CPA Quiz: Apply Ucc Article 2 Sales Provisions
20 questions · exam conditions
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Apply Ucc Article 2 Sales ProvisionsQuestion 1 of 20

Merchant buyer's PO is silent on arbitration; seller's acknowledgment adds it. Both merchants; no objection. Result?

Material term; excluded
Included as additional term
Counteroffer; PO terms bind
No contract; different terms
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CPA Quiz

CPA Quiz: Apply Ucc Article 2 Sales Provisions

Practice Apply Ucc Article 2 Sales Provisions in CPA with focused quiz questions that help you check what you know, review explanations, and build confidence with test-style prompts.

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.

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.

All questions

Question 1

Merchant buyer's PO is silent on arbitration; seller's acknowledgment adds it. Both merchants; no objection. Result?

  1. Material term; excluded (correct answer)
  2. Included as additional term
  3. Counteroffer; PO terms bind
  4. No contract; different terms
Explanation: Under UCC 2-207, additional terms in a merchant's acceptance can become part of the contract unless they materially alter it. An arbitration clause is a material alteration because it changes the parties' dispute-resolution rights, so even with no objection it is excluded. The tempting trap is treating both-merchant no-objection as enough to include the term, but material alterations require explicit assent.

Question 2

After breach, buyer promptly covers in good faith at $18/unit; market $16; contract $15. Damages?

  1. Market less contract price
  2. Cover less contract price (correct answer)
  3. Contract less cover price
  4. Market less cover price
Explanation: Because the buyer actually covered in good faith, damages are the cover price minus the contract price: 18 - 15 = 3 per unit. The market price of 16 doesn't replace the actual cover under UCC 2-712. The tempting market-less-contract approach is wrong; it applies only if the buyer did not cover.

Question 3

Buyer accepts 100 chairs; two have minor scratches. May buyer revoke acceptance?

  1. No; acceptance is conclusive
  2. Yes; any defect is enough
  3. No; not substantial enough (correct answer)
  4. Yes; revoke those units
Explanation: You can revoke acceptance only when the nonconformity substantially impairs the value of the goods. Two chairs with minor scratches do not meet that bar, so acceptance stands. The tempting mistake is thinking any defect justifies revocation, but the UCC requires a substantial impairment, not perfect tender.

Question 4

Oral sale of 1,000 mugs with buyer's logo at $2 each; seller makes all; buyer repudiates. Enforceable?

  1. Yes; custom goods exception (correct answer)
  2. No; contract exceeds $500
  3. Yes; quantity is definite
  4. No; no signed writing exists
Explanation: The mugs carry the buyer's logo, so they are specially manufactured goods. Because the seller made all 1,000 before the buyer repudiated, the oral contract is enforceable even though the $2,000 price exceeds the $500 Statute of Frauds limit. The tempting wrong answer is that no signed writing exists, but the custom-goods exception removes that requirement.

Question 5

Seller delivers defective goods; buyer rightfully rejects; goods destroyed before cure. Loss?

  1. Buyer; title passed to buyer
  2. Buyer; rejection is a breach
  3. Buyer; risk passed on delivery
  4. Seller; risk stays until cure (correct answer)
Explanation: When buyer rightfully rejects nonconforming goods, risk of loss does not pass on delivery; it remains with seller until the seller cures or the buyer accepts. Since the goods were destroyed before cure, the seller bears the loss. The tempting mistake is thinking risk passed on delivery, but rightful rejection keeps risk on the seller.

Question 6

Under UCC Section 2-609, a party to a sales contract who has reasonable grounds for insecurity about the other party's performance may demand adequate assurance of performance. What happens if the demanded assurance is not provided within a reasonable time, not to exceed 30 days?

  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 7

Under the perfect tender rule in UCC Article 2, a buyer may reject goods if the goods or tender of delivery fail in any respect to conform to the contract. Which of the following correctly identifies an exception to the perfect tender rule?

