Q&A Hero

Q: If a lessee wrongfully refuses to accept goods that conform to a contract, the lessor must tender substitute goods.

Q: An unpaid seller can bring an action to recover the purchase price, on the buyer's breach of a contract, only if the goods are first resold or otherwise disposed of.

Q: When a buyer breaches a contract while the seller is still in possession of the goods, the seller can resell the goods and hold the buyer liable for any loss.

Q: A buyer's breach of a contract will not usually give the seller the right to cancel the contract.

Q: If goods fail to conform to a contract in any way, the buyer or lessee cannot make even a partial acceptance of the goods.

Q: Unless the parties agree otherwise, the buyer must make payment at the time and place that the goods are received.

Q: A delay in delivery of goods under a sales contract is a breach if performance is commercially impracticable.

Q: If a nonconforming installment substantially impairs the value of a whole contract, the buyer can treat the entire contract as having been breached.

Q: In an installment contract, a buyer can reject any installment for any reason.

Q: A substitution of one commercially reasonable carrier for another can be a valid tender of delivery if it is done within the time for performance.

Q: A seller cannot exercise the right to cure once the time for performance under the contract has expired.

Q: Under a destination contract, a seller must deliver the goods to a carrier, after which the risk of loss passes to the buyer.

Q: Goods may be tendered in installments if the parties prefer it that way.

Q: A seller's tender of goods that does not conform to a contract is not a valid tender.

Q: The standard of good faith is only read into contracts that provide expressly for it.

Q: Fact Pattern 22-1 Internet Cafes, Inc., contracts to buy all of its requirements for coffee, at a minimum of 1 million pounds per year, from Java Corporation for six years. After three years, Internet tells Java that it plans to sell its company to Kwik Eateries, Inc. Kwik refuses to assure Java that it will continue Internet's contract. Refer to Fact Pattern 22-1. Kwik's refusal constitutes a. a justified response based on Kwik's relation to the contract. b. an assignment of Internet's rights under the contract. c. a reasonable suspension of performance under the contract. d. a repudiation of the contract.

Q: Glad Chair Company contracts to deliver 100 chairs to Home Furnishings Store on May 1. Glad tells Home on April 15 that it is canceling the contract because its workers have gone on strike. Home may a. await Glad's performance, sue Glad, or suspend its own performance. b. only await Glad's performance for a commercially reasonable time. c. only sue Glad for breach of contract. d. only suspend its own performance.

Q: According the court in Case 22.1, Maple Farms, Inc. v. City School District of Elmira, the defense of commercial impracticability will not excuse the performance of a contractual obligation when there is an increase in the seller's costs while the contract is in force a. unless the increase in the seller's costs is substantial. b. under any circumstances. c. unless the increase in the seller's costs makes it impossible for the seller to perform without losing money. d. unless the increase in the seller's costs was not foreseeable at the time the contract was formed.

Q: Food Packages, Inc., agrees to sell 50,000 6-ounce yogurt containers to Great Dairy Company. Food can obtain only 20,000 of the 6-ounce containers, but also ships 30,000 more expensive 8-ounce containers for the same price. Under these circumstances, Great a. cannot reject the delivery and Food cannot later replace the nonconforming containers. b. cannot reject the delivery but Food can later replace the nonconforming containers. c. may reject the delivery and notice to Great of Food's intent to cure will give Food a reasonable time to replace the nonconforming containers. d. may reject the delivery but Food cannot later replace the nonconforming containers.

Q: Clear Sight Company, which is based in Delaware, agrees to sell fifty windows, currently stored in Florida, to Great View, Inc., which is based in Hawaii. Absent an agreement to the contrary, the place of delivery will be in a. California. b. Delaware. c. Florida. d. Hawaii.

Q: Heavy Concrete Company contracts for a sale of its products to Interstate Construction, Inc. For Heavy to tender delivery of goods, it must a. give Interstate notice to take delivery and hold conforming goods at its disposal. b. neither give Interstate notice nor hold conforming goods at its disposal. c. only give Interstate notice. d. only hold conforming goods at Interstate's disposal.

