Q&A Hero

Q: Which of the following is true of insurable interest? A. Sellers can retain the insurable interest to goods as long as they have the title to them. B. Buyers cannot place insurance on goods. C. Buyers cannot obtain an insurable interest if they might later reject the goods. D. Buyers can obtain insurable interest on goods that are not mentioned in the contract.

Q: Mike and Jane contract to purchase and sell $1,000,000 worth of computer chips to be manufactured in Japan and shipped to San Francisco. The contract is silent about the method of delivery. Mike asserts that delivery is by ship, which is customary in the computer chip industry, but Jane insists that delivery is by air, which is what a previous contract between Mike and Jane provided. Explain how a court will resolve this dispute.

Q: Sun Supply Co., offered to sell Apartment Management Inc., air conditioner filters at $15 per case in a signed writing that stated the price was good for sixty days. Apartment Management discovers that other sellers charge $20 per case for identical air conditioner filters but before it can accept Sun Supply's offer, Sun Supply withdraws the offer after only 30 days, stating that changed market conditions has forced it to charge more. Discuss the case.

Q: Lucky Used Cars using their contracts form, agree to sell Alvin a truck for $5,000. The contract provides that it may not be modified except by a signed writing. After entering into the contract, Lucky and Alvin orally agree that Lucky will include new floor mats and a bed liner for an extra $100. At the time of delivery Lucky refuses to provide the new floor mats and bed liner unless Alvin pays $. Discuss the enforceability of the oral agreement Lucky and Alvin had.

Q: Big Choppers orally contracts with Jane to make a custom motorcycle for Jane for $30,000. When completed Jane refuses to accept the motorcycle or pay for it. Discuss the validity of the oral contract.

Q: Packers, Inc., bought a new kind of refrigeration system from Coolit for storage of its meats. As part of the contract, Coolit delivered the refrigeration system to the Packers plant, installed it, set its temperature, and then monitored it for several hours to make sure it worked. Packers, Inc., received title to the refrigeration system when: A. the system was delivered to the plant. B. it paid for the system prior to its delivery. C. the system was delivered, installed, and tested. D. it signed the sales contract.

Q: When goods are sent f.o.b. shipment, the title and risk of loss: A. pass to the carrier at the point of origin. B. pass to the buyer at the point of origin. C. pass to the buyer at the destination. D. pass to the buyer when he/she accepts the goods.

Q: Which of the following is true of destination contracts? A. It requires a seller to turn the goods over to a carrier for delivery to the buyer. B. Both title and risk of loss pass to the buyer when goods are given to the carrier. C. Title and risk of loss pass to the buyer once the seller tenders goods at place as per the contract. D. The seller bears no responsibility for seeing that the goods reach their destination.

Q: A document of title allows the person who possesses it to: A. receive the goods named in the document. B. conclusively prove ownership of the goods named in the document. C. receive the goods named in the document free of any creditor claims. D. conclusively prove that the goods are free of defects.

Q: In which of the following cases can reversion of title to the seller occur? A. When a buyer rejects the goods, which a seller has sent as per terms of contract. B. When buyer accepts the goods and returns them after some time due to a defect. C. When a buyer's rejection of goods in not justified. D. When a buyer rejects the goods due to a defect discovered after inspection.

Q: Samantha was looking for a certain shade of thread to complete her needlework on a tablecloth. At a local shop however, she was unable to decide which of the five selected shades would be the closes match to the cloth. The shop owner allows Samantha to take the selected shades home and decide which one she would want to have. This is an example of which of the following? A. Destination contract B. Sale on approval C. Sale on acceptation D. Approval contract

Q: _____ includes any symbol, made with the intent to authenticate a writing. A. Seal B. Informal note C. Mark D. Signature

Q: Under the ____, an electronic signature is defined as "an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record." A. E-Sign Act B. UETA C. UCC D. CSIG

Q: Which of the following is true of international sales law? A. It governs only the formation of a sales contract and the rights and duties that arise from it. B. It is concerned with the validity of a contract that would be governed by other laws. C. It applies to the liability of the seller for death or personal injury caused by the goods to any person. D. It applies to auctions sales, sales of stocks, securities, negotiable instruments or money.

Q: In an ____, after the auctioneer calls for bids on an article or lot, that article or lot cannot be withdrawn unless no bid is made within a reasonable time. A. auction with reserve B. enforced auction C. auction without reserve D. entitled auction

Q: If a person obtains property as a result of another's fraud, misrepresentation, mutual mistake, undue influence, or duress, the person is said to hold only ____. A. voidable rights B. contract rights C. insured rights D. valid rights

Q: Any method of dealing that is commonly used in a particular field is known as: A. usage of trade. B. contract for sale. C. good faith. D. firm offer.

