Question 1

Blue Rorschach Inc. has an immediate requirement for 80 laptops and contracts with Zenzo Electronics 80 Dell laptops at $550 each. But 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?

Accepted Answer

Blue Rorschach exercised the right to cover by procuring goods from another seller (Dell Computers) after Zenzo Electronics breached the contract and failed to deliver the laptops. By doing so, Blue Rorschach mitigated its damages and avoided a total loss. Additionally, Blue Rorschach also exercised the right to sue Zenzo Electronics for the breach of contract to recover damages.

Question 2

Larry, a merchant seller, had contracted with Simon, to buy welding equipment. The contract stipulated that Larry would pick up the equipment from Simon's warehouse on the 14th day from the date of the contract. But Larry could not make the pick up on that date and before he could do so on the 15th day, the warehouse was burned down by miscreants. In this situation, who bears the risk of loss of the goods that were to be received by Larry?

Accepted Answer

The answer of Larry, a merchant seller, had contracted with...

Question 3

Which of the following would contain the term "no-arrival, no-sale" in their contract?

Accepted Answer

The answer of Which of the following would contain the...

Question 4

Unless properly disclosed, a warranty that is implied that sold or leased goods are fit for the ordinary purpose for which they are sold or leased, as well as other assurances is known as ________.

Accepted Answer

An implied warranty that goods are fit for their ordinary purpose and other assurances is known as the implied warranty of merchantability. This implied warranty is applicable unless it is properly disclosed otherwise.

Question 5

The ________ bears the risk of loss during transportation in a destination contract.

Accepted Answer

In a destination contract, the seller bears the risk of loss during transportation, as they are responsible for delivering the goods to the buyer's designated location.

Question 6

A title for goods obtained by a seller through fraud, impersonation, or a dishonored check is referred to as a ________.

Accepted Answer

A title obtained through fraud, impersonation, or a dishonored check is considered voidable, meaning it can be challenged by the rightful owner or a third party. It is not unenforceable, as it can still be enforced until a challenge is made, nor is it conditional or unequivocal.

Question 7

Steve brings his watch to Knell Watches to be repaired. Knell Watches sells and repairs watches. Steve entrusts his watch at Knells' until it is repaired. The watch store repairs the watch, but then sells it to Kevin, who buys the watch with a fraudulent check that bounced. Kevin then resells the watch to his friend Jonathan, who is unaware of the stolen nature of the watch. Who can legally claim ownership over the watch in court?

Accepted Answer

The answer of Steve brings his watch to Knell Watches...

Question 8

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?

Accepted Answer

The right to obtain specific performance allows the buyer to seek a court order requiring the seller to transfer the unique and specific item (in this case the Picasso painting) as agreed upon in the contract. This remedy is often favored in cases where the subject matter of the contract is unique or one-of-a-kind, such as artwork, and cannot be easily replaced or substituted.

Question 9

The ________ requires all contracts for the sale of goods costing $500 or more and lease contracts involving payments of $1,000 or more to be in writing.

Accepted Answer

The Statute of Frauds requires all contracts for the sale of goods costing $500 or more and lease contracts involving payments of $1,000 or more to be in writing. The parol evidence rule is a rule of evidence, the open price term refers to a situation where no specific price is agreed upon in a contract, and the firm offer rule is part of the Uniform Commercial Code regarding offers made by merchants in writing.

Question 10

Which of the following is true of additional terms being added under the UCC?

Accepted Answer

The answer of Which of the following is true of...

Question 11

Which of the following would constitute the creation of an express warranty for goods?

Accepted Answer

The answer of Which of the following would constitute the...

Question 12

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?

Accepted Answer

Klint exercised the right to stop goods in transit when they cancelled the shipment before it was delivered to Zeitar, after being informed of their insolvency. This is a recognized common law right of a seller to stop the goods in transit if the buyer becomes insolvent.

Question 13

A computer program or an electronic or other automated means used independently to initiate an action or respond to electronic records or performances in whole or in part, without review or action by an individual, is known as a(n)________.

Accepted Answer

An electronic agent is a computer program or an electronic or other automated means used independently to initiate an action or respond to electronic records or performances in whole or in part, without review or action by an individual. This is the correct definition for the given term. The other options do not fit the definition.

