Please help me with my mutliple choice questions

Anonymous
timer Asked: Feb 9th, 2019
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Question Description

Part 1

Article 2 and 2(A) of the UCC apply to ____________.

  • deposits
  • leases only
  • negotiable instruments
  • sales and leases
  • sales only

Suppose for your new job you need to arrange the lease of a company vehicle. In your dealings with the car lease company, they fax over an offer for your acceptance. However, you change one of the terms from the lease company's original offer in your acceptance. Instead of paying in advance, you change the contract to say "Payment is due at the time and place at which the buyer is to receive the goods." Does the changing of the terms of the offer still allow for a valid acceptance?

  • No, because payment type can never be left unspecified in UCC contracts.
  • No, because the contract is required to be in writing under the statute of frauds.
  • No, because of the mirror-image rule.
  • Yes, the mirror-image rule does not apply.
  • Yes, because this scenario is an example of a firm offer.

In what states has Article 2 of the UCC been adopted?

  • In no states in the United States.
  • In all states except Louisiana.
  • States do not need to adopt the UCC to enact the rules.
  • In all states in the United States.
  • Article 2 of the UCC is mandated by the Constitution.

Charlene is starting a birthday party catering business and leases a popcorn machine and a frozen drink maker from E-Z Rental. Then Mrs. Smith pays Charlene for Charlene's catering services at her son's birthday party. Who is the lessor?

  • Both Charlene and Mrs. Smith.
  • Charlene.
  • E-Z Rental.
  • Mrs. Smith.
  • None of these parties are the lessor.

Suppose your company is a merchant and you enter into a contract with another merchant. However, instead of a formalized contract between the two parties, the other company just sends a written memo outlining the products ordered and prices. Is this memo sufficient to satisfy the statute of frauds?

  • Yes, if two parties are merchants, a written memo is deemed to satisfy the statute of frauds.
  • No, this is a specifically manufactured good.
  • No, memos never satisfy a statute of frauds requirement.
  • No, memos are never binding.
  • Yes, merchants do not need any written evidence to satisfy the statute of frauds.

All of the following give rise to a voidable title except

  • the buyer is a minor.
  • the seller was deceived as to the identity of the purchaser.
  • the buyer wrote a bad check for the goods.
  • the seller acquired the goods through a cash offering.
  • the goods were procured through criminal fraud.

Suppose Ned sells Flanders a flat screen TV. Flanders paid for the TV with a bad check, so the contract was voidable. Then Flanders gave you the flat screen as a gift for your graduation present. What kind of title do you have for the TV?

  • Voidable, because you received the goods as a gift.
  • Good, because you got the gift in good faith.
  • Void, because the activity described is illegal.
  • Void, because the contract involves check fraud.
  • Good, because Flanders (the purchaser) made a good-faith purchase.

If you buy a stolen watch from a vender on the streets of N.Y.C., and you know for a fact the vendor stole the watch from an unsuspecting woman on the street, what kind of title do you have for the watch?

  • Valid title, but you might be liable for some sort of negligent tort.
  • Good title, because you were a good-faith purchaser.
  • You have no title because the goods were acquired through theft.
  • A voidable title, because the woman on the street can find you to get the watch back.
  • Good title, because you were not the one who stole the goods.

Joey buys a couch from a furniture store for $450. He pays and the store delivers the couch to Joey's house the next day.

Recall that the critical thinking framework for legal reasoning involves asking what missing information exists in a case. What information that is missing in this scenario would allow you to determine whether the title is voidable?

  • Whether the contract was a simple delivery contract.
  • Whether insurable interest was involved.
  • The ownership of the title and couch.
  • The right to encumbrance of the couch.
  • Whether Joey wrote a bad check for the couch.

An insurable occurs when a contractual party has a/an

Multiple Choice

  • economic interest.
  • title.
  • risk of loss.
  • economic interest and title.
  • title and risk of loss.
  • economic interest and risk of loss.
  • economic interest, title, and risk of loss.

Required information

Title

Introduction

Read the overview below and complete the activities that follow.

Before beginning this interactive, you should review LO 15-6 in your text. Pay particularly close attention to the differences among the three types of titles that can arise when a buyer purchases goods: good titles, void titles, and voidable titles.

CONCEPT REVIEW:

Neither businesses nor individuals can own or sell goods unless you have good title to them. The Uniform Commercial Code (UCC) defines a sale as the passing of title from the seller to the buyer for a price.

Mini-Case:

Read the scenario below and answer the following questions relating to the sale of a title.

Hugo, a 21-year-old man, is birthday shopping for his mother over the online classifieds. While browsing the Internet for sale ads, he notices a particularly good deal on a 14-carat gold necklace with matching 1/3-carat diamond earrings. The seller says the jewelry is brand new, still in the box, and wants only $359 for the entire set. Hugo immediately e-mails the seller and arranges for the purchase of the jewelry. Hugo pays the seller, receives the necklace and earrings, and intends to give them to his mother for her birthday.

What is the sale of a title?

Multiple Choice

  • The passing of title from the seller to the buyer for a price.
  • When insurance on goods can be purchased.
  • When the goods become part of the buyer's inventory and can serve as collateral for a loan.
  • When the original parties would be void but the goods have already been sold to a third party.
  • When a buyer can sell goods to a third party.

Required information

Title

Introduction

Read the overview below and complete the activities that follow.

Before beginning this interactive, you should review LO 15-6 in your text. Pay particularly close attention to the differences among the three types of titles that can arise when a buyer purchases goods: good titles, void titles, and voidable titles.

CONCEPT REVIEW:

Neither businesses nor individuals can own or sell goods unless you have good title to them. The Uniform Commercial Code (UCC) defines a sale as the passing of title from the seller to the buyer for a price.

Mini-Case:

Read the scenario below and answer the following questions relating to the sale of a title.

Hugo, a 21-year-old man, is birthday shopping for his mother over the online classifieds. While browsing the Internet for sale ads, he notices a particularly good deal on a 14-carat gold necklace with matching 1/3-carat diamond earrings. The seller says the jewelry is brand new, still in the box, and wants only $359 for the entire set. Hugo immediately e-mails the seller and arranges for the purchase of the jewelry. Hugo pays the seller, receives the necklace and earrings, and intends to give them to his mother for her birthday.

Suppose that the reason the jewelry was brand new and at such a bargain price online was because the seller actually stole the jewelry. If the jewelry were stolen, what type of title would Hugo hold when he purchased the jewelry?

Multiple Choice

Entrustment.

Both void and voidable.

Voidable.

Void.

Good.

Required information

Title

Introduction

Read the overview below and complete the activities that follow.

Before beginning this interactive, you should review LO 15-6 in your text. Pay particularly close attention to the differences among the three types of titles that can arise when a buyer purchases goods: good titles, void titles, and voidable titles.

CONCEPT REVIEW:

Neither businesses nor individuals can own or sell goods unless you have good title to them. The Uniform Commercial Code (UCC) defines a sale as the passing of title from the seller to the buyer for a price.

Mini-Case:

Read the scenario below and answer the following questions relating to the sale of a title.

Hugo, a 21-year-old man, is birthday shopping for his mother over the online classifieds. While browsing the Internet for sale ads, he notices a particularly good deal on a 14-carat gold necklace with matching 1/3-carat diamond earrings. The seller says the jewelry is brand new, still in the box, and wants only $359 for the entire set. Hugo immediately e-mails the seller and arranges for the purchase of the jewelry. Hugo pays the seller, receives the necklace and earrings, and intends to give them to his mother for her birthday.

Once again, let's assume the jewelry was stolen. But suppose that Hugo did not know the jewelry was stolen. He bought the stolen jewelry, and then gave the gift to his mom in good faith. What kind of title does his mom now possess?

Multiple Choice

A good title because stolen goods are not considered stolen goods if the person did not know they were stolen.

A good title because he bought the jewelry in good faith.

A void title because stolen goods always remain stolen goods.

A voidable title because this is a situation involving entrustment.

A voidable title because the intentions of Hugo were dishonorable.

Required information

Title

Introduction

Read the overview below and complete the activities that follow.

Before beginning this interactive, you should review LO 15-6 in your text. Pay particularly close attention to the differences among the three types of titles that can arise when a buyer purchases goods: good titles, void titles, and voidable titles.

CONCEPT REVIEW:

Neither businesses nor individuals can own or sell goods unless you have good title to them. The Uniform Commercial Code (UCC) defines a sale as the passing of title from the seller to the buyer for a price.

Mini-Case:

Read the scenario below and answer the following questions relating to the sale of a title.

Hugo, a 21-year-old man, is birthday shopping for his mother over the online classifieds. While browsing the Internet for sale ads, he notices a particularly good deal on a 14-carat gold necklace with matching 1/3-carat diamond earrings. The seller says the jewelry is brand new, still in the box, and wants only $359 for the entire set. Hugo immediately e-mails the seller and arranges for the purchase of the jewelry. Hugo pays the seller, receives the necklace and earrings, and intends to give them to his mother for her birthday.

Now suppose that the goods were not stolen. The seller purchased the jewelry on clearance at wholesale price, and that is why he can offer such a good deal. Suppose, however, that Hugo bought the diamond jewelry with a check. Come to find out, it was a bad check and the check bounced. In this scenario, what kind of title does Hugo possess?

Multiple Choice

Void.

Entrustment.

Voidable, because the buyer wrote a bad check.

Good.

Voidable, because Hugo is just a minor.

Required information

Title

Introduction

Read the overview below and complete the activities that follow.

Before beginning this interactive, you should review LO 15-6 in your text. Pay particularly close attention to the differences among the three types of titles that can arise when a buyer purchases goods: good titles, void titles, and voidable titles.

CONCEPT REVIEW:

Neither businesses nor individuals can own or sell goods unless you have good title to them. The Uniform Commercial Code (UCC) defines a sale as the passing of title from the seller to the buyer for a price.

Mini-Case:

Read the scenario below and answer the following questions relating to the sale of a title.

