Question 1

Repair Tools Company contracts to deliver fifty heavy-duty steel floor jacks to Serv-UR-Self Auto Stores on May 1 for which Serv-UR-Self agrees to pay. Repair Tools tells Serv-UR-Self on April 15 that delivery will be delayed until June 1. Serv-UR-Self may do all of the following except
A) force Repair Tools to deliver substitute goods before the time for the contract's performance.
B) await Repair Tools' performance for a commercially reasonable time.
C) sue Repair Tools for breach of contract.
D) suspend its own performance.

Accepted Answer

Serv-UR-Self cannot force Repair Tools to deliver substitute goods before the time for performance because this would be considered a material alteration to the terms of the contract. Serv-UR-Self's options are to wait for a commercially reasonable time to see if Repair Tools will perform, sue for breach of contract, or suspend its own performance.

Question 2

Fuel Connector Products, Inc., agrees to sell Go-Flo, Inc., a certain quantity of hose couplings and fittings, but the contract does not specify a place of delivery. Go-Flo is expected to pick up the goods. The place of delivery is
A) Fuel Connector's place of business.
B) Go-Flo's place of business.
C) the current location of the hose couplings and fittings.
D) the U.S. Postal Service office nearest to Go-Flo's place of business.

Accepted Answer

Since the contract does not specify a place of delivery, the default rule is that delivery should be made at Fuel Connector's place of business.

Question 3

Almond Farms contracts for the sale of a certain quantity of nuts to Bulk Natural Foods Stores. Almond Farms delivers nonconforming goods. Acceptance will be presumed unless Bulk Natural Foods rejects the goods
A) within a reasonable time after delivery.
B) within a reasonable time after ordering the goods.
C) within any time, since hunting rifles are not perishable.
D) before the last day of the current hunting season.

Accepted Answer

According to the scenario, acceptance will be presumed unless Bulk Natural Foods rejects the goods within a reasonable time after delivery. Therefore, the correct choice is A. Choices B, C, and D are not relevant to the scenario.

Question 4

Oh! Wow! 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. Oh! Wow! 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

Since Oh! Wow! Markets is unable to obtain instructions from the seller, it can either reship the goods back to the seller or store them for the seller, as the seller still legally owns the goods until they are accepted by the buyer or otherwise disposed of. Therefore, the best choice for Oh! Wow! Markets would be to reship or store the goods for the seller.

Question 5

On May 1, Garage Prefabricators, Inc., agrees to sell four portable garages to Hiway Truck Service Center. Five days later, Hiway refuses delivery and cancels the contract. Garage Prefabricators is enti?tled to
A) force Hiway to accept the garage.
B) recover any damages from Hiway but not resell the garage.
C) resell the garage and recover any damages from Hiway.
D) resell the garage but not recover any damages from Hiway.

Accepted Answer

Garage Prefabricators can resell the garages and recover damages from Hiway Truck Service Center since they cancelled the contract and refused delivery. Option A is not valid since the contract was cancelled, and Hiway cannot be forced to accept the garages. Option B does not consider the possibility of reselling the garages, and thus, it is not the best choice. Option D also has the same issue as B, and the company should recover damages from Hiway.

Question 6

Fact Pattern 22-B1 (Questions B18-B20 apply)
Economy Bank issues a letter of credit in favor of Finish & Refining Company, a U.S. firm, to facilitate an international sales contract to buy resources from Global Mining, Ltd., a British company.
-Refer to Fact Pattern 22-B1. In this letter of credit, the account party is
A) Global Mining.
B) Finish & Refining.
C) Economy Bank.
D) Great Britain.

Accepted Answer

The account party, also known as the beneficiary, is the party receiving payment under the letter of credit. In this case, the beneficiary is Finish & Refining Company, the U.S. firm buying resources from Global Mining. Therefore, the correct choice is B.

Question 7

Fact Pattern 22-B1 (Questions B18-B20 apply)
Economy Bank issues a letter of credit in favor of Finish & Refining Company, a U.S. firm, to facilitate an international sales contract to buy resources from Global Mining, Ltd., a British company.
-Refer to Fact Pattern 22-B1. Economy Bank is bound to
A) make sure that the parties perform the contract.
B) verify with Finish & Refining that the transaction has been completed.
C) make payment when Global Mining presents the proper documents.
D) pay Global Mining whenever it asks to be paid.

