CONTRACTS, SALES AND LEASES

1.Contract law primarily developed in:

a.Courts through the common law

b.Statutes

c.Regulations

d.The Constitution

2.Edward stood up in front of a classroom, right after the lecture ended, and said, "I will sell my laptop to the first person to give me $150 cash."Frances immediately pulled out her pocketbook and gave Edward the money.This is:

a.not a binding contract because it was not written.

b.not a binding contract because Frances did not say she accepted the offer.

c.a binding bilateral contract.

d.a binding unilateral contract.

3.Jim Smith asked Tom Jones to give him a ride to the airport, and Smith said (1) he would give Jones gas money plus $5 for the ride. (2) Jones said, "I will give you a ride if you give me $10."(3) Smith said, "OK."What was the offer and what was the acceptance? You can use the numbers in the question to identify which statements you mean.

4.Paula Barnes said, "I am considering selling my bicycle for $50."Tina Carson replied, "Done!I will pay that right away!"Do they have a contract? Why or why not?

5.Doris Donnelly said, "I build decks for houses.I would be happy to build a deck for you."Evan Adams said, "Great.You are hired!"Do they have a contract?Why or why not?

6.Frank Myers said to Jane Jackson, "I would pay you $100 to come to my house while I am on vacation twice a day and walk my dog and feed him."Jackson said, "I don't know, that is a bit low, don't you think?"Myers said, "Well, never mind, I don't want you."Jackson said, "Wait, I will do it!"Do they have a contract?Why or why not?

7.Gail Giddings states, "I will sell my bicycle to the first person who hands me $50 in cash."Henry Hyde, without saying a word, pulls out his wallet and hands Giddings two twenty-dollar bills and one ten-dollar bill.Do they have a contract?Why or why not?

8.Jasmine Jeffries promises to give Karl Karstardt her textbook after she finished the class.Karl says, "Thanks, I will take it."Jasmine changes her mind and keeps the book.Did she breach a contract with Karl?Why or why not?

9.Acorn Company, after deciding to go out of business, sells all of its inventory to Basket Company, and sells its business premises (a store with offices) to Cedar Company.The U.C.C. governs:

a.Both sales, because they are all merchants.

b.Both sales, because they are sales.

c.The sale of the business premises.

d.The sale of the inventory.

10.Diggle Company sends a purchase order to Echo Company to buy 50 widgets at $5 each, "or, as they are normally packaged by you, 10 boxes of 5 widgets."Echo sends back an acknowledgement that states it will send Diggle "50 widgets at $5 each, which in our new packaging of 10 per box, is 5 boxes."Do they have a contract, and if so, what are its terms?

a. No, there is no contract because the offer and acceptance are not mirror images of each other.

b. Yes, and the terms of the contract are that Echo will send 5 boxes containing 10 widgets in each box.

c. Yes, and the terms of the contract are that Echo must send 10 boxes containing 5 widgets in each box.

d.No, because the packaging is a material term.

11.Framers Co. orders 5000 Grade A widgets from Graham Co.After Graham receives that order it sends 5000 Grade B widgets, without ever communicated with Framers.This is:

a.Graham's counteroffer.

b.Graham's rejection of the contract Framers offered.

c.Graham's acceptance of Framer's offer, with new termsGrade B instead of Grade A widgets.

d.Graham accepting Framer's offer, and then breaching the contract to which it agreed.

12.Helix Co. orders 5000 Grade A widgets from Intel Co, without specifying the price.Intel agrees to send them, and then sends 5000 Grade A widgets with an invoice.Do they have a contract?

a.No, the price was not agreed upon.

b.Yes, as long as the quantity and type of product is specified, the court can fill in the open terms relying on course of dealing, course of performance, and industry trade usage.

c.Yes, as long as Helix does not timely object to the price.

d.No, unless Helix specifically agrees to pay that price.

13. Able Company agrees to sell Baker Company $300 worth of bananas.What effect does the Statute of Frauds have on this agreement?

a. None.

b. The contract must be in writing, with all terms spelled out.

c. There must be a writing with the price and the quantity.

d.There must be a writing with the price, quantity, and signed by the seller.