Hugo, a 21-year-old man, is birthday shopping for his mother over the online classifieds. While browsing the Internet for sale ads, he notices a particularly good deal on a 14-carat gold necklace with matching 1/3-carat diamond earrings. The seller says the jewelry is brand new, still in the box, and wants only $359 for the entire set. Hugo immediately e-mails the seller and arranges for the purchase of the jewelry. Hugo pays the seller, receives the necklace and earrings, and intends to give them to his mother for her birthday.

If Hugo's title is voidable, what can the seller do?

Multiple Choice

Make Hugo pay him full price for the diamonds.

Turn Hugo into the police for creating a void contract.

Nothing, he should have stated that he only accepts cash.

Cancel the contract, but not reclaim the jewelry.

Cancel the contract and reclaim the jewelry.

Pat 2

_______________ is the legal term for honesty in fact.

  • Course of dealing
  • Perfect tender rule
  • Commercial reasonableness
  • Good faith
  • Tender of delivery

The buyer or lessee typically inspects the goods _____________, unless the parties have agreed otherwise.

  • before paying
  • after paying
  • for as long as they want after receiving the goods
  • only if the goods appear to be conforming
  • up to a year after receiving the goods

A seller has the right to effect a cure of non-conforming goods, except when

Multiple Choice

time is not of the essence.

the non-conforming goods were not accepted by the buyer.

the buyer notified the seller of the non-acceptance.

the goods were seasonal and the season has passed.

the goods were damaged by a common carrier.

Specific performance is allowed as a remedy for a breach of contract in which of the following situations?

  • The seller has breached contracts with this buyer more than once.
  • The goods have been accidentally destroyed by no fault of the seller.
  • The goods are valued at more than $7,500.
  • The goods are unique.
  • A remedy of law is adequate.

When is it permissible for a buyer to reject acceptance of nonconforming goods?

  • When a natural disaster ruins the nonconforming goods once they are in the possession of the buyer.
  • When the buyer for no reason decides he does not want the goods anymore.
  • When the seller engages in fraud.
  • When a reasonable assumption is made that the nonconformity would be cured but it is not.
  • When the buyer intends to sue the seller for punitive damages resulting from the nonconforming goods.

Canceling the contract is _____________ from the Uniform Commercial Code's (UCC) perspective.

  • the remedy of last resort
  • always used as a legal remedy
  • the easiest remedy to use
  • never used as a legal remedy
  • the most often used remedy

A contract calls for liquidated damages of $1,000 per day on late delivery of goods. The total value of the contract is $3200 and the goods are five days late. The buyer demands $5,000 in liquidated damages. The likely result is

Multiple Choice

the buyer will receive the $5000.

the liquidated damage clause is punitive and not enforceable here.

the liquidated damage clause is not punitive but the court will not enforce it as it is exculpatory.

the buyer will not receive the $5000 but will receive something less solely under the liquidated damage clause.

the buyer will receive the $5000 in liquidated damage clause plus the buyer's actual damages as well.

The law that is designed to protect consumers in warranties by requiring sellers who issue written warranties to indicate whether it is a full or limited warranty is known as the _________________________.

  • Effective Disclaimer Act
  • Magnuson-Moss Act
  • Warranty Disclaimer Act
  • Landham Act
  • Smoot-Hawley Act

A camera purchased at a camera shop is covered by a(n) ___________________, but a camera bought from a private seller on Craigslist is not, unless the Craigslist seller is a camera merchant.

  • implied warranty of trade usage
  • full warranty
  • implied warranty of merchantability
  • implied warranty of fitness for a particular purpose
  • express warranty

A buyer unknowingly purchases stolen goods from the buyer. This transaction is a breach of

Multiple Choice

express warranty.

implied warranty of title.

implied warranty of merchantability.

implied warranty of particular purpose.

implied warranty of usage.

Required information

Third Party Warranties and Warranty Disclaimers

Introduction

Read the overview below and complete the activities that follow.

Before beginning this interactive, review LO 16-6 and 16-7. Pay attention to the special situations in which third parties are beneficiaries to warranties, and when warranties can be disclaimed. This interactive will help explain who third-party beneficiaries of warranties are and how they benefit.

CONCEPT REVIEW:

The idea of a seller's being in breach of an implied warranty raises an entirely new issue: Is the seller liable to anyone other than the buyer? This question may initially sound peculiar. After all, the seller and the buyer are bound together by contract, and if either breaches, then the breaching party is liable to the nonbreaching party. But in many scenarios, often it is not the buyer, but rather a third party that uses the product or is injured by the product. So questions arise as to when those third parties are beneficiaries to warranties.

Mini-Case:

Read the case and answer the questions that follow.

Suppose, Howie buys a garbage disposal from a kitchen appliance outlet. He has it professionally installed by professionals from the kitchen appliance outlet, and he has a full and written warranty on the product. Howie's 18-year-old daughter, Joanna, was cleaning up after dinner one evening when the garbage disposal began to malfunction. Parts flew out of the hole in the sink, hitting Joanna in the face and causing serious injuries. She had reconstructive surgery on her face and no longer has full vision in her right eye.

Does a "contractual relationship" exist between Joanna (the third party) and the kitchen appliance seller?

Multiple Choice

Yes, Joanna and the seller entered into an official contract.

No, Joanna cannot bring a breach of warranty suit against the seller.

Yes, the Uniform Commercial Code (UCC) recognizes that third parties automatically enter into contracts with sellers.

No, Joanna did not enter into a contract with the merchant.

Yes, but only if Joanna paid for a portion of the garbage disposal.

Required information

Third Party Warranties and Warranty Disclaimers

Introduction

Read the overview below and complete the activities that follow.

Before beginning this interactive, review LO 16-6 and 16-7. Pay attention to the special situations in which third parties are beneficiaries to warranties, and when warranties can be disclaimed. This interactive will help explain who third-party beneficiaries of warranties are and how they benefit.

CONCEPT REVIEW:

The idea of a seller's being in breach of an implied warranty raises an entirely new issue: Is the seller liable to anyone other than the buyer? This question may initially sound peculiar. After all, the seller and the buyer are bound together by contract, and if either breaches, then the breaching party is liable to the nonbreaching party. But in many scenarios, often it is not the buyer, but rather a third party that uses the product or is injured by the product. So questions arise as to when those third parties are beneficiaries to warranties.

Mini-Case:

Read the case and answer the questions that follow.

Suppose, Howie buys a garbage disposal from a kitchen appliance outlet. He has it professionally installed by professionals from the kitchen appliance outlet, and he has a full and written warranty on the product. Howie's 18-year-old daughter, Joanna, was cleaning up after dinner one evening when the garbage disposal began to malfunction. Parts flew out of the hole in the sink, hitting Joanna in the face and causing serious injuries. She had reconstructive surgery on her face and no longer has full vision in her right eye.

Which of the following is not a choice the states are given regarding third-party beneficiaries of warranties, such as Joanna?

Multiple Choice

Seller's warranties extend to any reasonable and foreseeable user.

Seller's warranties extend to only the person who purchased the good and has the receipt.

Seller's warranties extend to the buyer's household members and guests.

None of these.

Seller's warranties extend to anyone injured by the good.

Required information

Third Party Warranties and Warranty Disclaimers

Introduction

Read the overview below and complete the activities that follow.

Before beginning this interactive, review LO 16-6 and 16-7. Pay attention to the special situations in which third parties are beneficiaries to warranties, and when warranties can be disclaimed. This interactive will help explain who third-party beneficiaries of warranties are and how they benefit.

CONCEPT REVIEW:

The idea of a seller's being in breach of an implied warranty raises an entirely new issue: Is the seller liable to anyone other than the buyer? This question may initially sound peculiar. After all, the seller and the buyer are bound together by contract, and if either breaches, then the breaching party is liable to the nonbreaching party. But in many scenarios, often it is not the buyer, but rather a third party that uses the product or is injured by the product. So questions arise as to when those third parties are beneficiaries to warranties.

Mini-Case:

Read the case and answer the questions that follow.

Suppose, Howie buys a garbage disposal from a kitchen appliance outlet. He has it professionally installed by professionals from the kitchen appliance outlet, and he has a full and written warranty on the product. Howie's 18-year-old daughter, Joanna, was cleaning up after dinner one evening when the garbage disposal began to malfunction. Parts flew out of the hole in the sink, hitting Joanna in the face and causing serious injuries. She had reconstructive surgery on her face and no longer has full vision in her right eye.

Most states have adopted which option regarding people like Joanna, who are third-party beneficiaries of warranties?

Multiple Choice

Seller's warranties extend to the buyer's household members and guests.

Most states do not acknowledge any third-party beneficiaries of warranties.

Seller's warranties extend to anyone injured by the good.

Seller's warranties extend to only the person who purchased the good and has the receipt.

Seller's warranties extend to any reasonable and foreseeable user.

Required information

Third Party Warranties and Warranty Disclaimers

Introduction

Read the overview below and complete the activities that follow.

Before beginning this interactive, review LO 16-6 and 16-7. Pay attention to the special situations in which third parties are beneficiaries to warranties, and when warranties can be disclaimed. This interactive will help explain who third-party beneficiaries of warranties are and how they benefit.

CONCEPT REVIEW:

The idea of a seller's being in breach of an implied warranty raises an entirely new issue: Is the seller liable to anyone other than the buyer? This question may initially sound peculiar. After all, the seller and the buyer are bound together by contract, and if either breaches, then the breaching party is liable to the nonbreaching party. But in many scenarios, often it is not the buyer, but rather a third party that uses the product or is injured by the product. So questions arise as to when those third parties are beneficiaries to warranties.

Mini-Case:

Read the case and answer the questions that follow.

Suppose, Howie buys a garbage disposal from a kitchen appliance outlet. He has it professionally installed by professionals from the kitchen appliance outlet, and he has a full and written warranty on the product. Howie's 18-year-old daughter, Joanna, was cleaning up after dinner one evening when the garbage disposal began to malfunction. Parts flew out of the hole in the sink, hitting Joanna in the face and causing serious injuries. She had reconstructive surgery on her face and no longer has full vision in her right eye.