Accepted Answer

Economy Bank is bound to make payment when Global Mining presents the proper documents as specified in the letter of credit. The bank's obligation is to pay against documents, not to ensure performance of the contract.

Question 8

Energy Products Corporation and First Response Preparedness.com enter into a contract for a sale of portable generators. 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

In a destination contract, the seller is responsible for delivering the goods to a particular destination agreed upon by both parties. Therefore, choice B is the correct answer. Choice A is incorrect because the buyer does not have an unrestricted right to reject the goods; they can only do so if they do not conform to the contract specifications. Choice C is incorrect because inspection of the goods is the responsibility of the buyer, and the seller is not required to inspect them before delivery. Choice D is incorrect because while the seller may be responsible for arranging for transportation, they are not required to physically place the goods into the hands of a carrier.

Question 9

GR8 Daze Products, Inc., and Hot Springs Spas Stores enter into a contract for a sale of hot tubs. Under a shipment 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 shipping them.
D) place the goods into the hands of a carrier.

Accepted Answer

The answer of GR8 Daze Products, Inc., and Hot Springs...

Question 10

Garden Field Farms and Haute Gourmet Restaurant, Inc., enter into a con?tract for a sale of lettuce. After Garden Field ships the lettuce but before Haute Gourmet receives it, the buyer declares bankruptcy. Garden Field can stop delivery of the goods in transit
A) only if the quantity is deficient.
B) only if the quantity exceeds the contract amount.
C) only if the quantity is at least a truckload.
D) regardless of the quantity.

Accepted Answer

Garden Field can stop delivery of the goods in transit regardless of the quantity because the buyer's declaration of bankruptcy constitutes a material breach of the contract, which would give Garden Field the right to stop delivery and reclaim possession of the goods.

Question 11

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

Shane's Auto Parts may inspect the tires and accept the shipment with a reduction in price. This is because the Uniform Commercial Code (UCC) allows the buyer to accept a shipment with damages and still have the option to reduce the price accordingly. Therefore, Shane's Auto Parts can still receive the remaining ten undamaged tires with a lower price due to the damages on the other ten tires.

Question 12

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 13

BBQ, Inc., makes and sells grills to Cook's Choice and Grill Mart, retailers of kitchen appliances, outdoor cooking equipment, and related utensils. Their contracts limit consequential damages when the loss is commercial in nature. This is prima facie un?conscionable with respect to
A) BBQ.
B) Grill Mart.
C) Cook's Choice.
D) none of these parties.

Accepted Answer

The answer of BBQ, Inc., makes and sells grills to...

Question 14

Sun Power, Inc., sells solar power cells and panels to commercial dealers in the Southwest. With regard to the UCC's good faith requirement, Sun Power can
A) avoid it only by a conspicuous written disclaimer.
B) avoid it only by oral disclaimer.
C) avoid it with or without a disclaimer.
D) not disclaim it.

Accepted Answer

The answer of Sun Power, Inc., sells solar power cells...

Question 15

Fact Pattern 22-B1 (Questions B18-B20 apply)
Economy Bank issues a letter of credit in favor of Finish & Refining Company, a U.S. firm, to facilitate an international sales contract to buy resources from Global Mining, Ltd., a British company.
-Refer to Fact Pattern 22-B1. Global Mining is entitled to payment when it
A) enters into the contract with Finish & Refining.
B) verifies that Finish & Refining has the money to pay for the purchase.
C) complies with the terms and conditions of the letter of credit.
D) asks to be paid.

Accepted Answer

Global Mining is entitled to payment when it complies with the terms and conditions of the letter of credit issued by Economy Bank in favor of Finish & Refining Company. The payment obligation is between Economy Bank and Global Mining, and Finish & Refining is not responsible for making the payment directly to Global Mining.

Question 16

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 does not apply in this situation because the quarantine of the cattle is beyond the control of Fattening Feedlots, making it impossible to deliver the steers as contracted. Therefore, neither party can be held responsible for the breach of contract.

Question 17

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 Sweet Fruits using another trucking company with refrigerated trucks.
B) must refund Sweet Fruits' 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 Sweet Fruits incidental damages.