Question 14

Kimberley, a merchant-seller in Kansas, had an oral contract to sell goods to Jane, a merchant-buyer in Memphis for $100,000. Two days after contracting, Kimberley sends a sufficient written confirmation to Jane of the agreed-upon transaction. Jane, who has reason to know the contents of the written confirmation, fails to object to the contents of the confirmation immediately. Two weeks after receiving the written confirmation, Jane receives a delivery of the goods from Kimberley. Jane immediately sends an objection to the confirmation to Kimberley. Which of the following is true of the contract between Kimberley and Jane?

Accepted Answer

Kimberley sent a written confirmation of the agreement to Jane, and Jane received the goods without objecting to the confirmation immediately. According to the UCC, if a merchant-seller sends a written confirmation within a reasonable time after an oral agreement has been made, and the merchant-buyer has reason to know the contents of the confirmation, but fails to object within 10 days of receipt, the confirmation is considered valid and the contract is enforceable. Therefore, the offer is valid because Jane did not object within 10 days.

Question 15

A ________ is a seller's or lessor's express or implied assurance to a buyer or lessee that the goods sold or leased meet certain quality standards.

Accepted Answer

A warranty is a seller's or lessor's express or implied assurance to a buyer or lessee that the goods sold or leased meet certain quality standards. A bond is a form of debt security that represents the borrower's promise to repay the loan, while collateral is a valuable asset pledged as security for a loan. "Caveat emptor" is a Latin term that means "let the buyer beware," indicating that the buyer is responsible for assessing the quality and suitability of goods before making a purchase.

Question 16

A warranty that is created when a seller or lessor makes an affirmation that the goods he or she is selling or leasing meet certain standards of quality, description, performance, or condition is known as a(n)________ warranty.

Accepted Answer

An express warranty is created when a seller or lessor makes an affirmation, promise, or representation about the goods being sold or leased. The affirmation could be about the quality, condition, description, or performance of the goods. The warranty can be either oral or written, but it must be reasonable and credible enough to convince the buyer or lessee to purchase or lease the goods.

Question 17

Who among the following is a good faith purchaser?

Accepted Answer

A good faith purchaser is someone who buys goods without knowledge of any defects in the seller's title. A person who buys goods from someone with a voidable title can be a good faith purchaser if they are unaware of the seller's defective title.

Question 18

Which of the following parties to a shipping contract bears the risk of loss of goods during transport?

Accepted Answer

According to the Incoterms (International Commercial Terms) rules, the buyer bears the risk of loss of goods during transport once they have been delivered to the carrier. Therefore, option C is correct. Option A (the seller) is incorrect because the seller's responsibility ends once the goods are delivered to the carrier. Option B (the carrier) is incorrect because the carrier is responsible for the safe transportation of the goods, but is not responsible for any losses or damages that may occur due to factors outside of their control. Option D (the seller and the carrier) is incorrect because the seller's responsibility ends once the goods are delivered to the carrier, and the carrier's responsibility is limited to safe transportation.

Question 19

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?

Accepted Answer

Under the Uniform Commercial Code (UCC), a seller has the right to stop delivery of goods in transit if they learn of the buyer's insolvency, regardless of the size of the shipment. This is to protect the seller's interest in ensuring payment for the goods before they are delivered to the buyer, who may not be able to pay for them if they are insolvent. Repudiation of the contract (answer A) may also allow the seller to stop delivery, but this usually applies to larger shipments and is not an automatic right. Payments due (answer B) would not give the seller the right to stop delivery of goods in transit, but may give them other legal recourse to collect payment from the buyer. Specific performance (answer D) does not relate to the seller's right to stop delivery of goods in transit.

Question 20

Sam expressed interest in buying a painting from Jasper, who claimed that the painting was a family heirloom. Jasper's asking price was $15,000, but Sam was only willing to offer $13,000. Jasper told him that it was a very old painting worth a fortune and that others would gladly pay $20,000 for it. He also told him that he was only selling it under its market value because he needed the money immediately. He then implied that Sam could sell it for a higher rate if he wanted. Sam decided to buy the painting for $15,000 on the condition that if he found that the painting was worth less than $15,000, Jasper would have to take the painting back and refund Sam. Which of the following warranties did this sales contract have?

Accepted Answer

The sales contract had an express warranty, as Jasper explicitly made a claim about the value of the painting and its potential resale value. Additionally, the contract included a condition of a refund if the painting was found to be worth less than the agreed-upon price, which further supports the existence of an express warranty.

Quiz 12: UCC Sales and Lease Contracts and Warranties