Question 1

Equipment Rentals Corporation (ERC) agrees to lease two backhoes to Dig & Fill Construction, Inc. Before any interest in the backhoes can pass from ERC to Dig & Fill, they must be​

Accepted Answer

Under UCC Article 2, for the lease of goods, they must exist and be identified as the specific goods in the contract before any interest can pass. Physical possession or listing in a document of title are not required for the transfer of interest in leased goods.

Question 2

Josefina owns a condominium that she leases to Katrina. Josefina gives her daughter Lucia $450 on her sixteenth birthday. Josefina sells her car to her neighbor Maria for $1,500. UCC Article 2 covers​

Accepted Answer

UCC Article 2 covers the sale of goods, which includes the sale of the car to Maria. The lease with Katrina is not covered by UCC Article 2 as it is a real estate transaction. The gift to Lucia is not covered by UCC Article 2 as it does not involve the sale of goods.

Question 3

Mountainside Coffee Company and Nature's Cuisine, Inc., enter into a contract for a sale of coffee beans. The contract includes the term "F.O.B. Ocean City," which is the location of Nature's Cuisine. This means that the contract is​

Accepted Answer

The answer of Mountainside Coffee Company and Nature's Cuisine, Inc.,...

Question 4

County Dentists Clinic offers to buy from Dental & Medical Supplies Company a certain quantity of floss and other items for a certain price. Dental & Medical can accept the offer by

Accepted Answer

A prompt promise to ship or a prompt or current shipment of the goods constitutes acceptance of an offer to buy goods under the Uniform Commercial Code (UCC).

Question 5

Safety Supply Corporation in New York sells a truckload of protective suits, masks, and other safety gear to Toxic Recovery, Inc., in Connecticut, "F.O.B. New York." Safety Supply arranges with US Truckline to transport the goods. The cost of the transport will be paid by​

Accepted Answer

The answer of Safety Supply Corporation in New York sells...

Question 6

Spuds Corporation buys from Tater Farms, Inc., potatoes that Tater plans to plant and harvest during the next growing season. Spuds plans to sell the harvest to Tasty Foods Restaurants, but they have not yet entered into a contract. After the potatoes are planted, but before they are harvested, an insurable interest in the crop exists in

Accepted Answer

An insurable interest exists in both Spuds and Tater because Spuds has a contract to buy the potatoes, and Tater owns and is growing the crop. Tasty Foods does not have an insurable interest as they have not entered into a contract.

Question 7

Refined Grains, Inc., agrees to sell to Sunny Cereal Company a certain quantity of refined oats each week but no mention is made of where the goods are to be delivered. In general, the UCC requires that the delivery take place at​

Accepted Answer

Under the Uniform Commercial Code (UCC), when a contract for the sale of goods does not specify a place of delivery, the default location is the seller's place of business.

Question 8

Talk Talk, Inc., offers to buy from Voice Media Corporation (VMC) 1,000 smartphones. Without notifying Talk Talk, VMC timely ships phones of a different quality. With respect to the offer and a possible contract, this shipment is an acceptance and​

Accepted Answer

The shipment of phones of a different quality is not in accordance with the terms of the offer made by Talk Talk, thereby breaching the offer.

Question 9

Marine Expeditions, Inc., pays Nate's Boats $4,000 to use an oceangoing vessel for a month. For the purposes of the UCC, this is​

Accepted Answer

The payment made by Marine Expeditions, Inc. to Nate's Boats for using the oceangoing vessel for a month is for a lease. This is not a sale as ownership of the vessel remains with Nate's Boats. It is not an option contract because there is no mention of any option to buy or sell the vessel. While it could be argued that this is a merchant's firm offer, as there is an agreement to lease the vessel for a specific time and price, the fact that the duration is for a month and not a "reasonable" amount of time would make it more appropriate to classify it as a lease.

Question 10

Brian, an agent for Clarion Motors, Inc., writes a letter on behalf of Clarion Motors to Dina on November 1 stating that he will sell her a 2016 Subaru Outback for $20,000 between November 1 and December 31. Brian's letter to Dina is

Accepted Answer

A merchant's firm offer is a written and signed promise by a merchant to hold an offer open for a specified period, which does not require consideration to be binding. Brian's letter meets these criteria.

Question 11

Pipes & Culverts Company orders six irrigation pumps from Quality Plumbing, Inc. The pumps are stored in Restorers Warehouse. Under the terms of the order, Quality must give Pipes a warehouse receipt for the goods, which Pipes will then pick up. Title to the goods passes to Pipes when

Accepted Answer

Title to the goods passes to Pipes when Quality gives Pipes a warehouse receipt for the pumps, as this is the point at which Pipes has the right to take possession of the goods.