14. Carson Widgets, in Enid, Oklahoma, ordered 100 new Hi-Grade widgets from Jumbo Widgets, Inc. on credit, agreeing to pay 10% of the purchase price at the signing of the agreement, and to pay the remainder of the price of the widgets within 60 days of delivery.The agreement's terms stated, "FOB Carson Widgets."The 100 widgets were placed on a delivery truck owned by Ace Trucking Company.While the widgets are on the truck traveling from the factory in Michigan to Oklahoma, a man named Ronald Jackson, driving drunk, veered into the Ace truck's lane.To avoid a possibly fatal accident, the Ace truck driver quickly ran his truck off the road onto the right shoulder.Unfortunately, 30 of the widgets were damaged, but this was not discovered until all 100 were taken off the truck at Carson.Carson refused to accept the damaged widgets.Who suffers the loss of the damaged widgets?

a.Carson Widgets

b.Jumbo Widgets, Inc.

c.Ace Trucking

d.Ronald Jackson

15.Rex Adams is a small rancher in southwestern Oklahoma.As he is often quite cash-poor, he runs an account with the local feed store, and only settles up his account (that is, pays his bill) a couple of times a year.In November, Rex calls the feed store and says, "I need fifteen sacks of cattle feed."The store clerk said, "Sure thing."

Rex drove to the store with his grandson, backed his truck up to the loading dock, and went inside to say he was there.The salesclerk, with Rex and the grandson's help, moved some sacks of feed to the loading dock, and then all three loaded the sacks onto the truck.Rex then pulled around the store and was driving out of the store's parking lot when the sacks fell off the truck and three of them burst open.Rex returns to the store and asks for three replacement sacks and says he should not have to pay for them.Will he?

a.Yes, he was at fault for damaging the store's property.

b.No, the store had the risk of loss until the sacks arrived at Rex's ranch.

c.Yes, because the store already had delivered the sacks of grain as soon as they were identified at the store, and Rex owned them when they were damaged.

d.Yes, because the store already had delivered the sacks of grain by making them available for Rex to put on his truck, and Rex owned them when they were damaged.

16. On August 1, Cargull Company contracts to buy David Davis's winter wheat crop that is yet to be planted. Davis plants his crop right after Labor Day.If all goes well, Davis will harvest the wheat in late May, and tender delivery to Cargull.When does Cargull have an insurable interest in the crop?

a.August 1

b.Right after Labor Day when the crop is planted.

c.In late May when the crop is harvested.

d.When Davis tenders delivery of his harvest.

17.Tom Baker buys a large backpack at Able Luggage store.He tells the clerk he wants to use it to travel on a plane, and he wants to avoid checking any luggage, so he wants the largest size backpack that is allowed on domestic flights.The clerk sells him a backpack.That pack is in fact too big, when full, to be allowed as a carryon under FAA regulations, and when Tom's clothes are stuffed into it, the zipper separates and will not work.Were any warranties violated?

a.Yes, the clerk made an express warranty by selling that backpack to Tom.

b.Yes, the implied warranty of fitness for a particular purpose.

c.Yes, the implied warranty of merchantability.

d.Yes, both of the implied warranties are violated.

18.Baker, a sales agent for Able Company, told a customer, Custer, the following:

"These widgets are the best on the market.They are machined to perfection.In fact, all of our widgets are machined to a tolerance of .0005 mm."What, if any, warranties does Able make to Custer?

a.An implied warranty of merchantability, and an express warranty that the widgets are "the best on the market," "machined to perfection," and "machined to a tolerance of .0005mm."

b.An express warranty that the widgets are "the best on the market," "machined to perfection," and "machined to a tolerance of .0005mm."

c.An express warranty that the widgets "machined to a tolerance of .0005mm."

d.An implied warranty of merchantability, and an express warranty that the widgets are "machined to a tolerance of .0005mm."