Q: Price-Cut Discount Stores are open to consumers. The UCC requirement of good faith imposes a. a higher duty on consumers than Price-Cut. b. a higher duty on Price-Cut than on consumers. c. no duty on either Price-Cut or consumers. d. the same duty on Price-Cut and consumers.

Q: If the parties to a sales contract state that a certain remedy is exclusive, then it is the sole remedy.

Q: A buyer who accepts conforming goods cannot revoke the acceptance.

Q: A buyer may reject a seller's goods only if they fail to conform to a material term of the contract.

Q: A lessor's failure to make proper delivery of unique goods under a contract will not usually give the lessee the right to specific performance.

Q: On a lessee's insolvency, the lessor can stop delivery of the goods.

Q: If a buyer wrongfully refuses to accept goods that conform to a contract, the seller may recover damages.

Q: If a buyer repudiates a contract, the seller cannot recover damages.

Q: If a buyer breaches a contract and the seller resells the goods to another party, the seller cannot recover any loss from the breaching buyer.

Q: An innocent party to a breached sales or lease contract is limited to one, exclusive remedy.

Q: A lessee's breach of a contract will usually give the lessor the right to cancel the contract.

Q: If, before the time for performance, a buyer communicates an intent not to perform, the seller can consider the buyer in breach and pursue a remedy.

Q: Unless the parties agree otherwise, a buyer or lessee must pay for goods at the time and place of their receipt.

Q: In general, a buyer's duty to pay for tendered goods becomes absolute before the buyer has had an opportunity to inspect the goods.

Q: A seller can terminate a contract on the basis of commercial impracticability if increases in the seller's costs threaten to undercut its profits.

Q: A substitution of one type of goods for another is always a valid tender of delivery if it is done within the time for performance.

Q: A seller fulfills a contract by delivering goods that conform to the terms.

Q: Goods may be rejected only if they are substantially nonconforming with the terms of the contract.

Q: A seller can always exercise the right to cure within the contract time for performance.

Q: If a contract does not specify where the goods are to be delivered and the buyer is to pick them up, the place of delivery is the location of the goods.

Q: Goods called for by a contract must be tendered in a single delivery unless the parties agree otherwise.

Q: Alpha Electronic Components, Inc., ships 100,000 silicon chips to Beta E-Products Corporation. The chips arrive a week early, on a Friday that is extremely busy on Beta's receiving dock. Beta's dockworkers check the bill of lading against the quantity marked on the boxes, but do not examine the chips. The chips are then put in the back of the warehouse until needed in the plant. The next week, when the chips are sent to the plant and unpacked, Beta's plant manager discovers that the quality is less than that stated in the parties' contract. Beta contacts Alpha to inform it of the defect. Does Beta have any remedies? If so, what are they? If not, why not?

Q: Midstates Utility Corporation contracts with North American Energy Company to buy 50,000 gallons of heating oil. North American agrees to deliver the oil in five equal installments between October 1 and the following March 15. The winter is the warmest on record, however, and after the last agreed delivery, Midstates has accepted only 30,000 gallons of the oil. When North American tenders the rest of the oil, Midstates refuses to take it, citing the weather and claiming to be acting in good faith. Will North American succeed in a suit against Midstates for breach of contract?

Q: Digital Video Company contracts to sell DVD players to E-lectric Stores, Inc. Digital Video ships nonconforming goods, which E-lectric accepts. E-lectric can recover damages equal to the difference between a. E-lectric's sale price and the contract price. b. the contract price and the value of the goods as promised. c. the value of the goods as promised and their value as accepted. d. the value of the goods as accepted and E-lectric's sale price.

