MGT 225-business Law- Ucc Quiz (25)

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MGT 225-business Law- Ucc Quiz (25) - Quiz


Questions and Answers
  • 1. 

    Uniform Commercial Code (UCC) Section 2-105 defines __________ as "all (tangible) things...which are movable at the time of identification to the contract for sale."

    • A.

      Goods

    • B.

      Services

    • C.

      Fixtures

    • D.

      A and B

    Correct Answer
    A. Goods
    Explanation
    The correct answer is "Goods". According to UCC Section 2-105, goods are defined as tangible things that are movable at the time of identification to the contract for sale. This means that goods refer to physical items that can be bought or sold, such as products, merchandise, or any other tangible objects. Services, on the other hand, are not considered goods as they are intangible and cannot be physically moved or possessed. Fixtures are also not considered goods as they are items that are permanently attached to real property and are not easily movable.

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  • 2. 

    _________ are governed by Article 2 of the Uniform Commercial Code (UCC) , while Article 2(A) governs __________ contracts.

    • A.

      Lease; sales

    • B.

      Sales; lease

    • C.

      Service; sale of goods

    • D.

      Sale of goods; service

    Correct Answer
    B. Sales; lease
    Explanation
    Article 2 of the Uniform Commercial Code (UCC) governs sales contracts, which are agreements for the transfer of ownership of goods from a seller to a buyer. On the other hand, Article 2(A) of the UCC governs lease contracts, which are agreements where the lessor transfers the right to use goods to the lessee in exchange for payment. Therefore, the correct answer is "Sales; lease" because Article 2 governs sales contracts and Article 2(A) governs lease contracts.

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  • 3. 

    Contracts for the sale of goods must be in writing if they are valued at __________ or more under the rules of the UCC.

    • A.

      $50

    • B.

      $500

    • C.

      $5000

    • D.

      None of the above

    Correct Answer
    B. $500
    Explanation
    Under the rules of the UCC, contracts for the sale of goods must be in writing if they are valued at $500 or more. This means that any sales contracts for goods that exceed this value must be documented in writing to be enforceable.

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  • 4. 

    Sam offers to sell all of the chocolate nut brownies that he makes to Beth, who needs them to sell in her specialty foods store, Sam and Beth have created: 

    • A.

      A requirements contract.

    • B.

      An output contract.

    • C.

      A void contract.

    • D.

      An invalid open quantity contract.

    Correct Answer
    B. An output contract.
    Explanation
    Sam and Beth have created an output contract. An output contract is a type of agreement where one party agrees to sell all the goods they produce to the other party. In this case, Sam is offering to sell all of the chocolate nut brownies he makes to Beth for her specialty foods store. This type of contract is commonly used when the buyer needs a specific product and the seller is the only source for that product. It ensures a steady supply for the buyer and guarantees a market for the seller's output.

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  • 5. 

    In cases in which a tangible good is mixed with something intangible (example: a service,) most states employ some variation of the __________ test in order to resolve contract issues and disputes.                                                                         

    • A.

      User-friendly

    • B.

      Predominant-purpose

    • C.

      Substantial performance

    • D.

      Commercial impracticability Commercial impracticability

    Correct Answer
    A. User-friendly
  • 6. 

    All of the following factors, except which of the following, is an indication of "merchant" status?

    • A.

      The party typically deals in the kinds of goods involved in the sales contract

    • B.

      The party is a casual seller

    • C.

      The party, by occupation, represents him/herself as having knowledge and skill unique to the practices or goods involved in the transaction

    • D.

      The party in question has employed a broker, agent, or other intermediary

    Correct Answer
    B. The party is a casual seller
    Explanation
    A casual seller is not an indication of "merchant" status because a casual seller does not typically engage in the regular buying and selling of goods. Merchants, on the other hand, are individuals or businesses that are involved in the regular trade of goods and have knowledge and skills unique to the practices or goods involved in the transaction. Therefore, a casual seller does not meet the criteria of being a merchant.

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  • 7. 

    Under the UCC, a contract involving which of the following goods is an exception to the statute of frauds writing requirement?

    • A.

      Specifically manufactured goods

    • B.

      Generically manufactured goods

    • C.

      Non-specifically manufactured goods

    • D.

