Law of Business Organizations Exam 1

Astate - PJ

Which of the following is true regarding Article 2 of the Uniform Commercial Code?

a. it applies to bonds, information, and other intangibles

b. it does not apply to contracts for the sale of goods

c. it applies to contracts for the sale of real estate or stocks

d. it does not apply to contracts for the provision of services

d. it does not apply to contracts for the provision of services

Which of the following is true regarding the Uniform Commerical Code?

a. it recognizes the enforceability of all oral and written contracts

b. it only applies to business-to-business (B2B) transactions

c. It expressly recognizes the concept of an unconscionable contract

d. it defines the term “merchant” uniformly, without regard to the particular facts of a case

c. It expressly recognizes the concept of an unconscionable contract

A quasi contract can be best described as ______.

a. a contract that has been fully performed

b. an agreement that contains all but one of the basic elements needed to form an enforceable contract

c. contract-like duties imposed by the court to prevent unjust enrichment

d. a contract that is expressed orally and not in writing

c. contract-like duties imposed by the court to prevent unjust enrichment

According to the UCC, the “reasonableness” standard ______.

a. is the theoretical concept based on the “reasonable person” standard of tort law

b. refers to the factual or status incapacity of one or more contracting parties

c. requires that jurors use their subjective opinions to determine whether a contract for the sale of goods exists, and whether justice dictates that it be enforced

d. is a practical standard used to gauge what people really do in the marketplace.

d. is a practical standard used to gauge what people really do in the marketplace.

According to the Uniform Commercial Code, a(n) ______ contract is one that is grossly unfair or one-sided.

a. unconscionable

b. voidable

c. void

d. conscionable

a. unconscionable

When Willem, an attorney, says to his client Alexandria “I will draft you a simple will today for $500” and Alexandria replies “That sounds great, please do and I will pay you after I have signed it,” a(n) _______ contract has been created.

a. void

b. voidable

c. express

d. executed

c. express

Suppose that Marguerite, owner of Curl Up and Dye Beauty Salon, sends hair It Is! Manufacturing Company an order for 12 cases of shampoo at $100 per case. Hair It Is! sends marguerite an acknowledgement form accepting the order. The parties have a _______ contract, and the contract is _______ until Hair It Is? has delivered the cases of shampoo an dmarguerite has paid for them.

a. valid, implied, unilateral; promissory

b. voidable, express, unilateral; promissory

c. voidable, implied, bilateral; executory

d. valid, express, bilateral; executory

d. valid, express, bilateral; executory

A voidable contract is enforceable against both parties unless a party with the right to cancel the contract has done so.

a. true

b. false

a. true

Patricia runs an advertisement in the local newspaper offering a $500 reward for the return of Dexter, her lost Snowshoes Siamese kitten. Patricia has made a promise to pay the person who performs the act of returning Dexter. This is a(n) _______ contract.

a. quasi

b. bilateral

c. implied

d. unilateral

d. unilateral

Lorenzo offered Ida a job at his new law firm. In anticipation, Ida quit her job at a large law firm, bought a new computer, and invested in a new set of law books. Shortly before her anticipated first day at Lorenzo’s firm, Lorenzo informed Ida that he had changed his mind and no longer wanted her to work for him. Ida may recover under the doctrine of _______.

a. unjust enrichment

b. res ipsa loquitur

c. promissory estoppel

d. respondeat superior

c. promissory estoppel

If Alfredo, a minor, buys a used car from “Good Carma” Pre-Owned Cars, LLC, the parties have a void contract.

a. true

b. false

b. false

Yuan writes to Kristina saying that he will sell his car to Kristina for $10,000. Kristina write back agreeing to buy the car on Yuan’s terms. Given this information, the contract betweenYuan and Kristina is _______.

a. unilateral and executory

b. bilateral and unenforceable

c. bilateral and executory

d. unilateral and implied

c. bilateral and executory

In a(n) _______ contract, both parties make a promise.

