A Computer Store That One of HJ's Friends Owned Went

question 192

Multiple Choice

A computer store that one of HJ's friends owned went broke. HJ bought some disk drives from the friend. HJ sold the equipment. Some buyers are mad because the equipment has problems. HJ told them no refunds. If buyers sue him based on the UCC, they are likely to:

• A) win on the basis of the UCC's implied warranty of merchantability
• B) win on the basis of contract law because computers are outside of the UCC
• C) win on the basis of the UCC's implied warranty of quality
• D) lose because HJ does not regularly deal in these goods
• E) lose since the goods involved were sold by a third party beneficiary (the bankrupt business)

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Definitions:

Business Combination

A transaction or event in which an acquirer obtains control of one or more businesses, usually involving the exchange of equity interests or cash.

Equity Method

An accounting technique used by a company to record its investment in another company based on the change in net assets of the investee, reflecting the investor's share of the earnings or losses.

Fair Market Value

The price at which a willing buyer and willing seller would transact, with neither being under any compulsion to buy or sell.

Net Book Value

The value of an asset after subtracting accumulated depreciation or amortization from its original cost.