Q: Good Food, Inc., orders "Grade A" rice from Happy Farms to process and sell to Imperial Grocers. Happy Farms ships "Grade B" rice, which Good Food accepts. To recover damages for the nonconformity, Good Food must give notice of the breach within a reasonable time to a. Happy Farms only. b. Imperial only. c. Happy Farms, Imperial, and the appropriate government agency. d. the appropriate government agency only.

Q: Java Company orders coffee beans from Kwik Sales Corporation. Java accepts the beans before discovering that the goods are nonconforming. To revoke acceptance, Java must notify Kwik a. any time. b. only after the beans undergo any substantial change not caused by their defects. c. only before the beans undergo any substantial change not caused by their defects. d. only while the beans undergo any substantial change not caused by their defects.

Q: SUV Motors Corporation contracts to buy brakes from Top Stop, Inc., which wrongfully fails to deliver the goods. SUV can recover damages equal to the difference between the contract price and the market price at the time a. and place of tender. b. SUV filed a suit against Top Stop. c. SUV learned of the breach. d. the parties contracted.

Q: Drew contracts for a sale of tools to Engineering Company (EC). If the tools fail to conform to the contract, EC a. may accept or reject the shipment in part or in whole. b. must accept the shipment. c. must reject the shipment. d. must renegotiate the contract.

Q: City Accounting Service pays half of the price for a shipment of computers that remain with the seller, Digital Computers, Inc. Within ten days, Digital becomes insolvent. City can recover the goods if a. City can describe the computers. b. City cannot obtain cover. c. City expected to obtain the computers within those ten days. d. the computers are identified to the contract.

Q: Garden Vegetable Farm and Hungry Restaurant, Inc., enter into a contract for a sale of tomatoes before Hungry declares bankruptcy. Garden 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: Heavy Equipment, Inc., and Interstate Construction Company enter into a contract for the sale of a crane. Heavy Equipment does not know that Interstate is insolvent. Interstate sells the crane to Jiffy Build, Inc., a good faith purchaser. Heavy Equipment may a. not reclaim the crane. b. reclaim the crane if demand is made in a timely manner. c. reclaim the crane if Interstate is going out of business entirely. d. reclaim the crane if Jiffy Build is paying Interstate for it on credit.

Q: Square B Ranch and Tom enter into a contract on August 1 in which Square B agrees to sell 200 cattle to Tom. Tom cancels the contract ten days later. Square B is unable to sell cattle to another buyer. Square B is entitled to a. force Tom to accept the cattle and recover the contract price. b. keep the cattle and recover the contract price from Tom. c. keep the cattle only. d. recover the contract price from Tom but must destroy the cattle.

Q: Ample Country Stables contracts to buy 1,000 horseshoes from Blacksmith, Inc., for $1 per shoe. When the market price decreases to 50 cents per shoe, Ample refuses to go through with the deal. Blacksmith can recover a. $1,500. b. $1,000. c. $500. d. 0.

Q: Regal Manufacturing Company contracts to sell sweaters to Superb Styles Store. Before the sweaters are delivered, Superb indicates that it will not be able to pay. Regal can resell the goods a. either after finishing the job (and identifying the goods), or after stopping the job. b. only after finishing the job and identifying the goods. c. only if Regal immediately stops the job. d. under no circumstances.

Q: Fact Pattern 22-1 Internet Cafes, Inc., contracts to buy all of its requirements for coffee, at a minimum of 1 million pounds per year, from Java Corporation for six years. After three years, Internet tells Java that it plans to sell its company to Kwik Eateries, Inc. Kwik refuses to assure Java that it will continue Internet's contract. In Case 22.3, Banco International, Inc. v. Goody's Family Clothing, the court noted that anticipatory repudiation a. is a remedy that is available to the nonbreaching party under the UCC. b. is a type of breach of contract. c. must be express to be effective. d. None of the above.

