Question 1

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

Accepted Answer

Under the Uniform Commercial Code (UCC), a seller has the right to cure a non-conforming delivery if the time for performance has not yet expired. Since the delivery date is January 15, Quality Collars has until then to correct the mistake.

Question 2

Craft Engineering,Inc.,contracts for a sale of technical instruments to Detail Design Company.Before the date on which performance is due,Craft notifies Detail that it will not perform.This is
A)anticipatory repudiation.
B)perfect tender.
C)rejection of performance.
D)revocation of acceptance.

Accepted Answer

Craft's notification that it will not perform before the performance date is an anticipatory repudiation, which is the renunciation of a contract's obligations by one party before the time for performance of its obligations under the contract arises.

Question 3

Shane's Auto Parts orders twenty tires from Tough Tires,Inc.The truck delivering the tires to Shane's is in an accident and ten of the tires are damaged.Shane's Auto Parts
A)cannot reject the entire shipment.
B)must still pay for all twenty tires at the original contract price.
C)may inspect the tires and accept the shipment with a reduction in price.
D)must reject the entire shipment.

Accepted Answer

According to the Uniform Commercial Code, if part of a shipment is damaged or defective, the buyer has the right to inspect the remainder of the shipment and accept it with a reduction in price. This means that Shane's Auto Parts can inspect the ten undamaged tires and accept them at a reduced price from the original contract. They do not have to reject the entire shipment or pay for all twenty tires at the original contract price.

Question 4

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

Accepted Answer

Stuffy has a few options in this situation. They can choose to await performance, meaning they can choose to wait until June 1 for delivery of the chairs. They can also choose to sue Sof' for breach of contract. Finally, they can suspend their own performance (i.e. stop payment or cancel the order) if they no longer want to receive the chairs. Option A is the best choice because it gives Stuffy the most flexibility and control over the situation.

Question 5

Levi's Toy Store orders one hundred board games from Big Board Games Warehouse.When the games are delivered,they are all missing pieces.Levi's Toy Store rejects the shipment.Big Board Games wants to cure.Big Board Games must
A)promptly notify Levi's Toy Store of the intent to cure.
B)pay Levi's Toy store a cure fee.
C)send a truck to pick up the nonconforming goods before the end of the business day.
D)create a new contract with Levi's Toy Store.

Accepted Answer

Big Board Games Warehouse must promptly notify Levi's Toy Store of their intent to cure the nonconformance by offering to replace the missing pieces or sending a new shipment of fully intact board games. This follows the principle of good faith and fair dealing in contract law. The other options are not necessary or appropriate solutions in this scenario.

Question 6

Kim's Pony Rides orders ten saddles from Little Horse Saddles,Inc.The sales contract states that if the saddles are defective,Kim's will allow Little Horse Saddles to repair or replace them instead of rejecting the shipment.When the saddles arrive,they are defective.In this case,the perfect tender rule
A)does not apply.
B)applies to both parties.
C)applies only to Little Horse Saddles.
D)applies only to Kim's Pony Rides.

Accepted Answer

The perfect tender rule does not apply because the contract allows Little Horse Saddles to repair or replace defective saddles, which is an exception to the rule.

Question 7

Silas Paving Co.contracts to buy some construction machinery from Massive Earthmovers,Inc.Before either party performs,Massive sells its assets to Phoenix Equipment Corp.On learning of the sale,Silas is concerned about its contract with Massive.Silas should
A)demand assurances of performance from Massive.
B)consider the contract repudiated and sue Massive for breach.
C)buy the machinery from a different supplier and bill Massive for the price.
D)buy the machinery from a different supplier and bill Phoenix for the price.

Accepted Answer

Silas should demand assurances of performance from Massive. Since there has been no performance by either party, the contract is still in force. Asking for assurances from Massive will help Silas determine if Massive is still willing and able to perform the contract. Silas can then decide whether to proceed with the contract or look for alternative suppliers.