Q: In which manner can a sales contract be formed? A. It can be formed only through an oral agreement. B. It can be agreed orally and signed in front of a witness. C. It can be only in the written format with all the terms being acceptable to the parties. D. It can be formed by any method that shows the parties have reached an agreement.

Q: _____ are those that are in accordance with the obligations under the contract. A. Future goods B. Nonconforming goods C. Tangible goods D. Conforming goods

Q: Which of the following is true of a firm offer? A. It occurs when parties intend to be bound by a contract but fail to mention the price. B. It occurs when a seller agrees to sell all its produce to a particular buyer. C. It occurs when a merchant promises to hold an offer open without any consideration. D. It occurs when a buyer agrees to buy all its requirements from a particular seller.

Q: Joshua, a merchant, promises in a signed writing to Pedro, a consumer, to hold an offer to sell goods open for five months. However, Joshua sells the goods to another consumer and Pedro sues him for breach of contract. Which of the following is true of this case? A. Joshua is not bound by the contract since firm offers cannot exceed three months. B. Since Joshua is a merchant and is bound by a firm offer made to Pedro, he has breached contract. C. The UCC will not enforce this contract as a firm offer as both parties are not merchants. D. Joshua is bound by this offer only if a five month offer is customary for this type of good.

Q: Which of the following is true of oral contracts for the sale of goods of $500 or more? A. Oral contracts can occur between merchants and consumers for sale of good of $500 or more. B. A written conformation is received and signed by one party, and sent to the other for approval. C. A written conformation is received by a party and to which it does not object to within 10 days. D. An oral objection is accepted to a written confirmation for the sales of goods for $500.

Q: The seller is said to have a security interest in shipped goods if the agreement between the buyer and seller allows the seller to retain title after the goods are shipped.

Q: Massive Equipment Co. sends machinery on approval to Mountain Moving Co. While in possession of the machinery, Mountain becomes insolvent. The machinery is subject to the claims of Mountain's creditors.

Q: Buyers obtain an insurable interest even though they might later reject or return the goods to the seller.

Q: Sellers retain an insurable interest in the goods even if they do not have title to them.

Q: Which of the following is considered to be future goods? A. Office furniture B. Stocks C. Fish in the sea D. Gasoline at a gas station

Q: In what respect is a bailment legally different from a sale? A. Title does not transfer in a bailment. B. Title transfers in a bailment but no price is involved. C. In both there is a transfer of title but in a bailment the title reverts to the bailer at the end of the bailment. D. In a sale the title transfer includes all rights of ownership but in a bailment the title transfer includes limited rights of ownership.

Q: In a shipment contract, risk of loss does not pass from the seller to the buyer until the buyer receives the goods.

Q: In a contract for which no delivery is required, title to the goods does not pass to the buyer until the buyer receives the goods.

Q: Robert receives a document of title for lumber she purchased. Even though she does not yet possess the lumber, the document transfers to her both title to the lumber and risk of loss for it.

Q: An automobile title certificate under the UCC has the legal status of a document of title.

Q: A bill of sale provides evidence of the transfer of personal property from one person to another.

Q: Title may pass as soon as goods are identified to the contract even if the goods are still in the possession of the seller.

Q: Any contract for the sale of goods involving a price of $500 or more is unenforceable unless it is in writing.

Q: Merchant A orally enters into a $1000 contract with Merchant B. Merchant A will be legally bound if Merchant B sends a written confirmation even if Merchant A has not signed it.

Q: Braxton has an oral contract to deliver 500 cases of green beans to Mary for $10,000. In court concerning the validity of the contract, Braxton admits that he sold Mary 100 cases of green beans. The contract is enforceable to only 100 cases of green beans.

Q: Under the UCC, a signature includes any symbol made with the intent to authenticate a writing.

Q: The Convention on Contracts for the International Sale of Goods requires a written contract for the sale of goods when the price exceeds $5,000.

Q: In an auction with reserve, the auctioneer must accept the highest bid.

Q: Tibbetts left a television with Quick Fix, Inc., for repair. Quick Fix made tests and diagnosed the problem but never began the actual repairs. Nothing was done on the set for more than three months. After repeated telephone calls demanding that the work be done, Tibbetts asked for the return of the set. Quick Fix refused to give up the set unless Tibbetts paid for the time spent on making the tests. Discuss the case.

Q: Fish not yet caught by a commercial fisher are called future goods.

Q: A gift is legally considered the same as a sale since title passes in both a gift and a sale.

Q: A sale of goods contract offer is silent concerning the method of acceptance. It may be accepted in any reasonable manner.

Q: Jackson Furniture Co., states in writing that their offer to sell sofas to a hospital will be held open for 40 days. The written offer requires a consideration to be legally binding.