Q: Fact Pattern 22-1 Internet Cafes, Inc., contracts to buy all of its requirements for coffee, at a minimum of 1 million pounds per year, from Java Corporation for six years. After three years, Internet tells Java that it plans to sell its company to Kwik Eateries, Inc. Kwik refuses to assure Java that it will continue Internet's contract. Refer to Fact Pattern 22-1. Java can a. assign its rights under the contract but cannot terminate it. b. do nothing. c. suspend performance under the contract until Java is fully paid. d. terminate the contract and seek damages.

Q: Ann boards her horse Blaze at Cora's Ranch. Ann sells the horse to Dan and tells Cora, "I sold Blaze to Dan." Cora says, "Ok." That night, Blaze is kicked in the head by another horse and dies. Who suffers the loss?

Q: A contract between Kwik Import Company in Los Angeles and Macro Retail Corporation in New York does not expressly state which party bears the risk of loss but says only that Kwik is "to ship goods at the seller's expense." At what point does the risk of loss of the goods pass from the seller to the buyer?

Q: Micro Chip Company sells most of its assets to National Tech Corporation in a bulk transfer that could be subject to UCC Article 6, depending on state law. In Micro's state, as in most states, UCC Article 6 has been a. repealed. b. replaced with new UCC Article 6A. c. retained but not revised. d. revised but not repealed.

Q: Orange Computer Corporation sells Pad-brand MP3 players to Quik Discount Stores and other retailers. Orange will have an insurable interest in the players as long as a. Orange remains in business. b. Orange retains title to the goods. c. the goods are in existence. d. there is no risk of loss.

Q: Business Office Corporation (BOC) orders five inkjet printers from Computer Products, Inc. (CPI), to be delivered by CPI. Before CPI's truck arrives with the goods, BOC tells CPI it will not pay. The printers are destroyed in transit. The loss is suffered by a. BOC only. b. BOC to the extent of a deficiency in CPI's insurance coverage only. c. BOC and CPI equally. d. CPI only.

Q: Little Jewelry Store orders display racks from Market Supplies, Inc. (MSI). MSI mistakenly ships racks of the wrong size and color, which Little rejects and returns via New Shipping Company. During the return, the racks are lost. The loss is suffered by a. Little only. b. Little and MSI, but not New Shipping. c. Little, MSI, and New Shipping. d. MSI only.

Q: Diner's Cafe orders five gallons of corn oil from EZ Distributors, Inc. EZ mistakenly ships olive oil, which Diner's keeps, despite the nonconformity. The oil is destroyed in a fire. The loss is suffered by a. Diner's and EZ, but not Diner's customers. b. Diner's, EZ, and Diner's customers. c. Diner's only. d. EZ only.

Q: Alpha Storage Company holds goods for Beta Sales Corporation, which contracts to sell them to City Stores, Inc. The goods are to be delivered without being moved and are represented by a negotiable bill of lading. The risk of loss passes to City Stores a. if Alpha refuses to honor the bill of lading. b. if Beta gives the bill of lading to Alpha. c. if the goods are lost due to an "act of God." d. when City Stores receives the bill of lading.

Q: Diamond Camera Shop receives lenses from Excel Optical, Inc., under a sale or return agreement. While the lenses are in Diamond's possession, title is held by a. Diamond and Excel jointly. b. Diamond only. c. Diamond's creditors only. d. Excel only.

Q: Ace Purchasing Corporation orders from Best Sales Company goods that are stored in a Coastal Properties, Inc., warehouse. Ace pays for the goods, delivery is via the transfer of a negotiable warehouse receipt, and Ace moves the goods out of the warehouse. The risk of loss passes to Ace when it a. orders the goods. b. pays for the goods. c. receives the negotiable warehouse receipt. d. moves the goods out of the warehouse.

Q: Commercial Storage Corporation (CSC), a bailee, holds goods for Delta Distributors, Inc., which has contracted to sell them to Eagle Retail Company. The goods are to be delivered without being moved. The risk of loss will pass to Eagle when Eagle receives a. a copy of Delta's contract with CSC. b. a copy of Delta's contract with Eagle. c. a negotiable document of title. d. a notice that Eagle's payment for the goods has cleared.

