CPA Regulation Reg Quiz: Apply Ucc Article 2 Sales Provisions

What this quiz covers

This quiz focuses on Apply Ucc Article 2 Sales Provisions, giving you a quick way to practice the rules, question types, and explanations that matter most for CPA Regulation Reg.

How to use this quiz

Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

Question 1

1. All contracts for the sale of goods must be in writing to be enforceable, regardless of price.
2. Contracts for the sale of goods are enforceable regardless of whether they are in writing.
3. Contracts for the sale of goods valued at $500 or more must be in writing, and the writing must include all essential terms.
4. Contracts for the sale of goods valued at $500 or more must be evidenced by a writing signed by the party against whom enforcement is sought, but the writing need not include all terms. (correct answer)

Explanation: Under UCC Section 2-201, a contract for the sale of goods for $500 or more is not enforceable unless evidenced by a writing sufficient to indicate a contract has been made, signed by the party against whom enforcement is sought. The writing need not include all material terms - it need only indicate a contract exists and state the quantity. Answer A is incorrect because the threshold is$500, not all contracts. Answer B is incorrect because contracts of $500 or more do require a writing. Answer C is incorrect because the UCC Statute of Frauds does not require all essential terms to be in writing; quantity is the only term that limits enforcement to what is stated.

Question 2

1. The offer must be made by a merchant, must be in a signed writing, and must give assurances that the offer will be held open, for a period not to exceed three months without consideration. (correct answer)
2. The offer must be made by any party, in writing or orally, and must state a specific price and quantity.
3. The offer must be supported by consideration to be irrevocable for any period.
4. The offer must be made by a merchant and may be irrevocable for any period specified in the offer, even if it exceeds one year.

Explanation: Under UCC Section 2-205, a firm offer requires: (1) the offeror is a merchant, (2) the offer is made in a signed writing, and (3) the writing gives assurance the offer will be held open. Without separate consideration, the firm offer is irrevocable for the time stated or, if no time is stated, for a reasonable time, but in no event may the period exceed three months. Answer B is incorrect because firm offers require a merchant offeror and a signed writing. Answer C is incorrect because the UCC firm offer rule specifically eliminates the consideration requirement for merchants. Answer D is incorrect because the maximum irrevocability period without consideration is three months, not any period specified.

Question 3

1. When the buyer receives and inspects the goods at the buyer's location.
2. When the seller ships the goods from its warehouse.
3. When the seller delivers the goods to the carrier at the shipping point. (correct answer)
4. When the buyer pays for the goods, regardless of physical location.

Explanation: Under UCC Section 2-319 and 2-509, in a shipment contract (FOB shipping point), risk of loss passes to the buyer when the seller duly delivers the goods to the carrier at the shipping point. From that moment, if the goods are damaged or destroyed in transit, the loss falls on the buyer. Answer A is incorrect because risk passes at delivery to the carrier, not upon the buyer's receipt or inspection. Answer B is incorrect because simply shipping from the warehouse is not sufficient; delivery to the carrier is the trigger. Answer D is incorrect because payment timing does not determine risk of loss under the UCC.

Question 4

1. The seller knows the buyer's particular purpose and knows the buyer is relying on the seller's skill or judgment to select suitable goods, and the buyer does in fact rely on that judgment. (correct answer)
2. The seller is a merchant and the goods are of the kind the seller normally sells.
3. The buyer expressly requests goods suitable for a specific use and the seller agrees in writing.
4. The goods are sold with an express warranty that they are suitable for any purpose.

Explanation: The implied warranty of fitness for a particular purpose under Section 2-315 requires three elements: (1) the seller has reason to know the buyer's particular purpose, (2) the seller knows the buyer is relying on the seller's skill or judgment to select suitable goods, and (3) the buyer actually relies on the seller's selection. This warranty may arise from any seller, merchant or not. Answer B describes conditions for the warranty of merchantability, not fitness for a particular purpose. Answer C is incorrect because no written agreement is required; the warranty arises by implication from the circumstances. Answer D describes an express warranty, not the implied fitness warranty.

Question 5

1. The failure to provide adequate assurance within 30 days is treated as a repudiation of the contract, allowing the demanding party to treat the contract as breached. (correct answer)
2. The demanding party must file suit within 30 days or forfeit all remedies.
3. The demanding party may only suspend its own performance but may not treat the contract as terminated.
4. The contract automatically terminates by operation of law after 30 days without assurance.

Explanation: Under UCC Section 2-609(4), if a party fails to provide adequate assurance of due performance within a reasonable time not exceeding 30 days after receipt of a justified demand, the failure is treated as a repudiation of the contract. This allows the demanding party to exercise all remedies for anticipatory repudiation, including treating the contract as breached and seeking damages. Answer B is incorrect because no 30-day suit deadline exists; the failure to assure is treated as repudiation, not a litigation trigger. Answer C is incorrect because the demanding party may go beyond suspension and treat the contract as repudiated. Answer D is incorrect because the contract does not terminate automatically; the party must elect to treat it as repudiated.

