Deck 20: Remedies for Breach of Sales and Lease Contracts

Question 1

Which of the following is true for the perfect tender rule under installment contracts?

A)The buyer cannot seek remedies against the seller for accepting noncorforming goods.
B)The seller cannot invoke the right to cure rule.
C)The buyer can reject a shipment only if it impairs the value of the entire contract.
D)The buyer can reject replacements or cured goods.

Answer 1

C

Question 2

When is a delivery considered to be complete in a shipment contract?

A)when the buyer receives the shipment
B)when the seller hands over the shipment to the carrier
C)when the shipment reaches the destination that the buyer specified
D)when the seller notifies the buyer of the shipment in transit

Answer 2

B

Question 3

A(n)________ is an action a party to a sales or lease contract is required by law to carry out.

A)obligation
B)breach
C)capture
D)revocation

Answer 3

A

Question 4

________ is a rule which provides that an action for breach of any written or oral sales or lease contract must commence within four years after the cause of action accrues.

A)Perfect tender rule
B)Specific performance decree
C)Replevin
D)Statute of limitations

Question 5

The obligation of a seller to transfer and deliver goods to the buyer or lessee in accordance with a sales or lease contract is known as ________.

A)the rule of capture
B)deliverance
C)replevin
D)tender of delivery

Question 6

For noncarrier deliveries,if the seller or lessor has no place of business,the place of delivery is the seller's or lessor's residence.

Question 7

A(n)________ is a sales contract that requires the seller to deliver goods to the buyer's place of business or another specified location.

A)consignment contract
B)option contract
C)shipment contract
D)destination contract

Question 8

A(n)________ is a type of contract that requires or authorizes goods to be delivered and accepted in separate lots.

A)option contract
B)installment contract
C)consignment
D)lease contract

Question 9

A(n)________ can be obtained in writing from the other party if there is an indication that a contract will be breached by that party.

A)adequate assurance of performance
B)replevy
C)right to obtain specific performance
D)good faith agreement

Question 10

Which of the following would be considered a breach of contract?

A)acceptance of nonconforming goods by a buyer
B)nonacceptance of conforming goods by a buyer
C)delivery of conforming goods by a seller
D)nondelivery of goods to a buyer that has a document of title

Question 11

A sales contract that requires the seller to send the goods to the buyer but not to a specifically named destination is known as a(n)________.

A)shipment contract
B)destination contract
C)option contract
D)consignment contract

Question 12

Unless otherwise agreed to by the parties,if the buyer purchases goods on credit sale from the seller,the credit period starts from the time ________.

A)the goods are shipped
B)the buyer receives the goods
C)the contract is signed by the buyer
D)the buyer accepts the shipment

Question 13

Which of the following is true of a contract in which the goods were destroyed,of no fault of the buyer or seller,before the title to goods passed to the buyer?

A)The buyer has to still pay for the destroyed goods.
B)The seller and buyer are excused from contractual obligations.
C)The buyer can successfully claim for replacements from the seller.
D)The seller is obligated to make a new shipment as the previous contract.

Question 14

Destination contracts are an example of noncarrier delivery.

Question 15

Unless otherwise agreed,the buyer's payment in a shipment contract is due to the seller when ________.

A)shipment is in transit
B)goods are delivered
C)contract is signed
D)shipment is handed over to the carriers

Question 16

In a destination contract,delivery is completed when the shipment ________.

A)reaches the destination specified in the contract
B)is inspected by the buyer and approved
C)is handed over to the carrier by the seller
D)is in transit to the destination specified in the contract

Question 17

A person buying goods from the place where the goods are manufactured would be an example of ________ delivery.

A)noncarrier case
B)carrier case
C)shipment contract
D)destination contract

Question 18

Failure of a party to perform an obligation in a sales or lease contract is known as ________.

A)revocation
B)breach
C)acceptance
D)replevin

Question 19

The seller's or lessor's general obligation is to transfer and deliver the goods to the buyer or lessee.

