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Suggested Additional Assignments Chapter


									Chapter 18


Practice Test
1. CPA QUESTION Cookie Co. offered to sell Distrib Markets 20,000 pounds of cookies at $1.00 per
   pound, subject to certain specified terms for delivery. Distrib replied in writing as follows: “We
   accept your offer for 20,000 pounds of cookies at $1.00 per pound, weighing scale to have valid city
   certificate.” Under the UCC:
   (a) A contract was formed between the parties
   (b) A contract will be formed only if Cookie agrees to the weighing scale requirement
   (c) No contract was formed because Distrib included the weighing scale requirement in its reply
   (d) No contract was formed because Distrib’s reply was a counteroffer
    (a). CPA Examination, November 1989, #46.
3. Jim Dan, Inc. owned a golf course that had trouble with crab grass. Jim Dan bought 20 bags of Scotts
   Pro Turf Goosegrass/Crabgrass Control for $835 and applied it to the greens. The Pro Turf harmed
   the greens, causing over $36,000 in damage. Jim Dan sued Scotts. Scotts defended by claiming that it
   sold the Pro Turf with a clearly written, easy-to-read disclaimer that stated that in the event of
   damage, the buyer’s only remedy would be a refund of the purchase price. Jim Dan, Inc. argued that
   the clause was unconscionable. Please rule.
    The court granted summary judgment for Scotts, ruling that the clause was not unconscionable. The
    court noted that such clauses are seldom held unconscionable when the buyer is a corporation, as
    here. Further, the clause was clear and easy to understand, and it was reasonable for the seller to limit
    its losses when it had no way of gauging the potential consequential damages that a user might
    allege. Jim Dan, Inc. v. O. M. Scott & Sons Co., 785 F. Supp. 1196, 1992 U.S. Dist. LEXIS 8325
    (W.D. Pa. 1992).
5. Mail Code, Inc. manufactured bar code machines for reading addresses on envelopes. Its offices were
   in Indiana. John Grauberger, who lived in Kansas, applied to become a dealer for the Mail Code
   machine in the Kansas area. He signed a dealer application form, agreeing to abide by the terms
   printed on it. Mail Code informed Grauberger that it accepted him as a dealer and showed him a
   dealer agreement outlining his duties. The agreement contained a “forum selection” clause, stating
   that any disputes would be settled in a court in Indiana. Grauberger made no objection. He purchased
   a bar code machine for $31,000, but it did not work. Grauberger sued in Kansas, but Mail Code
   attempted to have the case dismissed because it had not been brought in Indiana. Did the parties have
   a valid agreement? Was the forum selection clause part of the agreement?
    The parties did create an enforceable agreement because the key is intention. When Mail Code
    notified Grauberger that it accepted him as a dealer, they had a contract. The question becomes, what
    are its terms? Under UCC §2-207, the forum selection clause is an additional term included in the
    acceptance. It will become part of the bargain unless (1) the offer insisted on its own terms, (2) the
    additional term materially alters the offer, or (3) the offeror promptly objects to the added term.
    Grauberger's offer did not insist on its own terms, nor did Grauberger promptly object to the new
    clause. But the forum selection clause did materially alter the bargain because it strongly affected
   Grauberger's ability to enforce the deal. Therefore it was not part of the contract, and Grauberger was
   entitled to sue in Kansas. M.K.C. Equipment Co. v. M.A.I.L. Code, Inc., 843 F. Supp. 679, 1994 U.S.
   Dist. LEXIS 1204 (D. Kan. 1994).
7. Nina owns a used car lot. She signs and sends a fax to Seth, a used car wholesaler who has a huge lot
   of cars in the same city. The fax says, “Confirming our agrmt—I pick any 15 cars fr yr lot—30%
   below blue book.” Seth reads the fax, laughs, and throws it away. Two weeks later, Nina arrives and
   demands to purchase 15 of Seth’s cars. Is he obligated to sell?
   Probably. Under UCC §2-201(2), a signed memo between merchants that would be binding against
   the sender is sufficient to satisfy the statute of frauds against the recipient if he reads it and fails to
   object within 10 days.
9. Which one of the following transactions is not governed by Article 2 of the UCC?
   (a) Purchasing an automobile for $35,000
   (b) Leasing an automobile worth $35,000
   (c) Purchasing a radio worth $449
   (b). The automobile lease is governed by Article 2A.
11. Are you the typical student who just cannot get enough questions and quizzes about the UCC? Type
    your way to The Web site has a long discussion of the
    UCC, interspersed with contract hypotheticals and questions.
   Are you the typical student who just cannot get enough questions and quizzes about the UCC? Type
   your way to The Web site has a long discussion of the
   UCC, interspersed with contract hypotheticals and questions.

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