Q&A Hero

Q: Monroe Hardware contracted to purchase 20 alarm clocks from Clocks, Inc., a clock manufacturer. One week before delivery, Monroe Hardware notified Clocks, Inc. that it was canceling its contract because, it (Monroe Hardware) was overstocked with clocks. Under these circumstances, what remedies are available to Clocks, Inc.? A. Clocks, Inc. must attempt to resell the clocks to another buyer before it can recover damages from Monroe. B. Clocks, Inc. must attempt delivery of the goods before it can sue Monroe for damages. C. Clocks, Inc. may recover the difference between the contract price of the clocks and the current market price at which the clocks are selling. D. Clocks Inc. can recover purchase price even if resale is possible.

Q: Based on the difference between the contract price and the market price, a seller may recover damages from a breach of contract when the goods are: A. in the buyer's possession. B. in the seller's possession. C. in transit via airplane. D. in transit via sea.

Q: If the seller has justifiably withheld delivery of the goods because of the buyer's breach, the buyer is entitled to: A. recover any money or goods he has delivered to the seller over and above the agreed amount of liquidated damages. B. an amount in excess of $500 or 20% of the value of total performance. C. recover any money or goods he has delivered to the seller only to the agreed amount of liquidated damages. D. an amount in excess of $1,000 or 20% of the value of total performance or whichever amount is higher.

Q: Sam contracted with Roadies Garage for customized pink seat covers on a new Porsche he intended to gift his fianc a week later on her birthday. Two days before the delivery was due, Sam broke his engagement and told Roadies that he was no longer interested in getting the seat covers. Under a clear breach of contract by Sam, what is the best option Roadies has to mitigate their loss? A. They can coerce Sam into buying the covers. B. They can complete the job as per Sam's specifications and readily sell it at the contract price to another person as pink seat covers are most sought after by customers. C. They can stop the manufacturing and claim incidental damages from Sam. D. They can sell the uncompleted covers for their scrap or salvage value as those were custom made and could not be sold to anyone other than Sam.

Q: A seller may resell the goods when: A. the buyer breaches the contract and the seller has possession of the goods. B. the seller breaches the contract and the seller has possession of the goods. C. neither party breaches the contract, but the seller thinks he can make a higher profit upon resale. D. the seller is sure that the buyer is going to breach the contract.

Q: When a buyer breaches a sales contract and the seller resells the goods, and makes a profit from the resale, the seller: A. may keep the profits. B. must share the profit with the buyer who breached. C. may not keep the profits. D. must recover only incidental damages.

Q: _____ includes storage charges and sales commissions. A. Consequential damages B. Incidental damages C. Liquidated damages D. Unconscionable damages

Q: Which of the following holds true for the seller's entitlement on the recovery of purchase price of goods? A. The seller is not entitled to the purchase price of all goods accepted by the buyer. B. The seller cannot recover the purchase price of goods damaged after the buyer assumed the risk for their loss. C. Even if the seller successfully resells the goods, he can claim recovery of purchase price from the buyer. D. If the resale of goods happen before the buyer pays for them, the seller must give the buyer due credit for the proceeds of the resale.

Q: A breach of warranty is normally considered to have occurred: A. anytime within five years after the buyer discovers the defect. B. when the goods are delivered to the buyer. C. anytime within 15 years after the buyer discovers the defect. D. the moment the buyer discovers the defect in the product.

Q: Under the UCC, a lawsuit for breach of a sales contract must be filed: A. as soon as the breach is detected. B. within one year after the breach is detected. C. within 10 years after the breach occurs. D. within four years after the breach occurs.

Q: When a warranty covers the future performance of goods, the breach occurs: A. the moment the buyer discovers the defect in the product. B. anytime within four years after the buyer discovers the defect. C. anytime within 10 years after the buyer discovers the defect. D. when the goods are delivered to the buyer.

Q: When a buyer breaches a contract, the seller: A. must deliver the goods to the buyer. B. need not give any credit to the buyer for any expenses the seller saved because of the buyer's breach of contract. C. may resell the goods to recover damages. D. cannot reclaim value of goods if the buyer is insolvent.

