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Law
Q:
A manufacturer's duty of care does not extend to the inspection and testing of products bought to incorporate in the final product.
Q:
Express warranties displace inconsistent implied warranties except implied warranties of fitness for a particular purpose.
Q:
A contract can contain both an implied warranty and an express warranty.
Q:
The Magnuson-Moss Warranty Act modifies UCC warranty rules to some extent in consumer transactions.
Q:
An express warranty cannot be limited.
Q:
Merchants are required to warrant that the goods they sell are fit for their ordinary purpose.
Q:
A product is unmerchantable if any accident could arise in connection with the goods.
Q:
An expression of opinion by a seller will not usually create a warranty.
Q:
Only a statement made after a contract is entered into can be an express warranty.
Q:
A warranty of title cannot be disclaimed.
Q:
In sales law, a warranty is an assurance by one party of the existence of a fact on which the other party can rely.
Q:
Delta Company makes and sells table saws, which are designed to be safe if used properly. Erin buys a Delta saw and lends it to her neighbor Frank. To reach a toolbox on a high shelf in his garage, Frank props the saw at an angle against a cabinet and climbs onto the saw. Frank loses his footing, slips off the saw, falls on the blade, and is injured. He files a product liability suit against Delta, on the ground of negligence. On what basis could Delta prevail?
Q:
Adam steals from Business Resources, Inc., ten computer hard drives, which Adam sells to Computer Products Corporation (CPC). Unaware that the drives are stolen, CPC reconditions them and sells them to Direct Marketers, Inc. With the reconditioned drives, CPC gives Direct Marketers a written statement that disclaims "any and all warranties." Business Resources learns that Direct Marketers has the drives and demands their return. Direct Marketers gives the equipment to Business Resources and files a suit against CPC. Will Direct Marketers succeed in its suit? Why or why not?
Q:
Ed, an obese individual, files a suit against Fast Food Corporation (FFC), alleging that FFC's food is unhealthy because, as is well known, it contains high levels of cholesterol and saturated fat. If the court applies the reasoning of the court in Case 23.3, Pelman v. McDonald's Corp., Ed is most likely to
a. lose, because Ed assumed the risk when he bought FFC's food.
b. lose, because the food's unhealthiness is a commonly known danger.
c. win, because FFC's food poses an unreasonable risk to diners.
d. win, because the food's unhealthiness is a commonly known danger.
Q:
Quality Tools Corporation (QTC) makes hammers and other tools. Rita is injured while using a QTC hammer. She sues the company for product liability based on negligence. To defend successfully against the suit, QTC may show that
a. QTC did not sell the hammer to Rita.
b. Rita misused the hammer in a foreseeable way.
c. Rita's injury resulted from a commonly known danger.
d. the hammer was not altered after QTC sold it.
Q:
High Bikes, Inc., makes bicycles. A defective High bike injures Ilsa when she rides it. Ilsa files a product liability suit against High. The maker can
a. avoid liability because Ilsa apparently misused the bike in some way.
b. avoid liability because Ilsa assumed the risk when she rode the bike.
c. avoid liability because Ilsa was obviously negligent in some way.
d. not avoid liability.
Q:
Safe-Rite Company makes electrical cords and other connectors for electronic devices. Tina files a product liability suit against Safe-Rite, alleging a warning defect. Under the Restatement (Third) of Torts: Products Liability, in deciding whether to hold Safe-Rite liable, the court may consider
a. neither the characteristics of expected users nor the content of any warning.
b. only the characteristics of expected users.
c. only the content of any warning.
d. the characteristics of expected users and the content of any warning.
Q:
Digital Systems, Inc. (DSI), makes storage media and other peripheral computer products. A DSI product may be unreasonably dangerous due to
a. a defect in its design only.
b. a defect in its design or an inadequate warning.
c. an inadequate warning only.
d. neither a defect in its design nor an inadequate warning.
Q:
Cool Electronics makes DVD players. Edie is injured while using a Cool player, which also damages her house. She sues Cool for product liability based on strict liability. In most states, she may recover damages for
a. neither the personal injury nor the property damage.
b. the personal injury and the property damage.
c. the personal injury only.
d. the property damage only.