Let's suppose that Howie and Joanna live in a state that has adopted the most common guideline regarding third-party beneficiaries to warranties. Who might be covered by the warranty for the garbage disposal?

Multiple Choice

Only people who were stipulated as “foreseeable“ users on the written contract

No one other than the purchaser (Howie)

Only Howie's immediate family, including Joanna

Any foreseeable user, including Howie and Joanna

Only those injured by the good, including Joanna

Required information

Third Party Warranties and Warranty Disclaimers

Introduction

Read the overview below and complete the activities that follow.

Before beginning this interactive, review LO 16-6 and 16-7. Pay attention to the special situations in which third parties are beneficiaries to warranties, and when warranties can be disclaimed. This interactive will help explain who third-party beneficiaries of warranties are and how they benefit.

CONCEPT REVIEW:

The idea of a seller's being in breach of an implied warranty raises an entirely new issue: Is the seller liable to anyone other than the buyer? This question may initially sound peculiar. After all, the seller and the buyer are bound together by contract, and if either breaches, then the breaching party is liable to the nonbreaching party. But in many scenarios, often it is not the buyer, but rather a third party that uses the product or is injured by the product. So questions arise as to when those third parties are beneficiaries to warranties.

Mini-Case:

Read the case and answer the questions that follow.

Suppose, Howie buys a garbage disposal from a kitchen appliance outlet. He has it professionally installed by professionals from the kitchen appliance outlet, and he has a full and written warranty on the product. Howie's 18-year-old daughter, Joanna, was cleaning up after dinner one evening when the garbage disposal began to malfunction. Parts flew out of the hole in the sink, hitting Joanna in the face and causing serious injuries. She had reconstructive surgery on her face and no longer has full vision in her right eye.

Suppose Joanna is injured by the garbage disposal in 2004, but her family does not choose to bring a lawsuit against the kitchen appliance company until 2010. Can they bring a lawsuit for breach of contract in 2010?

Multiple Choice

No, Howie waived his warranty when he failed to inspect the good.

Yes, they can bring a lawsuit whenever they choose.

No, Joanna is not a foreseeable user of the product.

No, under the Uniform Commercial Code (UCC), they must sue within four years of the breach.

Yes, the lawsuit would be within the statute of limitations.

Part 3

By writing the phrase "to the order of" or similar words near the specific payee's name, the document is a(n) _____________________.

  • order instrument
  • check
  • time instrument
  • instrument of relative permanence
  • demand instrument

Negotiable instruments payable to whomever is bearing them are ________ and are treated like cash.

  • not transferable
  • demand instruments
  • time instruments
  • conditional promises to pay
  • bearer instruments

Payment on a time instrument can be made __________________.

  • never, because time instruments do not require payment
  • only at a specific future time, which must be easily determined from the document itself
  • at any future time
  • at any time in the present or future
  • on demand always

If Billy wrote Jamie an IOU that said, "IOU $500 (signed) Billy Smith" on a piece of paper, it would __________________.

  • be an example of a negotiable instrument if the consideration paid for the $500 was stated on the note
  • be an example of a negotiable instrument that could be passed to holder-in-due-course
  • be an example of a cashier's check
  • not be a negotiable instrument
  • be an example of a negotiable instrument

Negotiable instruments are governed by which of the UCC's articles?

  • Article 5.
  • Article 4.
  • Article 3.
  • The UCC does not apply to negotiable instruments.
  • Article 2.

The medium of exchange for negotiable instruments is _____________.

  • a national currency
  • any combination of money, goods, and services
  • promised services
  • credit
  • only in U.S. dollars

Which of the following is not an acceptable signature for negotiable instruments?

  • Stamping.
  • "An X."
  • A handwritten signature.
  • All of these are acceptable signatures.
  • A symbol used to designate the signee.

Each of the following is an example of a negotiable instrument except

Multiple Choice

traveler’s checks.

certificates of deposit.

promissory notes in exchange for goods or services.

fiat money.

cashier’s checks.

An endorsement consisting of the endorser’s signature along with a named endorsee is called a/an:

Multiple Choice

blank endorsement.

special endorsement.

trust endorsement.

endorsement for deposit and collection only.

endorsement to prohibit future endorsements.

A traveler's check must have all but which of the following characteristics?

  • The check is designated with the phrase traveler's check.
  • The check is drawn on or through a bank.
  • The check is a time instrument.
  • The check requires a countersignature by a person whose signature appears on the instrument.
  • The check is payable on demand.

Which type(s) of checks will fully be funded if lost, stolen, or destroyed?

  • Cashier's checks only.
  • Cashier's, certified, and teller's checks.
  • Cashier's and certified checks only.
  • Cashier's and teller's checks only.
  • None of these.

When a bank certifies a check, what is the drawer's liability on the instrument?

  • Primary; the bank accepts secondary liability.
  • Secondary; the bank acquires primary liability.
  • Unaffected; the procedure is only a formality.
  • None; the bank assumes all liability.
  • None of these.

For a check to be considered "properly payable" by a bank, it must have each of the following characteristics except:

Multiple Choice

Be paid to someone entitled to enforce the check.

Not be subject to a stop-payment.

Have the drawee's authorized signature on the check.

Be paid on or after the date of the check.

Not have been altered.

James provides Jack with a check for $2,000. Jack cashes this check from a Huntington bank. In this situation, Jack's bank is called a:

Multiple Choice

depository bank.

collecting bank.

intermediary bank.

payer bank.

federal reserve bank.

Which one of the following is a check for which the drawer and the drawee are the same bank?

Multiple Choice

Teller's check

Cashier's check

Traveler's check

Certified check

Money order

Part 4

Suppose Krissy orders some living room furniture from Bob. Krissy gives Bob a promissory note for the price of the furniture. But when Krissy receives the furniture, it is not the furniture she was promised. She refuses to pay on the note due to Bob's breach of contract. Both parties agree the contract was breached. However, Bob had already negotiated the note to a third party, Ron, who is an HDC. Will Krissy be allowed to use a "breach of contract" defense for not paying Ron the money on the note?

  • Yes, an HDC is subject to the breach of contract defense.
  • Yes, because Bob engaged in fraud.
  • No, Bob did not breach his contract.
  • No, an HDC is free from the breach of contract defense.
  • Yes, an HDC has special rights and privileges against all defenses.

Your grandparents give you a promissory note as a gift for a graduation present. Are you a holder in due course of this promissory note?

  • Yes. The note was given as a gift.
  • Yes. The note was negotiated in good faith.
  • No. The note was given as a gift.
  • Yes. The instrument was taken for value.
  • Yes. The gift was taken without notice.

Suppose Fred has a payroll check from his place of employment, Kelsey's Pub. He then endorses the back of a check and gives it to Clara as a form of payment. The holder (Clara) presented Fred's check, and the bank dishonored the check because of insufficient funds in Kelsey's Pub's account. Who is now liable for the check?

  • Fred is secondarily liable.
  • Kelsey's Pub is secondarily liable.
  • Clara is liable.
  • No one is liable because the money was not in the account.
  • Kelsey's Pub and Fred are secondarily liable parties.

You want a loan to start a business straight out of college. The bank, however, is a little wary about whether you will be able to pay the note, and therefore denies the loan. The bank decides to ask you to have a third party sign the note to ensure that the bank will be paid. Consequently, you get an accommodation party to sign the note as an endorser. Does the accommodation party have liability for the note?

  • It depends whether the accommodation party commits fraud.
  • Liability cannot be determined from the facts given.
  • Yes, the accommodation party is secondarily liable.
  • Yes, the accommodation party is primarily liable.
  • No, the accommodation party is not liable.

If a material alteration of an instrument exists but is not fraudulent, ______________________.

  • the party whose rights have been affected by the change is completely discharged from the instrument
  • the instrument will not be enforced, and the maker can sue the alterer or commit a tort against him
  • the instrument will not be enforced under the original terms
  • the instrument will be enforced with the material alteration intact
  • the instrument will be enforced under the original terms

After a tennis match, William Blake autographs a piece of paper provided to him by a fan. However, the piece of paper was a negotiable instrument. What defense could Blake use to not be held liable for the instrument?

Multiple Choice

Forgery.

Duress.

Fraud in the factum.

Discharge through insolvency proceedings.

Material alteration

__________ occurs when a party agrees, in writing, not to sue the obliged party.

  • A real defense
  • Reacquisition
  • Impairment of recourse
  • Renunciation
  • Dishonor

One of the female contestants on the reality show The Date is out clubbing in Vegas when a young man approaches her. He tells her that he is a big fan, and asks for her autograph. The contestant, believing she actually is noteworthy enough to be famous and be asked for autographs, obliges. In fact, she was duped and signed a promissory note instead of an actual autograph.

Which of the following occurred in the scenario above?

  • Forgery.
  • Discharge by impairment.
  • Fraud in the factum.
  • Renunciation.
  • A material alteration.

Required information

Holder in Due Course

Introduction

Read the overview below and complete the activities that follow.

A party who possesses a negotiable instrument payable to the party or bearer of the instrument is a holder of the instrument. A certain type of holder, however, called a holder in due course (HDC), has more extensive legal rights. This activity highlights the specific details that are necessary for someone to be considered an HDC.

CONCEPT REVIEW:

A negotiable instrument, as we saw in the preceding chapter, is a substitute for cash that is a written document containing the signature of the creator that makes an unconditional promise or order to pay a certain sum of money, either at a specified time or on demand. Negotiable instruments are executed on a daily basis in the form of checks, certificates of deposit, drafts, and promissory notes in exchange for goods, services, or business financing. One important characteristic of negotiable instruments is the ease of transferring them to a third party through negotiation. A negotiation occurs when multiple parties enter into an agreement meant to resolve a conflict or another subject of interest.

