Question 1

Which of the following is required by the Magnuson-Moss Act when the seller issues a written warranty for a consumer good?

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 must indicate whether that warranty is a full warranty or a limited warranty.

Question 2

Under the UCC, the seller must bring a lawsuit on a breached contract within _____________ years of when the breach occurred or when the seller became aware of it.

Accepted Answer

Under the UCC, the seller must bring a lawsuit on a breached contract within four years of when the breach occurred or when the nonbreaching party became aware of it.

Question 3

Under the UCC, the buyer must bring a lawsuit on a breached contract within _____________ years of when the breach occurred or when the buyer became aware of it.

Accepted Answer

Under the UCC, the buyer must bring a lawsuit on a breached contract within four years of when the breach occurred or when the nonbreaching party became aware of it.

Question 4

Which of the following are damages identified before the breach occurs?

Accepted Answer

Liquidated damages are damages identified before the breach occurs.

Question 5

Which of the following damages may a seller receive who resells goods to another buyer when the original buyer is in breach?

Accepted Answer

UCC Section 2-706 allows the seller to recover the difference between the resale price and contract price, plus incidental damages and minus expenses saved.

Question 6

Which of the following is generally true regarding a liquidated damages provision?

Accepted Answer

Generally speaking, a court will enforce a liquidated-damage clause as long as it is not so far out of reasonable range as to be punitive in nature.

Question 7

Assuming adoption of the UCC, which of the following is true regarding whether the buyer and seller may negotiate a shorter time for the statute of limitations than that allowed by the UCC?

Accepted Answer

Under the UCC, the buyer and seller are free to negotiate contractually a shorter time period for the statute of limitations (as long as it is not less than one year).

Question 8

The obligations of sellers/lessors and buyers/lessees are determined by which of the following?

Accepted Answer

The obligations of sellers/lessors and buyers/lessees are determined by (1) terms the parties outline in agreements, (2) custom, and (3) rules outlined by the Uniform Commercial Code.

Question 9

What does the UCC provide regarding liquidated damages if the parties do not agree to them?

Accepted Answer

UCC Section 2-718 pertains to liquidated damages and allows the nonbreaching seller to claim against a breaching buyer 20 percent of the purchase price or $500, whichever is less, as liquidated damages.

Question 10

Under the Magnuson-Moss Act, what is the effect of a full warranty?

Accepted Answer

A full warranty under the Magnuson-Moss Act means that if the good fails or is defective, the good or its defective part will be replaced. If replacement cannot be timely effected, the buyer has the right to a refund or a full replacement.

Question 11

By which of the following may a buyer waive implied and express warranties?

Accepted Answer

A buyer may waive express and implied warranties by (1) failing to examine goods for which an express warranty was created by a sample or model or (2) failing to comply with the seller's request to inspect the goods.

Question 12

Which of the following means that the seller or lessor has delivered the goods to a carrier or bailee, but the carrier or bailee has not yet turned them over to the buyer?

Accepted Answer

In transit means that the seller or lessor has delivered the goods to a carrier or bailee, but the carrier or bailee has not yet turned them over to the buyer.

Question 13

When was the Magnuson-Moss Act passed?

Accepted Answer

The Magnuson-Moss Act was enacted in 1975.

Question 14

What is the effect of a failure to comply with the statute of limitations?

Accepted Answer

A buyer may also waive her warranty rights under the contract by failing to comply with the statute of limitations.

Question 15

Between buyers and sellers in the U.S., which of the following is true regarding disclaiming the warranty of merchantability?

Accepted Answer

The seller may disclaim the warranty of merchantability either orally or in writing; however, some states require that the term "merchantability" must be used in the disclaimer.

Question 16

Which is true regarding a buyer's right to waive warranties?

Accepted Answer

The buyer may also waive both implied and express warranties.

Question 17

Which of the following is true under the Magnuson-Moss Act if a written warranty is silent as to whether or not it is a full warranty?

Accepted Answer

Under the Magnuson-Moss Act, if a written warranty is silent, it is presumed to be a full warranty.

Question 18

Assuming a buyer that is insolvent has breached a contract by not paying for goods that are in transit, which of the following may occur?

Accepted Answer

If the buyer/lessee is insolvent, the carrier/bailee can stop delivery regardless of the quantity shipped.

Question 19

Which option have most states adopted regarding the rights of third-party beneficiaries of warranties?

Accepted Answer

On extension of warranty rights to third parties, most states have adopted the option that seller's warranties extend to any reasonable and foreseeable user.

Question 20

Which of the following is true regarding whether a seller must provide a warranty under the Magnuson-Moss Act?

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.

Quiz 15: Formation and Performance of Sales and Lease Contracts