Question 1

Pavers Inc. contracts to buy some heavy equipment from Earthmovers, Inc. Before either party performs, Earthmovers sells its assets to Excavation Corporation. On learning of the sale, Pavers is concerned about its contract with Earthmovers. Pavers should​
A) ​demand assurances of performance from the seller.
B) ​consider the contract repudiated and sue the seller for breach.
C) ​buy the equipment from a different firm and bill the seller for the price.
D) ​buy the equipment from a different firm and bill Excavation for the price.

Accepted Answer

Pavers should demand assurances of performance from the seller, which in this case is Excavation Corporation. The sale of Earthmovers' assets to Excavation does not necessarily void the contract between Pavers and Earthmovers. Pavers should require Excavation to either honor the contract or compensate for any breach.

Question 2

Quade is an expert in twentieth-century art. Rachel visits Quade's gallery, seeking to buy artwork as an investment. Quade shows her a painting that in his opinion is by Picasso. Quade's statement is​
A) ​an express warranty.
B) ​an implied warranty.
C) ​a warranty of title.
D) ​puffery.

Accepted Answer

Quade is making a specific statement about the quality and authenticity of the painting, which can be considered an express warranty.

Question 3

MotorCo Inc. makes and sells auto parts to retail repair services, vehicle sales outlets, and consumer parts stores. On one MotorCo box is a label that reads "Contains one gross (144) sparkplugs, assorted sizes." This statement is​
A) ​an implied warranty of fitness for a particular purpose.
B) ​an implied warranty of merchantability.
C) ​an express warranty.
D) ​none of the choices.

Accepted Answer

The statement on the label is an express warranty because it explicitly states that the box contains one gross of sparkplugs in assorted sizes. This is a specific promise or guarantee made by MotorCo to the buyer.

Question 4

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​
A) ​can substitute some other material for the tin.
B) ​is excused from the performance of its contracts.
C) ​is liable for breach of contract.
D) ​must still supply the tin needs of its customers.

Accepted Answer

The embargo imposed by the cartel of tin-producing countries is a force majeure event, which is beyond the control and reasonable anticipation of the distributor. This exempts the distributor from fulfilling its contractual obligations as long as the event makes the performance of the contract impossible or impracticable. Thus, the distributor is excused from the performance of its contracts.

Question 5

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

Accepted Answer

Refined Mills must give notice of the breach within a reasonable time to Sweet Valley, as they are the party responsible for providing the nonconforming product.

Question 6

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

Accepted Answer

The creation of an express warranty requires that the seller's promise becomes part of the basis of the bargain. In other words, the buyer must rely on the seller's statement in making the purchase. Therefore, choice D is the best option.

Question 7

Soft Chair Company contracts to deliver 100 chairs to Stuffy Furnishings Store on May 1 for which Stuffy agrees to pay. Soft tells Stuffy on April 15 that delivery will be delayed until June 1. Stuffy may​
A) await performance, sue Soft, or suspend its own performance.​
B) ​only await Soft's performance for a commercially reasonable time.
C) ​only sue Soft for breach of contract.
D) ​only suspend its own performance.

Accepted Answer

Stuffy Furnishings Store has multiple options in this scenario. They can choose to await performance, which means they can wait until Soft Chair Company delivers the chairs on June 1. Alternatively, they can sue Soft for breach of contract because they did not fulfill their end of the agreement. Stuffy can also suspend their own performance, which means they can hold off on paying Soft until the chairs are delivered. Ultimately, the best choice depends on Stuffy's priorities, but they do have options.

Question 8

Field Farms and Gourmet Restaurant enter into a contract for a sale of produce. After Field Farms ships the lettuce but before the restaurant receives it, the buyer declares bankruptcy. The seller can stop delivery of the goods in transit​
A) ​only if the quantity is at least 50 percent of the contract amount.
B) ​only if the quantity is in a single "unit."
C) ​only if the quantity is at least a truckload.
D) ​regardless of the quantity.

Accepted Answer

The Uniform Commercial Code (UCC) allows the seller to stop delivery of goods in transit if the buyer is insolvent or has declared bankruptcy, regardless of the quantity or unit. This applies to all goods in transit, not just a specific quantity or type of unit.

