right to reject the nonconforming parts, the risk of loss still remains with Cey until they take possession of the parts. Therefore, in this situation, Cey would be responsible for the loss caused by the fire in Deck's warehouse.

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  • 45. 

    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?

    • Risk of loss and title passed to Barr.

    • Risk of loss and title remain with Sand.

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

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

    Correct Answer
    A. Risk of loss and title remain with Sand.
    Explanation
    If Barr has not returned the copier or indicated acceptance of it within the 30-day period, the risk of loss and title remain with Sand Corp. This means that Sand Corp. is still responsible for any damage or loss that may occur to the copier during this time, and they still retain ownership of the copier. Barr does not assume any responsibility or ownership until they either return the copier or indicate acceptance of it.

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  • 46. 

    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?

    • Who has title to the goods.

    • The shipping terms.

    • The credit terms.

    • The fact that a breach has occurred.

    Correct Answer
    A. The fact that a breach has occurred.
    Explanation
    The most important factor in resolving the dispute between the two merchants is the fact that a breach has occurred. This means that one of the parties involved has failed to fulfill their obligations under the contract, which can have implications for determining who bears the risk of loss. The breach may affect the legal rights and responsibilities of the parties involved, and can impact the resolution of the dispute. The other factors mentioned, such as who has title to the goods, the shipping terms, and the credit terms, may also be relevant in determining the outcome, but the fact of a breach is likely to be the most significant factor.

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  • 47. 

    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.

    • I and III only.

    • I, II, and III only.

    • II and III only.

    • I only.

    Correct Answer
    A. I only.
    Explanation
    The correct answer is I only. This is because in order for the warranty of merchantability to arise, the seller must be a merchant with respect to the goods of that kind. The warranty does not need to be in writing, and the buyer's reliance on the seller's skill or judgment is not necessary for the warranty to arise.

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  • 48. 

    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.

    • I only.

    • II only.

    • Either I and II.

    • Neither I nor II.

    Correct Answer
    A. II only.
    Explanation
    Under the Sales Article of the UCC, an auctioneer may withdraw the goods put up for sale if no bid is made within a reasonable time. This means that if there are no bids made within a reasonable timeframe, the auctioneer has the right to withdraw the goods from the sale. However, once the auctioneer announces completion of the sale, they are not allowed to withdraw the goods. Therefore, the correct answer is II only.

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  • 49. 

    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...

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

    • Giving Donnegal his check which was later dishonored.

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

    • Purchasing goods which had been previously stolen from Donnegal.

    Correct Answer
    A. Purchasing goods which had been previously stolen from Donnegal.
    Explanation
    The correct answer is "Purchasing goods which had been previously stolen from Donnegal." This means that if Variance purchased goods that were stolen from Donnegal, then Donnegal would be entitled to the goods. This suggests that the claim made by Donnegal is based on the fact that the goods were stolen from them and subsequently purchased by Variance.

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