Question 6

1. When the seller ships the goods from its warehouse.
2. When the seller tenders delivery of the goods at the specified destination. (correct answer)
3. When the buyer pays for the goods, regardless of delivery status.
4. When the goods are loaded onto the carrier's vehicle at the seller's location.

Explanation: In a destination contract (FOB destination) under UCC Section 2-509, risk of loss passes to the buyer when the seller tenders delivery of the goods at the destination specified in the contract. Until the seller makes a proper tender at the destination, the risk remains with the seller. Answer A is incorrect because in a destination contract, shipment from the seller's warehouse does not transfer risk; the seller bears risk during transit. Answer C is incorrect because payment timing is irrelevant to risk of loss under the UCC. Answer D describes the shipment contract (FOB shipping point) rule, not the destination contract rule.

Question 7

1. Only by a formal written statement labeled 'warranty' in the contract.
2. By any affirmation of fact or promise about the goods, any description of the goods, or any sample or model that becomes part of the basis of the bargain. (correct answer)
3. Only by a merchant who deals in goods of that kind.
4. Only when the seller uses the specific words 'warrant' or 'guarantee.'

Explanation: Under UCC Section 2-313, express warranties are created by (1) any affirmation of fact or promise about the goods that becomes part of the basis of the bargain, (2) any description of the goods that becomes part of the basis of the bargain, or (3) any sample or model that becomes part of the basis of the bargain. No formal language is required, and the seller need not use the words 'warrant' or 'guarantee.' Answer A is incorrect because no written label or formal document is required. Answer C is incorrect because any seller, merchant or not, may create an express warranty. Answer D is incorrect because specific warranty language is expressly not required under Section 2-313(2).

Question 8

1. The buyer may reject goods at any time before or after acceptance, provided rejection is communicated in writing.
2. The buyer must reject goods within 24 hours of receipt to be effective.
3. The buyer must reject within a reasonable time after delivery or tender and must seasonably notify the seller of the rejection. (correct answer)
4. Rejection requires the buyer to return the goods to the seller at the seller's expense before notifying the seller.

Explanation: Under UCC Section 2-602, a rejection of goods must be made within a reasonable time after delivery or tender, and the buyer must seasonably notify the seller of the rejection. If the buyer fails to reject within a reasonable time or fails to notify the seller, the rejection is ineffective and the buyer is deemed to have accepted the goods. Answer A is incorrect because rejection must occur before acceptance; once accepted, the buyer's remedy shifts to a claim for damages with notice under Section 2-607. Answer B is incorrect because there is no 24-hour rule; the standard is reasonable time based on the circumstances. Answer D is incorrect because the buyer is not required to return the goods before notifying; the seller must provide instructions for the goods after notification.

Question 9

1. A written confirmation sent by one merchant to another that is not objected to within 10 days after receipt, binding the recipient even without a signed contract. (correct answer)
2. An oral agreement that has been partially discussed by the parties at a business meeting.
3. A contract where the buyer has made a mental commitment to purchase but not yet communicated it to the seller.
4. An email exchange where the subject line says 'Purchase Discussion' but no specific quantity is mentioned.

Explanation: Under UCC Section 2-201(2), the merchant's confirmatory memo exception provides that if one merchant sends a written confirmation of an oral agreement to another merchant, and the recipient does not object within 10 days of receipt, the confirmation satisfies the Statute of Frauds against the recipient even though the recipient did not sign it. Additional exceptions include: goods specially manufactured for the buyer, partial performance (for the quantity delivered and accepted), and judicial admissions. Answer B (partial oral discussion) does not satisfy the Statute of Frauds. Answer C (mental commitment) creates no binding obligation. Answer D (email without quantity) does not satisfy the writing requirement because quantity is essential.

Question 10

1. By making any oral statement that the goods are sold without warranty.
2. By using the word 'merchantability' in the disclaimer, and if the disclaimer is in writing, it must be conspicuous. (correct answer)
3. By stating 'as is' in the contract, which is sufficient to disclaim the fitness warranty but not the merchantability warranty.
4. By providing a written disclaimer that is reviewed and signed by the buyer prior to delivery.

Explanation: Under UCC Section 2-316(2), to disclaim the implied warranty of merchantability, the disclaimer must mention the word 'merchantability' and, if in writing, must be conspicuous. The word 'merchantability' specifically is required; a general disclaimer is not sufficient for this warranty. Answer A is incorrect because an oral disclaimer is permitted for merchantability but must still use the specific word 'merchantability.' Answer C is incorrect because an 'as is' clause under Section 2-316(3) effectively disclaims all implied warranties, including merchantability, not just the fitness warranty. Answer D is incorrect because buyer review and signature are not specifically required by the UCC; conspicuousness and the specific word are what matter.