Question 9

ABC Toy Store orders one hundred board games from Big Board Games Inc. When the games are delivered, they are all missing pieces. ABC rejects the shipment. To cure, Big Board Games must​
A) ​promptly notify ABC of the intent to cure.
B) ​pay a cure fee.
C) ​pick up the nonconforming games before the end of the business day.
D) ​enter into a new contract with Axel's.

Accepted Answer

Prompt notification of intent to cure is the best choice as it allows Big Board Games to inform ABC of their plan to fix the issue and provides an opportunity for communication between the two parties on how to proceed.

Question 10

Greg, a salesperson for Home Improvement Center, tells Irena, "This is the best floor sander I've ever seen." This statement is​
A) ​an express warranty.
B) ​an implied warranty.
C) ​a warranty of title.
D) ​puffery.

Accepted Answer

This statement is not a legally binding warranty and is considered sales puffery, which is exaggerated or subjective language used to promote a product.

Question 11

Business Rental Corporation (BRC) and Cartage Trucking Company enter into a contract for a lease of ten hydraulic lifts. Under the perfect tender rule, BRC must ship or tender goods to the lessee that​
A) ​approximately conform to the contract description.
B) ​entirely conform to the contract description except in one or two details.
C) ​conform to the contract description in every way.
D) ​substantially conform to the contract description in most details.

Accepted Answer

According to the perfect tender rule, the goods must conform to the contract description in every way. Therefore, BRC must ship or tender the hydraulic lifts that precisely match the terms of the lease agreement with Cartage Trucking Company. Any deviation from the agreement, no matter how small, could result in a breach of contract.

Question 12

Tarts & Pies Bakery contracts with Sweet Fruits for strawberries to be delivered by Refrigerated Trucking Company. On the day of delivery, the refrigeration on the trucks is not working. Sweet Fruits​
A) ​may ship the strawberries to the buyer using a different carrier.
B) ​must cancel the contract.
C) ​must wait to ship the strawberries until the carrier fixes its trucks.
D) ​must ship the goods through a different carrier and pay damages.

Accepted Answer

Sweet Fruits may still ship the strawberries to Tarts & Pies Bakery using a different carrier, as long as the strawberries are still in good condition for delivery. If the strawberries cannot be shipped in the same condition or if Tarts & Pies Bakery refuses to accept the delivery from a different carrier, Sweet Fruits may need to discuss possible solutions with the buyer or pay damages. Cancelling the contract or waiting for the carrier to fix the trucks are not practical solutions in this situation.

Question 13

Steel Buildings, Inc., agrees to sell four portable garages to Truck Service Center. Five days later, the buyer refuses delivery and cancels the contract. The seller is entitled to​
A) ​force the buyer to accept the garages.
B) ​recover any damages from the buyer but not resell the garages.
C) ​resell the garages and recover any damages from the buyer.
D) ​resell the garages but not recover any damages from the buyer.

Accepted Answer

The answer of Steel Buildings, Inc., agrees to sell four...

Question 14

Vehicle Wholesale Company and Walt's Retail Motors enter into a contract for a sale of used cars. Vehicle Wholesale assures Walt's that it has valid title to the vehicles. Under the UCC, warranties of title arise​
A) ​automatically in most sales contracts.
B) ​only if the buyer asks for such a warranty.
C) ​only if the seller expresses such a warranty.
D) ​only in conjunction with lease contracts, not sales contracts.

Accepted Answer

Under the UCC, warranties of title arise automatically in most sales contracts, meaning that the seller is warranting that they have valid title to the goods being sold.

Question 15

Okay Markets, Inc., rejects a shipment of turkey that does not conform to its contract with Poultry Processing Corporation, but is unable to obtain instructions from the seller. Okay Markets can​
A) ​destroy the goods.
B) ​cure the goods to make them conform to the contract.
C) ​retain the goods without paying for them.
D) ​reship or store the goods for the seller.

