[Anonymous]

NINJA Question –

Under a contract governed by the U.C.C. Sales Article, which of the following statements is correct?

A. Unless both the seller and the buyer are merchants, neither party is obligated to perform the contract in good faith.

B. The contract will not be enforceable if it fails to expressly specify a time and a place for delivery of the goods.

C. The seller may be excused from performance if the goods are accidentally destroyed before the risk of loss passes to the buyer.

D. If the price of the goods is less than $500, the goods need not be identified to the contract for title to pass to the buyer.

The seller may be excused from performance if the goods are accidentally destroyed before the risk of loss passes to the buyer.

The other statements are false:

“Unless both the buyer and seller are merchants, neither party is obligated to perform the contract in good faith.” The good faith obligation is applied to both parties.

“The contract will not be enforceable if it fails to expressly specify a time and a place for delivery of goods.” The U.C.C. states that if delivery is not specified, then delivery is at the seller’s place of business or where the parties both know the goods are (such as a warehouse).

“If the price of the goods is less than $500, the goods need not be identified to the contract for title to pass to the buyer.” This is an attempt to confuse you with the Statutes of Fraud provision in the U.C.C. which states that the sale of goods of $500 or more must be evidenced by a writing to be enforceable.

---

Here it says statement C is correct. However, in CPAexcel, on this specific topic, it gives the example where someone promises to sell crops, and then there was this tornado that destroys his crops, but he was not off the hook because although his crops may be destroyed, not all the crops in the world are destroyed, so he still has to perform. Doesn’t that directly contradict the answer in this problem?

[Tax lady]

CPAexcel's question/answer is in relation to fungible goods. In that case, sellers are not excused from performance because those goods are easily obtained elsewhere in order to fulfill their obligation to the buyer.

REG 8/15/14 (73); 11/13/14 (82)-expired 🙁
AUD 5/30/15 (80)
BEC 11/28/15 (75)
FAR 7/30/16

Studying with CPAexcel and Ninja notes/MCQ's/Flashcards

[Anonymous]

Wait so this question isn't about fungible goods? How can you tell the difference?

[Tax lady]

The question in CPAexcel was for fungible goods and it specified that by using the term “crops.” Usually these questions will specify that they are fungible by saying crops, grain, wheat, tomatoes, etc. It's basically anything that is easily replaceable without causing a detriment to the seller. Like if I wanted to buy tomatoes from you but they spoiled, you could easily go to the store and buy more in order to fulfill our contract. I hope this makes sense!

REG 8/15/14 (73); 11/13/14 (82)-expired 🙁
AUD 5/30/15 (80)
BEC 11/28/15 (75)
FAR 7/30/16

Studying with CPAexcel and Ninja notes/MCQ's/Flashcards

[Author]

Replies