Question 20

Which of the following is true for a "perfect tender rule" delivery?

A)The seller can reject delivery of certain parts of the goods.
B)The buyer can only reject parts of the goods and not the whole shipment.
C)The buyer can seek remedies for accepting nonconforming goods.
D)The seller can seek remedies for noncorforming goods that were accepted by the buyer.

Question 21

Under the perfect tender rule,the buyer can reject a whole shipment of nonconforming goods.

Question 22

Acceptance occurs if the buyer resells the goods delivered by the seller.

Question 23

Which of the following is a right to remedy that a seller can claim while the goods are in possession of the buyer?

A)right to dispose of goods
B)right to withhold delivery of goods
C)right to stop delivery of goods in transit
D)right to reclaim goods

Question 24

In which of the following does a seller have the right to stop delivery of goods in transit regardless of the size of the shipment?

A)the buyer repudiates the contract
B)the buyer has payments due
C)the seller learns of the buyer's insolvency
D)the seller has been ordered for specific performance

Question 25

The ________ is the right of a seller or lessor to demand the return of goods from the buyer or lessee under specified situations.

A)right to dispose of goods
B)right to recover damages
C)right to recover purchase price
D)right to reclaim goods

Question 26

Acceptance of a part of any commercial unit is acceptance of the entire unit.

Question 27

Klint Microsystems,a microprocessor manufacturer,was contracted by Zeitar Studios to manufacture specially designed microchips to be used in an audio engineering process.Zeitar was to pay Klint $300,000 as per the contract.Klint decided to redesign their existing microchips and make them suitable for Zeitar.While the finished microchips were being shipped via a carrier,Klint was informed of Zeitar's insolvency.Klint cancelled the shipment before it was delivered.Klint then resold the chips to another studio where they had to settle for $150,000 as the chips were now only suitable for specific audio engineering processes. What right to remedy did Klint exercise when selling the microchips to another studio?

A)right to claim lost profits
B)right to cover
C)right to dispose of goods
D)right to recover damages

Question 28

A buyer cannot revoke his acceptance if he or she has already accepted nonconforming goods.

Question 29

Klint Microsystems,a microprocessor manufacturer,was contracted by Zeitar Studios to manufacture specially designed microchips to be used in an audio engineering process.Zeitar was to pay Klint $300,000 as per the contract.Klint decided to redesign their existing microchips and make them suitable for Zeitar.While the finished microchips were being shipped via a carrier,Klint was informed of Zeitar's insolvency.Klint cancelled the shipment before it was delivered.Klint then resold the chips to another studio where they had to settle for $150,000 as the chips were now only suitable for specific audio engineering processes. What right to remedy did Klint exercise when they stopped shipment to Zeitar?

A)right to dispose of goods
B)right to stop goods in transit
C)right to obtain specific performance
D)right to recover purchase rent

Question 30

Which of the following constitutes an acceptance by the buyer?

A)asking for inspection of goods upon its arrival
B)not passing the title of the goods to another buyer
C)failing to reject the goods within a reasonable time after delivery
D)accepting nonconforming goods

Question 31

Goods in possession of bailees are considered to be in transit.

Question 32

Which of the following is true of a seller's right to dispose of goods from a breach of contract?

A)Any profit made on the resale or release of the goods has to be shared with the original buyer.
B)Incidental charges can be recovered from the original buyer.
C)The seller cannot resell the goods unless the original buyer agrees to it.
D)The buyer can only dispose of goods that have already been delivered.

Question 33

The right of a seller or lessor to refuse to send goods to a buyer or lessee upon breach of a sales or lease contract by the buyer or lessee or the insolvency of the buyer or lessee is known as the ________.

A)right to recover purchase rent
B)right to reclaim goods
C)right to withhold delivery
D)right to dispose of goods

Question 34

How does the UCC deal with issues that are not present in the express terms of a contract?

Question 35

What is the doctrine of unconscionability under the UCC?

Question 36

A sales contract requires the seller to send the goods to the buyer at a specifically named destination.

