Terms 1
A clause in a contract designating the law (such as the law of a particular state or nation) that will govern the contract.
choice-of-law clause
A person to whom an instrument is made payable.
payee
Eric draws a check payable to Frankie's Hotdogs to buy lunch. With respect to Eric's check, Frankie's Hotdogs is
a. the drawee.
b. the drawer.
c. the maker.
d. the payee.
d. the payee.
James sells a grand piano to Kim for $5,000 and a gold ring to Larry for $999. A writing is required to enforce the sale of
a. the piano only.
b. neither the piano nor the gold ring.
c. the gold ring only.
d. the piano and the gold ring.
d. the piano and the gold ring.
Checks (a draft drawn on a bank and payable on demand)
A clause in a time instrument that allows the instrument’s date of maturity to be extended into the future.
extension clause
Property that is incapable of being apprehended by the senses (such as by sight or touch). Intellectual property is an example.
intangible property
Market Mania orders 2,000 magazines from Publishing, Inc., which delivers the magazines. This is most likely
a. a gift.
b. a lease of goods.
c. a sale of goods.
d. a service contract.
c. a sale of goods.
Goods and Services Combined: A court will generally use the predominant-factor test to determine whether a contract for a combination of goods and services is primarily for the sale of goods or the sale of services.
Gary owes $8,000 in unpaid bills. Using the back of a tablecloth, he executes an instrument for $8,000 that otherwise meets the requirements for negotiability. This instrument is likely
a. negotiable.
b. nonnegotiable, because an instrument must be on paper.
c. nonnegotiable, because a tablecloth is not sufficiently permanent.
d. nonnegotiable, because the creditor does not appreciate it.
a. negotiable.
Under the UCC, if a contract for a sale of goods does not specify the quantity, will it be enforced?
A person who pays for the use or possession of another’s property.
lessee
A note of a bank in which the bank acknowledges a receipt of money from a party and promises to repay the money, with interest, to the party on a specified date.
certificate of deposit (CD)
Tallia signs a check payable to the order of Atchison Bank, filling in the blanks for the amount with the figures “$100” and “One thousand and 00/100 dollars.” This check is payable in the amount of
a. $0.
b. $100.
c. $1,000.
d. $1,100.
c. $1,000.
Casey and Kraig are disputing a contract that a court has determined is fully integrated. Because of this finding, a court:
a. may use the course of dealing between the parties to give additional evidence to the meaning of the terms.
b. may not look at any additional evidence of the agreement.
c. may look to the terms and definitions as defined or used in the industry of the parties to give additional evidence to the meaning of the terms.
d. may look at the behavior of the parties to determine the meaning of the terms.
b. may not look at any additional evidence of the agreement.
Lease contracts
The party that initiates a draft (writes a check, for example), thereby ordering the drawee to pay.
drawer
An offer (by a merchant) that is irrevocable without consideration for a period of time (not longer than three months).
firm offer
Baseball Gear, Inc. and Hector, a consumer, enter into a contract for a sale of baseball gear. If the contract includes a clause that is perceived as grossly unfair to Hector, its enforcement may be challenged under
a. the mirror image rule.
b. the doctrine of unconscionability.
c. the principle of fair trade.d. the predominant-factor test.
b. the doctrine of unconscionability.
Traffic Corp., offers to buy 1,000 traffic lights from Lights On Inc. Without notifying Traffic Corp., Lights On timely ships lights of a different quality. With respect to the offer and a possible contract, this shipment is an acceptance and
a. a breach.
b. an accommodation.
c. complete performance.
d. a counteroffer.
a. a breach.
Acceptance:
Shipment of nonconforming goods is both an acceptance and a breach unless seller seasonably notifies the buyer that the nonconforming shipment is offered as an accommodation (favor) to buyer, not an acceptance to a contract.
Under the UCC, what generally happens if the parties to a contract for a sale of goods have not agreed on a price?
a court will determine a reasonable price at the time for delivery.
A provision in a contract stipulating that certain unforeseen events—such as war, political upheavals, acts of God, and the like—will excuse a party from liability for nonperformance of contractual obligations.
force majeure clause
In negotiable instruments law, the first transfer, or delivery, of an instrument to a holder.
issue
Jade signs an instrument using a rubber stamp. With this mark for a signature, the instrument is
a. negotiable.
b. not negotiable, because a stamp does not use a pen.
c. not negotiable, because a stamp is not a signature.
d. not negotiable, because a stamp is not an indication of serious intent.
a. negotiable.
Lance writes on a piece of paper, “I owe you $400,” signs it, and gives it to Mel. This instrument is
a. negotiable.
b. not negotiable, because it does not include an express promise to pay.
c. not negotiable, because it does not recite any consideration.
d. not negotiable, because it does not state any conditions to payment.
b. not negotiable, because it does not include an express promise to pay.
certificate of deposits (a note made by a bank acknowledging a deposit of funds made payable to the holder of the note)