Question 11

1. The difference between the cover price and the contract price, plus incidental and consequential damages, less expenses saved. (correct answer)
2. The full cover price paid for the substitute goods.
3. The difference between the market price and the contract price, regardless of whether the buyer actually covered.
4. The cover price only if the substitute goods are identical in every respect to the contracted goods.

Explanation: Under UCC Section 2-712, a buyer who covers in good faith without unreasonable delay may recover the difference between the cover price and the contract price, plus incidental and consequential damages, minus any expenses saved due to the seller's breach. This is the primary buyer's damage remedy when cover is made. Answer B is incorrect because awarding the full cover price would give the buyer a windfall since the buyer would have paid the contract price anyway. Answer C describes the market price remedy under Section 2-713, which applies when the buyer does not cover. Answer D is incorrect because cover does not require identical goods; commercially reasonable substitute goods qualify.

Question 12

1. Any time within one year of delivery, provided the goods are returned in original condition.
2. When the non-conformity substantially impairs the value of the goods to the buyer, and the buyer accepted either because of difficulty of discovery before acceptance or on the seller's assurances that the non-conformity would be cured. (correct answer)
3. When the buyer changes its mind about the purchase after delivery.
4. When the buyer can prove the goods were not merchantable at the time of sale.

Explanation: Under UCC Section 2-608, revocation of acceptance requires that: (1) the non-conformity substantially impairs the value of the goods to the buyer, and (2) the buyer accepted the goods either without discovery of the non-conformity due to the difficulty of discovery or because of the seller's assurances the defect would be cured. Revocation must occur within a reasonable time after discovery and before any substantial change in the condition of the goods. Answer A is incorrect because revocation has no fixed one-year period and requires substantial impairment, not just return in original condition. Answer C is incorrect because buyer's remorse is not a ground for revocation. Answer D is incorrect because lack of merchantability alone is not sufficient; the non-conformity must substantially impair value to this particular buyer.

Question 13

1. Parol evidence is never admissible to explain or supplement a written contract for goods.
2. Parol evidence is freely admissible to contradict any term in a fully integrated written contract.
3. Parol evidence may be used to explain or supplement a written contract with consistent additional terms and course of dealing, usage of trade, or course of performance evidence, but may not contradict the written terms. (correct answer)
4. Parol evidence may be used to add any oral terms the buyer claims were agreed to before the written contract was signed.

Explanation: Under UCC Section 2-202, a written contract intended as a final expression of the parties' agreement may not be contradicted by evidence of prior or contemporaneous oral or written agreements. However, the writing may be explained or supplemented by course of dealing, usage of trade, or course of performance evidence, or by evidence of consistent additional terms (unless the writing was intended as a complete and exclusive statement of the terms). Answer A is too broad; supplementing with consistent terms and trade usage is allowed. Answer B is incorrect because parol evidence may not contradict written terms. Answer D is incorrect because adding any oral terms would often contradict or vary the written agreement, which is not permitted.

Question 14

1. The buyer may not reject goods that are commercially reasonable substitutes.
2. The buyer may not reject goods that are within a 5% variance of the contracted quantity.
3. A buyer under an installment contract may reject an installment only if the non-conformity substantially impairs the value of that installment and cannot be cured. (correct answer)
4. The perfect tender rule does not apply to contracts between merchants.

Explanation: The perfect tender rule allows a buyer to reject for any non-conformity. However, a key exception applies to installment contracts under UCC Section 2-612: a buyer may reject a particular installment only if the non-conformity substantially impairs the value of that installment and cannot be cured. The buyer may cancel the entire contract only if the non-conformity of one installment substantially impairs the value of the whole contract. Answer A is incorrect because the perfect tender rule does not allow substitutions; the buyer has the right to exact conformance. Answer B is incorrect because no 5% variance exception exists in Article 2. Answer D is incorrect because the perfect tender rule applies to all Article 2 contracts, including those between merchants.

Question 15

1. A contract with an open price term is void for indefiniteness.
2. The buyer sets the price unilaterally based on its internal budget.
3. If the parties intended to be bound despite the open price, the price is a reasonable price at the time of delivery. (correct answer)
4. The open price term is resolved by using the price from the parties' last transaction.

Explanation: Under UCC Section 2-305, parties may form a contract even if the price is not yet settled. If the parties intend to be bound, the price is a reasonable price at the time for delivery. The court does not void the contract for indefiniteness as it would at common law; the UCC supplies the missing term. Answer A is incorrect because the UCC specifically provides for open price contracts, unlike the common law. Answer B is incorrect because the price is not set unilaterally by the buyer; it is a reasonable market price. Answer D is incorrect because prior transaction prices are not the statutory gap-filler; reasonable price at delivery is the rule.