Question 37

In a shipment contract,delivery occurs when the shipment reaches the destination.

Question 38

Klint Microsystems,a microprocessor manufacturer,was contracted by Zeitar Studios to manufacture specially designed microchips to be used in an audio engineering process.Zeitar was to pay Klint $300,000 as per the contract.Klint decided to redesign their existing microchips and make them suitable for Zeitar.While the finished microchips were being shipped via a carrier,Klint was informed of Zeitar's insolvency.Klint cancelled the shipment before it was delivered.Klint then resold the chips to another studio where they had to settle for $150,000 as the chips were now only suitable for specific audio engineering processes. What legal action can Klint take against Zeitar?

A)sue and recover lost profits
B)sue to recover purchase price
C)get a court order asking for specific performance
D)exercise the buyer's right to cover

Question 39

The UCC statutes of limitations cannot be reduced by the contracting parties.

Question 40

Explain how payments are made for contracts under the UCC?

Question 41

A seller can recover lost profits in a case where damages measured by the difference between contract price and market price would not put the seller in the same position as the performance of the contract would have.

Question 42

Under the UCC,what course of action can the sellers pursue in case of shipment of noncorforming or defective goods?

A)tender of delivery
B)right to cure
C)perfect tender rule
D)replevin

Question 43

The right to withhold delivery is available to the seller if the buyer or lessee wrongfully rejects or revokes acceptance of the goods.

Question 44

If a buyer breaches a sales contract before the seller has delivered the goods,the seller cannot recover damages from the buyer.

Question 45

The right to cure rule allows buyers to claim replacements for noncorforming goods.

Question 46

A seller can recover incidental charges incurred on the disposition of goods if a buyer breaches a sales or lease contract.

Question 47

The right to replevy goods can be invoked by the seller.

Question 48

If the goods are rejected for nonconformance,the cost of inspection can be recovered from the seller.

Question 49

Revocation of acceptance is not effective until the seller or lessor is so notified.

Question 50

A decree of specific performance is a court order that demands the seller or lessor to perform the contract.

Question 51

Which of the following is a ground for revoking an acceptance?

A)if the seller makes a timely cure of nonconforming goods
B)if the goods are accepted after the nonconformity is discovered
C)if the buyer has accepted only one commercial unit from the entire unit
D)if the nonconformity substantially impairs the value of the goods to the buyer

Question 52

Which of the following is true of a buyer's right of inspection?

A)Cost of inspection is shared by the seller and buyer if goods are conforming.
B)Cost of inspection can be recovered from the seller if goods are nonconforming.
C)Goods can only be inspected before shipment is made by the seller.
D)Inspection has to be performed after the goods in the contract have been accepted.

Question 53

The right to cure rule can be invoked by the seller.

Question 54

What is the right to cure in sales or lease contracts?

A)The right of the buyer to ask for a replacement of nonconforming goods.
B)The right of the seller to ship nonconforming goods on grounds of prior acceptance.
C)The right of the seller to fix nonconforming goods.
D)The right of the buyer to reject shipment of conforming goods.

Question 55

A lost volume seller can recover damages from a defaulting buyer who has sold to another buyer.

Question 56

If the goods conform to the contract,the seller pays for the inspection.

Question 57

Which of the following is essential for a revocation of acceptance to be effective?

A)The seller must be notified of the revocation within a reasonable time.
B)The seller's promise to timely cure if the nonconformity is not met.
C)The nonconformity must be discovered before acceptance is given.
D)The nonconformity substantially impairs the value of the goods to the buyer.

Question 58

The right to recover the goods from an insolvent seller applies to unfinished goods.

Question 59

The buyer or lessee can recover any damages incurred on the disposition of the goods.

Question 60

Give an account of the seller's right to recover damages for breach of contract.