      Traditional goods

    Correct Answer
    A. Specifically manufactured goods
    Explanation
    Under the UCC, a contract involving specifically manufactured goods is an exception to the statute of frauds writing requirement. This means that a written contract is not required for these types of goods to be enforceable. Specifically manufactured goods are goods that are made specifically for the buyer and are not suitable for sale to others. This exception exists because these goods are unique and have no market value to anyone other than the buyer. Therefore, the UCC allows oral contracts for specifically manufactured goods to be legally binding.

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  • 8. 

    Under the Uniform Commercial Code (UCC), sellers and lessors are obligated to transfer and deliver __________ goods.

    • A.

      Conditional

    • B.

      Collaborative

    • C.

      Conforming

    • D.

      Custom

    Correct Answer
    C. Conforming
    Explanation
    Under the Uniform Commercial Code (UCC), sellers and lessors are obligated to transfer and deliver conforming goods. This means that the goods must meet the agreed-upon specifications, be of the quality expected by the buyer or lessee, and be in the condition required for their intended use. The UCC ensures that sellers and lessors cannot deliver goods that do not meet these requirements, providing protection to buyers and lessees in commercial transactions.

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  • 9. 

    What would the effect of open terms on a contract covered by the UCC be?  

    • A.

      The contract will be void because of the open terms.

    • B.

      The contract will be valid if it involves the sale of land.

    • C.

      The contract will be valid if the parties intended to form a contract and there is a reasonable basis for a court to find a remedy

    • D.

      The contract will be valid as long as the parties expressed some interest in negotiating.

    Correct Answer
    C. The contract will be valid if the parties intended to form a contract and there is a reasonable basis for a court to find a remedy
    Explanation
    Open terms in a contract refer to missing or incomplete terms that have not been agreed upon by the parties involved. Under the UCC (Uniform Commercial Code), a contract can still be valid even if there are open terms as long as the parties intended to form a contract and there is a reasonable basis for a court to find a remedy. This means that if the parties have shown an intention to enter into a contract and there is enough information available for a court to determine an appropriate remedy, the contract will be considered valid despite the presence of open terms.

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  • 10. 

                    __________ refers to the history of dealings between the parties involved in the present contract.                                                                                                     

    • A.

      Course of performance

    • B.

      Usage of trade

    • C.

      Empirical accord

    • D.

      Accord and satisfaction

    Correct Answer
    A. Course of performance
    Explanation
    Course of performance refers to the history of dealings between the parties involved in the present contract. It involves looking at how the parties have performed under similar contracts in the past to determine their intentions and expectations in the current contract. By examining the course of performance, the parties can establish a pattern of behavior and understand how certain terms and conditions have been interpreted and applied in previous contracts. This can help guide their actions and decisions in the present contract.

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  • 11. 

    Under the UCC, the seller can presume acceptance if the buyer fails to __________ the goods within a reasonable time.                                                                                                                              

    • A.

      Revoke

    • B.

      Rehabilitate

    • C.

      Reject

    • D.

      Remonstrate

    Correct Answer
    C. Reject
    Explanation
    Under the UCC, the seller can presume acceptance if the buyer fails to reject the goods within a reasonable time. This means that if the buyer does not explicitly reject the goods or communicate their dissatisfaction within a reasonable timeframe, the seller can assume that the buyer has accepted the goods.

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  • 12. 

    __________ is defined by the UCC as any practice that members of an industry expect to be part of their dealings.                                                                                                                                     

    • A.

      Usage of trade

    • B.

      Course of dealings

    • C.

      Commercial reasonableness

    • D.

      Commercial practicality

    Correct Answer
    A. Usage of trade
    Explanation
    Usage of trade is a term defined by the UCC (Uniform Commercial Code) that refers to any practice that members of an industry expect to be part of their dealings. It represents the common and accepted practices within a specific industry or trade. This includes customary practices, understandings, and methods of dealing that have developed over time and are considered standard within that particular business community. Usage of trade helps to provide consistency and predictability in commercial transactions, allowing parties to rely on established norms and expectations when conducting business.

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  • 13. 

    A substitute for cash, or a __________, is a written document containing the signature of the creator that makes an unconditional promise or order to pay a sum certain at either a time certain or on demand.                                                                                                                 

    • A.

      Contract

    • B.

      Promissory estoppel

    • C.

      Negotiable instrument

    • D.

      Negotiable estoppels

    Correct Answer
    C. Negotiable instrument
    Explanation
    A substitute for cash, or a negotiable instrument, is a written document containing the signature of the creator that makes an unconditional promise or order to pay a sum certain at either a time certain or on demand. This means that a negotiable instrument can be used as a form of payment and can be transferred from one person to another. It is a legally binding document that guarantees payment to the holder of the instrument.

