Question 1

Because all goods are fungible, specific performance is not available under the UCC.

Accepted Answer

Specific performance can be available under the UCC for unique goods or goods that are not fungible. However, for fungible goods, such as oil or grain, specific performance may not be appropriate or feasible since one unit of the good is essentially the same as any other unit of the same type of good. In such cases, monetary damages may be the appropriate remedy.

Question 2

If the seller has justifiably withheld delivery of the goods because of the buyer's breach, the buyer may recover any money or goods he has delivered to the seller over and above the agreed amount of liquidated damages.

Accepted Answer

If the seller has justifiably withheld delivery due to the buyer's breach, the buyer can recover any money or goods he has delivered to the seller over the agreed amount of liquidated damages. This is because the seller's breach excuses the buyer from full performance of the contract.

Question 3

If the parties agree on a reasonable amount of damages that will be paid to the injured party, this amount is known as _____.

Accepted Answer

When the parties agree on a reasonable amount of damages that will be paid to the injured party, this amount is known as liquidated damages.

Question 4

If the seller delivers defective goods to the buyer, the buyer can recover the value of the goods as warranted minus the value of the goods received.

Accepted Answer

This is a correct statement for a breach of warranty situation. The buyer can recover the difference between the value of the goods as warranted and the value of the goods actually received if they are defective.

Question 5

What is the basic objective of the Code remedies for breach of contract?

Accepted Answer

The basic objective of Code remedies for breach of contract is to put the injured person in the same position that he would have been in if the contract had been performed. This is also known as the principle of "restitution." The injured party may be entitled to recover damages for any losses that may have been incurred due to the breach of contract. However, the purpose of these damages is to compensate for the actual losses suffered, not to punish the breaching party. Additionally, the Code may at times provide for specific performance of the contract, which might allow for the injured party to receive the benefit of the contract. However, the preferred remedy is usually monetary damages.

Question 6

Edna Boyle contracts with The Melonville Times to advertise her garage sale to be held this Saturday. The ad is to run in the Friday and Saturday morning edition. If the ad does not run on time, The Melonville Times agrees to pay Edna $50.00. This liquidated damages clause is most likely enforceable.

Accepted Answer

This is an example of a liquidated damages clause, where the parties agree in advance on a specific amount of damages to be paid if a certain condition occurs (in this case, if the ad does not run on time). Such clauses are generally enforceable if the amount of damages is reasonable and not disproportionate to the potential harm or loss suffered by the non-breaching party. In this case, $50 does not seem unreasonable for the potential loss of advertising revenue for a garage sale.

Question 7

Even if a buyer breaches a contract, the seller is accountable to the buyer for any profit that the seller makes on a resale.

Accepted Answer

If a buyer breaches a contract, the seller is generally not accountable to the buyer for any profit that the seller makes on a resale. However, the seller may still have legal remedies available to recover damages caused by the buyer's breach.

Question 8

Specific performance requires that the seller is obligated to give the buyer the requisite goods covered by the contract.

Accepted Answer

Specific performance is a legal remedy that requires the seller to fulfill their contractual obligation by providing the buyer with the goods or services agreed upon in the contract.

Question 9

The buyer cannot recover any incidental damages.

Accepted Answer

The buyer can recover any incidental damages sustained but must give the seller credit for any expenses saved.

Question 10

The UCC provides that a lawsuit for breach of a sales contract must be filed within a year after the breach occurs.

Accepted Answer

The Code provides that a lawsuit for breach of a sales contract must be filed within four years after the breach occurs.

Question 11

Even if the buyer has misrepresented his solvency to the seller in writing within three months before the delivery of the goods, the 10-day limitation on the seller's right to reclaim the goods still applies.

Accepted Answer

If the buyer has misrepresented his solvency to the seller in writing within three months before the delivery of the goods,the 10-day limitation on the seller's right to reclaim the goods does not apply.

Question 12

Bart agreed to deliver fruits worth $1,000 to a retail store. Bart and the store owner agree that if delivery is not made on time, Bart will pay the store some amount as liquidated damages, for the lost sales. Which of the following amounts would most likely be considered unconscionable if they settle for it?

Accepted Answer

If the amount were too small,say $5,it might be considered unconscionable and therefore not enforceable.

Question 13

If the seller is in the process of manufacturing the goods when the buyer breaches the contract, one of the seller's options is to complete manufacture of the goods and then resell them so long as this minimizes the loss to the seller.

Accepted Answer

This is true as one of the remedies available to the seller for a breach of contract by the buyer is to complete the manufacture of the goods and resell them to minimize the loss. This is referred to as the right to resale.

Question 14

Consequential damages do not include an injury to a person or property caused by a breach of warranty.

Accepted Answer

Consequential damages do include injury to a person or property caused by a breach of warranty.

Question 15

Bart agreed to deliver fruits worth $1,000 to a retail store. Bart and the store owner agree that if delivery is not made on time, Bart will pay the store some amount as liquidated damages, for the lost sales. Which of the following amounts would most likely be considered penal if they settle for it?

Accepted Answer

An amount that is excessively high in comparison to the expected damages is considered penal. In this case, $25,000 is a highly disproportionate amount in comparison to the value of the fruits being delivered. It is highly likely that a court would consider this amount penal and unenforceable.

Question 16

If the seller fails or refuses to deliver the goods called for in the contract, the buyer can purchase substitute goods and recover as damages from the seller.

Accepted Answer

This is known as the remedy of cover, where the buyer can purchase substitute goods and recover the difference between the contract price and the price of the substitute goods as damages from the seller.

Question 17

Under the UCC, a remedy limitation blocking recovery of personal injury caused by consumer goods is prima facie unconscionable.

Accepted Answer

The UCC contains a provision that deems any remedy limitation that seeks to block recovery for personal injury caused by consumer goods as prima facie unconscionable. This means that such a provision is presumed to be unfair or unreasonable on its face, and the burden is on the party seeking to enforce it to show why it is not unconscionable.

Question 18

If the buyer and seller have agreed to the manner in which the resale is to be made, the courts will enforce the agreement unless it is found to be unconscionable.

Accepted Answer

This statement is true. If the buyer and seller have mutually agreed on how the resale will be carried out, the courts will enforce the agreement unless it is determined to be unconscionable, which means that it is so unjust or unfair that it goes against good conscience.

Question 19

Which of the following is a condition necessary for an agreement for liquidated damages to be enforced?

Accepted Answer

A liquidated damages clause may be enforced if actual damages would be difficult to prove in the event of a breach of the contract. This means that there must be some uncertainty as to the actual damages that would be incurred in the event of a breach, and therefore the parties agree to a specific amount in advance to avoid litigation over damages. B is incorrect because if the amount is considered penal, the liquidated damages clause may be invalidated. C is incorrect because if the amount is unconscionable, it may also be invalidated. D is incorrect because the whole purpose of a liquidated damages clause is to account for a breach of the contract, therefore, there must be a breach for the clause to be applicable.

Question 20

The seller is obligated to resell the goods in cases where the buyer refuses to accept goods that conform to the contract.

Accepted Answer

If the seller sets aside goods intended for the contract or completes the manufacture of such goods,he is not obligated to try to resell the goods to someone else.

Quiz 22: Remedies for Breach of Sales Contracts