Mini-Case:

Read the case and then determine whether Zach is a holder in due course.

Suppose Jason works as a part-time DJ. On December 31, 2010, he DJs a New Year's office party for KL Industries (a fictional company). They pay Jason his usual rate for the evening, $200. There is no reason to believe the check is not authentic.

Jason does not cash the check immediately. Instead, he folds it up in his wallet and forgets about it. On April 15, 2011, Jason purchases some new DJ equipment from his friend, Zach. After purchasing all the equipment he planned on buying, he spies some lighting equipment he thinks would really help his business. However, he does not have enough cash, and his debit card does not have enough money transferred onto it. Jason asks Zach if he can endorse the back of the check to cover the cost instead. Zach agrees; Jason signs the back of the check and gives it to Zach as payment for the equipment.

A holder in due course must first be a __________, or a party in possession of an instrument payable to the party or the bearer.

Multiple Choice

  • creditor
  • holder
  • negotiator

Next

Required information

Holder in Due Course

Introduction

Read the overview below and complete the activities that follow.

A party who possesses a negotiable instrument payable to the party or bearer of the instrument is a holder of the instrument. A certain type of holder, however, called a holder in due course (HDC), has more extensive legal rights. This activity highlights the specific details that are necessary for someone to be considered an HDC.

CONCEPT REVIEW:

A negotiable instrument, as we saw in the preceding chapter, is a substitute for cash that is a written document containing the signature of the creator that makes an unconditional promise or order to pay a certain sum of money, either at a specified time or on demand. Negotiable instruments are executed on a daily basis in the form of checks, certificates of deposit, drafts, and promissory notes in exchange for goods, services, or business financing. One important characteristic of negotiable instruments is the ease of transferring them to a third party through negotiation. A negotiation occurs when multiple parties enter into an agreement meant to resolve a conflict or another subject of interest.

Mini-Case:

Read the case and then determine whether Zach is a holder in due course.

Suppose Jason works as a part-time DJ. On December 31, 2010, he DJs a New Year's office party for KL Industries (a fictional company). They pay Jason his usual rate for the evening, $200. There is no reason to believe the check is not authentic.

Jason does not cash the check immediately. Instead, he folds it up in his wallet and forgets about it. On April 15, 2011, Jason purchases some new DJ equipment from his friend, Zach. After purchasing all the equipment he planned on buying, he spies some lighting equipment he thinks would really help his business. However, he does not have enough cash, and his debit card does not have enough money transferred onto it. Jason asks Zach if he can endorse the back of the check to cover the cost instead. Zach agrees; Jason signs the back of the check and gives it to Zach as payment for the equipment.

To be a holder in due course, the negotiable instrument must be _______________.

Multiple Choice

  • expired or dishonored
  • complete and authentic
  • incomplete and forged

Required information

Holder in Due Course

Introduction

Read the overview below and complete the activities that follow.

A party who possesses a negotiable instrument payable to the party or bearer of the instrument is a holder of the instrument. A certain type of holder, however, called a holder in due course (HDC), has more extensive legal rights. This activity highlights the specific details that are necessary for someone to be considered an HDC.

CONCEPT REVIEW:

A negotiable instrument, as we saw in the preceding chapter, is a substitute for cash that is a written document containing the signature of the creator that makes an unconditional promise or order to pay a certain sum of money, either at a specified time or on demand. Negotiable instruments are executed on a daily basis in the form of checks, certificates of deposit, drafts, and promissory notes in exchange for goods, services, or business financing. One important characteristic of negotiable instruments is the ease of transferring them to a third party through negotiation. A negotiation occurs when multiple parties enter into an agreement meant to resolve a conflict or another subject of interest.

Mini-Case:

Read the case and then determine whether Zach is a holder in due course.

Suppose Jason works as a part-time DJ. On December 31, 2010, he DJs a New Year's office party for KL Industries (a fictional company). They pay Jason his usual rate for the evening, $200. There is no reason to believe the check is not authentic.

Jason does not cash the check immediately. Instead, he folds it up in his wallet and forgets about it. On April 15, 2011, Jason purchases some new DJ equipment from his friend, Zach. After purchasing all the equipment he planned on buying, he spies some lighting equipment he thinks would really help his business. However, he does not have enough cash, and his debit card does not have enough money transferred onto it. Jason asks Zach if he can endorse the back of the check to cover the cost instead. Zach agrees; Jason signs the back of the check and gives it to Zach as payment for the equipment.

The holder in due course must take the negotiable instrument "for value." What does "for value" mean in the context of HDCs?

Multiple Choice

  • Taking the instrument in exchange for a promise that is yet to be performed.
  • Taking the instrument in exchange for a promise that has already been performed.
  • Taking something with consideration.

Required information

Holder in Due Course

Introduction

Read the overview below and complete the activities that follow.

A party who possesses a negotiable instrument payable to the party or bearer of the instrument is a holder of the instrument. A certain type of holder, however, called a holder in due course (HDC), has more extensive legal rights. This activity highlights the specific details that are necessary for someone to be considered an HDC.

CONCEPT REVIEW:

A negotiable instrument, as we saw in the preceding chapter, is a substitute for cash that is a written document containing the signature of the creator that makes an unconditional promise or order to pay a certain sum of money, either at a specified time or on demand. Negotiable instruments are executed on a daily basis in the form of checks, certificates of deposit, drafts, and promissory notes in exchange for goods, services, or business financing. One important characteristic of negotiable instruments is the ease of transferring them to a third party through negotiation. A negotiation occurs when multiple parties enter into an agreement meant to resolve a conflict or another subject of interest.

Mini-Case:

Read the case and then determine whether Zach is a holder in due course.

Suppose Jason works as a part-time DJ. On December 31, 2010, he DJs a New Year's office party for KL Industries (a fictional company). They pay Jason his usual rate for the evening, $200. There is no reason to believe the check is not authentic.

Jason does not cash the check immediately. Instead, he folds it up in his wallet and forgets about it. On April 15, 2011, Jason purchases some new DJ equipment from his friend, Zach. After purchasing all the equipment he planned on buying, he spies some lighting equipment he thinks would really help his business. However, he does not have enough cash, and his debit card does not have enough money transferred onto it. Jason asks Zach if he can endorse the back of the check to cover the cost instead. Zach agrees; Jason signs the back of the check and gives it to Zach as payment for the equipment.

The HDC must take the negotiable instrument in good faith. What does "good faith" mean under the UCC?

Multiple Choice

  • What a reasonable holder would have done.
  • Actual behavior.
  • Honesty in fact and the observance of reasonable commercial standards of fair dealing.

Required information

Holder in Due Course

Introduction

Read the overview below and complete the activities that follow.

A party who possesses a negotiable instrument payable to the party or bearer of the instrument is a holder of the instrument. A certain type of holder, however, called a holder in due course (HDC), has more extensive legal rights. This activity highlights the specific details that are necessary for someone to be considered an HDC.

CONCEPT REVIEW:

A negotiable instrument, as we saw in the preceding chapter, is a substitute for cash that is a written document containing the signature of the creator that makes an unconditional promise or order to pay a certain sum of money, either at a specified time or on demand. Negotiable instruments are executed on a daily basis in the form of checks, certificates of deposit, drafts, and promissory notes in exchange for goods, services, or business financing. One important characteristic of negotiable instruments is the ease of transferring them to a third party through negotiation. A negotiation occurs when multiple parties enter into an agreement meant to resolve a conflict or another subject of interest.

Mini-Case:

Read the case and then determine whether Zach is a holder in due course.

Suppose Jason works as a part-time DJ. On December 31, 2010, he DJs a New Year's office party for KL Industries (a fictional company). They pay Jason his usual rate for the evening, $200. There is no reason to believe the check is not authentic.

Jason does not cash the check immediately. Instead, he folds it up in his wallet and forgets about it. On April 15, 2011, Jason purchases some new DJ equipment from his friend, Zach. After purchasing all the equipment he planned on buying, he spies some lighting equipment he thinks would really help his business. However, he does not have enough cash, and his debit card does not have enough money transferred onto it. Jason asks Zach if he can endorse the back of the check to cover the cost instead. Zach agrees; Jason signs the back of the check and gives it to Zach as payment for the equipment.

HDCs must take an instrument without notice of various defects in the negotiable instrument. Which of the following is one potential defect of a negotiable instrument?

Multiple Choice

  • The instrument has been endorsed.
  • The instrument is overdue.
  • The instrument has an authorized signature.

Required information

Holder in Due Course

Introduction

Read the overview below and complete the activities that follow.

A party who possesses a negotiable instrument payable to the party or bearer of the instrument is a holder of the instrument. A certain type of holder, however, called a holder in due course (HDC), has more extensive legal rights. This activity highlights the specific details that are necessary for someone to be considered an HDC.

CONCEPT REVIEW:

A negotiable instrument, as we saw in the preceding chapter, is a substitute for cash that is a written document containing the signature of the creator that makes an unconditional promise or order to pay a certain sum of money, either at a specified time or on demand. Negotiable instruments are executed on a daily basis in the form of checks, certificates of deposit, drafts, and promissory notes in exchange for goods, services, or business financing. One important characteristic of negotiable instruments is the ease of transferring them to a third party through negotiation. A negotiation occurs when multiple parties enter into an agreement meant to resolve a conflict or another subject of interest.

Mini-Case:

Read the case and then determine whether Zach is a holder in due course.

Suppose Jason works as a part-time DJ. On December 31, 2010, he DJs a New Year's office party for KL Industries (a fictional company). They pay Jason his usual rate for the evening, $200. There is no reason to believe the check is not authentic.

Jason does not cash the check immediately. Instead, he folds it up in his wallet and forgets about it. On April 15, 2011, Jason purchases some new DJ equipment from his friend, Zach. After purchasing all the equipment he planned on buying, he spies some lighting equipment he thinks would really help his business. However, he does not have enough cash, and his debit card does not have enough money transferred onto it. Jason asks Zach if he can endorse the back of the check to cover the cost instead. Zach agrees; Jason signs the back of the check and gives it to Zach as payment for the equipment.

