Question 1

Builder Inc. and Concrete Supply Company enter into a contract for a sale of cement. Concrete delivers, but Builder does not pay. Concrete can recover as damages

Accepted Answer

Concrete Supply Company can recover the purchase price plus incidental damages because this is the standard remedy in a situation where goods have been delivered but not paid for. Incidental damages could include costs incurred while attempting to collect payment.

Question 2

Real Stones Inc. and Sparkling Jewelry stores enter into a contract for a sale of gemstones. The seller fails to deliver. Sparkling can recover as damages the difference between

Accepted Answer

The correct answer is C) the contract price and the market price. In a situation where a seller fails to deliver goods as per a contract, the buyer can recover damages equal to the difference between the contract price and the market price of the goods at the time and place of delivery. This measure of damages is designed to put the buyer in as good a position as they would have been had the contract been performed.

Question 3

Construction Inc. contracts to buy some heavy equipment from Dig Machines Inc. Before either party performs, Dig sells its assets to Excavation Corporation. On learning of the sale, Construction is concerned about its contract with Dig. Construction should

Accepted Answer

When a party to a contract learns of circumstances that give it reasonable grounds to believe that the other party will not perform, it can demand in writing a reasonable assurance of performance. Since Dig Machines Inc. sold its assets to Excavation Corporation before performing under the contract with Construction Inc., Construction has reasonable grounds to be concerned about Dig's ability to fulfill the contract. Therefore, demanding an assurance of performance from Dig (the seller) is the appropriate action.

Question 4

Burgers Inc. contracts to buy five hundred head of cattle from Cattle Ranch. Before the seller delivers, an outbreak of disease causes a quarantine of the ranch. In this circumstance, the perfect tender rule

Accepted Answer

The perfect tender rule no longer applies because an unforeseen event (the outbreak of disease causing a quarantine) has made it impossible for the seller to perform as originally agreed. This rule typically requires the seller to deliver goods that conform exactly to the terms of the contract, but exceptions are made for circumstances beyond the seller's control.

Question 5

RV Company agrees to buy a certain quantity of vintage campers from Sales Inc. Their contract limits consequential damages for lost profits resulting from the use of the goods. This limit is not necessarily unconscionable because

Accepted Answer

The answer of RV Company agrees to buy a certain...

Question 6

H2O Company contracts to sell pumps, tanks, and water storage systems to In-Flo Irrigation, Inc. Before the goods are delivered, In-Flo indicates that it will not be able to pay. H2O can

Accepted Answer

H2O can resell the goods and recover any damages from In-Flo. This is a common remedy for sellers when buyers breach a contract by indicating they won't be able to pay.

Question 7

Rancho Stables orders ten saddles from Saddles Inc. The sales contract states that if the tack is defective, Rancho will allow Saddles to repair or replace it instead of rejecting the shipment. When the gear arrives, it is defective. In this case, the perfect tender rule

Accepted Answer

The perfect tender rule, which requires the seller to deliver goods that conform exactly to the terms of the contract, does not apply in this case because the contract specifically allows for the repair or replacement of defective items, thus modifying the perfect tender rule.

Question 8

Motor Parts Inc. and National Auto stores enter into a contract for a sale of auto parts that meet certain specifications. Motor ships goods that do not comply. National

Accepted Answer

National Auto stores can reject the entire shipment if the goods do not meet the specified contract terms, as per the Uniform Commercial Code (UCC) governing sales contracts.

Question 9

Fiesta LLC contracts to buy 1,000 balloons from Gas Bags Inc. for $1 per item. When the market price decreases to 50 cents per balloon, Fiesta refuses to go through with the deal. Gas Bags can recover

Accepted Answer

Gas Bags Inc. can recover the difference between the contract price and the market price, which is $1 - $0.50 = $0.50 per balloon. For 1,000 balloons, this amounts to $500.

Question 10

Steel Buildings Inc. agrees to sell four portable garages to Truck Service Center. Five days later, Truck refuses delivery and cancels the contract. Steel is entitled to

Accepted Answer

Under the Uniform Commercial Code (UCC), when a buyer breaches a contract for goods, the seller is entitled to resell the goods and recover any damages from the buyer. This includes the difference between the contract price and the resale price, plus any incidental damages.