Question 8

Mitch and Nadine enter into a contract for a sale of seventy-six specially made motion detectors.When Nadine does not deliver within a reasonable time after the agreed delivery date,Mitch files a suit for breach.Nadine asserts the doctrine of commercial impracticability.This doctrine extends only to problems that are
A)foreseen.
B)preventable.
C)unforeseen.
D)ordinarily assumed by a seller or lessor.

Accepted Answer

The doctrine of commercial impracticability applies to unforeseen events that make it commercially impracticable to perform a contract. Therefore, choice C is correct. Choices A, B, and D are incorrect as the doctrine does not apply to foreseeable or preventable problems, nor does it relieve a seller or lessor of their ordinary assumed responsibilities.

Question 9

Vehicle Leasing Agency (VLA) and Wander Trucking Company enter into a contract for a lease of eight cargo vans.VLA delivers eight vans,but they are not cargo-sized.Wander
A)cannot reject the entire shipment.
B)can reject the entire shipment.
C)must accept the entire shipment.
D)must reject the entire shipment.

Accepted Answer

Since VLA delivered a product that does not meet the specifications of the contract, Wander Trucking Company has the right to reject the entire shipment.

Question 10

Loomis Weaving Company contracts to sell sweaters to Style Mart stores.Before the sweat-ers are delivered,Style Mart indicates that it will not be able to pay.Loomis can resell the goods
A)either after finishing the job (and identifying the goods),or after stopping the job.
B)only after finishing the job and identifying the goods.
C)only if Loomis immediately stops the job.
D)under no circumstances.

Accepted Answer

According to the doctrine of anticipatory repudiation, when one party clearly and unequivocally indicates that they will not perform their contractual obligations, the other party can consider the contract breached and has the right to stop performance and seek remedies. In this case, Style Mart has indicated that it will not be able to pay, which constitutes anticipatory repudiation. Therefore, Loomis can either stop the job and seek remedies, or finish the job and resell the goods to recover their losses. Therefore, option A is the best choice, as it allows for both options.

Question 11

Beef Burgers,Inc.contracts to buy five hundred steers from Fattening Feedlots.Before Fattening Feedlots can deliver the steers,there is an outbreak of disease in the feedlot,and all the cattle are quarantined.In this case the perfect tender rule
A)applies to both parties.
B)does not apply.
C)applies only to Beef Burgers.
D)applies only to Fattening Feedlots.

Accepted Answer

The perfect tender rule only applies when the goods are available for delivery but fail to meet the contract specifications. In this case, the goods (the steers) are not available for delivery due to circumstances outside of either party's control (the outbreak of disease), so the perfect tender rule does not apply. Both parties are discharged from their obligations under the contract.

Question 12

Pine Mills Corporation and Ur-Choice Lumberyards enter into a contract for a sale of plywood.Under 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)inspect the goods before tendering their delivery.
D)place the goods into the hands of a carrier.

Accepted Answer

Under a destination contract, the seller has the obligation to deliver the goods to a particular destination specified by the buyer. The risk of loss or damage to the goods during transportation will be borne by the seller until the goods reach the specified destination. Therefore, option B is the correct answer. Option A is incorrect because in a destination contract, the buyer has no right to reject the goods for any reason. Option C is also incorrect because the seller is not required to inspect the goods before tendering their delivery. Option D is not necessarily true as the seller can choose the carrier or mode of transportation, as long as the goods are delivered to the specified destination.

Question 13

Sally's Sweet Fruits contracts with Fruits to You,Inc.for a delivery of two hundred pounds of strawberries to be delivered by Keep Kool Trucking,a trucking company with refrigerated trucks.On the day of delivery,the refrigeration units on Keep Kool's trucks are not working.Fruits to You
A)may ship the goods to Sally's using another trucking company with refrigerated trucks.
B)must refund Sally's money and cancel the contract.
C)must wait to ship the strawberries until Keep Kool has fixed its trucks.
D)must ship the goods through a different carrier and pay Sally incidental damages.

Accepted Answer

Fruits to You has a contractual obligation to deliver the strawberries to Sally's Sweet Fruits. Since Keep Kool Trucking's trucks are unable to make the delivery, Fruits to You may fulfill their obligation by using another trucking company with refrigerated trucks to make the delivery. This option ensures that Sally's Sweet Fruits receives the goods as agreed upon in the contract.

Question 14

Genuine Seed Company and Hillside Farmers Cooperative enter into a contract for a sale of hybrid seeds.Under the perfect tender rule,Genuine Seed must ship or tender seeds to Hillside that
A)approximately conform to all of the details of the contract.
B)entirely conform to the contract except in one or two details.
C)exactly conform to the contract in every detail.
D)substantially conform to the contract in most details.

Accepted Answer

Under the perfect tender rule, the seller must deliver goods that exactly conform to the contract in every detail. Any deviation from the agreed-upon terms could constitute a breach of contract.

Question 15

Double D Ranch and Esau enter into a contract on August 1 for the sale of 200 cattle.Esau cancels the con-tract ten days later.Double D is unable to sell the cattle to another buyer.Double D is enti-tled to
A)force Esau to accept the cattle and recover the contract price.
B)keep the cattle and recover the contract price from Esau.
C)keep the cattle only.
D)recover the contract price from Esau but must destroy the cattle.

Accepted Answer

Since Esau cancelled the contract, Double D Ranch is entitled to keep the cattle and recover the contract price from Esau. The option to force Esau to accept the cattle is not feasible as it would require legal intervention, and even if forced to accept the cattle, Esau may still refuse to pay for them. Option C is also not feasible as Double D Ranch would be stuck with unsold cattle, resulting in a financial loss. Option D is not necessary as Double D Ranch can recover the contract price by keeping and selling the cattle. Thus, option B is the best choice.

Question 16

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 all of the details of the contract.
B)entirely conform to the contract except in one or two details.
C)exactly conform to the contract in every detail.
D)substantially conform to the contract in most details.

Accepted Answer

Under the perfect tender rule, the goods must exactly conform to the contract in every detail. Any deviation, no matter how minor, could give the lessee the right to reject the goods.

Question 17

Julia orders twelve violins for her music shop from Notable Notes Instrument Manufacturers.The sale is made on credit.Julia orders the violins on May 1,Notable Notes ships the violins on May 2,and Julia receives the violins on May 4.Julia sells all the violins by June 15.Julia's credit period most likely began on
A)May 1.
B)May 2.
C)May 4.
D)June 15.

Accepted Answer

The credit period typically starts on the date the items are shipped, which in this case was May 2. Therefore, choice B is the best answer. Choice A (May 1) is incorrect because the order was not yet shipped and received on that date. Choice C (May 4) is incorrect because that is the date Julia received the violins, which is after they were shipped. Choice D (June 15) is incorrect because that is the date the violins were sold, which is after the credit period would have started.

Question 18

Mineral Resource Company contracts to provide several manufacturers with tin.When a cartel of tin-producing countries suddenly embargoes future shipments of tin to Mineral Resource 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 distributor is excused from the performance of its contracts due to the unexpected and unforeseeable event of the tin embargo. This is a force majeure event that makes it impossible for the distributor to fulfill its obligations. Therefore, the distributor is not liable for breach of contract. However, it is important to review the terms of the contracts to see if they include a force majeure clause that specifies the consequences of such events.

Question 19

Food Packaging,Inc.,agrees to sell 50,000 6-ounce yogurt containers to Golden Dairy Company.Food can obtain only 20,000 of the 6-ounce contain-ers,but also ships 30,000 more expensive 8-ounce containers for the same price.Under these circumstances,Golden
A)cannot reject delivery,and Food cannot later replace the containers.
B)cannot reject delivery,but Food can later replace the containers.
C)may reject delivery,and notice to Golden of Food's intent to cure will give Food a reasonable time to replace the containers.
D)may reject delivery,but Food cannot later replace the containers.