Generally, when is a check overdue?

Multiple Choice

  • 30 days after its due date.
  • 90 days after its due date.
  • 150 days after its due date.

Required information

Holder in Due Course

Introduction

Read the overview below and complete the activities that follow.

A party who possesses a negotiable instrument payable to the party or bearer of the instrument is a holder of the instrument. A certain type of holder, however, called a holder in due course (HDC), has more extensive legal rights. This activity highlights the specific details that are necessary for someone to be considered an HDC.

CONCEPT REVIEW:

A negotiable instrument, as we saw in the preceding chapter, is a substitute for cash that is a written document containing the signature of the creator that makes an unconditional promise or order to pay a certain sum of money, either at a specified time or on demand. Negotiable instruments are executed on a daily basis in the form of checks, certificates of deposit, drafts, and promissory notes in exchange for goods, services, or business financing. One important characteristic of negotiable instruments is the ease of transferring them to a third party through negotiation. A negotiation occurs when multiple parties enter into an agreement meant to resolve a conflict or another subject of interest.

Mini-Case:

Read the case and then determine whether Zach is a holder in due course.

Suppose Jason works as a part-time DJ. On December 31, 2010, he DJs a New Year's office party for KL Industries (a fictional company). They pay Jason his usual rate for the evening, $200. There is no reason to believe the check is not authentic.

Jason does not cash the check immediately. Instead, he folds it up in his wallet and forgets about it. On April 15, 2011, Jason purchases some new DJ equipment from his friend, Zach. After purchasing all the equipment he planned on buying, he spies some lighting equipment he thinks would really help his business. However, he does not have enough cash, and his debit card does not have enough money transferred onto it. Jason asks Zach if he can endorse the back of the check to cover the cost instead. Zach agrees; Jason signs the back of the check and gives it to Zach as payment for the equipment.

If a holder receives an overdue check, can he or she be a holder in due course of the check?

Multiple Choice

  • Yes, as long as the holder does not have notice.
  • No, a holder cannot be an HDC who is aware that an instrument is overdue.
  • Yes, being overdue does not qualify as a defect for checks.

Tags: drafts services title goods 2010 however Minnesota State Community and Technical College joanna 2011 ACCT1120 Business Law Gen Combo Ll Dynamic Bus Law W/connect - (4 Edition) Part 1 Article 2 and 2(A) of the UCC apply to ____________. • deposits • leases only • negotiable instruments • sales and leases • sales only Suppos they fax over an offer for your acceptance. However you change one of the terms from the lease company's original offer in your acceptance. Instead of paying in advance you change the contract to say "Payment is due at the time and place at which the buyer is to receive the goods." Does the changing of the terms of th because payment type can never be left unspecified in UCC contracts. • No because the contract is required to be in writing under the statute of frauds. • No because of the mirror-image rule. • Yes the mirror-image rule does not apply. • Yes because this scenario is an example of a firm offer. In what states has Article 2 of the UCC been adopted? • In no states in the United States. • In instead of a formalized contract between the two parties the other company just sends a written memo outlining the products ordered and prices. Is this memo sufficient to satisfy the statute of frauds? • Y if two parties are merchants a written memo is deemed to satisfy the statute of frauds. • No this is a specifically manufactured good. • No memos never satisfy a statute of frauds requirement. • No memos are never binding. • Yes merchants do not need any written evidence to satisfy the statute of frauds. All of the following give rise to a voidable title except • the buyer i so the contract was voidable. Then Flanders gave you the flat screen as a gift for your graduation present. What kind of title do you have for the TV? because you received the goods as a gift. • Good because you got the gift in good faith. • Void because the activity described is illegal. • Void because the contract involves check fraud. • Good because Flanders (the purchaser) made a good-faith purchase. If you buy a stolen watch from a vender on the streets of N.Y.C. and you know for a fact the vendor stole the watch from an unsuspecting woman on the street what kind of title do you have for the watch? • Valid title but you might be liable for some sort of negligent tort. • Good title because you were a good-faith purchaser. • You have no title because the goods were acquired through theft. • A voidable title because the woman on the street can find you to get the watch back. • Good title because you were not the one who stole the goods. Joey buys a couch from a furniture store for $450. He pays and the store delivers the couch and risk of loss. Required information Title Introduction Read the overview below and complete the activities that follow. Before beginnin you should review LO 15-6 in your text. Pay particularly close attention to the differences among the three types of titles that can arise when a buye void titles and voidable titles. CONCEPT REVIEW: Neither businesses nor individuals can own or sell goods unless you have good title to them. The Uniform Comm a 21-year-old man is birthday shopping for his mother over the online classifieds. While browsing the Internet for sale ads he notices a particularly good deal on a 14-carat gold necklace with matching 1/3-carat diamond earrings. The seller says the jewelry is brand new still in the box and wants only $359 for the entire set. Hugo immediately e-mails the seller and arranges for the purchase of the jewelry. Hugo pays the seller receives the necklace and earrings and intends to give them to his mother for her birthday. What is the sale of a title? Multiple Choice • The passing of title from the seller to the bu and intends to give them to his mother for her birthday. Suppose that the reason the jewelry was brand new and at such a bargain price online was beca what type of title would Hugo hold when he purchased the jewelry? Multiple Choice • Entrustment. • Both void and voidable. • Voidable. • Void. • Good. and intends to give them to his mother for her birthday. Once again let's assume the jewelry was stolen. But suppose that Hugo did not know the jewelry was stolen. He bought the stolen jewelry and then gave the gift to his mom in good faith. What kind of title does his mom now possess? Multiple Choice • A good title because stolen goods are and intends to give them to his mother for her birthday. Now suppose that the goods were not stolen. The seller purchased the jewelry on clearance at and that is why he can offer such a good deal. Suppose that Hugo bought the diamond jewelry with a check. Come to find out it was a bad check and the check bounced. In this scenario what kind of title does Hugo possess? Multiple Choice • Void. • Entrustment. • Voidable because the buyer wrote a bad check. • Good. • Voidable because Hugo is just a minor. Required information Title Introduction Read the overview below and complete the activities that follow. Befor and intends to give them to his mother for her birthday. If Hugo's title is voidable what can the seller do? Multiple Choice • Make Hugo pay him full price for the diamonds. • Turn Hugo into the police for creating a void contract. • N he should have stated that he only accepts cash. • Cancel the contract but not reclaim the jewelry. • Cancel the contract and reclaim the jewelry. Pat 2 _______________ is the legal term for honesty in fact. • unless the parties have agreed otherwise. • before paying • after paying • for as long as they want after receiving the goods • only if the goods ap except when Multiple Choice • time is not of the essence. • the non-conforming goods were not accepted by the buyer. • the buyer notified the seller o 500. • The goods are unique. • A remedy of law is adequate. When is it permissible for a buyer to reject acceptance of nonconforming goods? 000 per day on late delivery of goods. The total value of the contract is $3200 and the goods are five days late. The buyer demands $5 000 in liquidated damages. The likely result is Multiple Choice • the buyer will receive the $5000. • the liquidated damage clause is punitive and not but a camera bought from a private seller on Craigslist is not unless the Craigslist seller is a camera merchant. • implied warranty of trade usage • full warranty • implied warranty of merchantability • implied review LO 16-6 and 16-7. Pay attention to the special situations in which third parties are beneficiaries to warranties and when warranties can be disclaimed. This interactive will help explain who third-party beneficiaries of warranties are and how they benefit. CONC the seller and the buyer are bound together by contract and if either breaches then the breaching party is liable to the nonbreaching party. But in many scenarios often it is not the buyer but rather a third party that uses the product or is injured by the product. So questions arise as to when those third parties are beneficiaries to wa Howie buys a garbage disposal from a kitchen appliance outlet. He has it professionally installed by professionals from the kitchen appliance outlet and he has a full and written warranty on the product. Howie's 18-year-old daughter was cleaning up after dinner one evening when the garbage disposal began to malfunction. Parts flew out of the hole in the sink hitting Joanna in the face and causing serious injuries. She had reconstructive surgery on her face and no longer has full vision in her right eye. Do Joanna and the seller entered into an official contract. • No Joanna cannot bring a breach of warranty suit against the seller. • Yes the Uniform Commercial Code (UCC) recognizes that third parties automatically enter into contracts with sellers. • No Joanna did not enter into a contract with the merchant. • Yes but only if Joanna paid for a portion of the garbage disposal. Required information Third Party Warranties and Warranty Disclaimers Introduction hitting Joanna in the face and causing serious injuries. She had reconstructive surgery on her face and no longer has full vision in her right eye. Wh such as Joanna? Multiple Choice • Seller's warranties extend to any reasonable and foreseeable user. • Seller's warranties extend to only the person w hitting Joanna in the face and causing serious injuries. She had reconstructive surgery on her face and no longer has full vision in her right eye. Mo who are third-party beneficiaries of warranties? Multiple Choice • Seller's warranties extend to the buyer's household members and guests. • Most stat hitting Joanna in the face and causing serious injuries. She had reconstructive surgery on her face and no longer has full vision in her right eye. Le including Joanna • Any foreseeable user including Howie and Joanna • Only those injured by the good including Joanna Required information Third Party Warranties and Warranty Disclaimers Introduction Read the overview below and complete the acti hitting Joanna in the face and causing serious injuries. She had reconstructive surgery on her face and no longer has full vision in her right eye. Su but her family does not choose to bring a lawsuit against the kitchen appliance company until 2010. Can they bring a lawsuit for breach of contract in Howie waived his warranty when he failed to inspect the good. • Yes they can bring a lawsuit whenever they choose. • No Joanna is not a foreseeable user of the product. • No under the Uniform Commercial Code (UCC) they must sue within four years of the breach. • Yes the lawsuit would be within the statute of limitations. Part 3 By writing the phrase "to the order of" or similar words near the specific payee's na the document is a(n) _____________________. • order instrument • check • time instrument • instrument of relative permanence • demand instrument Neg because time instruments do not require payment • only at a specific future time which must be easily determined from the document itself • at any future time • at any time in the present or future • on demand always If Billy wrote "IOU $500 (signed) Billy Smith" on a piece of paper it would __________________. • be an example of a negotiable instrument if the consideration paid for the $500 was stated on the note • be an exampl and services • promised services • credit • only in U.S. dollars Which of the following is not an acceptable signature for negotiable instruments? • stolen or destroyed? • Cashier's checks only. • Cashier's certified and teller's checks. • Cashier's and certified checks only. • Cashier's and teller's checks only. • None of these. When a bank certifies a check what is the drawer's liability on the instrument? • Primary; the bank accepts secondary liability. • Secondary; the bank acquires primary liability. it must have each of the following characteristics except: Multiple Choice • Be paid to someone entitled to enforce the check. • Not be subject to a s 000. Jack cashes this check from a Huntington bank. In this situation Jack's bank is called a: Multiple Choice • depository bank. • collecting bank. • intermediary bank. • payer bank. • federal reserve bank. Which one it is not the furniture she was promised. She refuses to pay on the note due to Bob's breach of contract. Both parties agree the contract was breached Bob had already negotiated the note to a third party Ron who is an HDC. Will Krissy be allowed to use a "breach of contract" defense for not paying Ron the money on the note? • Yes an HDC is subject to the breach of contract defense. • Yes because Bob engaged in fraud. • No Bob did not breach his contract. • No an HDC is free from the breach of contract defense. • Yes an HDC has special rights and privileges against all defenses. Your grandparents give you a promissory note as a gift for a graduation present. Are y Kelsey's Pub. He then endorses the back of a check and gives it to Clara as a form of payment. The holder (Clara) presented Fred's check and the bank dishonored the check because of insufficient funds in Kelsey's Pub's account. Who is now liable for the check? • Fred is secondarily li is a little wary about whether you will be able to pay the note and therefore denies the loan. The bank decides to ask you to have a third party sign the note to ensure that the bank will be paid. Consequently you get an accommodation party to sign the note as an endorser. Does the accommodation party have liability for the note? • It depends whether the a the accommodation party is secondarily liable. • Yes the accommodation party is primarily liable. • No the accommodation party is not liable. If a material alteration of an instrument exists but is not fraudulent ______________________. • the party whose rights have been affected by the change is completely discharged from the instrument • the instrument will and the maker can sue the alterer or commit a tort against him • the instrument will not be enforced under the original terms • the instrument will be William Blake autographs a piece of paper provided to him by a fan. However the piece of paper was a negotiable instrument. What defense could Blake use to not be held liable for the instrument? Multiple Choice • Forgery. • Du in writing not to sue the obliged party. • A real defense • Reacquisition • Impairment of recourse • Renunciation • Dishonor One of the female contestants on t and asks for her autograph. The contestant believing she actually is noteworthy enough to be famous and be asked for autographs obliges. In fact she was duped and signed a promissory note instead of an actual autograph. Which of the following occurred in the scenario above? • Forgery. • Dis called a holder in due course (HDC) has more extensive legal rights. This activity highlights the specific details that are necessary for someone to be considered an HDC. CONCEPT REVIE as we saw in the preceding chapter is a substitute for cash that is a written document containing the signature of the creator that makes an unconditional promise or order to pay a cert either at a specified time or on demand. Negotiable instruments are executed on a daily basis in the form of checks certificates of deposit and promissory notes in exchange for goods or business financing. One important characteristic of negotiable instruments is the ease of transferring them to a third party through negotiation. A he DJs a New Year's office party for KL Industries (a fictional company). They pay Jason his usual rate for the evening $200. There is no reason to believe the check is not authentic. Jason does not cash the check immediately. Instead he folds it up in his wallet and forgets about it. On April 15 Jason purchases some new DJ equipment from his friend Zach. After purchasing all the equipment he planned on buying he spies some lighting equipment he thinks would really help his business. However he does not have enough cash and his debit card does not have enough money transferred onto it. Jason asks Zach if he can endorse the back of the check to cover the cost instead. and his debit card does not have enough money transferred onto it. Jason asks Zach if he can endorse the back of the check to cover the cost instead. and his debit card does not have enough money transferred onto it. Jason asks Zach if he can endorse the back of the check to cover the cost instead. and his debit card does not have enough money transferred onto it. Jason asks Zach if he can endorse the back of the check to cover the cost instead. and his debit card does not have enough money transferred onto it. Jason asks Zach if he can endorse the back of the check to cover the cost instead. and his debit card does not have enough money transferred onto it. Jason asks Zach if he can endorse the back of the check to cover the cost instead. and his debit card does not have enough money transferred onto it. Jason asks Zach if he can endorse the back of the check to cover the cost instead. or a party in possession of an instrument payable to the party or the bearer. Multiple Choice • creditor • holder • negotiator Next Required informat the negotiable instrument must be _______________. Multiple Choice • expired or dishonored • complete and authentic • incomplete and forged Required when is a check overdue? Multiple Choice • 30 days after its due date. • 90 days after its due date. • 150 days after its due date. Required informati can he or she be a holder in due course of the check? Multiple Choice • Yes as long as the holder does not have notice. • No a holder cannot be an HDC who is aware that an instrument is overdue. • Yes being overdue does not qualify as a defect for checks.Part 1 Article 2 and 2(A) of the UCC apply to ____________. • deposits • leases only • negotia