  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 8

Under UCC Section 2-508, a seller's right to cure a defective tender allows the seller to repair or replace non-conforming goods. Under which circumstances does the seller have a right to cure after the contract delivery date has passed?

  1. The seller has an unconditional right to cure at any time within 30 days after the buyer rejects the goods.
  2. The seller may cure after the delivery date if the seller reasonably believed the non-conforming tender would be acceptable to the buyer (with or without money allowance) and the seller seasonably notifies the buyer. (correct answer)
  3. The seller has no right to cure once the contract delivery date has passed.
  4. The seller may cure after the delivery date only if the buyer explicitly consented to the cure in writing.
Explanation: Under UCC Section 2-508(2), if the delivery date has passed and the seller had reasonable grounds to believe the non-conforming tender would be acceptable (such as based on course of dealing or prior acceptances), the seller may cure within a further reasonable time after seasonably notifying the buyer. Answer A is incorrect because there is no unconditional 30-day post-rejection cure right; the right to cure after the delivery date requires the seller's reasonable belief that the tender was acceptable. Answer C is incorrect because UCC Section 2-508(2) specifically grants a post-deadline cure right in appropriate circumstances. Answer D is incorrect because buyer consent is not required for the cure right; the seller's reasonable belief is sufficient.

Question 9

A buyer purchases goods and discovers after delivery that the seller has a voidable title (e.g., the seller obtained the goods through fraud). The buyer purchased in good faith for value without knowledge of the defect. Under UCC Section 2-403, which of the following is correct?

  1. The buyer takes the goods subject to the original owner's rights because voidable title cannot be transferred.
  2. The buyer must return the goods to the original seller immediately upon learning of the voidable title.
  3. The buyer may keep the goods only if the seller obtained them through a cashier's check.
  4. The buyer takes good title to the goods because a person with voidable title may transfer good title to a good-faith purchaser for value. (correct answer)
Explanation: Under UCC Section 2-403(1), a person with voidable title has the power to transfer good title to a good-faith purchaser for value. Even though the seller obtained the goods through fraud (giving the seller only voidable title), a buyer who purchases in good faith for value receives good title. This protects the flow of commerce. Answer A is incorrect because the UCC specifically allows transfer of good title by a person with voidable title to a bona fide purchaser for value. Answer B is incorrect because the good-faith purchaser has acquired good title and need not return the goods. Answer C is incorrect because the form of payment is not the determining factor; good faith and value are the relevant requirements.

Question 10

Under UCC Article 2, which of the following statements correctly describes the Statute of Frauds requirement for contracts for the sale of goods?

  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 11

Under UCC Article 2, a merchant's firm offer is irrevocable for a stated period without consideration. Which of the following requirements must be met for a firm offer to be valid?

  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 12

Under UCC Article 2, when does risk of loss pass from seller to buyer under an FOB shipping point (F.O.B. place of shipment) contract?

  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 13

Under UCC Section 2-315, the implied warranty of fitness for a particular purpose arises when which of the following conditions are met?

  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 14

Under UCC Article 2, when risk of loss passes under a destination contract (FOB destination), when does risk shift to the buyer?

  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 15

Under UCC Article 2, an express warranty is created in which of the following ways?

  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 16

Under UCC Article 2, which of the following correctly describes the requirements for an effective rejection of non-conforming goods by a buyer?

  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 17

Under UCC Section 2-201, which of the following qualifies as an exception to the Statute of Frauds requirement for contracts of $500 or more?

  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 18

Under UCC Section 2-316, which of the following correctly describes how a seller may disclaim the implied warranty of merchantability?

  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 19

Under UCC Section 2-712, a buyer who covers after a seller's breach by purchasing substitute goods may recover damages equal to which of the following?

  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 20

Under UCC Section 2-608, a buyer may revoke acceptance of non-conforming goods under which of the following circumstances?

  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.