Question 12

Cakes & Cookies Corporation orders Delicioso-brand chocolate from Edibles Distribution Inc. Edibles identifies the goods. Before they are shipped to Cakes & Cookies, an insurable interest in the goods exists in​

Accepted Answer

Cakes & Cookies has an insurable interest because they have ordered and will own the goods upon delivery. Edibles has an insurable interest because they currently own the goods and are responsible for them until delivery.

Question 13

Commercial Rents Corporation agrees to lease a pressure washer to Delivery Trucks, Inc., which agrees to pick it up at E Street Warehouse. Before Delivery Trucks retrieves the washer, it is stolen. The loss is suf-fered by​

Accepted Answer

Commercial Rents Corporation owns the pressure washer which was stolen, and therefore they bear the loss. Delivery Trucks, Inc. did not yet take possession of the washer, so they are not responsible for the loss. E Street Warehouse also cannot be held responsible as they did not cause the loss. The thief is responsible for the theft but may not be able to compensate for the loss.

Question 14

Pam buys from Midtown Motors a used sport utility vehicle (SUV). The SUV was manufactured by GEM Vehicles, Inc., and previously owned by Ron. Regarding title to the SUV, Pam acquires​

Accepted Answer

Pam acquires whatever title Midtown had since she purchased the SUV from them. If Midtown had a clear title, Pam will have a clear title. However, if Midtown had a defective title, Pam will acquire the same title.

Question 15

Great Harvest Farms offers to sell Hearty Bakeries, Inc., fifty bushels of wheat. Hearty's representative Ilene responds, "We agree to buy fifty bushels only if the wheat is Grade A quality." Between Great Harvest and Hearty Bakeries​

Accepted Answer

Ilene's response is a conditional acceptance which adds a new term to the original offer. This is considered a counteroffer which rejects the original offer and makes a new offer. Therefore, no contract is formed until Great Harvest Farms accepts the new offer by delivering Grade A quality wheat.

Question 16

Brad leaves a laptop at Computer Sales & Repair (CSR) to have the battery replaced. CSR sells the laptopto Doris, who does not know that it belongs to Brad. Brad can recover from

Accepted Answer

Brad can recover from CSR because they sold his property without his consent. Doris, being an innocent purchaser, is not liable.

Question 17

Olivia contracts to buy a refrigerator from a Prairie State Appliance store with the price to be paid in monthly installments. Later, Olivia files a suit against Prairie State, claiming that their contract is so unfair and one-sided that it would be unreasonable to enforce it. Olivia is asserting​

Accepted Answer

Olivia is asserting the doctrine of unconscionability, which states that a contract can be deemed unenforceable if it is so one-sided and unfair that it would be oppressive to enforce it.

Question 18

Consumers Choice store accepts a shipment of EZ2U-brand tablets from Digital Devices, Inc. Consumers Choice later discovers a defect in the tablets, revokes acceptance, and returns the tablets via Go Back, Inc. During the return, the tablets are lost. The loss is suffered by​

Accepted Answer

The loss of the tablets occurred during the return, which means that Digital Devices still owned the tablets at the time of loss. Therefore, Digital Devices is responsible for the loss.

Question 19

Lexi pays Mobile Edge Electronics $600 and receives a new phone. Under the UCC, this is​

Accepted Answer

Lexi pays for and receives a new phone, which constitutes a sale under the UCC (Uniform Commercial Code).

Question 20

Expert Stitching Corporation enters into a contract to sell denim clothing to Fine Fashion Company, which in turn sells a pair of jeans to Grady, a consumer. In contrast to standards that apply to consumers, the UCC imposes on merchants​

Accepted Answer

The UCC imposes special business standards on merchants, which include good faith, reasonable care, and promptness in performing contractual obligations. These standards recognize that merchants engage in commercial transactions on a regular basis and have greater knowledge and experience in the relevant industry.

Quiz 11: Sales and Lease Contracts

Equipment Rentals Corporation (ERC) agrees to lease two backhoes to Dig & Fill Construction, Inc. Before any interest in the backhoes can pass from ERC to Dig & Fill, they must be

Josefina owns a condominium that she leases to Katrina. Josefina gives her daughter Lucia $450 on her sixteenth birthday. Josefina sells her car to her neighbor Maria for $1,500. UCC Article 2 covers

Mountainside Coffee Company and Nature's Cuisine, Inc., enter into a contract for a sale of coffee beans. The contract includes the term "F.O.B. Ocean City," which is the location of Nature's Cuisine. This means that the contract is

County Dentists Clinic offers to buy from Dental & Medical Supplies Company a certain quantity of floss and other items for a certain price. Dental & Medical can accept the offer by

Safety Supply Corporation in New York sells a truckload of protective suits, masks, and other safety gear to Toxic Recovery, Inc., in Connecticut, "F.O.B. New York." Safety Supply arranges with US Truckline to transport the goods. The cost of the transport will be paid by