Question 61

Blue Rorschach Inc.has an immediate requirement for 80 laptops and contracts with Zenzo Electronics for 80 Dell laptops at $550 each.However,Zenzo Electronics breaches the contract and fails to deliver the laptops.Blue Rorschach then immediately contracts Dell Computers,buys 100 laptops at $600 per laptop and then sues Zenzo Electronics for the breach of contract. What legal right to remedy did Blue Rorschach exercise when contracting Dell Computers and suing Zenzo for failure of delivery of goods?

A)right to replevy goods
B)right to cover
C)right to recover damages for accepted nonconforming goods
D)right to obtain specific performance

Question 62

A buyer or lessee who rightfully covers may sue the seller or lessor for additional expenses paid.

Question 63

Replevin actions are also possible on goods not identified in the contract.

Question 64

Which of the following is a seller's remedy?

A)right to recover damages for nondelivery
B)right to dispose of goods
C)right to replevy goods
D)right to obtain specific performance

Question 65

An unconscionable contract can be enforced if the unconscionable clause is removed.

Question 66

Pre-established damages agreed to in a contract are known as liquidated damages.

Question 67

Blue Rorschach Inc.has an immediate requirement for 80 laptops and contracts with Zenzo Electronics for 80 Dell laptops at $550 each.However,Zenzo Electronics breaches the contract and fails to deliver the laptops.Blue Rorschach then immediately contracts Dell Computers,buys 100 laptops at $600 per laptop and then sues Zenzo Electronics for the breach of contract. What is the amount of legal damages that Blue Rorschach can recover from Zenzo because of the breach of contract?

A)$4,400
B)$5,000
C)$4,000
D)$44,000

Question 68

Which one of the following is a remedy for buyers in cases where the seller or lessor tenders nonconforming goods,and the buyer or lessee accepts them?

A)cover and then recover damages
B)deduct damages from the unpaid purchase or rent price
C)replevy the goods
D)sue for specific performance

Question 69

The measure of damages for nondelivery is the difference between the contract price and the market price at the time the breach is realized.

Question 70

Pollard entered into a sales contract to purchase a specific Picasso painting from Jenson for $15 million.When Pollard tenders payment,Jenson refuses to sell the painting to the buyer.Which of the following legal rights to remedy can Pollard exercise to retrieve the Picasso painting from Jenson?

A)right to cover
B)right to recover damages for nondelivery
C)right to obtain specific performance
D)right to cancel the contract

Question 71

When does a buyer have the right to cancel a sales or lease contract?

Question 72

A party in a contract that uses its bargaining power unfairly can render the contract unconscionable.

Question 73

Liquidated damages can be claimed in addition to actual damages.

Question 74

The right to cover can be invoked by the buyer if the seller delivers nonconforming goods.

Question 75

The term ________ refers to an action by a buyer or lessor to recover scarce goods wrongfully withheld by a seller or lessor.

A)revocation
B)replevin
C)accommodation
D)damages

Question 76

What is the similarity between a buyer's remedy of capture and replevy?

A)both are invoked when the buyer has to cover
B)both are invoked for accepting nonconforming goods
C)both help the buyer to receive damages
D)both help the buyer recover goods from the seller

Question 77

Mansfield Dairies entered into a contract with Aratez Inc.,a dairy product food processing company,to provide dairy products for a period of four years.The contract included a provision for a one-year limitation period in case of breach.But with less than a year left on the contract,Mansfield Dairies stopped shipment of milk products to Aratez Inc.Under the UCC statute of limitations,which of the following would be true with reference to Aratez's right to bring a lawsuit against Mansfield Dairies for breach of contract?

A)The lawsuit could be filed anytime within one year from the breach.
B)The lawsuit could only be filed after the expiration of the contract.
C)The lawsuit could not be filed as there was less than a year left to complete the contract.
D)The lawsuit could be filed any time within four years from the breach.

Question 78

The UCC alters the perfect tender rule with regard to installment contracts.

Question 79

If a buyer accepts nonconforming goods,the buyer may seek remedies against the seller.

Question 80

Damages that will be paid on a breach of contract that are established in advance are known as ________.

A)contemptuous damages
B)aggravated damages
C)installment damages
D)liquidated damages