Question 1

Under which of the following circumstances will a court refuse to uphold modifications or limitations to remedies agreed upon by the parties?

Accepted Answer

Courts uphold modifications or limitations to remedies unless the remedies fail in their essential purpose.

Question 2

New Furniture.Penny purchased $3,000 worth of furniture from Bob's furniture shop.Through an arrangement with Bob,Penny financed the purchase through a financing company called Let Us Help You.Twenty-nine days after the goods were delivered to her,Penny had a disagreement with Let Us Help You regarding the amount of interest she would be required to pay.She notified Bob on that day that she was rejecting the goods.Bob claimed that she did not properly reject the furniture and also that she acted in bad faith.Penny says that she properly rejected and denies that she acted in bad faith.She also says that,in any event,she cannot be sued for both wrongful rejection and also bad faith because of double jeopardy.Which of the following is true regarding Bob's claim that Penny failed to act in good faith?

Accepted Answer

As in the case referenced in the textbook,Y&N Furniture Inc.v.Nwabuoku,a rejection that does not even purport to rest on an honest assessment of conformity of the goods is in bad faith.

Question 3

New Furniture.Penny purchased $3,000 worth of furniture from Bob's furniture shop.Through an arrangement with Bob,Penny financed the purchase through a financing company called Let Us Help You.Twenty-nine days after the goods were delivered to her,Penny had a disagreement with Let Us Help You regarding the amount of interest she would be required to pay.She notified Bob on that day that she was rejecting the goods.Bob claimed that she did not properly reject the furniture and also that she acted in bad faith.Penny says that she properly rejected and denies that she acted in bad faith.She also says that,in any event,she cannot be sued for both wrongful rejection and also bad faith because of double jeopardy.Which of the following is true regarding the standard of good faith that would be applied regarding Penny?

Accepted Answer

Uniform Commercial Code Section 1-304 requires good faith in the performance and enforcement of every contract.Good faith means honesty in fact when a non-merchant is involved.

Question 4

Hot Toaster.Rebecca bought a toaster from Super Store and brought it home.A friend of hers,Greg,was at her house making toast.The toaster malfunctioned and shocked Greg,resulting in a small burn to his hand requiring medical attention.At a garage sale,Rebecca also purchased a blender from a friend,Samantha.When she paid for the blender,Rebecca said that it would be great for making smoothies.Samantha said nothing and just smiled while taking Rebecca's money.Unfortunately,the blender was not powerful enough to make smoothies.Which of the following is true regarding whether Samantha made an implied warranty of fitness for a particular purpose to Rebecca that the blender would make smoothies?

Accepted Answer

The warranty of fitness for a particular purpose requires that the seller knows or has reason to know that the buyer is relying on him or her to make the selection.

Question 5

Boat Tow.Donnie went to a new car dealership and told the salesperson (who was not the manager)that he needed a new car that would both get good gas mileage and pull his big boat.The salesperson encouraged him to buy a smaller car that the salesperson promised would pull the boat.Donnie bought the car and used it to pull the boat.Unfortunately,the heavy pull on the car did significant damage to the car's engine.Donnie complained to the salesperson,who denied any liability.Donnie,who had taken half-a-semester of business law,informed the salesperson that along with the sale of the car he also received an express warranty and an implied warranty of merchantability,and that he could recover under either of those theories.Will Donnie be able to recover damages based upon breach of the implied warranty of fitness for a particular purpose?

Accepted Answer

The implied warranty of fitness for a particular purpose arises when a seller knows or has reason to know a)why the buyer is purchasing the goods in question and b)that the buyer is relying on the seller to make the selection.

Question 6

Hot Toaster.Rebecca bought a toaster from Super Store and brought it home.A friend of hers,Greg,was at her house making toast.The toaster malfunctioned and shocked Greg,resulting in a small burn to his hand requiring medical attention.At a garage sale,Rebecca also purchased a blender from a friend,Samantha.When she paid for the blender,Rebecca said that it would be great for making smoothies.Samantha said nothing and just smiled while taking Rebecca's money.Unfortunately,the blender was not powerful enough to make smoothies.Based on the facts presented,what type of warranty did Super Store give Rebecca?

Accepted Answer

The implied warranty of merchantability is an assurance,inferred in every sale by a merchant unless clearly disclaimed,that merchantable goods will conform to a reasonable performance expectation.

Question 7

Which of the following is true regarding buyers or lessees who want to accept nonconforming goods and then seek monetary damages?

Accepted Answer

Under Uniform Commercial Code Sections 2-607,2-715,and 2A-519,buyers or lessees are allowed to accept nonconforming goods and then seek monetary damages to give them the benefit of the bargain.The buyer or lessee must give the seller or lessor reasonable notice of the defect.