a. illusory

b. bilateral

c. quasi

d. unilateral

b. bilateral

Uma enters into an agreement with Sheng to sell her farm to him. They shake hands to “seal the deal,” but do not put the agreement in writing. The contract is _______.

a. voidable but enforceable

b. valid

c. executed

d. unenforceable

d. unenforceable

The doctrine of promissory estoppel _______.

a. does not make a promise enforceable

b. protects reliance, not bargains

c. protects bargains, not reliance

d. makes a contract unenforceable

b. protects reliance, not bargains

Jane gave her car for maintenance to Bell Corporation, a company that deals in used cars and maintenance of cars. One of the employees at Bell Corporation accidentally sold Jane's car to Fiona. Under these circumstances, which of the following is correct?

a. Jane cannot recover the value of the car from Bell Corporation because she is a nonmerchant

b. Jane can recover the car from Fiona because Bell Corporation did not have ownership of the car when it was sold to Fiona

c. Jane cannot recover the car from Fiona because under the UCC, Bell Corporation could give good title to a buyer in the ordinary course of business

d. jane can recover the value of the car from Fiona or Bell Corporation since neither Bell Corporation nor Fiona had title to the car

c. Jane cannot recover the car from Fiona because under the UCC, Bell Corporation could give good title to a buyer in the ordinary course of business

If a contract merely requires the seller to ship the goods, title passes to the buyer when the ________blank.

a. buyer pays the seller

b. contract is signed by both parties

c. seller delivers the goods to the carrier

d. goods are delivered by the seller to the buyer

c. seller delivers the goods to the carrier

Which of the following transactions should be governed by Article 2 of the Uniform Commercial Code (UCC)?

a. Barney leased his house to Mick for conducting business

b. Bill contracted to sell 100 boxes of chocolates to a supermarket

c. Andrew agreed to decorate the interior of Jamie’s house

d. Monica contracted to sing with her group at Nancy’s wedding

b. Bill contracted to sell 100 boxes of chocolates to a supermarket

According to the UCC, title passes to the buyer when the seller has completely performed their duties concerning ________blank of the goods.

a. design

b. physical delivery

c. production

d. title and risk of loss insurance

b. physical delivery

When a contract is silent about the time for performance, ________.

a. performance must be tendered within a reasonable time

b. the payment for the goods is due at the time and place at which the seller deems convenient

c. it can be terminated by either party without giving any notice

d. it cannot be terminated at any time by either party

a. performance must be tendered within a reasonable time

According to the UCC, a buyer in the ordinary course of business ________.

a. takes goods free of any security interest in the goods the seller may have given to a third party

b. does not act in good faith

c. is a person who transacts only with nonmerchants

d. is one who buys goods from a merchant, knowing that the sale violates the ownership rights of a third party

a. takes goods free of any security interest in the goods the seller may have given to a third party

Adam offered to buy automobile batteries from Ben. Adam's purchase order was complete with respect to all significant terms except price, which was omitted. If Ben accepts Adam's offer, and the price of automobile batteries is well established in the industry, which of the following is true?

a. a contract cannot be formed between Adam and Ben if the price is not included

b. a contract can be formed between Adam and Ben even though the price term was omitted

c. a contract can be formed between Adam and Ben, but only if it can be proved that the parties intended to enter a contract to discuss the price

d. A contract can be formed between Adam and Ben, but the price will be treated as a proposed addition to the contract which must be accepted by both parties

b. a contract can be formed between Adam and Ben even though the price term was omitted

When may sellers obtain voidable title to goods?

a. by failing to pay for goods on a “cash sale” basis, or by impersonating another person which acquiring goods from their rightful owner

b. by paying for the goods with a bad check, or by failing to pay for goods on a “cash sale” basis

c. by impersonating another person when acquiring the goods from their rightful owner, or by paying for the goods with a bad check

d. by paying for the goods with a bad check, by failing to pay for goods on a “cash sale” basis, or by impersonating another person when acquiring the goods from their rightful owner

d. by paying for the goods with a bad check, by failing to pay for goods on a “cash sale” basis, or by impersonating another person when acquiring the goods from their rightful owner