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  • 14. 

    What are the four specific types of negotiable instruments recognized by the UCC ?                              

    • A.

      Notes, certificates of deposit, drafts, and checks

    • B.

      Notes, certificates of withdrawal, drafts, and checks

    • C.

      Notes, depository receipts, drafts, and checks

    • D.

      Notes, certificates of withdrawal, depository receipts, and checks

    Correct Answer
    A. Notes, certificates of deposit, drafts, and checks
    Explanation
    The correct answer is "Notes, certificates of deposit, drafts, and checks." These four specific types of negotiable instruments are recognized by the UCC (Uniform Commercial Code). Notes refer to promissory notes, which are written promises to repay a specific amount of money. Certificates of deposit are issued by banks and represent a deposit with a fixed term and interest rate. Drafts are orders to pay money, similar to checks but typically used in international transactions. Checks are written orders to pay a specific amount of money from one party to another.

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  • 15. 

                    The Uniform Commercial Code (UCC) Section 3-108(a) defines an instrument "payable on __________" as one that "(i) states that it is payable on demand or at sight, or otherwise indicates that it is payable at the will of the holder; or (ii) does not state any time of payment".                                 

    • A.

      Presentment

    • B.

      Date

    • C.

      Tender

    • D.

      Demand

    Correct Answer
    D. Demand
    Explanation
    The correct answer is "Demand" because according to UCC Section 3-108(a), an instrument that is "payable on demand" is one that either explicitly states that it is payable immediately or at the discretion of the holder, or does not specify any specific time of payment. This means that the instrument can be demanded for payment by the holder whenever they choose.

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  • 16. 

    Under the UCC, types of checks include all but which of the following?                               

    • A.

      Cashier's checks

    • B.

      Traveler's checks

    • C.

      Certified checks

    • D.

      Promissory checks

    Correct Answer
    A. Cashier's checks
    Explanation
    The correct answer is Cashier's checks. Cashier's checks are actually a type of check that is issued by a bank and guaranteed by the bank. Therefore, they should not be included in the list of types of checks under the UCC. The other options listed (Traveler's checks, Certified checks, and Promissory checks) are all valid types of checks that are recognized under the UCC.

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  • 17. 

    Payment on  __________ instruments can be made only at a specific future time, which Uniform Commercial Code (UCC) Section 3-108(b) says must be easily determined from the document itself.                               

    • A.

      Time

    • B.

      Qualified

    • C.

      Conditional

    • D.

      Demand

    Correct Answer
    D. Demand
    Explanation
    Payment on demand instruments can be made only when the holder of the instrument requests it. This means that the payment can be demanded at any time by the holder, without any specific future time mentioned in the document. According to UCC Section 3-108(b), the specific future time for payment must be easily determined from the document itself, which is not the case for demand instruments. Therefore, demand is the correct answer.

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  • 18. 

    Which of the following is not a requirement for negotiability?                                

    • A.

      The instrument is in writing

    • B.

      The instrument is executed by a merchant

    • C.

      The instrument has an unconditional promise or order to pay

    • D.

      The instrument is signed by the creator of the instrument

    Correct Answer
    B. The instrument is executed by a merchant
    Explanation
    The requirement for negotiability is that the instrument is in writing, has an unconditional promise or order to pay, and is signed by the creator of the instrument. The fact that the instrument is executed by a merchant is not a requirement for negotiability.

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  • 19. 

    Negotiable instruments must order or promise that payment be made in:               

    • A.

      Goods of the type specified in the subject contract

    • B.

      Bearer bonds

    • C.

      A national currency

    • D.

      U.S. dollars only

    Correct Answer
    D. U.S. dollars only
    Explanation
    Negotiable instruments are financial documents that guarantee payment to the holder. In order to be considered negotiable, these instruments must order or promise payment in a specific form. In this case, the correct answer is "U.S. dollars only" because negotiable instruments must specify that payment will be made in U.S. dollars and not any other currency or form of payment.

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  • 20. 

    Under the UCC, which of the following is not a requirement for negotiability?                                                                                                       

    • A.

      The amount to be paid is a sum certain in money

    • B.

      The amount to be paid includes a fixed rate of interest

    • C.

      Payment is to be made either on demand or at a fixed future time

    • D.