Q: The objective of providing remedies for breach of a sales contract is to: A. punish the breaching party. B. encourage parties to rely on trade practices rather than express terms. C. put the injured person in the same position as if the contract has been performed. D. encourage parties to rely on written contracts rather than oral contracts.

Q: If the parties agree on the amount of damages that will be paid to the injured party, this amount is known as ____. A. liquidated damages B. registration expenses C. consequential damages D. remedy

Q: Which of the following statements is true for consequential damages? A. Liability for it not limited by an agreement between the parties. B. It cannot be enforced if it is unconscionable. C. It does not allow for recovery of damages caused by consumer goods. D. It is enforced even if found to be unconscionable.

Q: These result from a breach of contract and may also be limited or excluded by an agreement. A. Liquidated damages B. Registration default C. Consequential damages D. Remedy

Q: If the seller refuses to deliver the goods called for by the contract, the buyer can recover as damages from the seller the difference between the contract price of the goods and the cost of the substitute goods.

Q: If the seller fails or refuses to deliver the goods called for in the contract, the buyer has the right to cover.

Q: An injured buyer is able to recover consequential damages even if he could have prevented the damage by obtaining substitute goods.

Q: If the seller fails to deliver the goods, the buyer may cancel the contract.

Q: Buyers are entitled to specific performance if the goods covered by a contract are unique.

Q: The seller may recover the contract price from the buyer when he/she manufactured goods especially for the buyer and those goods are not usable by anyone else.

Q: When the buyer refuses to accept goods that conform to the contract or repudiates the contract, the seller has to resell the goods.

Q: A seller is not liable for paying damages when the buyer rightfully rejects goods.

Q: Parties may extend the length of time in which a lawsuit can be filed for breach of sales contract to six years.

Q: When a buyer breaches a contract, a seller does not have the right to mitigate damages.

Q: After breach of contract by a buyer, if a seller auctions the goods and makes profit, he is not liable to give the profit to the buyer.

Q: When one of the parties to a contract fails to perform his obligations, he enjoys a variety of remedies for breach of contract.

Q: If a liquidated damages clause is not enforceable because it is unconscionable, the injured party is barred from recovering actual damages.

Q: Any attempts to limit consequential damages for injury caused to a person by consumer goods is considered prima facie unconscionable.

Q: The parties' agreement on the amount of damages to be paid, if one of them breaches their contract, will not be enforced if the amount named is unreasonable.

Q: "COD" stands for: A. cash on delivery. B. cargo on date. C. certificate of deposit. D. cash on details.

Q: If there is no agreement between the parties for delivery to happen in installments, then all the goods: A. should be delivered in "reasonably spaced" intervals. B. must be delivered to the buyer in a single delivery. C. may be delivered in installments as the seller dictates. D. must be delivered as the buyer dictates.

Q: If a buyer and seller do not agree on where the goods are to be delivered, where would the goods be delivered to? A. The seller's place of business B. The seller's house, even if the seller has a place of business C. The distributor D. The buyer has to collect it from the seller's place of business

Q: Under a contract that does not require the seller to deliver the goods to the buyer's place of business but merely to ship the goods to the buyer, the seller: A. is required to put the goods into the possession of a carrier such as a trucking company or a railroad. B. is not required to notify the buyer of the shipment, as it is the duty of the carrier to bear for any material delay or loss in the process. C. is required to deliver the goods personally to the buyer's place of business. D. is not required to make a contract with the carrier, as the seller's duty ends after he delivers the goods safely to the carrier.

Q: Which of the following implies that the seller must make the goods available to the buyer during reasonable hours and for a reasonable period of time so that the buyer can take possession of the goods? A. Tender of payment B. Notification C. Acceptance D. Tender of delivery

Q: In a conflict between the express terms of the contract and trade usage: A. trade usage prevails. B. express terms prevail. C. the contract is invalid. D. implied terms prevail.