Accepted Answer

Under the circumstances described, Golden Dairy Company has the right to reject delivery. However, Food Packaging, Inc. has a right to cure the nonconformity if they can replace the 6-ounce containers with conforming goods within a reasonable time after notice of Golden's intent to reject. Therefore, Option C is the correct answer.

Question 20

Screen Perfect,Inc.,and TV Stores enter into a contract for a sale of high-definition television sets.Screen Perfect ships goods that do not exactly conform to the contract in some details.TV Stores
A)cannot reject the entire shipment.
B)can reject the entire shipment.
C)must accept the entire shipment.
D)must reject the entire shipment.

Accepted Answer

TV Stores can reject the entire shipment if the goods do not conform to the contract in essential details. This is because nonconformity in essential matters constitutes a breach of contract, entitling the buyer to reject the entire shipment. However, if the nonconformity is minor, TV Stores cannot reject the entire shipment and must accept the conforming portion of the goods.

Quiz 15: Performance and Breach of Sales and Lease Contracts

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

Craft Engineering,Inc.,contracts for a sale of technical instruments to Detail Design Company.Before the date on which performance is due,Craft notifies Detail that it will not perform.This is

Shane's Auto Parts orders twenty tires from Tough Tires,Inc.The truck delivering the tires to Shane's is in an accident and ten of the tires are damaged.Shane's Auto Parts

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

Levi's Toy Store orders one hundred board games from Big Board Games Warehouse.When the games are delivered,they are all missing pieces.Levi's Toy Store rejects the shipment.Big Board Games wants to cure.Big Board Games must

Silas Paving Co.contracts to buy some construction machinery from Massive Earthmovers,Inc.Before either party performs,Massive sells its assets to Phoenix Equipment Corp.On learning of the sale,Silas is concerned about its contract with Massive.Silas should

Vehicle Leasing Agency (VLA) and Wander Trucking Company enter into a contract for a lease of eight cargo vans.VLA delivers eight vans,but they are not cargo-sized.Wander

Loomis Weaving Company contracts to sell sweaters to Style Mart stores.Before the sweat-ers are delivered,Style Mart indicates that it will not be able to pay.Loomis can resell the goods

Beef Burgers,Inc.contracts to buy five hundred steers from Fattening Feedlots.Before Fattening Feedlots can deliver the steers,there is an outbreak of disease in the feedlot,and all the cattle are quarantined.In this case the perfect tender rule

Pine Mills Corporation and Ur-Choice Lumberyards enter into a contract for a sale of plywood.Under a destination contract,the seller must

Sally's Sweet Fruits contracts with Fruits to You,Inc.for a delivery of two hundred pounds of strawberries to be delivered by Keep Kool Trucking,a trucking company with refrigerated trucks.On the day of delivery,the refrigeration units on Keep Kool's trucks are not working.Fruits to You

Genuine Seed Company and Hillside Farmers Cooperative enter into a contract for a sale of hybrid seeds.Under the perfect tender rule,Genuine Seed must ship or tender seeds to Hillside that

Double D Ranch and Esau enter into a contract on August 1 for the sale of 200 cattle.Esau cancels the con-tract ten days later.Double D is unable to sell the cattle to another buyer.Double D is enti-tled to

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

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

Food Packaging,Inc.,agrees to sell 50,000 6-ounce yogurt containers to Golden Dairy Company.Food can obtain only 20,000 of the 6-ounce contain-ers,but also ships 30,000 more expensive 8-ounce containers for the same price.Under these circumstances,Golden

Screen Perfect,Inc.,and TV Stores enter into a contract for a sale of high-definition television sets.Screen Perfect ships goods that do not exactly conform to the contract in some details.TV Stores