Perry and Tim Negotiate a Contract Governed by the UCC

question 61

Multiple Choice

Perry and Tim negotiate a contract governed by the UCC. Perry is worried about being sued, so Perry and Tim negotiate an agreement wherein each will only have 16 months to pursue a claim for breach. Tim, claiming the UCC gives him four years to sue, files a claim after three years. Can Tim go forward with his claim?

• A) Yes, because the UCC does allow him four years and parties cannot change that.
• B) Yes, because the UCC allows him four years and parties can only extend the UCC statute of limitations, not shorten it.
• C) No, because buyers and sellers are free to negotiate contractually a shorter time period than the UCC's four year statute of limitations.
• D) No, because parties to a contract are never allowed to negotiate on the statute of limitations.
• E) It depends upon the contract terms.

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Definitions:

Relevance

The importance of information in decision-making; it must be timely and have predictive and confirmatory value.

Going Concern Assumption

The accounting principle that a company will continue to operate indefinitely, without the intention or necessity of liquidation.

Foreseeable Future

A concept in accounting referring to the period during which a business is expected to continue its operations without significant change.

Financial Statement Element

Components of financial statements, like assets, liabilities, equity, revenues, and expenses that provide structure to financial reporting.