Ellie took her diamond ring to Portman Jewelers Company for routine cleaning. An employee at the store sold the ring to Daniel, who was unaware that the ring belonged to Ellie. Which of the following is true in this case?

a. Ellie can recover the ring from Daniel

b. Ellie can recover the ring from Portman Jewelers Company under the UCC’s ownership principles because the service element is predominant in this case

c. Ellie can sue Portman Jewelers Company for conversion but cannot recover the ring from Daniel because he was a buyer in the ordinary course of business

d. Ellie cannot sue Portman Jewelers Company because the store employee acted in good faith

c. Ellie can sue Portman Jewelers Company for conversion but cannot recover the ring from Daniel because he was a buyer in the ordinary course of business

Jessica went to Angel Beauty Salon to get a facial. The cosmetic products used by the beautician contained certain harmful chemicals that adversely reacted with Jessica's face. This resulted in several rashes and spots on her face. Which of the following is true regarding the applicability of UCC Article 2 in determining the rights and responsibilities of the parties?

a. it would apply because any contract involving the use of cosmetic products is governed by the Code

b. it would apply because the cosmetic products are not Jessica’s tangible personal property

c. it would not apply because Jessica is not a merchant

d. it would not apply because Jessica entered a contract which was predominantly a service contract

d. it would not apply because Jessica entered a contract which was predominantly a service contract

Patty buys a Persian rug from James, a plumber, in an online auction. James called Patty on Wednesday to inform her that she submitted the winning bid and that she could pick it up anytime or he would ship the rug to her on Friday. On Thursday, the rug was destroyed in a garage fire at James' house. Which of the following is true in this case?

a. James bears the loss, since he tendered delivery of goods

b. James bears the loss, since he did not deliver the goods

c. Patty bears the loss, since James was only providing a service

d. Patty bears the loss, since James is not a merchant of Persian rugs

d. Patty bears the loss, since James is not a merchant of Persian rugs

Which of the following is true regarding time terms and contracts for the sale of goods?

a. according to UCC Section 2-309(1), when the parties’ contract is silent about the time of performance, performance must be tendered within 60 days from the date the contract was formed

b. according to UCC Section 2-309(1), when the parties’ contract is silent about the time of performance, performance must be tendered within 30 days from the date the contract was formed

c. The UCC takes a different position from the common law when the parties’ contract is silent about the time of performance

d. According to UCC Section 2-310(a), unless the parties agreed on some other payment terms, payment for the goods is due at the time and place at which the buyer is to receive the goods

d. According to UCC Section 2-310(a), unless the parties agreed on some other payment terms, payment for the goods is due at the time and place at which the buyer is to receive the goods

Under the UCC, which of the following is true regarding the identification of goods to the contract?

a. it occurs when the parties use a negotiable document of title when the goods are being shipped

b. it results in title passing at the time and place of contracting if delivery is to be made without moving the goods

c. it does not result from the actions of the seller, such as setting aside or marking the goods

d. it doesn not result from the contract description of the goods

b. it results in title passing at the time and place of contracting if delivery is to be made without moving the goods

Which of the following is true regarding voidable title?

a. sellers may obtain voidable title by paying for the goods with a good check

b. sellers may obtain voidable title by impersonating another person when acquiring the goods from their rightful owner

c. sellers may obtain voidable title by paying for goods sold on a “cash sale” basis

d. sellers may obtain voidable title by obtaining the goods without using fraudulent means

b. sellers may obtain voidable title by impersonating another person when acquiring the goods from their rightful owner

Which of the following is true regarding an insurable interest in goods?

a. sellers have an insurable interest in their goods as long as they have title to the goods or a security interest in them

b. sellers have an insurable interest in goods at the moment the goods are identified to the contract

c. buyers have an insurable interest in goods at the moment they receive title to the goods

d. buyers have an insurable interest in goods at the moment they pay for the goods

a. sellers have an insurable interest in their goods as long as they have title to the goods or a security interest in them

Goods sold "as is" are not covered by the implied warranty of merchantability.

a. true

b. false

a. true

If a seller uses a drawing to convey the characteristics of goods that are taken into consideration in a sales transaction, that seller has merely expressed an opinion, but has not made an express warranty.

a. true

b. false

b. false

Which of the following would create an express warranty?

a. “This car is a V8 engine.”

b. “This bike is awesome.”

c. “This care is a real steal.”

d. “This computer rocks.”

a. “This car is a V8 engine.”