Question 8

Hot Toaster.Rebecca bought a toaster from Super Store and brought it home.A friend of hers,Greg,was at her house making toast.The toaster malfunctioned and shocked Greg,resulting in a small burn to his hand requiring medical attention.At a garage sale,Rebecca also purchased a blender from a friend,Samantha.When she paid for the blender,Rebecca said that it would be great for making smoothies.Samantha said nothing and just smiled while taking Rebecca's money.Unfortunately,the blender was not powerful enough to make smoothies.Which of the following is true regarding whether Samantha made an express warranty to Rebecca that the blender would make smoothies?

Accepted Answer

Samantha made no description of the blender's physical nature or its use,in either general or specific circumstances,which became part of the contract of sale.

Question 9

Stacy,located in Florida,is entering into a contract with Natasha,located in Russia,for the purchase of snow globes to sell to people who do not typically get to see snow.Stacy is familiar with the Uniform Commercial Code,but she is uneasy about what law would apply if she has a dispute with Natasha regarding the contract.She would like for Florida law to apply.Which of the following is the best advice to Stacy?

Accepted Answer

It is a common practice for parties to any contract to indicate in the very contract itself which laws will govern the transaction if a dispute arises.

Question 10

Mary sells handmade earrings for a living.Susan is a new lawyer and a friend of Mary who gives legal advice to Mary in return for earrings.Susan tells Mary that under the Magnuson-Moss Act she is required to provide all buyers with a written warranty setting forth their rights as consumers.Mary asks if there is not a way around that because she is tired of complaining customers who do not take care of their earrings and that she would love to find a way to provide no warranties whatsoever.Which of the following is true regarding Susan's advice and warranties on the earrings?

Accepted Answer

The 1975 federal law known as the Magnuson-Moss Act requires that if a seller decides to issue a written warranty for a consumer good (the seller is not required to do so),the seller must indicate whether that warranty is a full warranty or a limited warranty.

Question 11

Refused Furniture.Selina arranges to sell furniture from her furniture store to Roland for $3,000.Roland was supposed to give Selina a $500 deposit on February 1 and pay the remainder in monthly installments.Selina was to deliver the furniture by February 7.Roland did not pay Selina as promised on February 1.He asked her to wait until March 1,but she refused.She also refused to deliver the furniture.Selina was able to sell the furniture for only $2,500 because of a downturn in the economy.Roland told Selina that she had no right to withhold or sell his furniture and that he was suing.Selina incurred $100 in additional amounts in advertising costs to advertise the furniture that Roland initially purchased.Selina saved $40 in delivery costs because the subsequent purchaser picked up her own furniture.Which of the following is true regarding Roland's claim that Selina had no right to withhold his furniture?

Accepted Answer

Uniform Commercial Code Sections 2-703(a)and 2A-523(1)(c)allow sellers or lessors to withhold delivery of goods when the buyer or lessee is in breach.

Question 12

New Furniture.Penny purchased $3,000 worth of furniture from Bob's furniture shop.Through an arrangement with Bob,Penny financed the purchase through a financing company called Let Us Help You.Twenty-nine days after the goods were delivered to her,Penny had a disagreement with Let Us Help You regarding the amount of interest she would be required to pay.She notified Bob on that day that she was rejecting the goods.Bob claimed that she did not properly reject the furniture and also that she acted in bad faith.Penny says that she properly rejected and denies that she acted in bad faith.She also says that,in any event,she cannot be sued for with both wrongful rejection and also bad faith because of double jeopardy.Which of the following is true regarding Bob's claim that Penny failed to properly reject the goods?

Accepted Answer

As in the case referenced in the textbook,Y&N Furniture Inc.v.Nwabuoku,there was no claim of nonconforming goods.

Question 13

Which of the following was the result in Hill v.Gateway 2000,the case in the textbook in which the purchaser of a computer failed to read a contract requiring arbitration that came packaged with the computer and asked the court to determine that a seller of computers could not limit buyers' remedies or require arbitration by bundling hardware and legal documents?

Accepted Answer

The court ruled that the contract was binding on the parties.The court stated,"A contract need not be read to be effective; people who accept take the risk that the unread terms may in retrospect prove unwelcome."

Question 14

When does the Uniform Commercial Code allow buyers to seek the remedy of specific performance?

Accepted Answer

Uniform Commercial Code Sections 2-716(1)and 2A-521(1)allow buyers and lessees to seek the remedy of specific performance when either a)the goods are unique or b)a remedy at law is inadequate.