Accepted Answer

Fruits to You has a duty to deliver the goods to Sweet Fruits as per the contract. Since Keep Kool Trucking's refrigeration units are not working, Fruits to You can still fulfill their obligation by using another trucking company with refrigerated trucks. Therefore, the best choice would be to ship the goods to Sweet Fruits using another trucking company with refrigerated trucks.

Question 18

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

The perfect tender rule requires that the goods must conform to the contract description in every way. Any deviation from the contract terms will give the lessee the right to reject the delivery.

Question 19

Lock & Key Storage Pods and Maxi Discount Stores enter into a contract for a lease of ten storage pods of a certain size. Lock & Key delivers ten pods, but they are not the right size. Maxi Discount
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 the pods delivered are not the right size, Maxi Discount has the right to reject the entire shipment.

Question 20

Loading Ramps Plus Inc. contracts to sell sixteen aluminum loading ramps to Moving Services, Inc. Loading Ramps ships the ramps, which Moving Services accepts but does not pay for. Loading Ramps can
A) sue to recover the purchase price plus inci?dental damages.
B) sue to recover the purchase price minus inci?dental damages.
C) resell the ramps to any buyer willing to reclaim them from Moving Services.
D) require Moving Services to revoke its acceptance of the ramps.

Accepted Answer

Loading Ramps can sue Moving Services for breach of contract and seek to recover the purchase price of the ramps along with incidental damages, such as any additional costs incurred as a result of Moving Services' failure to pay. Reselling the ramps or requiring Moving Services to revoke their acceptance may not be viable options, as Loading Ramps may still be owed payment for the original sale.

Quiz 22: Performance Breach of Sales Lease Contracts

Repair Tools Company contracts to deliver fifty heavy-duty steel floor jacks to Serv-UR-Self Auto Stores on May 1 for which Serv-UR-Self agrees to pay. Repair Tools tells Serv-UR-Self on April 15 that delivery will be delayed until June 1. Serv-UR-Self may do all of the following except

Fuel Connector Products, Inc., agrees to sell Go-Flo, Inc., a certain quantity of hose couplings and fittings, but the contract does not specify a place of delivery. Go-Flo is expected to pick up the goods. The place of delivery is

Almond Farms contracts for the sale of a certain quantity of nuts to Bulk Natural Foods Stores. Almond Farms delivers nonconforming goods. Acceptance will be presumed unless Bulk Natural Foods rejects the goods

Oh! Wow! 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. Oh! Wow! Markets can

On May 1, Garage Prefabricators, Inc., agrees to sell four portable garages to Hiway Truck Service Center. Five days later, Hiway refuses delivery and cancels the contract. Garage Prefabricators is enti?tled to

Fact Pattern 22-B1 (Questions B18-B20 apply) Economy Bank issues a letter of credit in favor of Finish & Refining Company, a U.S. firm, to facilitate an international sales contract to buy resources from Global Mining, Ltd., a British company. -Refer to Fact Pattern 22-B1. Economy Bank is bound to

Energy Products Corporation and First Response Preparedness.com enter into a contract for a sale of portable generators. Under a destination contract, the seller must

GR8 Daze Products, Inc., and Hot Springs Spas Stores enter into a contract for a sale of hot tubs. Under a shipment contract, the seller must

Garden Field Farms and Haute Gourmet Restaurant, Inc., enter into a con?tract for a sale of lettuce. After Garden Field ships the lettuce but before Haute Gourmet receives it, the buyer declares bankruptcy. Garden Field can stop delivery of the goods in transit

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

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

BBQ, Inc., makes and sells grills to Cook's Choice and Grill Mart, retailers of kitchen appliances, outdoor cooking equipment, and related utensils. Their contracts limit consequential damages when the loss is commercial in nature. This is prima facie un?conscionable with respect to

Sun Power, Inc., sells solar power cells and panels to commercial dealers in the Southwest. With regard to the UCC's good faith requirement, Sun Power can

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

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

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

Lock & Key Storage Pods and Maxi Discount Stores enter into a contract for a lease of ten storage pods of a certain size. Lock & Key delivers ten pods, but they are not the right size. Maxi Discount

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