Q:
Alpha Company, Beta Corporation, and Gamma, Inc., are drug makers. Kappa Company and Omega, Inc., are drug distributors. In a suit against all of these parties in which market-share liability is imposed, most likely to be liable are
a. neither the distributors nor the manufacturers.
b. the distributors and the manufacturers.
c. the distributors only.
d. the manufacturers only.
Q:
Fun Toyz Corporation makes skateboards, which it sells to consumers, including Holly and Ira. Due to a defect, Holly is injured while using her new board. Ira's board has the same defect, but he is not injured. In a product liability suit based on strict liability, Fun Toyz may be liable to
a. Holly and Ira.
b. Holly only.
c. Ira only.
d. no one.
Q:
Topp Tools Company makes and leases a backhoe to Vic. Due to a defect attributable to Topp's negligence, Vic is injured in an accident in which Warren is also hurt. In a product liability suit based on negligence, Topp may be liable to
a. no one.
b. Vic and Warren.
c. Vic only.
d. Warren only.
Q:
Farm Equipment, Inc., makes farming machinery. Gail discovers that her Farm Equipment tractor is defective and sues the maker for product liability based on negligence. To win, Gail must show that
a. Farm Equipment sold the tractor to Gail.
b. Gail knew and appreciated the risk caused by the defect.
c. Gail suffered an injury caused by the defect.
d. the "defect" was a commonly known danger.
Q:
Omega Custom Tile Company designs and makes floor tiles. In a product liability suit based on negligence, Omega could be liable for violating its duty of care with respect to
a. neither the design nor the making of the tiles.
b. the design and the making of the tiles.
c. the design of the tiles only.
d. the making of the tiles only.
Q:
A-One Appliance Company markets its products through its own A-One Appliance Stores. For A-One's written disclaimer to nullify any express warranties, it must be
a. clear and conspicuous and called to a buyer's attention.
b. in smaller print than the rest of the sales contract.
c. in the same print as the rest of the sales contract.
d. presented to a buyer after a sales contract has been entered into.
Q:
Fact Pattern 23-1
Ann, a representative of Best Concrete Products, Inc. assures City Construction Company (CCC) that Best's cement will not crack within a certain range of temperatures. CCC uses Best's product. When cracks develop within the stated temperature range, CCC files a suit against Best.
Refer to Fact Pattern 23-1. Suppose that the court rules against Best. The manufacturer might have avoided that result by
a. making its cement fit for its particular purpose.
b. making its cement merchantable for its intended use.
c. not allowing Ann to express an opinion.
d. not permitting Ann to make an express warranty.
Q:
Fact Pattern 23-1
Ann, a representative of Best Concrete Products, Inc. assures City Construction Company (CCC) that Best's cement will not crack within a certain range of temperatures. CCC uses Best's product. When cracks develop within the stated temperature range, CCC files a suit against Best.
Refer to Fact Pattern 23-1. The court is most likely to rule in favor of
a. Best, because Ann's statement was an expression of opinion.
b. Best, because CCC chose Best's product voluntarily.
c. CCC, because Ann's statement was an express warranty.
d. CCC, because Best's product is not fit for its purpose.
Q:
Great Paint, Inc., sells paint and painting tools and supplies under "full" warranties. Under the Magnuson-Moss Warranty Act, this means that Great must provide
a. a choice between a refund or replacement if a product cannot be fixed and repair or replacement of defective parts.
b. neither a choice of a refund or replacement, or repair of defective parts.
c. only a choice of a refund or replacement if a product cannot be fixed.
d. only repair or replacement of defective parts.
Q:
Value Hardware, Inc., makes and sells hedge trimmers, for which it issues "limited" warranties. While using a Value trimmer, Wendy is injured. Under the Magnuson-Moss Warranty Act, an action against the maker of the trimmer may be brought by
a. the Federal Trade Commission only.
b. the Federal Trade Commission or Wendy, but not Value.
c. Value or Wendy, but not the Federal Trade Commission.
d. Wendy only.
