Deck 22: Remedies for Breach of Sales Contracts

Question 1

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

Answer 1

C
Explanation: Liability for consequential damages resulting from a breach of contract (such as lost profits or damage to property)may also be limited or excluded by agreement.The limitation or exclusion is not enforced if it would be unconscionable.

Question 2

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

Answer 2

False

Question 3

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

Answer 3

False

Question 4

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

Question 5

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

Question 6

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.

Question 7

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

Question 8

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.

Question 9

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

Question 10

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

Question 11

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

Question 12

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.

Question 13

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.

Question 14

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

Question 15

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.

Question 16

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.

Question 17

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

Question 18

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

Question 19

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

Question 20

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.

Question 21

When a seller breaches a contract,the buyer may:

A)buy other goods and recover damages from the seller based on any additional expense incurred in obtaining the goods.
B)obtain specific performance when the goods are generic and can be obtained elsewhere.
C)never recover consequential damages.
D)be legally sued into performing as well as made to compensate for loss of time.

Question 22

Tom Tune purchased a new radio that was warranted to be free from manufacturing defects or defects in workmanship for a period of six years.Five years after Tom purchased the radio,he was burned when the radio spontaneously caught fire as a result of a manufacturing defect.Under these circumstances,which of the following statements is most correct?

A)Tom is entitled to recover the difference between the price of the defective radio and its value as warranted,but Tom cannot recover damages for personal injuries unless the contract expressly provided for such recovery.
B)Tom is entitled to recover damages for personal injury as consequential damages but he cannot recover damages for the loss in value of the radio.
C)Tom can recover damages for loss in value of the radio and can recover damages for personal injury as consequential damages for breach of warranty.
D)Tom cannot recover damages from the manufacturer under these facts because his action is barred by the U.C.C.statute of limitations.

Question 23

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.

Question 24

When a buyer covers,he/she can recover from the seller:

A)the difference between the contract price and the market price.
B)the difference between the contract price and the cost of the substitute goods.
C)the goods the seller has failed to deliver.
D)the reasonable value of the goods.

Question 25

An injured buyer can recover consequential damages if:

A)expenses incurred during storage of goods do not conform to those called for in the contract.
B)he covers.
C)the goods are not consumer products.
D)he can show that he could not have prevented the damage by obtaining substitute goods.

Question 26

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.

Question 27

In which of the following ways can a seller breach a contract?

A)By entrusting goods are in buyer's possession.
B)By delivering goods that do not conform to the contract.
C)By repudiating a contract.
D)By indicating an intention to fulfill the obligations under the contract.

Question 28

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.

Question 29

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.

Question 30

Sam contracted with Roadies Garage for customized pink seat covers on a new Porsche he intended to gift his fiancé 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.

Question 31

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.

Question 32

A buyer is _____ if he cannot pay his bills when they become due.

A)unconscionable
B)liquidated
C)repudiated
D)insolvent

Question 33

_____ includes storage charges and sales commissions.

A)Consequential damages
B)Incidental damages
C)Liquidated damages
D)Unconscionable damages

Question 34

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.

Question 35

Which of the following is true for damages incurred by the seller when a buyer repudiates a contract?

A)The buyer is not liable for the difference between the contract price and the market price at which the goods are currently selling.
B)The only way the seller can recover damages is by reselling the goods.
C)The seller cannot recover any incidental damages.
D)The seller can recover lost profit and overheads along with incidental expenses.

Question 36

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.

Question 37

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.

Question 38

If a seller discovers a buyer is insolvent,the seller:

A)must wait 10 days before taking action.
B)has the right to stop delivery of any goods that are being shipped to the buyer.
C)has the right to stop delivery of any goods that are being shipped to the buyer as long as they have not already been entrusted to a carrier.
D)must wait seven days before taking any action.

Question 39

Under the UCC,which of the following remedies is available to both a buyer and a seller?

A)Cover and damages for the total value of goods in the contract.
B)Contract rescission.
C)Damages in the amount of the difference between the contract price and the market price of goods.
D)Specific performance.

Question 40

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.

Question 41

Oleta makes a contract with Jim to sell her a 1965 lava lamp once owned by a famous artist.Jim later decides that he does not want to sell the lamp.Oleta:

A)can do nothing; she has no remedy.
B)cannot compel specific performance.
C)can make Jim deliver the lamp because it is one of a kind.
D)can sue Jim and make him pay a fine for misconduct.

Question 42

Under the UCC,list five remedies available to a buyer when the seller has breached a contract.

Question 43

Bev ordered an alabaster-colored mink coat from Poe's Furs.The coat had been specially made because she required an unusually large size and had requested a particular styling.The coat cost $5,500,of which Bev paid $250.Several months later,she decided that she did not want the coat and canceled the order,even though Poe's had completed the coat.Poe's then filed suit for the balance of the purchase price.What can Bev argue in defense?

Question 44

If a buyer accepts defective goods and wants to hold the seller liable,the buyer must give the seller notice of the defect:

A)within four weeks.
B)within a reasonable time.
C)within a year.
D)within a period of three months.

Question 45

If the seller refuses to deliver the goods called for by the contract,the buyer can:

A)get the difference between the contract price of the goods and their market price at the time the buyer learns of the seller's breach.
B)sue for only consequential damages.
C)deprive the seller of credit for any expenses saved.
D)seek for specific performance even if the goods ordered are not unique in nature.

Question 46

When goods are defective and the buyer provides the seller with notice,which of the following remedies is applicable?

A)The buyer is entitled to only consequential damages.
B)The buyer can claim only incidental damages.
C)The buyer can recover the difference between the value of the goods received and the value the goods would have had if they had been as warranted.
D)The buyer can obtain specific performance when the goods are generic and can be easily found elsewhere.

Question 47

Name the most common ways a buyer may breach a contract.

Question 48

Under the UCC,list three remedies available to a seller when a buyer breaches a contract.

Question 49

The buyer is entitled to ____ of the contract if the goods are unique.

A)liquidated damages
B)specific performance
C)incidental damages
D)consequential damages

Question 50

On May 1,Fred Farmer agreed to sell 1,000 bushels of wheat to a bread maker for $7 per bushel.Delivery was to be on August 1.After the market price of wheat rose to $8 per bushel,Fred breached the contract.If the bread maker can get substitute wheat at the current market price,can he get specific performance? If not,what two options are available to him if he seeks damages for breach of contract from Fred? What will he recover under each option?