Multiple Choice Questions
Items 21 and 22 are based on the following:
On May 2, Handy Hardware sent Ram Industries a signed purchase order that stated, in part, as follows:
"Ship for May 8 delivery 300 Model A-X socket sets at current dealer price. Terms 2/10/net 30."
Ram received Handy's purchase order on May 4. On May 5, Ram discovered that it had only 200 Model A-X socket sets and 100 Model W-Z socket sets in stock. Ram shipped the Model A-X and Model W-Z sets to Handy without any explanation concerning the shipment. The socket sets were received by Handy on May 8.
21. Which of the following statements concerning the shipment is correct?
a. Ram's shipment is an acceptance of Handy's offer.
b. Ram's shipment is a counteroffer.
c. Handy's order must be accepted by Ram in writing before Ram ships the socket sets.
d. Handy's order can only be accepted by Ram shipping conforming goods.
2Q-4 22. Assuming a contract exists between Handy and Ram, which of the following implied warranties would result?
I. Implied warranty of merchantability.
II. Implied warranty of fitness for a particular purpose.
III. Implied warranty of title.
a. I only.
b. III only.
c. I and III only.
d. I, II, and III.
__________
23. Under the UCC Sales Article, which of the following warranties requires the seller to be a merchant with respect to the goods being sold in order for the warranty to apply?
Implied warranty of fitness Implied warranty for a particular purpose of merchantability
a. Yes Yes
b. No No
c. Yes No
d. No Yes
24. Which of the following conditions must be met for an implied warranty of fitness for a particular purpose to arise in connection with a sale of goods?
I. The warranty must be in writing.
II. The seller must know that the buyer was relying on the seller in selecting the goods.
a. I only.
b. II only.
c. Both I and II.
d. Neither I nor II.
25. Wally, a CPA and a neighbor of Rita's, offered to sell Rita his power chain saw for $400. Rita stated that she knew nothing about chain saws but would buy the saw if it were capable of cutting down the trees in her backyard, which had an average diameter of five feet. Wally assured Rita that the saw "would do the job". Relying on Wally's assurance, Rita purchased the saw. Wally has created a warranty that a. The saw is of an average fair quality.
b. The saw is fit for the ordinary purposes for which it is used.
c. The saw is capable of cutting the trees in Rita's backyard.
d. Is unenforceable because it is not in writing.
26. Vick bought a used boat from Ocean Marina that disclaimed "any and all warranties" in connection with the sale. Ocean was unaware the boat had been stolen from Kidd. Vick surrendered it to Kidd when confronted with proof of the theft. Vick sued Ocean.
Who is likely to prevail and why?
a. Vick, because the implied warranty of title has been breached.
b. Vick, because a merchant cannot disclaim implied warranties.
c. Ocean, because of the disclaimer of warranties.
d. Ocean, because Vick surrendered the boat to Kidd.
27. Under the Sales Article of the UCC, the warranty of title
a. Provides that the seller cannot disclaim the warranty if the sale is made to a bona fide purchaser for value.
b. Provides that the seller deliver the goods free from any lien of which the buyer lacked knowledge when the contract was made.
c. Applies only if it is in writing and signed by the seller.
d. Applies only if the seller is a merchant.
28. Under the UCC Sales Article, the implied warranty of merchantability
a. May be disclaimed by a seller's oral statement that mentions merchantability.
b. Arises only in contracts involving a merchant seller and a merchant buyer.
c. Is breached if the goods are not fit for all purposes for which the buyer intends to use the goods.
d. Must be part of the basis of the bargain to be binding on the seller.
29. Under the UCC Sales Article, the warranty of title may be excluded by
a. Merchants or non-merchants provided the exclusion is in writing.
b. Non-merchant sellers only.
c. The seller's statements that it is selling only such right or title that it has.
d. Use of an "as is" disclaimer.
2Q-5 30. Larch Corp. manufactured and sold Oak a stove.
The sale documents included a disclaimer of warranty for personal injury. The stove was defective. It exploded causing serious injuries to Oak's spouse. Larch was notified one week after the explosion. Under the UCC Sales Article, which of the following statements concerning Larch's liability for personal injury to Oak's spouse would be correct?
a. Larch cannot be liable because of a lack of privity with Oak's spouse.
b. Larch will not be liable because of a failure to give proper notice.
c. Larch will be liable because the disclaimer was not a disclaimer of all liability.
d. Larch will be liable because liability for personal injury cannot be disclaimed.