Q:
Neil goes to Oil Shop to change the oil in his car. Pat, the service technician, learns that Neil plans to take a trip and advises the use of a certain type of oil. The oil breaks down during the trip, damaging the car. Neil may recover from Oil Shop for breach of
a. an express warranty.
b. an implied warranty of fitness for a particular purpose.
c. an implied warranty of merchantability.
d. a warranty of title.
Q:
Allen buys a new sport utility vehicle (SUV) from Best Cars & Trucks, Inc. The most important factor in determining whether an express warranty is created is whether
a. Allen expresses to Best what he wants warranted.
b. Allen's desire for the SUV becomes part of his motivation to deal.
c. Best expresses to Allen what it expects of its customers.
d. Best's promise becomes part of the basis of the bargain.
Q:
A statement by Beth, a salesperson in an All-Rite Discount Store, that the store's combs are "unbreakable" is
a. an express warranty.
b. an implied warranty.
c. a statement of fact.
d. puffing.
Q:
Eve, a salesperson for Finest Cars & Trucks, Inc., tells Gus, "This is the best car I"ve ever seen." This statement is
a. an express warranty.
b. an implied warranty.
c. a warranty of title.
d. puffing.
Q:
Manufacturers are liable in strict product liability for injuries caused by commonly known dangers.
Q:
In many states, the plaintiff's negligence is a defense that may be raised in a product liability suit based on strict liability.
Q:
To succeed in a product liability suit based on strict liability, a plaintiff must be more than a mere injured bystander.
Q:
To succeed in a product liability suit alleging a design defect, a plaintiff must show that there was a reasonable alternative design available when the product was designed.
Q:
To succeed in a product liability suit based on strict liability, a plaintiff must prove that a product was in a defective condition when the defendant sold it.
Q:
One requirement for a product liability suit based on strict liability is a failure to exercise reasonable care.
Q:
Strict liability is liability without fault.
Q:
Privity of contract between the plaintiff and the defendant is required to bring a product liability suit based on negligence.
Q:
To succeed in a product liability suit based on negligence, a plaintiff must prove that there was a failure to exercise due care.
Q:
A product liability action may be based on warranty theory.
Q:
A merchant can disclaim an implied warranty of merchantability.
Q:
A contract cannot contain both a warranty of merchantability and a warranty of fitness for a particular purpose.
Q:
A seller must provide a written warranty for consumer goods.
Q:
An implied warranty of merchantability arises in every sale or lease by a merchant who deals in goods of the kind sold or leased.
Q:
A seller must use words such as "warrant" or "guarantee" to make an express warranty.
Q:
Advertisements can include express warranties.
Q:
A warranty against infringement is a promise by the seller that the product was constructed in a workmanlike manner.
Q:
Promises of fact made during the bargaining process are not express warranties.
Q:
A warranty is an assurance by the buyer to the seller that he or she will pay valid consideration for a product.
Q:
Warranties of title arise in most sales contracts only when the seller expressly declares that he or she possesses title to the goods.
Q:
Theatrical Supplies Company contracts to sell to United Costumes & Uniforms, Inc., seven hundred plastic masks at $1 each to be delivered by October 1. Theatrical knows that United will use the masks to make Halloween costumes. United usually makes $7,000 profit from the costumes' sale. Theatrical fails to deliver on October 1. United attempts to buy substitute masks, but must pay $1.20 for each and take delivery on October 15, cutting United's sales in half. United sues Theatrical. What is the measure of recovery?
Q:
Tech Electronics Corporation agrees to sell to Universal Retail Stores fifty televisions with LCD screens, to be delivered in five equal installments. The first installment consists of nine TVs with LCD screens and one with a CRT screen. Can Universal cancel the whole contract?
Q:
Fact Pattern 22-2
First State Bank issues a letter of credit in favor of Oboe Company, an American firm, to facilitate an international sales contract to buy resources from Lapland Mining, Ltd., a Finnish company.
Refer to Fact Pattern 22-2. To obtain payment, Lapland must comply with all of the requirements of the letter of credit
a. strictly.
b. substantially.
c. reasonably.
d. materially.
Q:
Fact Pattern 22-2
First State Bank issues a letter of credit in favor of Oboe Company, an American firm, to facilitate an international sales contract to buy resources from Lapland Mining, Ltd., a Finnish company.
