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Bus 2061 Test 5

Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
 

1. 

Article 2 of the Uniform Commercial Code applies to the sale of:
a.
corporate stocks.
b.
U.S. Treasury bonds.
c.
goods.
d.
insurance policies.
 

2. 

A transfer of possession, but not title, is called:
a.
a bailment.
b.
an option to purchase.
c.
a gift.
d.
all of the above.
 

3. 

A sales contract must be evidenced by a writing if the sales price of goods is equal to or more than:
a.
$100.
b.
$300.
c.
$500.
d.
$1,000.
 

4. 

Which of the following situations creates an exception to the requirement of a writing under the statute of frauds?
a.
nonresellable goods
b.
receipt and acceptance
c.
payment
d.
all of the above
 

5. 

In a sale of identified goods from one nonmerchant to another, the risk of loss passes to the buyer:
a.
at the time of the contract.
b.
upon delivery.
c.
upon tender of delivery.
d.
upon payment by the buyer.
 

6. 

In a contract for delivery at destination:
a.
the title and the risk of loss pass to the buyer when the goods are successfully given to the carrier.
b.
when the goods are successfully given over to the buyer.
c.
when the goods are marked for the buyer.
d.
when the goods are insured by the buyer.
 

7. 

A consignment sale:
a.
transfers title to the consignee.
b.
does not create an agency relationship.
c.
does not require the consignee to return any unsold goods.
d.
causes title to transfer directly from the consignor to the buyer in the event of a sale.
 

8. 

Which of the following parties may not pass good title to a good-faith purchaser?
a.
one who has purchased through fraud
b.
entrustee
c.
thief
d.
consignee
 

9. 

The concept of strict tort liability was created by:
a.
the CISG.
b.
the UCC.
c.
recent court decisions.
d.
state statutes.
 

10. 

The defendant in a defective product suit may be:
a.
the seller.
b.
the manufacturer.
c.
the manufacturer of a component part.
d.
all of the above.
 

11. 

Which of the following statements made by the seller probably will not form an express warranty?
a.
"This looks beautiful on you."
b.
"This is 100 percent wool."
c.
"This motor generates 100 horsepower."
d.
"This is a 3.2 liter rotary engine."
 

12. 

Under what type of warranty is the seller obligated to fix or replace a defective product within a reasonable time at no cost to the buyer?
a.
full
b.
express
c.
limited
d.
implied
 

13. 

The federal regulation of express warranties:
a.
applies only to limited warranties.
b.
applies when an item costs at least $10.
c.
requires all express warranties to be full warranties.
d.
requires a warranty to be denominated as either full or limited.
 

14. 

A warranty is limited if:
a.
only the original buyer is covered by the warranty.
b.
the buyer is required to fill out and return a warranty registration card shortly after the purchase for the warranty to be effective.
c.
it covers only part of the product purchased.
d.
all of the above.
 

15. 

If an express warranty is false, then:
a.
the buyer has no further remedies.
b.
the seller has no further warranty obligation if the buyer had the opportunity to inspect the goods before the purchase.
c.
the breach of warranty renders the seller liable just as if the truth of the warranty had been guaranteed.
d.
all implied warranties must be waived as well.
 

16. 

In most instances, the mere fact that a sale was made gives rise to a(n):
a.
express warranty.
b.
limited warranty.
c.
full warranty.
d.
implied warranty.
 

17. 

Which of the following warranties is created when the buyer relies on the seller to pick out the goods that the buyer requires to meet a stated need?
a.
conformity to description
b.
merchantability
c.
fitness for particular purpose
d.
conformity to sample or model
 

18. 

The warranty of merchantability guarantees that the:
a.
party in question is a merchant.
b.
product is fit for its normal use at the time of the sale.
c.
product will remain fit for its normal use for a reasonable period of time.
d.
product can be resold by the buyer if the buyer does not want to keep it.
 

19. 

A disclaimer or exclusion of the warranty of merchantability will be invalid:
a.
when the goods cost $500 or more.
b.
when the defects in the goods are obvious to all buyers.
c.
when it is made at the time of the sale.
d.
when it is contained in a writing and is not conspicuously set forth.
 

20. 

