1. A contract which does not satisfy the writing requirement of the Article 2 statute of frauds, but which is otherwise valid, is enforceable in which of the following situations?

A. Where the goods have been delivered and accepted B. Where payment has been accepted C. Where the goods have been specially manufactured and are not suitable for resale in the ordinary course of business D. All of these are situations where the contract would be enforceable.

2. Which of the following is correct with respect to finance leases?

A finance lease generally involves three parties instead of two.

A finance lessor supplies the goods.

The finance lessor typically has special expertise as to the goods.

All of these are correct.

3. Knecht contracts to sell $20,000 of goods to Morales. Later, Morales hears from another supplier that Knecht is having financial trouble, and Morales is concerned that Knecht will not be able to fill his order. If Morales has reasonable grounds for insecurity about Knecht's contractual performance:

A. Morales has no recourse except to wait for the contractual delivery date and, if Knecht fails to deliver, Morales can then sue for breach of contract. B. Morales may demand written assurance of performance from Knecht before the contract delivery date, and Knecht must provide adequate assurance within a reasonable time not exceeding 30 days.

C. Morales may demand assurance of performance from Knecht, and Knecht must provide adequate assurance within ten days or the contract is repudiated. D. the statement by the other supplier creates an anticipatory repudiation which allows Morales to avoid the contract.

4. Under the ____, a buyer may reject goods for even the slightest defect.

revocation of acceptance rule

perfect tender rule

rules for inspection

excuses for nonperformance

5. Damages that are generally equal to the difference between the value of the goods as warranted and the actual value of the goods accepted at the time and place of acceptance are known as ________.

compensatory damages

incidental damages

punitive damages

future damages

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6. A buyer in Atlanta enters into a sales contract with a seller in Chicago. If the contract does not mention the place for delivery of the goods, the place of delivery will be:

at the seller's business or residence in Chicago.

as stated in all destination contracts.

at the buyer's business or residence in Atlanta.

irrelevant, since the contract is void.

7. Klint Microsystems, a microprocessor manufacturer, was contracted by Zeitar Studios to manufacture specially designed microchips to be used in an audio engineering process. Zeitar was to pay Klint $300,000 as per the contract. Klint decided to redesign their existing microchips and make them suitable for Zeitar. While the finished microchips were being shipped via a carrier, Klint was informed of Zeitar's insolvency. Klint cancelled the shipment before it was delivered. Klint then resold the chips to another studio where they had to settle for $150,000 as the chips were now only suitable for specific audio engineering processes.

What legal action can Klint take against Zeitar?

sue to recover purchase price

get a court order asking for specific performance

exercise the buyer's right to cover

sue and recover lost profits

8. The most important element in determining whether a sales contract has been made is the:

language of the contract.

fact that the terms of the offer and acceptance are exactly alike.

number of open terms.

intention of the parties to make a contract.

9. Which of the following is true of the display of warranty disclaimers?

It can be implied as an understanding between the buyer and seller.

It need only be present in the contract.

It must be published in the local newspaper before actually being displayed.

It should be conspicuous and noticeable.

10. Which of the following would constitute an implied warranty?

A. affirmation of the facts of the goods B. adequate packaging and labeling of the goods C. description of the goods D. model or sample of the goods

11. In which of the following situations does the seller have the right to cure?

A. Where the time for performance under the contract has not yet expired B. After the time for performance has expired if the seller didn't have any conforming items to tender C. Where the buyer has revoked acceptance D. All of these.

12. Under the UCC, what course of action can the sellers pursue in case of shipment of nonconforming or defective goods?

A. perfect tender rule B. replevin C. right to cure D. tender of delivery

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13. Which of the following would be considered a breach of contract?

A. acceptance of nonconforming goods by a buyer B. nondelivery of goods to a buyer that has a document of title C. delivery of conforming goods by a seller D. nonacceptance of conforming goods by a buyer

14. Which of the following would constitute the creation of an express warranty for goods?

A. affirmation of the value of the goods B. commendation of the goods C. prior experience with the goods D. description of the goods

15. Which of the following is a seller's remedy?

A. right to dispose of goods B. right to obtain specific performance C. right to replevy goods D. right to recover damages for nondelivery

16. If a promissory note is secured by a piece of real estate, then the note is called a(n) ______. A. demand note B. installment note C. mortgage note

D. collateral note

A two-party negotiable instrument that is a special form of note created when a person deposits money at a financial institution in exchange for the institution's promise to pay back the amount of the deposit plus an agreed-on rate of interest upon the expiration of a set time period agreed upon by the parties is known as a ________.

A. bill of exchange B. collateral note C. certificate of deposit D. check

Which of the following must a promissory note contain to make it negotiable?

A. an implied promise to pay B. a promise to negotiate C. an unconditional promise to pay D. an acknowledgement of debt

A fundamental requirement for a negotiable instrument is that it must ________.

A. be secured with collateral B. contain a drawer, drawee, and a payee C. be in a permanent state D. be supplemented with interest upon payment

Which of the following is true of a bearer paper?

A. It will contain an additional undertaking besides the payment of money. B. It will mention a specific person as payee. C. It will contain the term "payable to the order of." D. It will not specify a payee.