Q: Dash's auto insurance policy requires that he file a written notice of claim with the insurance company within ten days of any damage in an auto accident or the insurance company may refuse to pay the damage claim. Dash has several accidents and always simply orally reports the damage to the insurance agent and the insurance company pays the claim; however, on this occasion after his failure to file a written notice of the claim the company refuses to pay the claim. They cite the express language of the insurance policy. Is the insurance company correct? Discuss.

Q: Lisa did not deliver goods in 1992 as her contract with Jozell required but Jozell took no legal action for fifteen years and then sued Lisa for breach of contract. Discuss the suit.

Q: Roxta Biscuits and Seven Eleven Supermarkets enter a contract where the biscuit-making company will supply 1000 biscuit packs a day at $50 each to the supermarket chain for the next six months. However, Roxta Biscuits stops their supplies to the supermarkets mid-way claiming that the prices of each biscuit pack, due to inflation, are $80. Seven Eleven Supermarkets sues Roxta saying that it has to oblige by the contract signed. Evaluate the case.

Q: Norbert receives an official-looking written notice which states that Mountain Mortgage Inc., from whom he had borrowed money to purchase his house, has assigned Walter all rights to receive payment and that Norbert should make all future mortgage payments to Walter. Discuss Norbert's rights and duties.

Q: Basic Carpet contracts to install stain-resistant carpet in Alice's house for $6,000. Basic Carpet then assigns the right to receive payment from Alice to Home Finance Co. When payment comes due, Alice refuses to pay more than $2,000, asserting that the installed carpet was not stain-resistant. Home Finance asserts that Alice must pay $6,000 since Home Finance was not responsible for installing the carpet. Alice decides to sue Basic Carpet. Discuss the case.

Q: Jennifer contracts to purchase Allison's house when Allison is transferred out of the state. The contract calls for monthly payments but allows Jennifer to pay the remaining balance at any time. Jennifer, on June 1, sends Allison an offer to pay the balance. Allison receives the offer on June 2, but sets it aside until October 1. When Allison realizes that Jennifer has not made any payments for four months, she threatens to sue Jennifer for breach of contract. Discuss the legal rules governing this situation.

Q: _____ occurs when one party makes false statements or commits some sort of false action that causes another party to rely on those falsehoods then experience an injury or loss as a result. A. Abandonment of contractual obligation B. Fraudulent misrepresentation C. Anticipatory breach D. Constructive breach of contract

Q: Which of the following is an equitable remedy under contract law? A. Injunction B. Monetary damages C. Human servitude D. Specific damages

Q: The City of Newburyport contracted with Ace Paint Contractors for the repainting of a steel bridge. The contract specifically called for the use of a particular brand of paint called Nopeel Paint. It was later discovered that Ace used another brand of paint. Discuss the situation if Nopeel Paint decides to bring a lawsuit against Ace Paint Contractors.

Q: Alphonse owes huge debts to many creditors. A month before filing for bankruptcy, he distributes all of his assets among his creditors. Discuss the case.

Q: Martin entered into a written contract to sell Anna his football card collection for $10,000 payable in five installments. Martin then orally told Cathy that she could collect the proceeds of his sale. Discuss Cathy's legal rights.

Q: _____ occurs when a party to a contract either expresses or clearly implies an intention not to perform the contract, even before being required to act. A. Frustration-of-purpose B. Abandonment of contractual obligations C. Commercial impracticability D. Anticipatory breach

Q: Better Houses, Inc. has been contracted to build an addition on the Joyners' house. It built half of the addition and then unexpectedly announced that it was not going to finish the job. Such a desertion of work is called: A. a constructive breach of contract. B. substantial performance. C. abandonment of contractual obligations. D. a repudiation of contract.

Q: Which of the following is true of consequential damages? A. They result from a breach due to special circumstances that exist with a particular contract. B. They are the sum of money equal to the real financial loss suffered by the injured party. C. They cover any expenses paid out by the innocent party to prevent further loss. D. They are awarded as a measure of punishment for the defendant's wrongful acts.

Q: Time Zone sells to Gary for $4000 a designer jeweled watch which has a real gold band. Later Gary finds that the band is just polished with golden color and the watch does not have any real jewels and could be bought in the local store for $20. Gary can sue Time Zone for: A. consequential damages. B. exemplary damages. C. nominal damages. D. speculative damages.

Q: Tom and Nancy enter into a written contract for the sale of a dollhouse that Tom will custom-make. In the contract, they agree that Nancy will pay $350 if she breaks the contract. This sum of money is known as: A. mitigation of damages. B. speculative damages. C. equitable remedy. D. liquidated damages.