Accepted Answer

Under the Uniform Commercial Code (UCC), when a buyer rejects non-conforming goods and cannot obtain instructions from the seller, the buyer has the option to reship or store the goods for the seller's account. Destroying the goods, curing the goods, or retaining the goods without paying for them are not actions generally permitted without specific agreement or further instructions from the seller.

Question 16

Medical Supply Company and Health Care, Inc., enter into a contract for a sale of medical equipment and supplies. Under either a shipment contract or a destination contract, the seller must​
A) ​allow the buyer to reject the goods for any reason.
B) ​deliver the goods to a particular destination.
C) ​place the goods into the hands of a carrier.
D) ​give the buyer any necessary documents of title.

Accepted Answer

Under both shipment and destination contracts, the seller is required to provide the buyer with any necessary documents of title to facilitate the transfer of ownership and possession of the goods.

Question 17

On July 10, Pet Supply Store orders fifty small dog collars from Quality Collars, Inc. to be delivered by July 15. On July 13, Quality Collars tenders fifty large dog collars. Pet Supply rejects the shipment. Quality Collars has​
A) ​no right to cure.
B) ​until July 15 to cure.
C) ​until the end of the business day on July 13 to cure.
D) ​unlimited time to cure.

Accepted Answer

Quality Collars has until July 15 to cure because that is the original delivery date agreed upon, and they have the opportunity to correct the mistake and deliver the correct items by that date.

Question 18

Arnold buys a backhoe from Big Dig Equipment Inc. Arnold is unaware that Credit Collection Company holds a lien against the backhoe when he buys it. If Credit Collection repossesses the backhoe, Arnold can​
A) ​recover from Big Dig for breach of warranty.
B) ​do nothing.
C) ​file criminal charges against Big Dig and Credit Collection.
D) ​recover damages from Credit Collection for breach of warranty.

Accepted Answer

Arnold can recover from Big Dig for breach of warranty because when Big Dig sold the backhoe to Arnold, they implicitly warranted that the title was clear of any liens or claims, such as the one held by Credit Collection Company.

Question 19

Phoenix, a salesperson for Quality Fruit, Inc., shows Robert, a buyer for Sweet Home Fruit Company, samples of peaches, stating that any shipment will match the samples. This statement is​
A) ​an express warranty.
B) ​an implied warranty.
C) ​a warranty of title.
D) ​puffery.

Accepted Answer

The statement made by the salesperson is a specific promise about the quality of the peaches, which constitutes an express warranty.

Question 20

Global Talk Corporation sells phones and other mobile devices. Under most circumstances, Global Talk will be presumed to have warranted that its title to the goods is​
A) ​the same as each brand's name.
B) ​none of the choices-a warranty of title is not presumed.
C) ​good and valid.
D) ​the best that money can buy.

Accepted Answer

The UCC provides that, absent a contrary agreement, a seller warrants that its title to the goods is good and valid. Therefore, under most circumstances, Global Talk will be presumed to have warranted that its title to the goods is good and valid.

Quiz 16: Performance, Breach, and Warranties of Sales and Lease Contracts

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

Quade is an expert in twentieth-century art. Rachel visits Quade's gallery, seeking to buy artwork as an investment. Quade shows her a painting that in his opinion is by Picasso. Quade's statement is​

MotorCo Inc. makes and sells auto parts to retail repair services, vehicle sales outlets, and consumer parts stores. On one MotorCo box is a label that reads "Contains one gross (144) sparkplugs, assorted sizes." This statement is​

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​

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

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

Soft Chair Company contracts to deliver 100 chairs to Stuffy Furnishings Store on May 1 for which Stuffy agrees to pay. Soft tells Stuffy on April 15 that delivery will be delayed until June 1. Stuffy may​

Field Farms and Gourmet Restaurant enter into a contract for a sale of produce. After Field Farms ships the lettuce but before the restaurant receives it, the buyer declares bankruptcy. The seller can stop delivery of the goods in transit​

ABC Toy Store orders one hundred board games from Big Board Games Inc. When the games are delivered, they are all missing pieces. ABC rejects the shipment. To cure, Big Board Games must​

Greg, a salesperson for Home Improvement Center, tells Irena, "This is the best floor sander I've ever seen." This statement is​