Q: ABC Builders and XYZ Lumber had a contract, calling for XYZ Lumber to deliver a certain quantity of bricks to ABC's place of business on the first of every month for one year. The contract also said that any modifications had to be made in writing. XYZ delivered the bricks one week late for the first six months but ABC did not object. When XYZ delivered the bricks late in the seventh month, ABC attempted to cancel the contract. What is the result? A. There has been an assignment of the contract. B. The contract has been modified. C. XYZ is not in breach because delivery should have been made at XYZ's place of business. D. ABC has waived its right to cancel the contract.

Q: Once a party has waived rights to a portion of a contract that has not yet been performed, that party: A. may not retract the waiver later. B. may retract the waiver unconditionally. C. may retract the waiver by giving reasonable notice. D. may retract the waiver within 24 hours.

Q: A contract calls for a farmer to send apples growing at his farm to the fruit market every Monday and he promptly sends them fresh stock of apples every Monday as per the contract. If the fruit market does not pay cash but rather sends a check the following week then: A. the farmer can object if he may want to rely on the late payment for canceling the contract, but can do this only after six months of the contract period. B. the farmer cannot object under any circumstances. C. the farmer must object if he may want to rely on the late payment as grounds for later canceling the contract. D. the farmer can object only if he has not been paid for the apples he delivered.

Q: Under the UCC, only the buyer can demand assurance from the seller that the contract will be performed. If such assurances are not given within 30 days, then the seller is considered to have repudiated the contract.

Q: Once made, anticipatory repudiation can never be withdrawn.

Q: If the goods required for the performance of a contract are destroyed without fault of either party prior to the time the risk of loss passed to the buyer, then the contract is voided.

Q: A buyer has the right to retain goods, even if the bank refuses to pay the buyer's check.

Q: By accepting goods, the buyer forfeits remedies against the seller for any nonconformities in the goods.

Q: A buyer can accept only part of a commercial unit, without accepting the whole unit.

Q: If a buyer has a basis for rejecting a delivery of goods, the buyer must act within a reasonable time, but does not need to give the seller notice of rejection.

Q: If the buyer wrongfully rejects goods, he is liable to the seller for breach of the sales contract.

Q: Under the UCC, the duties of either the buyer or the seller generally may be delegated to someone else.

Q: The basic duty of the seller is to deliver the goods called for by the contract.

Q: Goods may be delivered in installments, even if not stated so in the contract.

Q: If the buyer does not have a place of business, delivery is to be made to the buyer's home.

Q: In a COD contract, the buyer may fully inspect the goods before accepting them.

Q: PC Corp. entered into a contract with Easy University to supply the school with 500 PCs for use in its new computer facility. A week before the PCs were to be delivered, Easy University called PC Corp. and said that it would not go through with the purchase. Is PC Corp. obligated to deliver the PCs as required by the contract? Why or why not?

Q: When the express terms of a contract and the past course of dealings are in conflict, the express terms will prevail.

Q: A party who has waived rights to a portion of the contract not yet performed may retract the waiver.

Q: Peds, a wholesale shoe distributor, ordered a quantity of shoes from Ma Industries. When Peds received the shipment, it discovered that all of the shoes were cracked and peeling. Peds contacted Ma and stated that it was rejecting the shipment because the shoes were defective. Peds wanted to ship the shoes back to Ma but received no communication from Ma regarding what was to be done with the shipment. Peds did not pay the remainder owed for the shipment and stopped payment on the check that had been initially issued for the order. Subsequently, Peds had the shoes refinished by another company and distributed and sold the shoes. Ma sued for the value of the shipment. Did Peds accept the shipment of shoes and owe Ma for the goods?

Q: Can a buyer reject goods for nonconformity in contracts that call for delivery of the goods in separate installments? If yes, under what circumstances can he reject such goods?

Q: If a buyer becomes concerned that the seller may not be able to perform required contract obligations: A. he may not assign his contract rights under the contract. B. he may demand assurance from the other party that the contract will be performed. C. he may refuse to perform the contract under the doctrine of commercial impracticability. D. he may be excused from performance under the doctrine of impossibility.

