Question 1

Which of the following usually requires that the seller or lessor deliver the particular goods identified in the contract?
A) Absolute order
B) Absolute performance
C) Specific performance
D) Specific order
E) True performance

Accepted Answer

Specific performance usually requires that the seller or lessor deliver the particular goods identified in the contract.

Question 2

What does the UCC provide regarding liquidated damages if the parties do not agree to them?
A) That the nonbreaching seller may claim against a breaching buyer 20 percent of the purchase price or $500, whichever is less, as liquidated damages.
B) That the nonbreaching seller may claim against a breaching buyer 20 percent of the purchase price or $500, whichever is more, as liquidated damages.
C) That the nonbreaching seller may claim against a breaching buyer 30 percent of the purchase price or $1,000, whichever is less, as liquidated damages.
D) That the nonbreaching seller may claim against a breaching buyer 30 percent of the purchase price or $1,000, whichever is more, as liquidated damages.
E) Nothing because liquidated damages are unavailable under the UCC unless the parties have expressly agreed to them.

Accepted Answer

The code provides for liquidated damages if the parties have not expressly negotiated a liquidated-damage clause. 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 3

Under the UCC buyers and lessees may recover goods identified in the contract if the seller or lessor becomes insolvent within ______ after receiving the first payment due under the agreement.
A) 5 days
B) 10 days
C) 15 days
D) 30 days
E) 60 days

Accepted Answer

UCC sections 2-502 and 2a-522 allow buyers and lessees to recover the goods identified in the contract if the seller or lessor becomes insolvent within 10 days after receiving the first payment due under the agreement.

Question 4

Assuming proper proof, which of the following represents damages a buyer or lessee may recover in the event of a breach?
A) