Question 1

Signal Sets Company contracts to deliver one hundred 52-inch plasma high-definition television sets to a new retail customer, Tuner TV Store, 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 warehouse 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 2

Ramblin' Country Stables contracts to buy 1,000 horseshoes from Blacksmith, Inc., for $1 per shoe. When the market price decreases to 50 cents per shoe, Ramblin' refuses to go through with the deal. Blacksmith can recover
A) $1,500.
B) $1,000.
C) $500.
D) $0.

Accepted Answer

Ramblin' breached the contract by refusing to go through with the deal. However, Blacksmith can only recover their actual damages. In this case, the actual damages are the difference between the contract price (1 dollar) and the market price at the time of breach (50 cents) multiplied by the number of horseshoes (1,000). Therefore, Blacksmith can recover $500 (0.50*1000).

Question 3

Noni and Myra enter into a contract for a sale of clarinets and other wind instruments. Noni does not deliver. Myra can normally 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 current prices in the parties' locations.

Accepted Answer

Myra can normally recover as damages the difference between the contract price and the market price. This is the most commonly used measure of damages in cases of breach of contract for the sale of goods. It reflects the idea that the injured party should be put in the same position they would have been in if the contract had been performed as promised.

Question 4

Summer Breeze, Inc., contracts for the sale of fifty ceiling fans to Island Décor store. If Summer Breeze fails to deliver the goods, Island Décor must commence a suit for breach of contract within
A) four years.
B) not more than one year.
C) not less than four years.
D) thirty days.

Accepted Answer

The answer of Summer Breeze, Inc., contracts for the sale...

Question 5

Garden Field Farms and Haute Gourmet Restaurant, Inc., enter into a contract for a sale of lettuce before Haute Gourmet declares bankruptcy. Garden Field can stop delivery of the goods in transit
A) only if the quantity is at least a carload.
B) only if the quantity is at least a planeload.
C) only if the quantity is at least a truckload.
D) regardless of the quantity.

Accepted Answer

Garden Field Farms can stop delivery of goods in transit regardless of the quantity since Haute Gourmet Restaurant, Inc. has declared bankruptcy, which is considered a breach of contract. In such cases, the seller can exercise their right of stoppage in transit and reclaim the goods. The quantity of goods is not relevant in this case.

Question 6

Text Publishers, Inc., contracts for a sale of textbooks to University Bookstores, Inc. Viable Shipping Corporation, the carrier, transports the books to Warehouse Storage Company. Text's right to stop delivery is lost when University's rights to the goods are acknowledged by
A) the appropriate government agency.
B) the students who opt to buy the books.
C) University Bookstores.
D) Warehouse Storage.

Accepted Answer

The answer of Text Publishers, Inc., contracts for a sale...

Question 7

Bayou Boats, Inc., contracts for the sale of seven swamp boats to Eventide Fishing Tours. Bayou repudiates the contract. Eventide's recovery is measured at the time
A) Bayou advertised the goods.
B) Eventide ordered the goods.
C) Eventide learned of the breach.
D) Bayou knew that it would repudiate the contract.

Accepted Answer

Eventide's recovery is measured at the time they learn of the breach, as this is when they would have been put on notice that they would need to find a substitute product and the cost of doing so should be factored into the damages awarded. The other options are not relevant to measuring recovery in a breach of contract case.

Question 8

Leatherbound Stores, Inc., rejects a shipment of goods that does not conform to its contract with Cowhide Corporation, but is unable to obtain instructions from the seller. Leatherbound may
A) resell or return the goods only.
B) resell or store the goods only.
C) return or store the goods only.
D) resell, return, or store the goods.

Accepted Answer

Leatherbound has the right to resell, return, or store the goods according to the Uniform Commercial Code (UCC). Since they have rejected the non-conforming shipment and are unable to obtain instructions from the seller, they can choose to either resell the goods to another buyer, return the goods to the seller for a refund, or store the goods until the seller provides further instructions.

Question 9

Natural Foods, Inc., orders "Grade A" oil from Olive Grove Farms to process and sell to Pic 'N Pay Grocers. Olive Grove ships "Grade B" oil, which Natural Foods accepts. To recover damages for the nonconformity, Natural Foods must give notice of the breach within a reasonable time to
A) Olive Grove only.
B) Olive Grove, Pic 'N Pay, and the appropriate government agency.
C) Pic 'N Pay only.
D) the appropriate government agency only.

Accepted Answer

Natural Foods must give notice of the breach within a reasonable time to the party responsible for the nonconformity, which in this case is Olive Grove Farms, the supplier who shipped the wrong grade of oil. There is no need to involve Pic 'N Pay or the government agency unless the issue cannot be resolved with Olive Grove.

Question 10

Hi-Tech Company contracts to sell fiber optic cable to Internet Services, Inc. Hi-Tech may bring an action to recover the purchase price and incidental damages if Internet
A) accepts the cable and pays for it.
B) accepts the cable but does not pay for it.
C) rejects the cable.
D) revokes acceptance of the cable.

Accepted Answer

The answer of Hi-Tech Company contracts to sell fiber optic...

Question 11

Colby contracts in writing to sell his 2005 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 12

BBQ, Inc., makes and sells grills to Grill Mart, a retailer, which sells one of the grills to Hope, a consumer. BBQ and Grill Mart include in their contracts a limitation on consequential damages for personal injuries arising from a breach of warranty. This is prima facie unconscionable with respect to
A) all of these parties.
B) BBQ and Grill Mart, but not Hope.
C) Hope only.
D) none of these parties.

Accepted Answer

The limitation on consequential damages for personal injuries arising from a breach of warranty is likely to disproportionately harm the consumer, which would make it unconscionable only with respect to Hope, not BBQ or Grill Mart.

Quiz 16: Performance and Breach of Sales Lease Contracts

Ramblin' Country Stables contracts to buy 1,000 horseshoes from Blacksmith, Inc., for $1 per shoe. When the market price decreases to 50 cents per shoe, Ramblin' refuses to go through with the deal. Blacksmith can recover

Noni and Myra enter into a contract for a sale of clarinets and other wind instruments. Noni does not deliver. Myra can normally recover as damages the difference between

Summer Breeze, Inc., contracts for the sale of fifty ceiling fans to Island Décor store. If Summer Breeze fails to deliver the goods, Island Décor must commence a suit for breach of contract within

Garden Field Farms and Haute Gourmet Restaurant, Inc., enter into a contract for a sale of lettuce before Haute Gourmet declares bankruptcy. Garden Field can stop delivery of the goods in transit

Text Publishers, Inc., contracts for a sale of textbooks to University Bookstores, Inc. Viable Shipping Corporation, the carrier, transports the books to Warehouse Storage Company. Text's right to stop delivery is lost when University's rights to the goods are acknowledged by

Bayou Boats, Inc., contracts for the sale of seven swamp boats to Eventide Fishing Tours. Bayou repudiates the contract. Eventide's recovery is measured at the time

Leatherbound Stores, Inc., rejects a shipment of goods that does not conform to its contract with Cowhide Corporation, but is unable to obtain instructions from the seller. Leatherbound may

Natural Foods, Inc., orders "Grade A" oil from Olive Grove Farms to process and sell to Pic 'N Pay Grocers. Olive Grove ships "Grade B" oil, which Natural Foods accepts. To recover damages for the nonconformity, Natural Foods must give notice of the breach within a reasonable time to

Hi-Tech Company contracts to sell fiber optic cable to Internet Services, Inc. Hi-Tech may bring an action to recover the purchase price and incidental damages if Internet