Q: The doctrine that permits a party to suspend its performance under a contract when the other party repudiates the contract is known as: A. anticipatory repudiation. B. revocation. C. voidance. D. breach.

Q: Campus Bus Service entered into a contract with Smith Bus Company to purchase 10 buses. One week before Campus Bus was scheduled to receive the buses, a fire destroyed Smith's warehouse and the buses inside. As a result, Campus Bus had to purchase its buses at a higher cost from another manufacturer. If Campus Bus sues Smith Bus for damages for breach of contract under these circumstances, what defense, if any, does Smith Bus have? Assume Campus Bus did not bear the risk of loss of the goods under the contract. A. Smith Bus should not be excused from performance because it should be ready with contingency plans or options for all unforeseeable events. B. Smith Bus should not be excused because it did not act in good faith. C. Smith Bus should be excused from performance under the doctrine of commercial impracticability because the fire was an unforeseen event that made it impossible for Smith to perform its contractual obligations. D. Smith Bus is guilty of anticipatory repudiation.

Q: The Code rule that determines when, a person is excused from performing, uses the test of: A. impossibility. B. commercial impracticability. C. proximate causes. D. concurrent causes.

Q: What does it mean to require parties to act in "good faith" in the performance of a sales contract? Explain and provide an example.

Q: Spudz, an Iowa corporation, agreed to sell Bob two carloads of potatoes at "$5 per sack, FOB Iowa shipping point." Spudz had the potatoes put aboard the railroad cars; however, it did not have floor racks used in the cars under the potatoes as is customary during winter months. As a result, there was no warm air circulating and the potatoes were frozen while in transit. Spudz claims that its obligations ended with the delivery to the carrier and that the risk of loss was on Bob. What argument would you make for Bob?

Q: Which of the following is one of the options of a buyer when the goods delivered do not conform to the contract? A. The buyer can pay for the units accepted at a price lower to the price per unit provided in the contract. B. The buyer can accept only part of a commercial unit and reject the rest. C. The buyer can reject an installment delivery even if the nonconformity can be corrected by the seller. D. The buyer can accept all of the goods, or accept any commercial unit, and reject the rest.

Q: Jay, the owner of a cosmetic store, orders 20 bottles of face cream and 30 bottles of face cleansing cream. After the consignment is delivered, he discovers that he has received 10 bottles of face wash and 10 bottles of face cleansing cream. Jay: A. can accept and avoid payment for the face cleansing cream. B. cannot accept nonconforming goods. C. can reject or accept the entire consignment. D. can avoid payment for the face wash which he had not ordered but has accepted.

Q: The seller has the right to cure: A. anytime after the buyer accepts delivery but before the buyer repudiates. B. only once the original time for delivery has expired. C. even if the buyer accepts nonconforming goods. D. if he notifies the buyer about the willingness to cure the improper delivery or tender.

Q: The "right to cure" refers to: A. the seller's right to reship conforming goods in circumstances where the seller had some reason to believe the buyer would accept nonconforming goods. B. the seller's opportunity to reship conforming goods only within the time of delivery. C. the exclusive right, granted by state permit, of certain businesses to reship certain types of items. D. the seller's right to sell nonconforming goods and not replace, when the past shipments were not objected for substitution.

Q: Buyer, who owns a grocery store, orders bananas from a fruit wholesaler. The bananas arrive, but they are much too ripe to sell in the grocery. Buyer rejects the bananas and promptly notifies the fruit wholesaler of his rejection. What are Buyer's responsibilities regarding the rejection of the spoilt goods? A. Buyer must follow any reasonable instructions the seller gives concerning the disposition of the bananas. B. Buyer must make a reasonable effort to sell them on the seller's behalf, but must not expect a reimbursement from the seller. C. Buyer need not state any reasons for the rejection to the seller. D. Buyer must give sufficient notice to the seller and the seller must personally come and collect the goods rejected by the buyer.