Refer to Fact Pattern 22-2. In a letter of credit, the beneficiary is
a. Lapland.
b. Oboe.
c. First State Bank.
d. none of the above.
Q:
Fact Pattern 22-2
First State Bank issues a letter of credit in favor of Oboe Company, an American firm, to facilitate an international sales contract to buy resources from Lapland Mining, Ltd., a Finnish company.
Refer to Fact Pattern 22-2. First State Bank
a. is responsible for making sure that the parties perform the contract.
b. will make payment once the transaction has been completed.
c. will make payment when Lapland presents the proper documents.
d. none of the above.
Q:
Fact Pattern 22-2
First State Bank issues a letter of credit in favor of Oboe Company, an American firm, to facilitate an international sales contract to buy resources from Lapland Mining, Ltd., a Finnish company.
Refer to Fact Pattern 22-2. First State Bank must pay Lapland when Lapland
a. enters into the contract with Oboe.
b. verifies that Oboe has the money to pay for the purchase.
c. complies with the terms and conditions of the letter of credit.
d. none of the above.
Q:
A-1 BBQ, Inc., makes and sells barbecue grills to Big Mart, a retailer, which sells a grill to Carl, a consumer. A-1 and Big Mart include in their sales contracts a limitation on consequential damages for personal injuries from a breach of warranty. This is prima facie unconscionable with respect to
a. A-1 only.
b. A-1 and Big Mart, but not Carl.
c. Big Mart and Carl, but not A-1.
d. Carl only.
Q:
Hidebound Stores, Inc., rejects a shipment of leather goods that does not conform to its contract with International Cowhide Corporation (ICC), but is unable to obtain instructions from ICC. Hidebound may
a. resell or return the goods only.
b. resell or store the goods only.
c. return or store the goods only.
d. resell, return, or store the goods.
Q:
Omega Corporation contracts for a sale of water pumps to Pool & Spa, Inc. The pumps partly fail to conform to the contract. Pool & Spa
a. may accept or reject the shipment in part or in whole.
b. must accept the conforming part of the shipment.
c. must reject the nonconforming part of the shipment.
d. must reject the whole shipment.
Q:
Superior Furniture Company contracts to buy from Timber Products, Inc., a shipment of wood that Superior will use to make furniture. Timber refuses to deliver the wood. Superior can recover damages equal to the difference between the contract price and
a. the cost to make the furniture.
b. the cost to obtain the wood elsewhere.
c. the profit that Superior would have made on the furniture.
d. the sale price of the furniture.
Q:
Pisa Pizza Company contracts to sell 1,000 cases of frozen pizzas to Quality Grocers, Inc., but refuses to deliver. Due to a spice shortage, Quality cannot obtain pizza elsewhere. Quality's right to recover the goods from Pisa is the right of
a. cover.
b. replevin.
c. repudiation.
d. specific performance.
Q:
Hi-Tech Company contracts to sell fiber optic cable to Internet Services, Inc. Hi-Tech may bring an action to recover the purchase price and incidental damages if Internet
a. accepts the cable and pays for it.
b. accepts the cable but does not pay for it.
c. rejects the cable.
d. revokes acceptance of the cable.
Q:
AAA Architects, Inc., and Best Office Supply Company contract for a sale of office furniture. AAA, which is insolvent, breaches the contract. Best can stop delivery of the goods in transit
a. only if the quantity is at least a carload.
b. only if the quantity is at least a planeload.
c. only if the quantity is at least a truckload.
d. regardless of the quantity.
Q:
Topps Publishing, Inc., contracts for a sale of textbooks to University Bookstores, Inc. (UBI). Value Shipping Company, the carrier, transports the books to Wit Warehouse Company. Topps' right to stop delivery is lost when UBI's rights to the goods are acknowledged by
a. the appropriate government agency only.
b. Value only.
c. Wit only.
d. Value or Wit.
