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Exam 19: The Formation of Sales and Lease Contracts

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Question 1

Multiple Choice

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Grass Farm LLC offers to sell fifty bales of hay at a certain price to Horse Stable Inc. The owner of the stable responds, "We agree if you agree to make it sixty bales for the price." Their contract is formed according to

A) the new terms of the acceptance.
B) whatever is reasonable.
C) the terms of the original offer.
D) none of the terms.

E) All of the above
F) C) and D)

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Question 2

Multiple Choice

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Auto Body & Paint Company orders custom paint from Best Hues Inc., but Best does not deliver. Auto Body will probably be unable to enforce the agreement if the parties omitted

A) a price term.
B) a delivery date.
C) a quantity term.
D) shipping arrangements.

E) A) and B)
F) A) and C)

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Question 3

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Except for an option contract, a firm offer by a merchant is irrevocable once it has been made.

Generally, when an acceptance to a sales contract between merchants includes terms additional to those in the offer, the terms automatically become part of the deal.

Under the UCC, the meaning of any agreement must be interpreted in light of commercial practices, so a court will not assume that the usage of trade was taken into account when the agreement was phrased.

Life Products Inc. enters into a contract to sell medical supplies to Med Clinic, which later sells some of the items to Nina, a patient and consumer. Article 2 of the UCC applies to

Dona offers to sell her used sofa, chair, coffee table, end table, and lamp to Erma for $700. Erma responds that she will pay that price if Dona's TV set is included. Neither party is a merchant. Their contract is formed according to

Ed sells his car to Fran for $5,000, his bike to Gwen for $600, his game player to Holly for $200, and three shares of stock to Inez for $100. Article 2 of the UCC does not apply to the sale of

Interstate Transport Company pays Trucks & Trailers Inc. a stated price for the use of seven tractor-trailer rigs for a year. Under the UCC, this is

Clean Machines Company makes washing machines. Over the phone, Clean offers to sell Dealers Appliance Outlet one hundred model EZ2000 washers at a price of $150 per unit. Clean says that it will keep the offer open for ninety days. Dealers responds that within two or three weeks it will decide whether to accept. One week later, Clean faxes, and Dealer receives, notice that the offer is withdrawn. Dealer immediately phones Clean to accept the $150-per-unit offer. When Clean refuses to deliver at that price, Dealer files a suit. Clean asserts, first, that there is no contract and, second, that if there is a contract, it is unenforceable. Discuss Clean's assertions.

Rice Farm Corporation offers to sell Sushi Restaurants, Inc., five hundred bushels of rice. Sushi responds, "We agree to buy five hundred bushels only if the rice is Grade A quality." Without more, their contract is formed according to

Joel sells a violin to Key for $5,000, a cello to Leda for $400, and five music stands to Mica for $50. A writing is required to enforce the sale of

When a sales contract contemplates shipment of the goods but does not specify the arrangements, either party can make those arrangements.

Brooke is an art collector and hires a broker to buy and sell artworks on her behalf. Under the UCC, in those transactions, Brooke has the status of

Tune Products, Inc., offers to sell to Unlimited Sales Company one hundred MP3 players at $50 a piece, subject to certain specific delivery dates. Unlimited replies with a signed purchase order that reads, "Accept your offer for 100 I-appliances at $50 each. Must be delivered to our warehouse." Tune does not respond or deliver the goods. Unlimited files a suit for breach of contract, to which Tune answers that there is no contract because Unlimited's purchase order contained additional terms and is not signed by Tune. Can Unlimited recover? Explain.

Miko owns a lake house that she rents to vacationers. Miko gives her son Ninh a trip to Omaha on his graduation from community college. Miko sells her car to her neighbor Pye for $4,500. UCC Article 2 covers

Aaron offers to sell Babe a collection of baseball cards. For their transaction to be a sale under the UCC, title to the collection must be passed from the seller to the buyer for

Bert's Bagels Inc. and other bakeries refer to a "baker's dozen" as consisting of a collection of thirteen baked goods. According to the UCC, this is

Under the law that governs the international sale of goods, when the parties to a contract do not specify a price term, or at least provide for its specification, normally no contract will exist.

An auto dealer is a merchant when selling or leasing a new car but not when selling or leasing a pre-owned vehicle.