Question 1

Riverside Mill and Standard Contractors enter into a contract for a sale of lumber. The mill knows the purpose for which the buyer will use the goods. Under the UCC, an implied warranty of fitness of a particular purpose arises if
A) the buyer is relying on the seller to select suitable goods.
B) the buyer asks for it.
C) the seller is a merchant who deals in goods of the kind sold.
D) the seller knows that the product is fit for any purpose.

Accepted Answer

According to UCC, an implied warranty of fitness for a particular purpose arises only if the seller is a merchant who deals in goods of the kind sold, and the seller has reason to know the particular purpose for which the buyer requires the goods and that the buyer is relying on the seller's skill or judgment to select suitable goods. Therefore, option C is the correct choice. The other options are incorrect because they do not meet the required conditions for the implied warranty of fitness for a particular purpose.

Question 2

Colby contracts in writing to sell his Dodge-brand pick-up truck to Efrem for $10,500. Colby agrees to deliver the truck on Friday, and Efrem promises to pay the $10,500 on the following Monday. On Thursday, Efrem tells Colby that he changed his mind and will not buy the truck. Over the weekend, Efrem changes his mind again and tenders $10,500 to Colby on Monday. Colby has not sold the truck to another party but refuses the tender and refuses to deliver. Efrem claims that Colby has breached their contract. Colby contends that Efrem's repudiation released him from his duty to perform under the contract. Who is correct, and why?

Accepted Answer

The answer of Colby contracts in writing to sell his...

Question 3

Coal Mine Company buys an excavator from Dig Equipment Inc. Coal Mine is unaware that Equity Credit Company holds a lien against the excavator. If Equity repossesses the goods, Coal Mine can recover for breach of warranty from
A) Dig.
B) none of the parties.
C) the maker of the excavator.
D) Equity.

Accepted Answer

The breach of warranty claim would be against Dig Equipment Inc. This is because Dig sold the excavator to Coal Mine Company without disclosing the underlying lien held by Equity Credit Company, which was a breach of the implied warranty of title. Although Equity Credit Company may have wrongfully repossessed the goods, they did not breach any warranty to Coal Mine Company. The maker of the excavator may be liable if there was a defect in the product itself, but this is not relevant to the scenario presented.

Question 4

Cruisin' Autos, Inc., sells cars to consumers. To avoid liability for oral express warranties, each sales agreement should note that a car is sold
A) as is.
B) in perfect condition.
C) subject to warranties included in the written contract only.
D) with no known defects.

Accepted Answer

Including a clause that states warranties are limited to those in the written contract helps avoid liability for any oral express warranties that may have been made during the sales process.

Question 5

Brass Instruments, Inc., sells seventy-six trombones to Community Band. To avoid liability for most implied warranties, Brass should state in writing that the trombones are sold
A) as is.
B) by a merchant.
C) in perfect condition.
D) with no known defects.

Accepted Answer

To avoid liability for most implied warranties, Brass should state in writing that the trombones are sold "as is." This means that the buyer is accepting the product in its current condition and that no warranties are implied.

Question 6

Ski Shop sells a pair of skis to Tami. When Tami uses the skis, they snap in two. The cause is something that Ski Shop did not know about and could not have discovered. This is a breach of
A) the implied duty of inspection.
B) the implied warranty of merchantability.
C) an express warranty.
D) none of the choices.

Accepted Answer

This is a breach of the implied warranty of merchantability, as the skis were not fit for their ordinary purpose (skiing) and broke while being used in a normal manner. The implied duty of inspection would only apply if Ski Shop had reason to believe that there was a defect in the skis, which is not the case here. An express warranty would be if Ski Shop provided a specific guarantee about the skis, which is also not the case here.

Question 7

Eliza buys a new motorcycle from Fast Bikes, Inc. The most important factor in determining whether an express warranty is created is whether
A) Eliza expresses to Fast Bikes what she wants warranted.
B) Eliza's desire for the cycle becomes part of her motivation to deal.
C) Fast Bikes expresses to Eliza what it expects of its customers.
D) Fast Bikes' promise becomes part of the basis of the bargain.

Accepted Answer

An express warranty is created when the seller makes a promise or affirmation of fact about the product that becomes part of the basis of the bargain. Therefore, the most important factor in determining whether an express warranty is created is whether Fast Bikes' promise becomes part of the basis of the bargain.