Q: When the seller does not give the buyer instructions concerning the disposal of the goods upon rejection and whether the goods are not perishable, the buyer: A. can resell the goods for the seller, but cannot keep a commission on the sale. B. cannot reship them to the seller without the seller's instructions. C. can resell them for the buyer's benefit. D. can give reasonable time for the seller to reclaim the goods.

Q: Which of the following holds true of revocation of acceptance by the buyer? A. He/she can revoke acceptance when the nonconformity substantially impairs the value of the goods. B. He/she cannot revoke if the buyer accepted the goods because of assurances by the seller. C. He/she can revoke acceptance even after accepting goods with the knowledge of the nonconformity. D. He/she after revoking acceptance will not have the same rights and duties with regard to goods involved as they had rejected them.

Q: Alice purchased a new computer from Compu-Best, a local computer store. She used the computer for a week when the computer began to malfunction. She returned it to the store, where the store manager assured her that he could repair what he called a "minor problem" in the computer. Two months had passed and Alice had already returned the computer five times for repair. Alice finally gave up and demanded her money back. Under these circumstances: A. Alice is not entitled to revoke her acceptance of the goods because she did not reject the goods when she first discovered the defect. B. Alice should be entitled to revoke her acceptance because she accepted the goods because of assurances by the seller that the nonconformity would be cured. C. Alice cannot revoke her acceptance because the value of the computer is impaired by the defect which causes it to malfunction. D. Alice cannot revoke her acceptance but she is entitled to damages for breach of warranty under the UCC.

Q: This occurs when a buyer, after having reasonable opportunity to inspect the goods, either indicates that he will take them or fails to reject them. A. Tender of delivery B. Notification C. Acceptance D. Reasonable contract

Q: A commercial unit is: A. comprised of any unit of goods, even set of articles that is treated by commercial usage as a single whole. B. comprised only of single articles treated by commercial usage as a single whole. C. comprised only of set of articles contained in a commercially recognized measurement (such as a bushel, ton, or truckload). D. comprised of units of articles which can also be accepted as one single article.

Q: Farmer Tom entered into a contract with Jerry's Pickle Company wherein Tom agreed to sell Jerry 500 pounds of cucumbers suitable for processing into pickles. The terms of the sale were cash on delivery. When Jerry received the cucumbers, it was obvious to him without inspection that the cucumbers were too large for processing into pickles. Under these circumstances: A. Jerry may reject the cucumbers, but Jerry must notify Tom of the rejection and follow any reasonable instructions from Tom concerning disposal of the cucumbers. B. Tom may not reject the cucumbers because the terms of the sale were cash on delivery. C. Tom must accept the cucumbers and pay for them, but he may be entitled to reduction in the purchase price as damages for breach of contract. D. even if Tom had some reason to believe Jerry would accept the cucumbers, he cannot cure the breach by reshipping conforming cucumbers to Jerry within a reasonable time.

Q: When a payment is tendered by check, the payment is: A. final. B. conditional. C. unenforceable. D. realized only after the goods are inspected.

Q: Which of the following is a basic obligation or right of the buyer and seller concerning the payment for goods? A. The price of the goods must be paid only in money, else the seller can consider the goods to be rejected by the buyer. B. If there is no agreement for extending credit to the buyer, the buyer must pay for them on delivery. C. If all or part of the price of goods is payable in real property, then both the transfer of goods and real property are covered by the law of sales of goods. D. The buyer has the right to inspect the goods before payment under all circumstances.

Q: Which of the following is true about acceptance of goods by a buyer? A. He must indicate that he/she will take them. B. Failure to reject cannot be assumed as an acceptance. C. He must pay for the goods without inspecting them. D. He must assume the seller to be the owner of the good.

Q: To reject goods, the buyer must: A. notify the seller of the rejection. B. specify the nonconformity after treating the good as his own. C. desist from paying the seller in full. D. never specify the defect to the seller.

Q: When a buyer has a right to inspect the goods, the right usually must be exercised: A. before the goods are shipped. B. after paying for them. C. before accepting the goods. D. within 15 days after accepting the goods.