Business Law, 8e: Chapter 16

Chapter 16
Formation Of The Sales Contract: Contracts For Leasing Goods:

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1. Natalie owns a store that sells televisions, stereo components, video equipment and computers. One day, Natalie decides to throw an office party for her staff. She makes a contract with Isaiah, who owns a local pizza parlor, to purchase 20 pizzas. In this contract Isaiah is considered a merchant.: a. True
b. False

2. U-Move-It, Inc. sent a preprinted purchase order to Fasteners, Inc. offering to purchase 500 fasteners. The purchase order did not include a warranty clause. Fasteners accepted the order by sending an acceptance form to U-Move-It. The acceptance form stated that the fasteners were sold "AS IS with NO WARRANTIES." As soon as U-Move-It received the acceptance, it objected to the warranty clause. The warranty clause will not be part of the agreement.: a. True
b. False

3. A firm offer is effective only if the merchant receives consideration to keep the offer open.: a. True
b. False

4. The statute of frauds requires the writing be signed and the quantity and price of the goods.: a. True
b. False

5. Under the UCC, Article 2, good faith for merchants means subjective, good intentions.: a. True
b. False

6. If a sales contract is silent as to the place of delivery, the Uniform Commercial Code states that delivery is to take place at the buyer's place of business, if the buyer has a place of business. If the buyer has no place of business, delivery is to take place at the buyer's residence.: a. True
b. False

7. K-Smart called Best View Curtains and offered to purchase 1000 widgets but no price was specified and there was no written memorandum confirming the order. The widgets were delivered within 72 hours. There is no contract formed because the price was not agreed upon.: a. True
b. False

8. A consumer lease is defined by Article 2A of the UCC as a lease made by a lessor who regularly engages in the business of making leases and which is made to a lessee (excluding an organization) for personal, family or household usage.: a. True
b. False

9. When a seller receives a purchase order calling for prompt shipment of the goods, the seller may promptly ship nonconforming goods without being in breach of the contract, provided that the seller also seasonably notifies the buyer that the goods were shipped as an accommodation to the buyer.: a. True
b. False

10. In interpreting a written sales contract, the court will generally not permit merchants to use parol evidence.: a. True
b. False

11. In which of the following situations is the seller a merchant under Article 2 of the UCC?: a. John, a financial planner, sells his car to a neighbor.
b. Carlos, a marketing consultant, sells his boat to a co-worker.
c. Mondo Inc., a textile manufacturer, contracted to sell pillows to K-Smart Department Stores.
d. In all of the above situations the seller is a merchant.

12. ABC Industries, Inc., a textile manufacturer, offered to sell 500 cotton blankets to St. Johns Hospital for $10,000 with payment on delivery. St. Johns Hospital responded, "accept your offer; full payment due 30 days after delivery." The parties:: a. do not have a contract since the acceptance violated the mirror image rule.
b. do not have a contract because the hospital's response was a counteroffer.
c. have a contract and in the majority of states, the terms of the offeree control.
d. have a contract and in the majority of states, the different terms will cancel each other out.

13. Which term is not required in a writing to satisfy the statute of frauds?: a. quantity
b. evidence of the transaction
c. price of the goods
d. signature of the defendant

14. A merchant cannot revoke a firm offer to buy or sell goods if the merchant has:: a. promised to keep the offer open.
b. stated in a signed letter that the offer would not be revoked.
c. declared in the presence of two or more reputable witnesses that the offer will be kept open.
d. received consideration to keep the offer open.

15. Which of the following contracts requires a writing under the UCC, Article 2?: a. Leslie sells her couch to Paula for $300.
b. Wiley purchase a telephone from a discount store for $100.
c. MondoColor Inc., a textile manufacturer, contracted to sleeping bags for $10,000 to K-Smart Department Stores.
d. K-Smart Department Store contracted to sell Jeremy a $400 bed.