Refined Grains, Inc., agrees to sell to Sunny Cereal Company a certain quantity of refined oats each week but no mention is made of where the goods are to be delivered. In general, the UCC requires that the delivery take place at

Talk Talk, Inc., offers to buy from Voice Media Corporation (VMC) 1,000 smartphones. Without notifying Talk Talk, VMC timely ships phones of a different quality. With respect to the offer and a possible contract, this shipment is an acceptance and

Marine Expeditions, Inc., pays Nate's Boats $4,000 to use an oceangoing vessel for a month. For the purposes of the UCC, this is

Brian, an agent for Clarion Motors, Inc., writes a letter on behalf of Clarion Motors to Dina on November 1 stating that he will sell her a 2016 Subaru Outback for $20,000 between November 1 and December 31. Brian's letter to Dina is

Pipes & Culverts Company orders six irrigation pumps from Quality Plumbing, Inc. The pumps are stored in Restorers Warehouse. Under the terms of the order, Quality must give Pipes a warehouse receipt for the goods, which Pipes will then pick up. Title to the goods passes to Pipes when

Cakes & Cookies Corporation orders Delicioso-brand chocolate from Edibles Distribution Inc. Edibles identifies the goods. Before they are shipped to Cakes & Cookies, an insurable interest in the goods exists in

Commercial Rents Corporation agrees to lease a pressure washer to Delivery Trucks, Inc., which agrees to pick it up at E Street Warehouse. Before Delivery Trucks retrieves the washer, it is stolen. The loss is suf-fered by

Pam buys from Midtown Motors a used sport utility vehicle (SUV) . The SUV was manufactured by GEM Vehicles, Inc., and previously owned by Ron. Regarding title to the SUV, Pam acquires

Great Harvest Farms offers to sell Hearty Bakeries, Inc., fifty bushels of wheat. Hearty's representative Ilene responds, "We agree to buy fifty bushels only if the wheat is Grade A quality." Between Great Harvest and Hearty Bakeries

Brad leaves a laptop at Computer Sales & Repair (CSR) to have the battery replaced. CSR sells the laptopto Doris, who does not know that it belongs to Brad. Brad can recover from

Olivia contracts to buy a refrigerator from a Prairie State Appliance store with the price to be paid in monthly installments. Later, Olivia files a suit against Prairie State, claiming that their contract is so unfair and one-sided that it would be unreasonable to enforce it. Olivia is asserting

Consumers Choice store accepts a shipment of EZ2U-brand tablets from Digital Devices, Inc. Consumers Choice later discovers a defect in the tablets, revokes acceptance, and returns the tablets via Go Back, Inc. During the return, the tablets are lost. The loss is suffered by

Lexi pays Mobile Edge Electronics $600 and receives a new phone. Under the UCC, this is

Expert Stitching Corporation enters into a contract to sell denim clothing to Fine Fashion Company, which in turn sells a pair of jeans to Grady, a consumer. In contrast to standards that apply to consumers, the UCC imposes on merchants

Quiz 11: Sales and Lease Contracts

Equipment Rentals Corporation (ERC) agrees to lease two backhoes to Dig & Fill Construction, Inc. Before any interest in the backhoes can pass from ERC to Dig & Fill, they must be​

Josefina owns a condominium that she leases to Katrina. Josefina gives her daughter Lucia $450 on her sixteenth birthday. Josefina sells her car to her neighbor Maria for $1,500. UCC Article 2 covers​

Mountainside Coffee Company and Nature's Cuisine, Inc., enter into a contract for a sale of coffee beans. The contract includes the term "F.O.B. Ocean City," which is the location of Nature's Cuisine. This means that the contract is​

County Dentists Clinic offers to buy from Dental & Medical Supplies Company a certain quantity of floss and other items for a certain price. Dental & Medical can accept the offer by

Safety Supply Corporation in New York sells a truckload of protective suits, masks, and other safety gear to Toxic Recovery, Inc., in Connecticut, "F.O.B. New York." Safety Supply arranges with US Truckline to transport the goods. The cost of the transport will be paid by​

Refined Grains, Inc., agrees to sell to Sunny Cereal Company a certain quantity of refined oats each week but no mention is made of where the goods are to be delivered. In general, the UCC requires that the delivery take place at​

Talk Talk, Inc., offers to buy from Voice Media Corporation (VMC) 1,000 smartphones. Without notifying Talk Talk, VMC timely ships phones of a different quality. With respect to the offer and a possible contract, this shipment is an acceptance and​

Marine Expeditions, Inc., pays Nate's Boats $4,000 to use an oceangoing vessel for a month. For the purposes of the UCC, this is​

Brian, an agent for Clarion Motors, Inc., writes a letter on behalf of Clarion Motors to Dina on November 1 stating that he will sell her a 2016 Subaru Outback for $20,000 between November 1 and December 31. Brian's letter to Dina is