Suppose a seller says "These goods are first class." This is an example of ________blank.

a. an implied warranty of merchantability

b. an express warranty

c. an implied warranty of fitness for a particular purpose

d. sales talk

d. sales talk

Which of the following situations would create an implied warranty of merchantability?

a. Ollie hires Louise to work in his electronics store

b. Vinnie buys a microwave oven at MegaMart

c. Greta moves to Paris and gives her car to her younger brother

d. Ben sells his high-definition television to his cousin, Sam

b. Vinnie buys a microwave oven at MegaMart

Which of the following warranties is created if the seller knows the particular use the buyer has for the goods in question and the seller makes a recommendation that the seller knows the buyer is relying on?

a. implied warranty of merchantability

b. implied warranty of recommendation

c. implied warranty of fitness for a particular purpose

d. express warranty

c. implied warranty of fitness for a particular purpose

Under the UCC, disclaimers of implied warranties do not need to be conspicuous.

a. true

b. false

b. false

When the seller is a merchant, which of the following automatically occurs?

a. the implied warranty of fitness for a particular purpose

b. the implied warranty of merchantability

c. a limited warranty

d. a full warranty

b. the implied warranty of merchantability

While dining at his favorite fast food restaurant, Donny noticed a fingernail in his French fries. Which of the following statements is true?

a. the restaurant has not breached any warranties based on the fingernail being a naturally occurring and organic, although unexpected, presence

b. the restaurant has breached their warranty of merchantability

c. the restaurant has breached the Magnuson-Moss Warranty Act

d. the restaurant has breached their warranty of fitness for a particular purpose

b. the restaurant has breached their warranty of merchantability

Oak Wood Furniture, LLC (Oak Wood), a furniture manufacturer, sold 150 chairs to Sierra, the owner of a furniture shop. In the sales contract between Oak Wood and Sierra, a provision of the contract read, "Seller hereby disclaims all implied warranties." Unlike the rest of the contract, this provision was written in all capital letters and placed prominently in the document. In this scenario, Oak Wood has effectively made a disclaimer of ________.

a. neither the implied warranty of merchantability nor the implied warranty of fitness for a particular purpose

b. the implied warranty of fitness for a particular purpose, but not the implied warranty of merchantability

c. both the implied warranty of merchantability and the implied warranty of fitness for a particular purpose

d. the implied warranty of merchantability, but not the implied warranty of fitness for a particular purpose

b. the implied warranty of fitness for a particular purpose, but not the implied warranty of merchantability

A contractual promise by a seller regarding the quality, character or suitability of goods sold is referred to as a(n):

a. commercial promise

b. warranty

c. tort

d. title

b. warranty

In regard to a breach of warranty action, most states hold that where a consumer good has caused personal injury to the consumer, a limitation or exclusion of consequential damages is not unconscionable.

a. true

b. false

b. false

Suppose a 350-pound man tells a retail store manager he needs a chair that will not collapse under his weight, but the manager recommends and sells him one that will support only the weight of an average person. The man later sits in the chair, the chair collapses under his weight, and he is injured as a result. The chair would have in fact supported the weight of an average person. Which of the following is true in this scenario?

a. the warranty of merchantability has been breached but not the warranty of fitness for a particular purpose

b. both the warranty of fitness for a particular purpose and the warranty of merchantability have been breached

c. both the warranty of fitness for a particular purpose and the warranty of fitness for ordinary use have been breached

d. the warranty of fitness for a particular purpose has been breached but not the warranty of merchantability

d. the warranty of fitness for a particular purpose has been breached but not the warranty of merchantability

A seller creates an express warranty when she states an opinion.

a. true

b. false

b. false