Q: Joe pays for his food at the drive-thru window as he receives it. The payment and the receipt are _____ conditions. A. precedent B. concurrent C. subsequent D. spontaneous

Q: Which of the following discharge by agreements requires that both the parties return to the other any consideration already received or pay for any services or materials already rendered? A. Termination by waiver B. Novation C. Mutual rescission D. General release

Q: _____ is a new agreement resulting from a bona fide dispute between the parties as to the terms of their original agreement. A. Mutual rescission B. Accord and satisfaction C. Novation D. Termination by waiver

Q: Which of the following is true of time for performance? A. When there is nothing to indicate in the contract that time is of importance, the court will allow additional time. B. Time period cannot be enforced simply by including the phrase "time is of the essence" written contract. C. When the time for performance is not stated in the contract, the contract must be performed within a reasonable time. D. When there is something special about the contract that indicates time is essential, additional time is allowed.

Q: Which of the following is true of satisfactory performance? A. It is either an express or implied condition of every contract. B. It exists when parties fully accomplish every term, condition, and promise to which they agreed. C. It exists when a party executes all the terms, except minor details that do not affect the contract's real intent. D. It terminates an agreement, freeing the parties of any further obligation or liability.

Q: _____ occurs when a party, in good faith, executes all promised terms and conditions with the exception of minor details that do not affect the real intent of their agreement. A. Complete performance B. Satisfactory performance C. Partial performance D. Substantial performance

Q: John must repair Gladys' motorcycle, but when he becomes ill he transfers that responsibility to Clark. The transfer to Clark is: A. an assignment. B. a delegation. C. a novation. D. a conveyance.

Q: Morey and Sheryl enter into a contract in which Morey agrees to pay Sheryl $40 to collect his mail while he is on a month-long vacation. Sheryl then delegates the duty to her son Greg. In this assignment, Sheryl is: A. the assignor. B. the obligor. C. the assignee. D. the obligee.

Q: Jo is duly notified that her mortgage with Fund All Savings has been transferred to Big Loan Co. and that she should henceforth pay Big Loan Co. Jo continues to pay Fund All Savings and Big Loan Co. sues Jo for nonpayment. Which of the following is most likely to be the court's judgment? A. Jo is not liable to Big Loan Co. since she has already paid to Fund All Savings. B. Jo is liable to Fund All Savings and to Big Loan Co. since her mortgage has been transferred. C. Jo is liable to Fund All Savings since her mortgage was processed by them. D. Jo is liable to Big Loan Co. since she received a notice from them about the assignment.

Q: Aspen assigns his right to receive payment from Donna to Henry. Later Aspen assigns this same right to Doris. Doris gives notice to Donna on May 1 and Henry gives notice to Donna on May 2. Which of the following is most likely to be the court's ruling? A. Since Henry was the first assignee, he will be given the superior right to claim Aspen's benefits. B. Since Doris was the first to notify Donna, she will be given the right to claim the assigned benefits. C. Henry and Doris are joint assignees and will be given equal rights to claim the assigned benefits from Donna. D. Donna will be required to pay to Aspen, who in turn will be asked to make respective payments to Doris and Henry.

Q: Henry borrows money from Commerce Bank to purchase a house. However, he moves to another city to attend graduate school and so sells the house to Maria. Henry wants to be released from his payment obligations to Commerce Bank. Which of the following would release Henry from his liability to Commerce Bank? A. A delegation of the payment obligation by Henry to Maria is will release Henry from liability. B. The sale of the house by Henry to Maria involuntarily releases his payment obligation. C. A delegation of the payment obligation to Maria along with a written notice to Commerce Bank can release Henry from the liability. D. A novation in which Commerce Bank agrees to substitute Maria for Henry will release Henry.

Q: An anticipatory breach occurs when a party to a contract expresses or clearly implies an intention not to perform to contract after being required to act.

Q: Quantum meruit damages are in an amount considered to be reasonable in return for the benefits one party derived through the quasi-contract relationship.

Q: Under law, court-issued injunctions are typically temporary can never be permanent.

Q: Claudia contracts with Friendly Paving Co. to install a new driveway. To pay for this work, Claudia transfers to Friendly Paving Co. her right to receive payment from Clifford for a loan she made him. Friendly Paving Co. is the: A. creditor beneficiary. B. donee beneficiary. C. executor. D. fiduciary.

Q: Which of the following beneficiaries have no enforceable legal rights? A. Donee beneficiary B. Incidental beneficiary C. Creditor beneficiary D. Insurance benefiicary

Q: The satisfactory performance by a car dealer of a contract for the purchase of a new car would be judged by an objective standard.

Q: Promising to pay when goods are delivered is an example of a condition precedent.

Q: Stella contracts to purchase Wilma's horse for $10,000. The horse dies soon after the contract is signed. Stella is still obligated to pay for the horse.