Question 1

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

Wander Trucking Company has the right to reject the entire shipment because the delivered vans do not meet the agreed specification of being cargo-sized. This is a breach of contract by VLA, and Wander has the right to expect delivery of the agreed upon goods.

Question 2

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 slight, gives the lessee the right to reject the goods. Therefore, BRC must ensure that the ten hydraulic lifts conform to all aspects of the contract in order to fulfill its obligations under the perfect tender rule.

Question 3

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 still has a duty to deliver the strawberries, and they can fulfill this obligation by using another trucking company with refrigerated trucks. This option allows for the contract to be fulfilled while still ensuring that the goods are delivered in the condition required by the contract.

Question 4

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

The answer of On January 10, Winchester Pet Supplies orders...

Question 5

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, no matter how minor, gives the buyer the right to reject the goods. Therefore, Genuine Seed Company must ship or tender hybrid seeds to Hillside Farmers Cooperative that exactly conform to every detail of the contract.

Question 6

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

In a destination contract, the seller is responsible for delivering the goods to a specified destination, usually chosen by the buyer. Therefore, option B is the correct answer. Option A is not correct as a buyer cannot reject the goods for any reason in a destination contract, unlike in a sale on approval contract. Option C is not correct as inspection of the goods is the buyer's responsibility in a destination contract. Option D is not correct as placing the goods into the hands of a carrier is only a requirement in a shipment contract.

Question 7

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 three options in this situation. They can either wait for Sof' to perform on the new delivery date, sue Sof' for breach of contract, or suspend their own performance.

Question 8

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 can inspect the tires and negotiate with Tough Tires, Inc. for a reduction in price based on the damaged tires. They can still accept the shipment and only pay for the undamaged tires. Rejecting the entire shipment may not be necessary if the undamaged tires are still needed by Shane's. They do not have to pay for the damaged tires.

Question 9

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

Loomis can resell the goods either after finishing the job (and identifying the goods) or after stopping the job. This is because the contract with Style Mart has been breached and Loomis has the right to mitigate its damages by reselling the goods to another buyer. However, it is recommended that Loomis mitigate its damages as soon as possible to minimize its losses.

Question 10

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 circumstances that make performance of the contract commercially impracticable, such as a natural disaster or unexpected governmental regulation. If the problem was foreseen or preventable, it would not fall under this doctrine. The fact that Nadine could not deliver within a reasonable time suggests that the problem was not preventable or foreseen, but rather unexpected.

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 states that goods must be in perfect condition and delivered exactly as specified in the contract. However, in this case, the outbreak of disease in the feedlots is an event beyond the control of both parties and qualifies as an excuse for non-performance. Therefore, the perfect tender rule does not apply, and neither party is liable for breach of contract.

Question 12

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

The situation described is an example of anticipatory repudiation, which occurs when one party to a contract indicates in advance that they do not intend to perform their obligations. This gives the other party the right to consider the contract breached and seek damages.

Question 13

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 14

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. They were unable to sell the cattle to another buyer so keeping the cattle is reasonable.

Question 15

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 would need to promptly notify Levi's Toy Store of their intent to cure the issue. This means that they would need to provide a plan for remedying the missing pieces, whether that be by sending replacement games or offering a discount to cover the cost of the missing parts. A cure fee would not be appropriate in this situation, and creating a new contract would not address the issue at hand. Sending a truck to pick up the nonconforming goods would be a step in the right direction, but notifying the store of the intent to cure must be the first action taken.

Question 16

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

Golden Dairy Company may reject delivery of the 8-ounce containers since they did not agree to purchase them. However, Food Packaging, Inc. can cure the non-conforming delivery by replacing the 8-ounce containers with the agreed-upon 6-ounce containers within a reasonable time. Notice to Golden Dairy Company of Food's intent to cure gives Food Packaging, Inc. a reasonable time to replace the containers. Therefore, choice C is the best option.

Question 17

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 states that the goods delivered must conform perfectly to the contract, and if the goods are defective, the buyer has the option to reject them. However, in this case, Kim's Pony Rides agreed to the provision in the sales contract that allows Little Horse Saddles to repair or replace defective saddles. Therefore, the perfect tender rule does not apply, and Kim's cannot reject the shipment based on the defectiveness of the goods.

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

When an unanticipated event, such as an embargo, makes it impossible for a party to perform its contractual obligations, the affected party may be excused from performance under the doctrine of frustration of purpose. Therefore, Mineral Resource Company would be excused from the performance of its contracts due to the embargo.

Question 19

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.

Question 20

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 first demand assurances of performance from Massive, which may include a guarantee from Phoenix. If such assurances are not provided, Silas may consider the contract repudiated and sue for breach. However, Silas cannot simply buy the machinery from a different supplier and bill Massive or Phoenix without first attempting to mitigate any damages.

Quiz 19: Performance and Breach of Sales Lease Contracts

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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