Question 16

1. The buyer may cancel the contract and recover any amounts paid, seek cover and recover the difference between the cover price and the contract price, or recover market-price damages. (correct answer)
2. The buyer may only seek specific performance if the goods are unavailable elsewhere.
3. The buyer may recover the contract price plus a 20% penalty from the seller.
4. The buyer must accept substitute goods tendered by the seller before seeking other remedies.

Explanation: When a seller fails to deliver or repudiates under UCC Section 2-711, the buyer's primary remedies include: (1) cancel the contract and recover payments made; (2) cover by purchasing substitute goods and recover the difference between the cover price and the contract price under Section 2-712; or (3) recover market-price damages under Section 2-713 (contract price minus market price at the time of breach). Specific performance and replevin are also available in appropriate cases. Answer B is incorrect because specific performance is only one option and requires unique goods; it is not the only remedy. Answer C is incorrect because no statutory 20% penalty exists in the UCC. Answer D is incorrect because the buyer is not required to accept substitute goods; the right to cover is an option, not an obligation.

Question 17

1. Commercial impracticability excuses performance whenever a contract becomes more expensive than anticipated.
2. Commercial impracticability is identical to the common law doctrine of frustration of purpose.
3. Commercial impracticability excuses performance only if the contract was for the sale of services, not goods.
4. Commercial impracticability excuses a seller's non-performance when performance has been made impracticable by an unforeseen contingency whose non-occurrence was a basic assumption on which the contract was made. (correct answer)

Explanation: Under UCC Section 2-615, a seller is excused from performance if performance has become commercially impracticable due to the occurrence of a contingency whose non-occurrence was a basic assumption of the contract, provided the seller did not assume the risk of the contingency. Mere increased cost or difficulty is generally not sufficient. Answer A is incorrect because cost increases alone do not constitute commercial impracticability; the contingency must be unforeseen and go beyond normal market risk. Answer B is incorrect because frustration of purpose and commercial impracticability are related but distinct doctrines; frustration focuses on the purpose of the contract rather than performance difficulty. Answer C is incorrect because Section 2-615 applies to goods contracts, not service contracts.

Question 18

1. Any seller of goods, whether or not they are a merchant.
2. Only sellers of food and beverage products.
3. Only sellers who expressly represent that the goods are merchantable.
4. Only merchants who deal in goods of the kind being sold. (correct answer)

Explanation: The implied warranty of merchantability under UCC Section 2-314 arises automatically in every sale by a merchant who deals in goods of that kind. A casual seller (non-merchant) does not give this warranty. The warranty means the goods are fit for the ordinary purposes for which such goods are used, among other requirements. Answer A is incorrect because the warranty applies only to merchants dealing in that type of good, not to all sellers. Answer B is incorrect because the warranty applies to all merchants dealing in goods of the kind, not only food sellers. Answer C is incorrect because the warranty is implied by law; no express representation is required.

Question 19

1. A contract for the lease of commercial office space for two years.
2. A contract for an attorney to provide legal services for a flat fee.
3. A contract for the purchase of a patent license.
4. A contract for the purchase of 500 units of manufactured widgets. (correct answer)

Explanation: UCC Article 2 applies to transactions in goods, defined as movable personal property. A contract for 500 units of manufactured widgets is a sale of goods and is therefore governed by Article 2. Answer A (commercial office space lease) involves real property, which is governed by real property law, not Article 2. Answer B (legal services) is a services contract governed by common law. Answer C (patent license) involves intellectual property rights, not tangible movable goods, and is governed by federal IP law and common law.

Question 20

1. The additional terms automatically become part of the contract because the acceptance is effective.
2. The additional terms become part of the contract between merchants unless the original offer expressly limits acceptance to its terms, the additional terms materially alter the contract, or the offeror objects within a reasonable time. (correct answer)
3. The acceptance is a counteroffer and no contract is formed unless the offeror expressly agrees to the new terms.
4. The additional terms are void and the contract consists only of the terms in the original offer.

Explanation: Under UCC Section 2-207, a definite and seasonable expression of acceptance operates as an acceptance even if it states additional or different terms. Between merchants, the additional terms automatically become part of the contract unless (1) the offer expressly limits acceptance to its own terms, (2) the additional terms materially alter the contract, or (3) the offeror notifies the offeree of objection within a reasonable time. Answer A is incorrect because there are three conditions that prevent additional terms from becoming part of the contract. Answer C describes the common law mirror-image rule, not the UCC rule. Answer D is incorrect because under the UCC, an acceptance with additional terms still forms a contract.