      The document must contain the words of negotiability "to the order of" or, in the alternative, words indicating that it is a bearer instrument

    Correct Answer
    B. The amount to be paid includes a fixed rate of interest
    Explanation
    The requirement for negotiability under the UCC does not include the amount to be paid including a fixed rate of interest. The other requirements for negotiability include the amount to be paid being a sum certain in money, payment being made either on demand or at a fixed future time, and the document containing the words of negotiability "to the order of" or words indicating that it is a bearer instrument.

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  • 21. 

    A negotiable instrument that indicates no specific name of the payee, is known as a(n) ___________ instrument.                                                        

    • A.

      Designated

    • B.

      Unqualified

    • C.

      Order

    • D.

      Bearer

    Correct Answer
    D. Bearer
    Explanation
    A negotiable instrument that indicates no specific name of the payee is known as a bearer instrument. This means that the instrument is payable to whoever possesses it, rather than a specific individual or entity. Bearer instruments can be transferred by delivery, making them more flexible and easily negotiable.

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  • 22. 

    The Uniform Commercial Code (UCC) attempts to provide which of the following:

    • A.

      Guidelines for making common law contracts that deal with the sale of land.

    • B.

      A framework for all international contracts dealing with the sale of securities.

    • C.

      A consistent and integrated framework of rules to deal with all aspects of commercial sales transactions

    • D.

      A consistent body of rules for dealing with criminal violations of the law that involve either securities or government bonds.

    Correct Answer
    C. A consistent and integrated framework of rules to deal with all aspects of commercial sales transactions
    Explanation
    The correct answer is a consistent and integrated framework of rules to deal with all aspects of commercial sales transactions. The Uniform Commercial Code (UCC) is a set of laws that govern commercial transactions in the United States. It provides a standardized set of rules and regulations that apply to the sale of goods, including contracts, warranties, and remedies for breach of contract. The UCC aims to create a uniform and fair system for conducting business transactions across different states, ensuring consistency and predictability in commercial sales.

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  • 23. 

    If you lease an automobile from an automobile dealer, this contract is covered by:

    • A.

      Article 2 of the UCC.

    • B.

      Article 2A of the UCC.

    • C.

      Article 6 of the UCC.

    • D.

      The common law, because it involves an intangible good.

    Correct Answer
    B. Article 2A of the UCC.
    Explanation
    When you lease an automobile from an automobile dealer, the contract is covered by Article 2A of the UCC. The UCC, or Uniform Commercial Code, is a set of laws that govern commercial transactions in the United States. Article 2A specifically deals with leases of goods, including automobiles. This article provides regulations and guidelines for both lessors (automobile dealers) and lessees (individuals leasing the automobile). It establishes rights, duties, and remedies for both parties involved in the lease agreement. Therefore, Article 2A of the UCC is the appropriate law that applies to the leasing contract in this scenario.

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  • 24. 

    Suppose Sue offers to sell her sofa to her friend Brian. Sue does not sell furniture for a living. If, after Sue offers the sofa to Brian for $750, Brian says, “I’ll take it and I want you to throw in the coffee table along with it,” under the UCC, what kind of contract do Sue and Brian have?  

    • A.

      They have no contract because of the mirror image rule.

    • B.

      They have a contract for the sofa and coffee table

    • C.

      They have a contract for the sofa only.

    • D.

      They have no contract.

    Correct Answer
    D. They have no contract.
    Explanation
    Under the UCC (Uniform Commercial Code), the mirror image rule states that the acceptance of an offer must be a mirror image of the offer itself. In this case, Brian's acceptance includes a condition (throwing in the coffee table) which is not a mirror image of Sue's offer. Therefore, according to the mirror image rule, there is no valid acceptance and thus no contract between Sue and Brian.

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  • 25. 

    If Smith sells Burns copper that he removed from land that he owns in Colorado, this contract:  

    • A.

      Will be covered by Article 2 of the UCC.

    • B.

      Will be covered by Article 2A of the UCC.

    • C.

      Will be covered by Article 3 of the UCC.

    • D.

      Will be covered by the common law.

    Correct Answer
    A. Will be covered by Article 2 of the UCC.
    Explanation
    This contract will be covered by Article 2 of the UCC because Article 2 specifically deals with the sale of goods. In this case, Smith is selling copper, which is considered a good under the UCC. Therefore, the rules and regulations outlined in Article 2 would apply to this contract.

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  • 26. 

    Which one do you like?

    • A.

      Option 1

    • B.

      Option 2

    • C.

      Option 3

    • D.

      Option 4

    Correct Answer
    A. Option 1
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