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Part 1 Article 2 and 2(A) of the UCC apply to ____________. deposits leases only negotiable instruments sales and leases sales only Suppose for your new job you need to arrange the lease of a company vehicle. In your dealings with the car lease company, they fax over an offer for your acceptance. However, you change one of the terms from the lease company's original offer in your acceptance. Instead of paying in advance, you change the contract to say "Payment is due at the time and place at which the buyer is to receive the goods." Does the changing of the terms of the offer still allow for a valid acceptance? • • • • • No, because payment type can never be left unspecified in UCC contracts. No, because the contract is required to be in writing under the statute of frauds. No, because of the mirror-image rule. Yes, the mirror-image rule does not apply. Yes, because this scenario is an example of a firm offer. In what states has Article 2 of the UCC been adopted? • • • • • In no states in the United States. In all states except Louisiana. States do not need to adopt the UCC to enact the rules. In all states in the United States. Article 2 of the UCC is mandated by the Constitution. Charlene is starting a birthday party catering business and leases a popcorn machine and a frozen drink maker from E-Z Rental. Then Mrs. Smith pays Charlene for Charlene's catering services at her son's birthday party. Who is the lessor? • • • • • • • • • • Both Charlene and Mrs. Smith. Charlene. E-Z Rental. Mrs. Smith. None of these parties are the lessor. Suppose your company is a merchant and you enter into a contract with another merchant. However, instead of a formalized contract between the two parties, the other company just sends a written memo outlining the products ordered and prices. Is this memo sufficient to satisfy the statute of frauds? Yes, if two parties are merchants, a written memo is deemed to satisfy the statute of frauds. • No, this is a specifically manufactured good. • No, memos never satisfy a statute of frauds requirement. • No, memos are never binding. • Yes, merchants do not need any written evidence to satisfy the statute of frauds. All of the following give rise to a voidable title except • the buyer is a minor. the seller was deceived as to the identity of the purchaser. the buyer wrote a bad check for the goods. the seller acquired the goods through a cash offering. the goods were procured through criminal fraud. Suppose Ned sells Flanders a flat screen TV. Flanders paid for the TV with a bad check, so the contract was voidable. Then Flanders gave you the flat screen as a gift for your graduation present. What kind of title do you have for the TV? • • • • • Voidable, because you received the goods as a gift. Good, because you got the gift in good faith. Void, because the activity described is illegal. Void, because the contract involves check fraud. Good, because Flanders (the purchaser) made a good-faith purchase. If you buy a stolen watch from a vender on the streets of N.Y.C., and you know for a fact the vendor stole the watch from an unsuspecting woman on the street, what kind of title do you have for the watch? • • • • • • • • • • Valid title, but you might be liable for some sort of negligent tort. Good title, because you were a good-faith purchaser. You have no title because the goods were acquired through theft. A voidable title, because the woman on the street can find you to get the watch back. Good title, because you were not the one who stole the goods. Joey buys a couch from a furniture store for $450. He pays and the store delivers the couch to Joey's house the next day. Recall that the critical thinking framework for legal reasoning involves asking what missing information exists in a case. What information that is missing in this scenario would allow you to determine whether the title is voidable? • • • • • Whether the contract was a simple delivery contract. Whether insurable interest was involved. The ownership of the title and couch. The right to encumbrance of the couch. Whether Joey wrote a bad check for the couch. An insurable occurs when a contractual party has a/an Multiple Choice • economic interest. • title. • risk of loss. • economic interest and title. • title and risk of loss. • economic interest and risk of loss. • economic interest, title, and risk of loss. Required information Title Introduction Read the overview below and complete the activities that follow. Before beginning this interactive, you should review LO 15-6 in your text. Pay particularly close attention to the differences among the three types of titles that can arise when a buyer purchases goods: good titles, void titles, and voidable titles. CONCEPT REVIEW: Neither businesses nor individuals can own or sell goods unless you have good title to them. The Uniform Commercial Code (UCC) defines a sale as the passing of title from the seller to the buyer for a price. Mini-Case: Read the scenario below and answer the following questions relating to the sale of a title. Hugo, a 21-year-old man, is birthday shopping for his mother over the online classifieds. While browsing the Internet for sale ads, he notices a particularly good deal on a 14-carat gold necklace with matching 1/3-carat diamond earrings. The seller says the jewelry is brand new, still in the box, and wants only $359 for the entire set. Hugo immediately emails the seller and arranges for the purchase of the jewelry. Hugo pays the seller, receives the necklace and earrings, and intends to give them to his mother for her birthday. What is the sale of a title? Multiple Choice • • • • • The passing of title from the seller to the buyer for a price. When insurance on goods can be purchased. When the goods become part of the buyer's inventory and can serve as collateral for a loan. When the original parties would be void but the goods have already been sold to a third party. When a buyer can sell goods to a third party. Required information Title Introduction Read the overview below and complete the activities that follow. Before beginning this interactive, you should review LO 15-6 in your text. Pay particularly close attention to the differences among the three types of titles that can arise when a buyer purchases goods: good titles, void titles, and voidable titles. CONCEPT REVIEW: Neither businesses nor individuals can own or sell goods unless you have good title to them. The Uniform Commercial Code (UCC) defines a sale as the passing of title from the seller to the buyer for a price. Mini-Case: Read the scenario below and answer the following questions relating to the sale of a title. Hugo, a 21-year-old man, is birthday shopping for his mother over the online classifieds. While browsing the Internet for sale ads, he notices a particularly good deal on a 14-carat gold necklace with matching 1/3-carat diamond earrings. The seller says the jewelry is brand new, still in the box, and wants only $359 for the entire set. Hugo immediately emails the seller and arranges for the purchase of the jewelry. Hugo pays the seller, receives the necklace and earrings, and intends to give them to his mother for her birthday. Suppose that the reason the jewelry was brand new and at such a bargain price online was because the seller actually stole the jewelry. If the jewelry were stolen, what type of title would Hugo hold when he purchased the jewelry? Multiple Choice • • • • • Entrustment. Both void and voidable. Voidable. Void. Good. Required information Title Introduction Read the overview below and complete the activities that follow. Before beginning this interactive, you should review LO 15-6 in your text. Pay particularly close attention to the differences among the three types of titles that can arise when a buyer purchases goods: good titles, void titles, and voidable titles. CONCEPT REVIEW: Neither businesses nor individuals can own or sell goods unless you have good title to them. The Uniform Commercial Code (UCC) defines a sale as the passing of title from the seller to the buyer for a price. Mini-Case: Read the scenario below and answer the following questions relating to the sale of a title. Hugo, a 21-year-old man, is birthday shopping for his mother over the online classifieds. While browsing the Internet for sale ads, he notices a particularly good deal on a 14-carat gold necklace with matching 1/3-carat diamond earrings. The seller says the jewelry is brand new, still in the box, and wants only $359 for the entire set. Hugo immediately emails the seller and arranges for the purchase of the jewelry. Hugo pays the seller, receives the necklace and earrings, and intends to give them to his mother for her birthday. Once again, let's assume the jewelry was stolen. But suppose that Hugo did not know the jewelry was stolen. He bought the stolen jewelry, and then gave the gift to his mom in good faith. What kind of title does his mom now possess? Multiple Choice • • • • • A good title because stolen goods are not considered stolen goods if the person did not know they were stolen. A good title because he bought the jewelry in good faith. A void title because stolen goods always remain stolen goods. A voidable title because this is a situation involving entrustment. A voidable title because the intentions of Hugo were dishonorable. Required information Title Introduction Read the overview below and complete the activities that follow. Before beginning this interactive, you should review LO 15-6 in your text. Pay particularly close attention to the differences among the three types of titles that can arise when a buyer purchases goods: good titles, void titles, and voidable titles. CONCEPT REVIEW: Neither businesses nor individuals can own or sell goods unless you have good title to them. The Uniform