Question 1

Snee, a consumer, agrees to buy an exercise machine from Treadmills Inc. Their contract excludes consequential damages for personal injuries resulting from the use of the device. This exclusion is
A)presumably unconscionable.
B)not unconscionable because any loss would be commercial in nature.
C)reasonably foreseeable and therefore meets its essential purpose.
D)permissible because the buyer can pursue other remedies.

Accepted Answer

Excluding consequential damages for personal injuries in a consumer contract, especially for a product like an exercise machine which has a high potential for causing personal injury if defective, is generally considered unconscionable. This is because it puts the consumer at a significant disadvantage, denying them compensation for potentially serious injuries.

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

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 4

The use of a letter of credit in a transaction for the international sale of goods greatly reduces costs in the deal because the issuer
A)must determine whether the contract conditions have been satisfied.
B)does not inquire into whether the contract conditions have been met.
C)pays only against the facts reflected in documents presented by the beneficiary.
D)has the obligation to police the underlying contract.

Accepted Answer

The answer of The use of a letter of credit...

Question 5

Granos de Café S.A., a Columbian company, and Hot Drinks Inc., a U.S. firm, contract for a sale of coffee beans. Granos does not deliver. Under the United Nations Convention for the International Sale of Goods, Hot can recover as damages the difference between
A)any loss avoided and any profit gained.
B)the actual price and the hoped-for price.
C)the contract price and the market price.
D)the market prices in the contracting parties' places of business.

Accepted Answer

The United Nations Convention for the International Sale of Goods (CISG) allows a buyer to recover damages equal to the difference between the contract price and the market price. This is to put the buyer in as good a position as if the seller had performed the contract.

Question 6

Merchant Mart accepts a shipment of nonconforming goods from Nabob Inc. Under the applicable statute of limitations, with respect to pursuing a remedy against the seller for the shipment, the buyer
A)must warrant that the goods will be returned.
B)is limited to a certain amount of damages.
C)is barred from seeking damages.
D)has a reasonable time to notify the seller of the breach.

Accepted Answer

Under the Uniform Commercial Code (UCC), when a buyer receives nonconforming goods, they must notify the seller of the breach within a reasonable time in order to preserve their rights to any remedy. This notification allows the seller the opportunity to cure the breach if possible. There is no requirement for the buyer to warrant the return of goods, nor are they automatically limited to a certain amount of damages or barred from seeking damages without first providing notification.

Question 7

Under the United Nations Convention for the International Sale of Goods, the measure of damages for a breach of an international sales contract normally is the difference between
A)the contract price and the market price of the goods.
B)compensatory damages and foreseeable consequential damages.
C)the value of the currencies of the contracting parties' respective markets.
D)the costs of assurance and cooperation.

Accepted Answer

The United Nations Convention for the International Sale of Goods (CISG) generally measures damages for a breach of contract as the difference between the contract price and the market price of the goods. This approach aims to put the aggrieved party in the position they would have been in had the contract been properly performed.

Question 8

Refined Mills orders "Grade A" oats from Sweet Farms to grind and sell to Town Grocery. Sweet ships "Grade B" grain, which Refined accepts. To recover damages for the nonconformity, Refined must give notice of the breach within a reasonable time to
A)Sweet.
B)Town.
C)no one.
D)the appropriate state government agency.

Accepted Answer

Under the Uniform Commercial Code (UCC), when goods delivered fail to conform to the contract, the buyer must notify the seller of the breach within a reasonable time in order to recover damages. In this scenario, Refined Mills must notify Sweet Farms, the seller, of the nonconformity (receiving Grade B oats instead of Grade A) to pursue any remedy.

Question 9

Bull & Cow Corporation, a U.S. firm, and Carne Ltd., an Italian company, contract for a sale of beef. Under a letter of credit issued by Fiscal Bank to facilitate the deal, Carne promises to
A)reimburse the bank for the amount paid to the seller.
B)ascertain whether the seller delivers as contracted.
C)transmit information and expedite payment.
D)pay the seller when the bank has complied with the terms of the letter.

Accepted Answer

Under a letter of credit, the buyer (or the buyer's bank) promises to reimburse the bank for the amount it pays to the seller, ensuring the seller receives payment for the goods or services provided, assuming all terms of the letter of credit are met.