Pipes & Culverts Company orders six irrigation pumps from Quality Plumbing, Inc. The pumps are stored in Restorers Warehouse. Under the terms of the order, Quality must give Pipes a warehouse receipt for the goods, which Pipes will then pick up. Title to the goods passes to Pipes when

Cakes & Cookies Corporation orders Delicioso-brand chocolate from Edibles Distribution Inc. Edibles identifies the goods. Before they are shipped to Cakes & Cookies, an insurable interest in the goods exists in​

Commercial Rents Corporation agrees to lease a pressure washer to Delivery Trucks, Inc., which agrees to pick it up at E Street Warehouse. Before Delivery Trucks retrieves the washer, it is stolen. The loss is suf-fered by​

Pam buys from Midtown Motors a used sport utility vehicle (SUV) . The SUV was manufactured by GEM Vehicles, Inc., and previously owned by Ron. Regarding title to the SUV, Pam acquires​

Great Harvest Farms offers to sell Hearty Bakeries, Inc., fifty bushels of wheat. Hearty's representative Ilene responds, "We agree to buy fifty bushels only if the wheat is Grade A quality." Between Great Harvest and Hearty Bakeries​

Brad leaves a laptop at Computer Sales & Repair (CSR) to have the battery replaced. CSR sells the laptopto Doris, who does not know that it belongs to Brad. Brad can recover from

Consumers Choice store accepts a shipment of EZ2U-brand tablets from Digital Devices, Inc. Consumers Choice later discovers a defect in the tablets, revokes acceptance, and returns the tablets via Go Back, Inc. During the return, the tablets are lost. The loss is suffered by​

Lexi pays Mobile Edge Electronics $600 and receives a new phone. Under the UCC, this is​

Expert Stitching Corporation enters into a contract to sell denim clothing to Fine Fashion Company, which in turn sells a pair of jeans to Grady, a consumer. In contrast to standards that apply to consumers, the UCC imposes on merchants​

Equipment Rentals Corporation (ERC) agrees to lease two backhoes to Dig & Fill Construction, Inc. Before any interest in the backhoes can pass from ERC to Dig & Fill, they must be

Josefina owns a condominium that she leases to Katrina. Josefina gives her daughter Lucia $450 on her sixteenth birthday. Josefina sells her car to her neighbor Maria for $1,500. UCC Article 2 covers

Mountainside Coffee Company and Nature's Cuisine, Inc., enter into a contract for a sale of coffee beans. The contract includes the term "F.O.B. Ocean City," which is the location of Nature's Cuisine. This means that the contract is

Safety Supply Corporation in New York sells a truckload of protective suits, masks, and other safety gear to Toxic Recovery, Inc., in Connecticut, "F.O.B. New York." Safety Supply arranges with US Truckline to transport the goods. The cost of the transport will be paid by

Refined Grains, Inc., agrees to sell to Sunny Cereal Company a certain quantity of refined oats each week but no mention is made of where the goods are to be delivered. In general, the UCC requires that the delivery take place at

Talk Talk, Inc., offers to buy from Voice Media Corporation (VMC) 1,000 smartphones. Without notifying Talk Talk, VMC timely ships phones of a different quality. With respect to the offer and a possible contract, this shipment is an acceptance and

Marine Expeditions, Inc., pays Nate's Boats $4,000 to use an oceangoing vessel for a month. For the purposes of the UCC, this is

Cakes & Cookies Corporation orders Delicioso-brand chocolate from Edibles Distribution Inc. Edibles identifies the goods. Before they are shipped to Cakes & Cookies, an insurable interest in the goods exists in

Commercial Rents Corporation agrees to lease a pressure washer to Delivery Trucks, Inc., which agrees to pick it up at E Street Warehouse. Before Delivery Trucks retrieves the washer, it is stolen. The loss is suf-fered by

Pam buys from Midtown Motors a used sport utility vehicle (SUV) . The SUV was manufactured by GEM Vehicles, Inc., and previously owned by Ron. Regarding title to the SUV, Pam acquires

Great Harvest Farms offers to sell Hearty Bakeries, Inc., fifty bushels of wheat. Hearty's representative Ilene responds, "We agree to buy fifty bushels only if the wheat is Grade A quality." Between Great Harvest and Hearty Bakeries

Consumers Choice store accepts a shipment of EZ2U-brand tablets from Digital Devices, Inc. Consumers Choice later discovers a defect in the tablets, revokes acceptance, and returns the tablets via Go Back, Inc. During the return, the tablets are lost. The loss is suffered by

Lexi pays Mobile Edge Electronics $600 and receives a new phone. Under the UCC, this is

Expert Stitching Corporation enters into a contract to sell denim clothing to Fine Fashion Company, which in turn sells a pair of jeans to Grady, a consumer. In contrast to standards that apply to consumers, the UCC imposes on merchants