Commercial Code (UCC) defines a sale as the passing of title from the seller to the buyer for a price. Mini-Case: Read the scenario below and answer the following questions relating to the sale of a title. Hugo, a 21-year-old man, is birthday shopping for his mother over the online classifieds. While browsing the Internet for sale ads, he notices a particularly good deal on a 14-carat gold necklace with matching 1/3-carat diamond earrings. The seller says the jewelry is brand new, still in the box, and wants only $359 for the entire set. Hugo immediately emails the seller and arranges for the purchase of the jewelry. Hugo pays the seller, receives the necklace and earrings, and intends to give them to his mother for her birthday. Now suppose that the goods were not stolen. The seller purchased the jewelry on clearance at wholesale price, and that is why he can offer such a good deal. Suppose, however, that Hugo bought the diamond jewelry with a check. Come to find out, it was a bad check and the check bounced. In this scenario, what kind of title does Hugo possess? Multiple Choice • • • • • Void. Entrustment. Voidable, because the buyer wrote a bad check. Good. Voidable, because Hugo is just a minor. Required information Title Introduction Read the overview below and complete the activities that follow. Before beginning this interactive, you should review LO 15-6 in your text. Pay particularly close attention to the differences among the three types of titles that can arise when a buyer purchases goods: good titles, void titles, and voidable titles. CONCEPT REVIEW: Neither businesses nor individuals can own or sell goods unless you have good title to them. The Uniform Commercial Code (UCC) defines a sale as the passing of title from the seller to the buyer for a price. Mini-Case: Read the scenario below and answer the following questions relating to the sale of a title. Hugo, a 21-year-old man, is birthday shopping for his mother over the online classifieds. While browsing the Internet for sale ads, he notices a particularly good deal on a 14-carat gold necklace with matching 1/3-carat diamond earrings. The seller says the jewelry is brand new, still in the box, and wants only $359 for the entire set. Hugo immediately emails the seller and arranges for the purchase of the jewelry. Hugo pays the seller, receives the necklace and earrings, and intends to give them to his mother for her birthday. If Hugo's title is voidable, what can the seller do? Multiple Choice • • • • • Pat 2 Make Hugo pay him full price for the diamonds. Turn Hugo into the police for creating a void contract. Nothing, he should have stated that he only accepts cash. Cancel the contract, but not reclaim the jewelry. Cancel the contract and reclaim the jewelry. _______________ is the legal term for honesty in fact. • • • • • Course of dealing Perfect tender rule Commercial reasonableness Good faith Tender of delivery The buyer or lessee typically inspects the goods _____________, unless the parties have agreed otherwise. • • • • • before paying after paying for as long as they want after receiving the goods only if the goods appear to be conforming up to a year after receiving the goods A seller has the right to effect a cure of non-conforming goods, except when Multiple Choice • time is not of the essence. • the non-conforming goods were not accepted by the buyer. • the buyer notified the seller of the non-acceptance. • the goods were seasonal and the season has passed. • the goods were damaged by a common carrier. Specific performance is allowed as a remedy for a breach of contract in which of the following situations? • • • • • The seller has breached contracts with this buyer more than once. The goods have been accidentally destroyed by no fault of the seller. The goods are valued at more than $7,500. The goods are unique. A remedy of law is adequate. When is it permissible for a buyer to reject acceptance of nonconforming goods? • • • • • When a natural disaster ruins the nonconforming goods once they are in the possession of the buyer. When the buyer for no reason decides he does not want the goods anymore. When the seller engages in fraud. When a reasonable assumption is made that the nonconformity would be cured but it is not. When the buyer intends to sue the seller for punitive damages resulting from the nonconforming goods. Canceling the contract is _____________ from the Uniform Commercial Code's (UCC) perspective. • • • • • the remedy of last resort always used as a legal remedy the easiest remedy to use never used as a legal remedy the most often used remedy A contract calls for liquidated damages of $1,000 per day on late delivery of goods. The total value of the contract is $3200 and the goods are five days late. The buyer demands $5,000 in liquidated damages. The likely result is Multiple Choice • the buyer will receive the $5000. • the liquidated damage clause is punitive and not enforceable here. • the liquidated damage clause is not punitive but the court will not enforce it as it is exculpatory. • the buyer will not receive the $5000 but will receive something less solely under the liquidated damage clause. • the buyer will receive the $5000 in liquidated damage clause plus the buyer's actual damages as well. The law that is designed to protect consumers in warranties by requiring sellers who issue written warranties to indicate whether it is a full or limited warranty is known as the _________________________. • • • • • Effective Disclaimer Act Magnuson-Moss Act Warranty Disclaimer Act Landham Act Smoot-Hawley Act A camera purchased at a camera shop is covered by a(n) ___________________, but a camera bought from a private seller on Craigslist is not, unless the Craigslist seller is a camera merchant. • • • • • implied warranty of trade usage full warranty implied warranty of merchantability implied warranty of fitness for a particular purpose express warranty A buyer unknowingly purchases stolen goods from the buyer. This transaction is a breach of Multiple Choice • express warranty. • implied warranty of title. • implied warranty of merchantability. • implied warranty of particular purpose. • implied warranty of usage. Required information Third Party Warranties and Warranty Disclaimers Introduction Read the overview below and complete the activities that follow. Before beginning this interactive, review LO 16-6 and 16-7. Pay attention to the special situations in which third parties are beneficiaries to warranties, and when warranties can be disclaimed. This interactive will help explain who third-party beneficiaries of warranties are and how they benefit. CONCEPT REVIEW: The idea of a seller's being in breach of an implied warranty raises an entirely new issue: Is the seller liable to anyone other than the buyer? This question may initially sound peculiar. After all, the seller and the buyer are bound together by contract, and if either breaches, then the breaching party is liable to the nonbreaching party. But in many scenarios, often it is not the buyer, but rather a third party that uses the product or is injured by the product. So questions arise as to when those third parties are beneficiaries to warranties. Mini-Case: Read the case and answer the questions that follow. Suppose, Howie buys a garbage disposal from a kitchen appliance outlet. He has it professionally installed by professionals from the kitchen appliance outlet, and he has a full and written warranty on the product. Howie's 18-year-old daughter, Joanna, was cleaning up after dinner one evening when the garbage disposal began to malfunction. Parts flew out of the hole in the sink, hitting Joanna in the face and causing serious injuries. She had reconstructive surgery on her face and no longer has full vision in her right eye. Does a "contractual relationship" exist between Joanna (the third party) and the kitchen appliance seller? Multiple Choice • • • • • Yes, Joanna and the seller entered into an official contract. No, Joanna cannot bring a breach of warranty suit against the seller. Yes, the Uniform Commercial Code (UCC) recognizes that third parties automatically enter into contracts with sellers. No, Joanna did not enter into a contract with the merchant. Yes, but only if Joanna paid for a portion of the garbage disposal. Required information Third Party Warranties and Warranty Disclaimers Introduction Read the overview below and complete the activities that follow. Before beginning this interactive, review LO 16-6 and 16-7. Pay attention to the special situations in which third parties are beneficiaries to warranties, and when warranties can be disclaimed. This interactive will help explain who third-party beneficiaries of warranties are and how they benefit. CONCEPT REVIEW: The idea of a seller's being in breach of an implied warranty raises an entirely new issue: Is the seller liable to anyone other than the buyer? This question may initially sound peculiar. After all, the seller and the buyer are bound together by contract, and if either breaches, then the breaching party is liable to the nonbreaching party. But in many scenarios, often it is not the buyer, but rather a third party that uses the product or is injured by the product. So questions arise as to when those third parties are beneficiaries to warranties. Mini-Case: Read the case and answer the questions that follow. Suppose, Howie buys a garbage disposal from a kitchen appliance outlet. He has it professionally installed by professionals from the kitchen appliance outlet, and he has a full and written warranty on the product. Howie's 18-year-old daughter, Joanna, was cleaning up after dinner one evening when the garbage disposal began to malfunction. Parts flew out of the hole ...
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Tutorann50
School: Carnegie Mellon University