Business Rental Corporation (BRC) and Cartage Trucking Company enter into a contract for a lease of ten hydraulic lifts. Under the perfect tender rule, BRC must ship or tender goods to the lessee that​

Tarts & Pies Bakery contracts with Sweet Fruits for strawberries to be delivered by Refrigerated Trucking Company. On the day of delivery, the refrigeration on the trucks is not working. Sweet Fruits​

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

Vehicle Wholesale Company and Walt's Retail Motors enter into a contract for a sale of used cars. Vehicle Wholesale assures Walt's that it has valid title to the vehicles. Under the UCC, warranties of title arise​

Okay Markets, Inc., rejects a shipment of turkey that does not conform to its contract with Poultry Processing Corporation, but is unable to obtain instructions from the seller. Okay Markets can​

Medical Supply Company and Health Care, Inc., enter into a contract for a sale of medical equipment and supplies. Under either a shipment contract or a destination contract, the seller must​

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

Arnold buys a backhoe from Big Dig Equipment Inc. Arnold is unaware that Credit Collection Company holds a lien against the backhoe when he buys it. If Credit Collection repossesses the backhoe, Arnold can​

Phoenix, a salesperson for Quality Fruit, Inc., shows Robert, a buyer for Sweet Home Fruit Company, samples of peaches, stating that any shipment will match the samples. This statement is​

Global Talk Corporation sells phones and other mobile devices. Under most circumstances, Global Talk will be presumed to have warranted that its title to the goods is​

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

Quade is an expert in twentieth-century art. Rachel visits Quade's gallery, seeking to buy artwork as an investment. Quade shows her a painting that in his opinion is by Picasso. Quade's statement is

MotorCo Inc. makes and sells auto parts to retail repair services, vehicle sales outlets, and consumer parts stores. On one MotorCo box is a label that reads "Contains one gross (144) sparkplugs, assorted sizes." This statement is

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

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

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

Soft Chair Company contracts to deliver 100 chairs to Stuffy Furnishings Store on May 1 for which Stuffy agrees to pay. Soft tells Stuffy on April 15 that delivery will be delayed until June 1. Stuffy may

Field Farms and Gourmet Restaurant enter into a contract for a sale of produce. After Field Farms ships the lettuce but before the restaurant receives it, the buyer declares bankruptcy. The seller can stop delivery of the goods in transit

ABC Toy Store orders one hundred board games from Big Board Games Inc. When the games are delivered, they are all missing pieces. ABC rejects the shipment. To cure, Big Board Games must

Greg, a salesperson for Home Improvement Center, tells Irena, "This is the best floor sander I've ever seen." This statement is

Business Rental Corporation (BRC) and Cartage Trucking Company enter into a contract for a lease of ten hydraulic lifts. Under the perfect tender rule, BRC must ship or tender goods to the lessee that

Tarts & Pies Bakery contracts with Sweet Fruits for strawberries to be delivered by Refrigerated Trucking Company. On the day of delivery, the refrigeration on the trucks is not working. Sweet Fruits

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

Vehicle Wholesale Company and Walt's Retail Motors enter into a contract for a sale of used cars. Vehicle Wholesale assures Walt's that it has valid title to the vehicles. Under the UCC, warranties of title arise

Okay Markets, Inc., rejects a shipment of turkey that does not conform to its contract with Poultry Processing Corporation, but is unable to obtain instructions from the seller. Okay Markets can

Medical Supply Company and Health Care, Inc., enter into a contract for a sale of medical equipment and supplies. Under either a shipment contract or a destination contract, the seller must

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

Arnold buys a backhoe from Big Dig Equipment Inc. Arnold is unaware that Credit Collection Company holds a lien against the backhoe when he buys it. If Credit Collection repossesses the backhoe, Arnold can

Phoenix, a salesperson for Quality Fruit, Inc., shows Robert, a buyer for Sweet Home Fruit Company, samples of peaches, stating that any shipment will match the samples. This statement is

Global Talk Corporation sells phones and other mobile devices. Under most circumstances, Global Talk will be presumed to have warranted that its title to the goods is