Question 15

New Furniture.Penny purchased $3,000 worth of furniture from Bob's furniture shop.Through an arrangement with Bob,Penny financed the purchase through a financing company called Let Us Help You.Twenty-nine days after the goods were delivered to her,Penny had a disagreement with Let Us Help You regarding the amount of interest she would be required to pay.She notified Bob on that day that she was rejecting the goods.Bob claimed that she did not properly reject the furniture and also that she acted in bad faith.Penny says that she properly rejected and denies that she acted in bad faith.She also says that,in any event,she cannot be sued for both wrongful rejection and also bad faith because of double jeopardy.Which of the following is the correct analysis of Penny's claim that she cannot be sued for both a wrongful rejection and bad faith because of the constitutional prohibition against double jeopardy?

Accepted Answer

As in the case referenced in the textbook,Y&N Furniture Inc.v.Nwabuoku,a rejection may be both wrongful and in bad faith.

Question 16

Ann chipped a tooth on a peach pit while eating a can of mixed fruit.She wants to sue the manufacturer of the fruit mix.Which of the following would be the manufacturer's best defense?

Accepted Answer

As indicated in the Webster v.Blue Ship Tea Room,Inc.case in the textbook addressing the implied warranty of merchantability,in cases where the buyer should expect a problem,the buyer must be prepared to accept the situation.

Question 17

Hot Toaster.Rebecca bought a toaster from Super Store and brought it home.A friend of hers,Greg,was at her house making toast.The toaster malfunctioned and shocked Greg,resulting in a small burn to his hand requiring medical attention.At a garage sale,Rebecca also purchased a blender from a friend,Samantha.When she paid for the blender,Rebecca said that it would be great for making smoothies.Samantha said nothing and just smiled while taking Rebecca's money.Unfortunately,the blender was not powerful enough to make smoothies.Which of the following rights,if any,does Greg have against Super Store in most states?

Accepted Answer

Most states have adopted the option under the Uniform Commercial Code providing that the seller's warranties extend to any reasonable and foreseeable user who is injured by the good.

Question 18

Boat Tow.Donnie went to a new car dealership and told the salesperson (who was not the manager)that he needed a new car that would both get good gas mileage and pull his big boat.The salesperson encouraged him to buy a smaller car that the salesperson promised would pull the boat.Donnie bought the car and used it to pull the boat.Unfortunately,the heavy pull on the car did significant damage to the car's engine.Donnie complained to the salesperson,who denied any liability.Donnie,who had taken half-a-semester of business law,informed the salesperson that along with the sale of the car he also received an express warranty and an implied warranty of merchantability,and that he could recover under either of those theories.Is Donnie correct that the car was sold with an implied warranty of merchantability?

Accepted Answer

The implied warranty of merchantability is an assurance,inferred in every sale or lease from a merchant unless clearly disclaimed,that merchantable goods will conform to a reasonable performance expectation.

Question 19

Priscilla,who worked for a dry cleaner,came up with a great new idea for a type of press that speeded up the process immensely.She quit her job,hired labor and purchased materials,and manufactured a number of the presses.She sold the presses to her friend Phil for resale.Phil began advertising and distributing the press,but was notified by ABC Company that the sales violated its patent.After investigation,Phil determined that ABC had the better argument and demanded that Priscilla refund the purchase price.Priscilla declined on the basis that she had no idea that a patent on a similar press was in existence.Who will likely win the dispute and why?

Accepted Answer

The Uniform Commercial Code assumes that the seller has good and valid title to the good and has the right to transfer title free and clear of any liens,judgments,or infringements of intellectual property rights of which the buyer does not have knowledge.

Question 20

Boat Tow.Donnie went to a new car dealership and told the salesperson (who was not the manager)that he needed a new car that would both get good gas mileage and pull his big boat.The salesperson encouraged him to buy a smaller car that the salesperson promised would pull the boat.Donnie bought the car and used it to pull the boat.Unfortunately,the heavy pull on the car did significant damage to the car's engine.Donnie complained to the salesperson,who denied any liability.Donnie,who had taken half-a-semester of business law,informed the salesperson that along with the sale of the car he also received an express warranty and an implied warranty of merchantability,and that he could recover under either of those theories.Will Donnie likely be able to recover damages based upon a breach of the implied warranty of merchantability?

Accepted Answer

According to the Uniform Commercial Code,in order to be merchantable,goods must be fit for the ordinary purposes for which such goods are used.

Quiz 16: Sales and Lease Contracts: Performance, Warranties, and Remedies

Under which of the following circumstances will a court refuse to uphold modifications or limitations to remedies agreed upon by the parties?

Which of the following is true regarding buyers or lessees who want to accept nonconforming goods and then seek monetary damages?

When does the Uniform Commercial Code allow buyers to seek the remedy of specific performance?

Ann chipped a tooth on a peach pit while eating a can of mixed fruit.She wants to sue the manufacturer of the fruit mix.Which of the following would be the manufacturer's best defense?