In a Contract Involving Elements of Both Goods and Services

question 42

Multiple Choice

In a contract involving elements of both goods and services, a court will determine whether Article 2 of the Uniform Commercial Code (UCC) applies by:

• A) asking which element predominates in the contract.
• B) balancing the need to apply a uniform standard with the interest of justice.
• C) asking if the contract is barred by public policy.
• D) using the criteria of reasonableness.

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Definitions:

Sales Mix

The composition of a company’s product or service sales, showing the relative proportions of each product or service sold.

Net Income

The total revenue minus total expenses, indicating the profitability of a company over a specific period.

Contribution Margin Ratio

The ratio of Contribution Margin to Sales Revenue, measuring the percentage of each sales dollar available to cover fixed costs and profit.

Fixed Costs

Unvarying costs that do not fluctuate with changes in production or sales levels, such as office rent, staff wages, and insurance coverage.