Question 10

Watercraft Inc., a U.S. firm, files a suit in a U.S. court against Xia Ltd., a Chinese company, seeking specific performance. Under the United Nations Convention for the International Sale of Goods, the court is most likely to grant this remedy if
A)no remedy at law is available and the goods at issue are unique.
B)specific performance is a commonly granted remedy in China.
C)the measure of damages would be undercut by currency differences.
D)the parties' deal was a simple letter-of-credit transaction.

Accepted Answer

Under the United Nations Convention for the International Sale of Goods (CISG), specific performance can be granted if no adequate remedy at law, such as monetary damages, is available and the goods are unique, making specific performance the most appropriate remedy.

Question 11

In a letter-of-credit transaction, Unum Inc., a U.S. firm, delivers a bill of lading to Verity Bank to prove that a contracted-for shipment was made to Wallaby Ltd., an Australian company. Verity must pay Unum
A)before policing the underlying contract.
B)after verifying the facts that the bill of lading purports to reflect.
C)against the bill of lading, without more.
D)coincident with the buyer's assurance of its receipt of the goods.

Accepted Answer

In a letter-of-credit transaction, the bank (Verity Bank) must pay against the bill of lading as presented by the seller (Unum Inc.) without requiring additional verification or conditions such as policing the underlying contract, verifying the facts, or waiting for the buyer's assurance of receipt. The bill of lading serves as the key document that triggers payment because it is proof that the seller has fulfilled their part of the contract by shipping the goods.

Question 12

Durable Goods Inc., a U.S. firm, and Économique S.A., a French company, contract for an international sale of goods with the use of a letter of credit issued by Finance Corporation. In this transaction, the letter protects
A)primarily the issuer.
B)both the buyer and the seller.
C)only any third parties, such as advising and paying banks.
D)chiefly the account party.

Accepted Answer

The letter of credit primarily protects both the buyer (Durable Goods Inc.) and the seller (Économique S.A.) in an international transaction. It ensures the seller receives payment as long as the terms of the credit are met, and it assures the buyer that the bank will only pay the seller upon the presentation of the documents evidencing shipment of the goods as specified in the letter of credit.

Quiz 22: Performance and Breachapter of Sales and Lease Contracts

Snee, a consumer, agrees to buy an exercise machine from Treadmills Inc. Their contract excludes consequential damages for personal injuries resulting from the use of the device. This exclusion is

The use of a letter of credit in a transaction for the international sale of goods greatly reduces costs in the deal because the issuer

Granos de Café S.A., a Columbian company, and Hot Drinks Inc., a U.S. firm, contract for a sale of coffee beans. Granos does not deliver. Under the United Nations Convention for the International Sale of Goods, Hot can recover as damages the difference between

Merchant Mart accepts a shipment of nonconforming goods from Nabob Inc. Under the applicable statute of limitations, with respect to pursuing a remedy against the seller for the shipment, the buyer

Under the United Nations Convention for the International Sale of Goods, the measure of damages for a breach of an international sales contract normally is the difference between

Refined Mills orders "Grade A" oats from Sweet Farms to grind and sell to Town Grocery. Sweet ships "Grade B" grain, which Refined accepts. To recover damages for the nonconformity, Refined must give notice of the breach within a reasonable time to

Bull & Cow Corporation, a U.S. firm, and Carne Ltd., an Italian company, contract for a sale of beef. Under a letter of credit issued by Fiscal Bank to facilitate the deal, Carne promises to

Watercraft Inc., a U.S. firm, files a suit in a U.S. court against Xia Ltd., a Chinese company, seeking specific performance. Under the United Nations Convention for the International Sale of Goods, the court is most likely to grant this remedy if

In a letter-of-credit transaction, Unum Inc., a U.S. firm, delivers a bill of lading to Verity Bank to prove that a contracted-for shipment was made to Wallaby Ltd., an Australian company. Verity must pay Unum

Durable Goods Inc., a U.S. firm, and Économique S.A., a French company, contract for an international sale of goods with the use of a letter of credit issued by Finance Corporation. In this transaction, the letter protects