Q: Leo buys a bicycle from his brother, Mike, who is a used car dealer. Mike agrees to keep the bike at his house until Leo picks it up. A tree falls on Mike's garage and destroys the bike. The loss is suffered by a. Leo and Mike. b. Leo only. c. Mike only. d. neither Leo nor Mike.

Q: Barb pays $1,000 for a new computer to Computer Products Corporation, which pays Discount Warehouse, Inc., $50 to store it until Barb retrieves it. Discount Warehouse is a. a bailee. b. a consignee. c. a lessee. d. a seller.

Q: Fay pays $1,000 for a new computer to Global Goods, Inc. Global holds the computer until Fay picks it up. Global is a. a bailee. b. a consignee. c. a lessee. d. a seller.

Q: In Case 21.2, Windows, Inc. v. Jordan Panel System Corp., suppose that the contract specified that the goods were to be delivered to Jordan Panel System Corp., 111 A Street, New York, New York. The court would most likely rule that the risk of loss was on a. Jordan, because there was no zip code. b. Windows, because the destination was expressly specified. c. Jordan, because of the language in UCC 2-509(1)(a). d. None of the above.

Q: Royal Breakfast Cafe buys 100 bags of oranges from Sweet Citrus Company. The parties agree to ship the oranges "F.O.B. Royal Breakfast" via Total Trucking Company. The oranges rot in transit. The loss is suffered by a. Royal Breakfast and Sweet Citrus, but not Total Trucking. b. Royal Breakfast, Sweet Citrus, and Total Trucking. c. Royal Breakfast only. d. Sweet Citrus only.

Q: Sweet Store buys chocolate from Tasty Candies, Inc. The parties agree that the chocolate will be shipped "F.O.B. Sweet Store" via United Railroad Corporation. The chocolate is lost in transit. The loss is suffered by a. Sweet Store and Tasty Candies, but not United Railroad. b. Sweet Store, Tasty Candies, and United Railroad. c. Sweet Store only. d. Tasty Candies only.

Q: Dan steals Eve's necklace and sells it to Fiona. Eve can recover the necklace from Fiona a. only if Fiona did not know that the necklace was stolen. b. only if Fiona gave legally sufficient consideration for the necklace. c. only if Fiona knew that the necklace was stolen. d. under any circumstances.

Q: Beta Electronics orders thirty hard drives from Alpha Computers, Inc. The hard drives are stored in City Warehouse. Under the terms of the order, Alpha must give Beta a warehouse receipt for the goods, which Beta will then pick up. Title to the goods passes to Beta when a. Alpha gives Beta a warehouse receipt for the goods. b. Beta orders the goods. c. Beta picks up the goods. d. City Warehouse stores the goods.

Q: Lou's Bicycle Store contracts to buy fifty bicycles from Mountain Bikes, Inc. Unless the contract states otherwise, it is assumed that this is a. a bill of lading. b. a destination contract. c. a shipment contract. d. a warehouse receipt.

Q: Best Foods Company agrees to sell Consolidated Grocery Stores, Inc., 1,000 cases of beans. Before any interest in specific cases of beans can pass from Best to Consolidated, the beans must be a. in existence only. b. identified as the specific goods designated in the contract only. c. in existence and identified as the goods in the contract. d. none of the above.

Q: Rita orders 1,000 cases of 1/4-inch nuts from Steel Parts Company's 10,000-case lot. Steel Parts separates 1,000 cases from the lot. Title and risk of loss a. remain with Steel Parts until Rita acknowledges tender of delivery. b. remain with Steel Parts until Rita accepts 1,000 cases. c. shift to Rita after she accepts the nuts and inspects them for defects. d. shift to Rita when Steel Parts separates the cases.

Q: Before a seller can have an insurable interest in goods, the goods must be identified to a contract.