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SURNAME: 1
Institution:
Professor:
Student’s Name:
Date of submission:

Part 1
Article 2 and 2(A) of the UCC apply to ____________.






deposits
leases only
negotiable instruments
sales and leases
sales only
Suppose for your new job you need to arrange the lease of a company vehicle. In your dealings
with the car lease company, they fax over an offer for your acceptance. However, you change
one of the terms from the lease company's original offer in your acceptance. Instead of paying in
advance, you change the contract to say "Payment is due at the time and place at which the buyer
is to receive the goods." Does the changing of the terms of the offer still allow for a valid
acceptance?






No, because payment type can never be left unspecified in UCC contracts.
No, because the contract is required to be in writing under the statute of frauds.
No, because of the mirror-image rule.
Yes, the mirror-image rule does not apply.
Yes, because this scenario is an example of a firm offer.
In what states has Article 2 of the UCC been adopted?






In no states in the United States.
In all states except Louisiana.
States do not need to adopt the UCC to enact the rules.
In all states in the United States.
Article 2 of the UCC is mandated by the Constitution.
Charlene is starting a birthday party catering business and leases a popcorn machine and a frozen
drink maker from E-Z Rental. Then Mrs. Smith pays Charlene for Charlene's catering services at
her son's birthday party. Who is the lessor?






Both Charlene and Mrs. Smith.
Charlene.
E-Z Rental.
Mrs. Smith.
None of these parties are the lessor.

SURNAME: 2

Suppose your company is a merchant and you enter into a contract with another merchant.
However, instead of a formalized contract between the two parties, the other company just sends
a written memo outlining the products ordered and prices. Is this memo sufficient to satisfy the
statute of frauds?


Yes, if two parties are merchants, a written memo is deemed to satisfy the statute of
frauds.
• No, this is a specifically manufactured good.
• No, memos never satisfy a statute of frauds requirement.
• No, memos are never binding.
• Yes, merchants do not need any written evidence to satisfy the statute of frauds.
All of the following give rise to a voidable title except






the buyer is a minor.
the seller was deceived as to the identity of the purchaser.
the buyer wrote a bad check for the goods.
the seller acquired the goods through a cash offering.
the goods were procured through criminal fraud.
Suppose Ned sells Flanders a flat screen TV. Flanders paid for the TV with a bad check, so the
contract was voidable. Then Flanders gave you the flat screen as a gift for your graduation
present. What kind of title do you have for the TV?






Voidable, because you received the goods as a gift.
Good, because you got the gift in good faith.
Void, because the activity described is illegal.
Void, because the contract involves check fraud.
Good, because Flanders (the purchaser) made a good-faith purchase.
If you buy a stolen watch from a vender on the streets of N.Y.C., and you know for a fact the
vendor stole the watch from an unsuspecting woman on the street, what kind of title do you have
for the watch?






Valid title, but you might be liable for some sort of negligent tort.
Good title, because you were a good-faith purchaser.
You have no title because the goods were acquired through theft.
A voidable title, because the woman on the street can find you to get the watch back.
Good title, because you were not the one who stole the goods.

SURNAME: 3

Joey buys a couch from a furniture store for $450. He pays and the store delivers the couch to
Joey's house the next day.
Recall that the critical thinking framework for legal reasoning involves asking what missing
information exists in a case. What information that is missing in this scenario would allow you to
determine whether the title is voidable?






Whether the contract was a simple delivery contract.
Whether insurable interest was involved.
The ownership of the title and couch.
The right to encumbrance of the couch.
Whether Joey wrote a bad check for the couch.

An insurable occurs when a contractual party has a/an

Multiple Choice
• economic interest.


title.



risk of loss.



economic interest and title.



title and risk of loss.



economic interest and risk of loss.



economic interest, title, and risk of loss.

SURNAME: 4

Required information
Title
Introduction
Read the overview below and complete the activities that follow.
Before beginning this interactive, you should review LO 15-6 in your text. Pay particularly close
attention to the differences among the three types of titles that can arise when a buyer purchases
goods: good titles, void titles, and voidable titles.
CONCEPT REVIEW:
Neither businesses nor individuals can own or sell goods unless you have good title to them. The
Uniform Commercial Code (UCC) defines a sale as the passing of title from the seller to the
buyer for a price.
Mini-Case:
Read the scenario below and answer the following questions relating to the sale of a title.
Hugo, a 21-year-old man, is birthday shopping for his mother over the online classifieds. While
browsing the Internet for sale ads, he notices a particularly good deal on a 14-carat gold necklace
with matching 1/3-carat diamond earrings. The seller says the jewelry is brand new, still in the
box, and wants only $359 for the entire set. Hugo immediately e-mails the seller and arranges for
the purchase of the jewelry. Hugo pays the seller, receives the necklace and earrings, and intends
to give them to his mother for her birthday.
What is the sale of a title?
Multiple Choice
• The passing of title from the seller to the buyer for a price.
• When insurance on goods can be purchased.
• When the goods become part of the buyer's inventory and can serve as collateral for a
loan.
• When the original parties would be void but the goods have already been sold to a third
party.
• When a buyer can sell goods to a third party.

SURNAME: 5
Required information
Title
Introduction
Read the overview below and complete the activities that follow.
Before beginning this interactive, you should review LO 15-6 in your text. Pay particularly close
attention to the differences among the three types of titles that can arise when a buyer purchases
goods: good titles, void titles, and voidable titles.
CONCEPT REVIEW:
Neither businesses nor individuals can own or sell goods unless you have good title to them. The
Uniform Commercial Code (UCC) defines a sale as the passing of title from the seller to the
buyer for a price.
Mini-Case:
Read the scenario below and answer the following questions relating to the sale of a title.
Hugo, a 21-year-old man, is birthday shopping for his mother over the online classifieds. While
browsing the Internet for sale ads, he notices a particularly good deal on a 14-carat gold necklace
with matching 1/3-carat diamond earrings. The seller says the jewelry is brand new, still in the
box, and wants only $359 for the entire set. Hugo immediately e-mails the seller and arranges for
the purchase of the jewelry. Hugo pays the seller, receives the necklace and earrings, and intends
to give them to his mother for her birthday.
Suppose that the reason the jewelry was brand new and at such a bargain price online was
because the seller actually stole the jewelry. If the jewelry were stolen, what type of title would
Hugo hold when he purchased the jewelry?
Multiple Choice
• Entrustment.
• Both void and voidable.
• Voidable.
• Void.
• Good.

Required information
Title

SURNAME: 6

Introduction
Read the overview below and complete the activities that follow.
Before beginning this interactive, you should review LO 15-6 in your text. Pay particularly close
attention to the differences among the three types of titles that can arise when a buyer purchases
goods: good titles, void titles, and voidable titles.
CONCEPT REVIEW:
Neither businesses nor individuals can own or sell goods unless you have good title to them. The
Uniform Commercial Code (UCC) defines a sale as the passing of title from the seller to the
buyer for a price.
Mini-Case:
Read the scenario below and answer the following questions relating to the sale of a title.
Hugo, a 21-year-old man, is birthday shopping for his mother over the online classifieds. While
browsing the Internet for sale ads, he notices a particularly good deal on a 14-carat gold necklace
with matching 1/3-carat diamond earrings. The seller says the jewelry is brand new, still in the
box, and wants only $359 for the entire set. Hugo immediately e-mails the seller and arranges for
the purchase of the jewelry. Hugo pays the seller, receives the necklace and earrings, and intends
to give them to his mother for her birthday.
Once again, let's assume the jewelry was stolen. But suppose that Hugo did not know the jewelry
was stolen. He bought the stolen jewelry, and then gave the gift to his mom in good faith. What
kind of title does his mom now possess?
Multiple Choice
• A good title because stolen goods are not considered stolen goods if the person did not
know they were stolen.
• A good title because he bought the jewelry in good faith.
• A void title because stolen goods always remain stolen goods.
• A voidable title because this is a situation involving entrustment.
• A voidable title because the intentions of Hugo were dishonorable.

Required information
Title
Introduction
Read the overview below and complete the activities that follow.

SURNAME: 7

Before beginning this interactive, you should review LO 15-6 in your text. Pay particularly close
attention to the differences among the three types of titles that can arise when a buyer purchases
goods: good titles, void titles, and voidable titles.
CONCEPT REVIEW:
Neither businesses nor individuals can own or sell goods unless you have good title to them. The
Uniform Commercial Code (UCC) defines a sale as the passing of title from the seller to the
buyer for a price.
Mini-Case:
Read the scenario below and answer the following questions relating to the sale...

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