An examination of goods excludes any implied warranty with respect to a defect that:
a.
is apparent after a reasonable examination is made.
b.
will not be apparent without chemical analysis.
c.
will not be apparent until the goods are processed or used in manufacturing.
d.
is unknown to all parties and is not detectable by reasonable examination.
 

21. 

The UCC expressly preserves the pre-Code law as to:
a.
negligence.
b.
fraud.
c.
strict liability.
d.
all of the above.
 

22. 

When one party informs another party that performance will not be given in advance of contract deadlines:
a.
an anticipatory repudiation has occurred.
b.
a repudiation has occurred.
c.
both a and b.
d.
none of the above.
 

23. 

The obligations of the parties to a sales contract include:
a.
the seller's duty to deliver the goods to the buyer's place of business.
b.
the buyer's duty to always accept the goods.
c.
the seller's duty to arrange for appropriate transport.
d.
the buyer's duty to pay for the goods.
 

24. 

Unless otherwise agreed, the proper place for the delivery of goods is:
a.
the buyer's place of business.
b.
the seller's home.
c.
a delivery service selected by the seller.
d.
the seller's place of business.
 

25. 

When a buyer shows in some way that the goods conform to the contract, the buyer has made a(n):
a.
acceptance of the goods.
b.
assignment of the goods.
c.
substitution of the goods.
d.
avoidance of the contract.
 

26. 

Which of the following does not constitute an acceptance?
a.
express statement of approval by the buyer
b.
examination by the buyer
c.
retaining goods for an unreasonably long period of time
d.
modifying the goods
 

27. 

Which means of payment gives the buyer credit by postponing the time for payment?
a.
a promissory note
b.
a check
c.
cash
d.
a certified check
 

28. 

A seller's right to retain possession of goods until the seller has been paid is called a:
a.
seller's lien.
b.
buyer's lien.
c.
merchandise estoppel.
d.
nonpayment tort.
 

29. 

A seller may cancel a sales contract if the buyer:
a.
wrongfully rejects the goods.
b.
repudiates the contract.
c.
fails to make a payment due on or before delivery.
d.
all of the above.
 

30. 

A seller may not sue the buyer for the full purchase price if:
a.
the goods are resold at one-third of the contract price.
b.
the goods cannot be resold.
c.
the goods have been accepted.
d.
the goods have been damaged after the risk of loss passed to the buyer.
 

31. 

Which of the following is not an example of incidental damages recoverable by a seller?
a.
expenses for the care of the goods after the buyer's breach
b.
expenses for transportation of the goods after the buyer's breach
c.
expenses for resale of the goods after the buyer's breach
d.
expenses for the attorney's fees after the buyer's breach
 

32. 

A buyer may reject a tender of delivery:
a.
unless it is perfect.
b.
unless the goods substantially conform to the contract.
c.
unless the seller promises to cure the defective tender.
d.
unless the goods have been sold on credit.
 

33. 

When a buyer sues the seller for failing to deliver the goods, the buyer may recover the:
a.
difference between the market price at the time of the breach and the contract price.
b.
difference between the market price on the date that the buyer learned of the breach and the contract price.
c.
reasonable value of the goods.
d.
value of the goods measured by the contract price.
 

34. 

If a buyer procures the same or similar goods as those involved in the sales contract breached by the seller, the buyer:
a.
loses all rights to prosecute for breach.
b.
is said to have validated the seller's action.
c.
is said to have covered.
d.
is also in breach.
 

35. 

When a seller breaches a contract for the sale of goods to a buyer, the buyer is entitled to specific performance of the contract if the:
a.
goods are unique.
b.
market cost of the goods has increased.
c.
goods can be purchased in any major city in the country.
d.
buyer's customers will be disappointed if the buyer does not obtain the goods.
 

Essay
 

36. 

I walk out on to the floor of my store. To my surprise, I am all out of Play Station 2’s. Because Christmas is just around the corner, I decide to restock my shelf. I call Sony and place an order for 100 Play Station Two’s; the total bill comes to $10,000. After the conversation the Sony manager places a signed letter in the mail confirming the order. The next morning the goods are placed onto a Truck. On the way to my store, the truck driver drops a chilidog on his lap and drives into Lake Wales. From this, all goods are ruined. One week later, I receive the above-mentioned letter and refuse payment. Sony sues me, who prevails?  Discuss all relevant contract issues.
 



 
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