31. Which of the following factors result(s) in an express warranty with respect to a sale of goods?
I. The seller's description of the goods as part of the basis of the bargain.
II. The seller selects goods knowing the buyer's intended use.
a. I only.
b. II only.
c. Both I and II.
d. Neither I nor II.
32. An important factor in determining if an express warranty has been created is whether the
a. Statements made by the seller became part of the basis of the bargain.
b. Sale was made by a merchant in the regular course of business.
c. Statements made by the seller were in writing.
d. Seller intended to create a warranty.
33. Under the Sales Article of the UCC, most goods sold by merchants are covered by certain warranties.
An example of an express warranty would be a warranty of
a. Usage of trade.
b. Fitness for a particular purpose.
c. Merchantability.
d. Conformity of goods to sample.
34. Under the Sales Article of the UCC, unless a contract provides otherwise, before title to goods can pass from a seller to a buyer, the goods must be a. Tendered to the buyer.
b. Identified to the contract c. Accepted by the buyer.
d. Paid for.
35. Under the Sales Article of the UCC, which of the following factors is most important in determining who bears the risk of loss in a sale of goods contract?
a. The method of shipping the goods.
b. The contract’s shipping terms.
c. Title to the goods.
d. How the goods were lost.
36. Under the Sales Article of the UCC and the United Nations Convention for the International Sale of Goods (CISG), absent specific terms in an international sales shipment contract, when will risk of loss pass to the buyer
a. When the goods are delivered to the first carrier for transmission to the buyer.
b. When the goods are tendered to the buyer.
c. At the conclusion of the execution of the contract.
d. At the time the goods are identified to the contract.
37. Cey Corp. entered into a contract to sell parts to Deck, Ltd. The contract provided that the goods would be shipped "F.O.B. Cey's warehouse." Cey shipped parts different from those specified in the contract.
Deck rejected the parts. A few hours after Deck informed Cey that the parts were rejected, they were destroyed by fire in Deck's warehouse. Cey believed that the parts were conforming to the contract. Which of the following statements is correct?
a. Regardless of whether the parts were conforming, Deck will bear the loss because the contract was a shipment contract.
b. If the parts were nonconforming, Deck had the right to reject them, but the risk of loss remains with Deck until Cey takes possession of the parts.
c. If the parts were conforming, risk of loss does not pass to Deck until a reasonable period of time after they are delivered to Deck.
d. If the parts were nonconforming, Cey will bear the risk of loss, even though the contract was a shipment contract.
38. Bond purchased a painting from Wool, who is not in the business of selling art. Wool tendered delivery of the painting after receiving payment in full from Bond. Bond informed Wool that Bond would be unable to take possession of the painting until later that day. Thieves stole the painting before Bond returned.
The risk of loss
a. Passed to Bond at Wool's tender of delivery.
b. Passed to Bond at the time the contract was formed and payment was made.
c. Remained with Wool, because the parties agreed on a later time of delivery.
d. Remained with Wool, because Bond had not received the painting.
2Q-6 39. Under the Sales Article of the UCC, which of the following events will result in the risk of loss passing from a merchant seller to a buyer?
Tender of the goods Use of the seller's at the seller's truck to deliver place of business the goods
a. Yes Yes
b. Yes No
c. No Yes
d. No No
40. Pulse Corp. maintained a warehouse where it stored its manufacturing goods. Pulse received an order from Star. Shortly after Pulse identified the goods to be shipped to Star, but before moving them to the loading dock, a fire destroyed the warehouse and its contents. With respect to the goods, which of the following statements is correct?
a. Pulse has title but no insurable interest.
b. Star has title and an insurable interest.
c. Pulse has title and an insurable interest.
d. Star has title but no insurable interest.
41. Quick Corp. agreed to purchase 200 typewriters from Union Suppliers, Inc. Union is a wholesaler of appliances and Quick is an appliance retailer. The contract required Union to ship the typewriters to Quick by common carrier, "F.O.B. Union Suppliers, Inc. Loading Dock." Which of the parties bears the risk of loss during shipment?
a. Union, because the risk of loss passes only when Quick receives the typewriters.
b. Union, because both parties are merchants.
c. Quick, because title to the typewriters passed to Quick at the time of shipment.
d. Quick, because the risk of loss passes when the typewriters are delivered to the carrier.
42. Under the Sales Article of the UCC, in an F.O.B.
place of shipment contract, the risk of loss passes to the buyer when the goods
a. Are identified to the contract.
b. Are placed on the seller’s loading dock.
c. Are delivered to the carrier.
d. Reach the buyer’s loading dock.
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