Question 8

Signal Sets Company contracts to deliver one hundred television sets to a new retail customer, Tuner Electronics Warehouse, on May 1, with payment to be made on delivery. Signal tenders delivery in its own truck. Tuner's manager notices that some of the cartons have scrape marks. Tuner's owner phones Signal's office and asks whether the sets might have been damaged as they were being loaded. Signal assures Tuner that the sets are in perfect condition. Tuner tenders Signal a check, which Signal refuses, claiming that the first delivery to new customers is always for cash. Tuner promises to pay the cash within two days. Signal leaves the sets with Tuner, which stores them in its facility pending its "Grand Opening Sale" on May 15. Two days later, Tuner's stocker opens some of the cartons and discovers that a number of the sets are damaged beyond ordinary repair. Signal claims Tuner has accepted the sets and is in breach by not paying on delivery. Will Signal succeed on these claims? Explain.

Accepted Answer

The answer of Signal Sets Company contracts to deliver one...

Question 9

Trucks & Trailers, Inc. (T&T), and United Express Service enter into a contract for a lease of trucks. T&T is a merchant who deals in goods of the kind leased. Under the UCC, an implied warranty of merchantability arises
A) automatically.
B) only if the lessee asks for it.
C) only if the lessor expresses such a warranty.
D) only in conjunction with sales, not lease, contracts.

Accepted Answer

Under the UCC, an implied warranty of merchantability arises automatically in contracts for the lease of goods from a merchant who deals in goods of the kind leased. The lessee does not need to ask for it, and it does not require a specific expression of the warranty by the lessor.

Question 10

Home Redo, Inc., and Ivy enter into a contract for a sale of cabinets and countertops. Home Redo, a merchant who deals in goods of the kind sold, notes that its goods come with an implied warranty of merchantability. Under the UCC, this means that the goods are reasonably
A) fit for the buyer's particular purpose.
B) fit for the ordinary purpose for which such goods are used.
C) suitable for resale at an acceptable price.
D) the best quality that money can buy.

Accepted Answer

The implied warranty of merchantability under the UCC means that the goods are fit for the ordinary purpose for which such goods are used. This means that the goods should be of average quality and should meet the reasonable expectations of the buyer. Option A refers to the implied warranty of fitness for a particular purpose, which requires that the goods be specifically suitable for the buyer's stated purpose. Option C refers to the requirement that goods be suitable for resale at an acceptable price, which is not part of the implied warranty of merchantability. Option D is incorrect as it is too broad and does not accurately describe the implied warranty of merchantability.

Question 11

Pipe Company includes in its contracts a provision that reads, in large red letters, "There are no warranties that extend beyond the description on the face hereof." This disclaimer negates
A) the implied warranty of fitness for a particular purpose.
B) the implied warranty of merchantability.
C) the implied warranty of title.
D) none of the choices.

Accepted Answer

The answer of Pipe Company includes in its contracts a...

Question 12

Blake, a salesperson for Custom Commercial Kitchens Inc., shows Dylan, a buyer for Eatery Inc., display items in Custom's showroom, stating that any purchased equipment will match the display. This statement is
A) an express warranty.
B) an implied warranty.
C) none of the choices.
D) puffery.

Accepted Answer

Blake's statement is an express warranty as he is explicitly stating a promise that the purchased equipment will match the display.

Quiz 21: Performance and Breach of Sales and Lease Contracts

Riverside Mill and Standard Contractors enter into a contract for a sale of lumber. The mill knows the purpose for which the buyer will use the goods. Under the UCC, an implied warranty of fitness of a particular purpose arises if

Coal Mine Company buys an excavator from Dig Equipment Inc. Coal Mine is unaware that Equity Credit Company holds a lien against the excavator. If Equity repossesses the goods, Coal Mine can recover for breach of warranty from

Cruisin' Autos, Inc., sells cars to consumers. To avoid liability for oral express warranties, each sales agreement should note that a car is sold

Brass Instruments, Inc., sells seventy-six trombones to Community Band. To avoid liability for most implied warranties, Brass should state in writing that the trombones are sold

Ski Shop sells a pair of skis to Tami. When Tami uses the skis, they snap in two. The cause is something that Ski Shop did not know about and could not have discovered. This is a breach of

Eliza buys a new motorcycle from Fast Bikes, Inc. The most important factor in determining whether an express warranty is created is whether

Trucks & Trailers, Inc. (T&T) , and United Express Service enter into a contract for a lease of trucks. T&T is a merchant who deals in goods of the kind leased. Under the UCC, an implied warranty of merchantability arises

Home Redo, Inc., and Ivy enter into a contract for a sale of cabinets and countertops. Home Redo, a merchant who deals in goods of the kind sold, notes that its goods come with an implied warranty of merchantability. Under the UCC, this means that the goods are reasonably

Pipe Company includes in its contracts a provision that reads, in large red letters, "There are no warranties that extend beyond the description on the face hereof." This disclaimer negates

Blake, a salesperson for Custom Commercial Kitchens Inc., shows Dylan, a buyer for Eatery Inc., display items in Custom's showroom, stating that any purchased equipment will match the display. This statement is