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Exam 14: Sales and Lease Contracts

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Question 41

True/False

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Parties to sales and lease contracts are not free to agree to terms different from those stated in the UCC.

A) True
B) False

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Question 42

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When the risk of loss passes is generally determined by

A) the passage of title to identified goods.
B) the acquisition of an insurable interest in specific goods.
C) the expression of a buyer or lessee's interest in obtaining certain goods.
D) the terms of a contract for a sale or lease of goods.

E) B) and D)
F) B) and C)

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Question 43

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Digital Video Company contracts to deliver one hundred television sets to a new retail customer, Electric Warehouse, on May 1, with payment to be made on delivery. The seller tenders delivery in its own truck. The buyer's manager notices that some of the cartons have scrape marks. Electric's owner phones Digital's office and asks whether the sets might have been damaged as they were being loaded. Digital assures Electric that the sets are in perfect condition. Electric tenders a check, which Digital refuses, claiming that the first delivery to new customers is always for cash. Electric promises to pay the cash within two days. Digital leaves the sets with Electric, which stores them in its facility pending its "Grand Opening Sale" on May 15. Two days later, Electric's stocker opens some of the cartons and discovers that a number of the sets are damaged beyond ordinary repair. Digital claims that Electric accepted the sets and is in breach for failing to pay on delivery. Will Digital succeed on these claims? Explain.

A seller who tenders nonconforming goods with a price allowance has reasonable grounds to believe that the buyer will accept the tender.

ABC Hardware Store orders one hundred power hand-drills from Drilling Tools Inc. When the hand-drills are delivered, they are all missing pieces. ABC rejects the shipment. To exercise a right to cure, Drilling must

Generally, if an acceptance to a sales contract between merchants includes terms additional to those in the offer, the terms automatically become part of the deal.

When the goods delivered are not as promised, the measure of recovery in the buyer's suit for damages is the difference between the values of the goods as accepted and if they had been delivered as warranted.

Nano Watches Inc. offers to sell to On-Time Company one hundred digital watches at $50 a piece, subject to certain specific delivery dates. On-Time replies with a signed purchase order that reads, "Accept your offer for 100 watches at $50 each. Must be delivered to our warehouse." Nano does not respond or deliver the goods. On-Time files a suit for breach of contract, to which Nano answers that there is no contract because On-Time's purchase order contained additional terms and is not signed by Nano. Can On-Time recover? Explain.

In response to an order for a hundred baseballs, the shipment of a hundred basketballs is both an acceptance of the offer and a breach of the contract.

Meds-Free Inc. enters into a contract to sell its product line to Naturopath Clinic, which later sells some of the items to Oneida, a patient and consumer. Article 2 of the UCC applies to

If a person buys cattle at a livestock auction, unless the parties agree otherwise, title will pass to the buyer when the cattle are physically delivered.

An insurable interest is