Question 1

If a buyer breaches a contract while the seller is still in possession of the goods, the seller can resell the goods and hold the buyer liable for any loss.

Accepted Answer

This is an example of the seller's right to a remedy for breach of contract called "resale." Under the Uniform Commercial Code, the seller has the right to resell the goods and hold the buyer liable for any loss if the buyer breaches the contract.

Question 2

If, before the time for performance, a buyer communicates an intent not to perform, the seller can consider the buyer in breach and pursue a remedy.

Accepted Answer

If the buyer communicates an intent not to perform before the time for performance, the seller is entitled to consider it a breach of contract and pursue a remedy.

Question 3

A buyer may reject a seller's goods under any circumstances.

Accepted Answer

A buyer cannot reject a seller's goods without a valid reason, such as the goods being defective or not meeting the specifications agreed upon. There are certain rules and guidelines that govern the buyer's right to reject goods, such as the Uniform Commercial Code (UCC) in the United States.

Question 4

Elegant Carpets, Inc., and Fantastic Floors Stores enter into a contract for a sale of carpeting. 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

Under a shipment contract, the seller's responsibility is to place the goods into the hands of a carrier. The carrier then assumes responsibility for delivery of the goods to the buyer. The buyer does not have the right to reject the goods for any reason, and the seller is not required to deliver the goods to a particular destination or inspect the goods before shipping them.

Question 5

Office Suppliers, Inc. and Little Office Shop enter into a contract for a sale of office supplies. Office Suppliers is the seller. Under a shipment contract, the Office Suppliers does not have to
A) obtain and promptly deliver or tender to the buyer any documents necessary to enable the buyer to obtain the goods.
B) deliver the goods to a particular destination.
C) put the goods in the hands of the carrier.
D) promptly notify the buyer when the shipment has been made.

Accepted Answer

Under a shipment contract, the seller (Office Suppliers) is not responsible for delivering the goods to a particular destination. The seller's responsibility ends once they have put the goods in the hands of the carrier. The buyer is responsible for arranging for the goods to be shipped to their desired location. Therefore, option B is not a requirement under a shipment contract. Options A, C, and D are all requirements under a shipment contract.

Question 6

Unless otherwise agreed, inspection of goods can take place at any reasonable place and time and in any reasonable manner.

Accepted Answer

This is stated in Section 58 of the Sale of Goods Act 1979.

Question 7

Clear Day Company, which is based in Delaware, agrees to sell fifty windows, currently stored in Florida, to Far Vu, Inc., which is based in Hawaii. Absent an agreement to the contrary, the place of deliv?ery is in
A) California.
B) Delaware.
C) Florida.
D) Hawaii.

Accepted Answer

The answer of Clear Day Company, which is based in...

Question 8

If goods identified to a contract are destroyed through no fault of either party, both parties are excused from performance.

Accepted Answer

This is known as the doctrine of frustration of purpose, which allows for both parties to be excused from performance if the goods are destroyed through no fault of either party.

Question 9

If a seller repudiates a contract, the buyer's damages do not have to be adjusted to reflect any expenses that were saved as a result of the breach.

Accepted Answer

If a seller repudiates a contract, the buyer's damages may be adjusted to reflect any expenses that were saved as a result of the breach. This principle is known as the "mitigation of damages" rule.

Question 10

On a lessee's insolvency, the lessor can stop delivery of the goods.

Accepted Answer

In case of lessee's insolvency, the lessor can exercise the right of stoppage in transit, which means they can stop the delivery of goods that are in transit to the lessee. This right is available to the lessor even if the goods have been paid for or if the ownership has passed to the lessee. This is provided under section 50 of the Sale of Goods Act, 1930.

Question 11

If a buyer wrongfully refuses to accept goods that conform to a contract, the seller can recover damages.

Accepted Answer

According to the Uniform Commercial Code (UCC), if a buyer wrongfully refuses to accept goods that conform to a contract, the seller can recover damages.

Question 12

A buyer who obtains substitute goods to replace goods that a seller did not deliv?er can also recover damages from the seller.

Accepted Answer

This is known as the doctrine of cover or cover rule, which allows the buyer to recover the difference between the cost of the substitute goods and the contract price from the seller who failed to deliver the goods.

Question 13

Sparkling Gem Corporation agrees to sell Jewel Outlets, Inc. (JOI), fifty new diamonds, but the contract does not specify a place of delivery. JOI is expected to pick up the goods. The place of delivery is
A) Sparkling's place of business.
B) JOI's place of business.
C) the Annual Gems and Jewels Convention in New York City.
D) the U.S. Postal Service office nearest to JOI's place of business.

Accepted Answer

The answer of Sparkling Gem Corporation agrees to sell Jewel...

Question 14

Under the UCC, parties to a contract cannot limit or exclude consequential damages.

Accepted Answer

Parties to a contract can limit or exclude consequential damages under the UCC as long as the limitation or exclusion is not unconscionable. However, this limitation or exclusion must be specifically and clearly stated in the contract.

Question 15

If a seller fails to deliver the goods, the buyer's damages do not include all losses resulting from this course of events.

Accepted Answer

If a seller fails to deliver the goods, the buyer's damages may include all losses resulting from this course of events, such as the cost of finding a replacement supplier, lost profits, and additional expenses incurred as a result of the delay in delivery.

Question 16

In general, a buyer's duty to pay for tendered goods becomes absolute be?fore the buyer has had an opportunity to inspect the goods.

Accepted Answer

The answer of In general, a buyer's duty to pay...

Question 17

If a buyer repudiates a contract, the seller cannot re?cover damages.

Accepted Answer

If a buyer repudiates a contract, the seller can recover damages for any losses suffered as a result of the breach.

Question 18

If a seller asks a buyer to store nonconforming goods overnight, then the buyer is entitled to reimbursement for the costs involved.

Accepted Answer

According to the UCC (Uniform Commercial Code), if a seller requests the buyer to store nonconforming goods overnight, then the buyer is entitled to reimbursement for the storage costs incurred. This is mentioned in UCC section 2-711(1), also known as the right to cover.

Question 19

Once the seller has tendered delivery, the buyer is obligated to accept the goods and pay for them.

Accepted Answer

This is one of the fundamental principles of the sales contract, according to the Uniform Commercial Code (UCC). Once the seller has fulfilled their obligation to deliver the goods, the buyer must accept them and pay the agreed price. Refusal to do so can lead to breach of contract and legal consequences.

Question 20

Big Eggs, Inc. agrees to supply Omelet Express with five hundred eggs. Big Eggs cannot reasonably ask Omelet Express to pick up the eggs at
A) 1:00 p.m.
B) 2:00 p.m.
C) 3:00 p.m.
D) 4:30 A.m.

Accepted Answer

Big Eggs cannot reasonably ask Omelet Express to pick up the eggs at 4:30 A.M. as this is an unreasonable time for most businesses to operate. The other options are reasonable times for pick-up.

Quiz 11: Performance and Breach of Sales Lease Contracts