Q:
Fact Pattern 22-1
Acme, Inc., buys scrap metal from Beta Resources, Inc., to process and sell. Their contract provides for an annual review of the price. When the processed scrap's market value decreases, the parties continue to ship and process the scrap while they review the price. During the negotiations, Acme does not pay Beta. Unable to agree on a price, Beta ends the deal, retrieves the scrap that was shipped and processed but not paid for, and sells it.
Refer to Fact Pattern 22-1. Under the court's reasoning in Case 22.3, Utica Alloys, Inc. v. Alcoa, Inc., the reason for the measure of damages awarded to Beta is that
a. Acme was not the party who ended the dealBeta was.
b. Beta participated in the price review in good faith.
c. Beta retrieved and sold scrap that Acme processed without paying for.
d. Beta retrieved the processed scrap without paying for the processing.
Q:
Fact Pattern 22-1
Acme, Inc., buys scrap metal from Beta Resources, Inc., to process and sell. Their contract provides for an annual review of the price. When the processed scrap's market value decreases, the parties continue to ship and process the scrap while they review the price. During the negotiations, Acme does not pay Beta. Unable to agree on a price, Beta ends the deal, retrieves the scrap that was shipped and processed but not paid for, and sells it.
Refer to Fact Pattern 22-1. According to the court's ruling in Case 22.1, Utica Alloys, Inc. v. Alcoa, Inc., Beta is entitled to the proceeds from this sale and
a. nothing more.
b. the contract price without subtracting the market price for scrap.
c. the difference between the contract price and the market price for processed scrap.
d. the difference between the contract price and the market price for unprocessed scrap.
Q:
On May 1, A-Plus Auto Sales agrees to sell a car to Bob. Five days later, Bob cancels the contract. A-Plus is entitled to
a. force Bob to take the car.
b. recover any resulting damages from Bob but not resell the car.
c. resell the car and recover any resulting damages from Bob.
d. resell the car but not recover any damages from Bob.
Q:
In Case 22.3, Banco International, Inc. v. Goody's Family Clothing, the court held that anticipatory repudiation was indicated by
a. Banco's failure to start performance within a reasonable time to meet the contract deadlines.
b. Banco's misrepresentations concerning the status of its performance.
c. Both a and b.
d. None of the above.
Q:
Pep Paints agrees to sell to Quality Painters Grade A-1 latex outdoor paint to be delivered May 8. On May 7, Pep tenders Grade B-2 paint. Quality rejects the Grade B-2 paint. Two days later, Pep tenders Grade C-3 paint with an offer of a price allowance. Pep has
a. additional, unlimited time to cure.
b. a reasonable, additional time to cure.
c. one more day to cure.
d. no more time to cure.
Q:
Custom Tableware, Inc., contracts for a sale of cutlery to Diners Cafe under a shipment contract. Custom must
a. contract for transportation of the cutlery and tender to Diners documents to obtain its possession.
b. neither contract for transportation of the cutlery nor tender to Diners documents to obtain its possession.
c. only contract for transportation of the cutlery.
d. only tender to Diners documents to obtain possession of the cutlery.
Q:
International Gem Corporation agrees to sell Jewelry Outlets, Inc. (JOI), fifty new diamonds, but the contract does not specify a place of delivery. JOI is expected to pick up the goods. The place of delivery is
a. International's place of business.
b. JOI's place of business.
c. the Annual Gems and Jewels Convention.
d. the U.S. Postal Service office nearest to JOI's place of business.
Q:
Superb Resources, Inc., sells unprocessed minerals to commercial processors in Texas. With regard to the UCC's good faith requirement, Superb can
a. avoid it only by a conspicuous written disclaimer.
b. avoid it only by oral disclaimer.
c. avoid it with or without a disclaimer.
d. not disclaim it.
Q:
A buyer who accepts nonconforming goods cannot revoke the acceptance.
Q:
A buyer who rightfully rejects nonconforming goods can resell the goods and keep the proceeds without accounting to the seller for any of the amount.
Q:
If a lessor's tender of delivery fails to conform to a contract in any way, the lessee cannot accept the goods.
Q:
A buyer who obtains substitute goods to replace goods that a seller did not deliver can also recover damages from the seller.
Q:
If a lessee wrongfully refuses to accept goods that conform to a contract, the seller can maintain an action to recover the damages sustained.