Question 11

Minerals Ltd. contracts to provide several manufacturers with tin. When a cartel of tin-producing countries suddenly embargoes future shipments of tin to Minerals so that it cannot fulfill its contracts, the distributor

Accepted Answer

The embargo by the tin-producing countries constitutes an unforeseeable event that makes Minerals Ltd.'s performance impracticable. Under the doctrine of impracticability, when a party's performance is made impracticable by an event the non-occurrence of which was a basic assumption on which the contract was made, they are excused from performance.

Question 12

Bayou Boats Inc. contracts for the sale of seven swamp boats to Eventide Fishing Tours. Bayou repudiates the contract. Eventide's recovery is measured at the time

Accepted Answer

Eventide's recovery is measured at the time Eventide learned of the breach, as this is when the actual damages can be assessed based on the market price or replacement cost of the goods.

Question 13

Fresh Grow Farm enters into a contract with Gourmand's Restaurant for a sale of a certain quantity of specified vegetables. After Fresh ships the produce but before Gourmand's receives it, the buyer declares bankruptcy. Fresh can stop delivery of the goods in transit

Accepted Answer

Under the Uniform Commercial Code (UCC), a seller may stop delivery of goods in transit to the buyer upon learning that the buyer has declared bankruptcy, regardless of the quantity of goods being shipped. This right is designed to protect sellers from the risk of non-payment in the event of the buyer's insolvency.

Question 14

Speedy Auto Parts orders two gross of tires from Tough Tread Inc. Ten of the tires are delivered in a damaged condition. Speedy

Accepted Answer

Speedy can accept the shipment with a reduction in price for the damaged tires, as they have the right to a price adjustment for the non-conforming goods.

Question 15

ABC Hardware Store orders one hundred power hand-drills from Drilling Tools Inc. When the hand-drills are delivered, they are all missing pieces. ABC rejects the shipment. To exercise a right to cure, Drilling must

Accepted Answer

To exercise a right to cure, Drilling Tools Inc. must promptly notify ABC Hardware Store of its intent to cure the defect in the delivered goods. This is a requirement under the Uniform Commercial Code (UCC) for sellers to make right on the delivery of nonconforming goods, provided that the time for performance has not yet expired or the seller has reasonable grounds to believe that the nonconforming delivery would be acceptable with or without money allowance. There is no requirement for a cure fee, immediate pickup of nonconforming goods, or entering into a new contract as part of the right to cure.

Question 16

River Gear Company and Scenic Trips Inc. enter into a contract on August 1 for the sale of fifty inflatable river rafts. Scenic cancels the contract ten days later. River is unable to sell the rafts to another buyer. River can

Accepted Answer

River Gear Company can recover the contract price but must hold the rafts for the buyer because the buyer breached the contract by canceling it, and River is unable to resell the goods. Under the Uniform Commercial Code (UCC), the seller can recover the price of goods if they are unable to resell them after a breach by the buyer, but they must hold the goods for the buyer.

Question 17

Chair Company contracts to deliver a dozen suites of dining room tables and chairs to Furniture Store on May 1. On April 15, Chair tells Furniture that delivery will be delayed until June 1. Furniture may

Accepted Answer

Furniture has the option to await Chair Company's performance until the new delivery date, sue Chair Company for breach of contract due to the delay, or suspend its own performance obligations under the contract in response to Chair Company's anticipated breach.

Question 18

Loading Ramps Inc. contracts to sell sixteen loading ramps to Moving Service Inc. Loading ships the ramps, which Moving accepts but does not pay for. Loading can

Accepted Answer

Loading Ramps Inc. can sue to recover the purchase price plus incidental damages because Moving Service Inc. accepted the ramps but failed to pay for them. Under the Uniform Commercial Code (UCC), once goods have been accepted, the seller can recover the purchase price plus any incidental damages caused by the buyer's breach.

Question 19

Alpha Packaging Company agrees to buy goods from Boxes Inc. Their contract limits Alpha's remedies to repair or replacement of defective parts. Alpha can pursue other remedies

Accepted Answer

If a defective part cannot be repaired or replaced, Alpha can pursue other remedies, as the limitation to repair or replacement would not be feasible or fulfill the contract's purpose in such a scenario.

Question 20

On July 10, Best Pet Supply Store orders fifty small dog collars from Collars Inc. to be delivered by July 15. On July 13, Collars delivers fifty large dog collars. Best rejects the shipment. Collars has

Accepted Answer

Collars Inc. has until the original delivery date of July 15 to cure the mistake by delivering the correct size dog collars as per the order.

Quiz 22: Performance and Breachapter of Sales and Lease Contracts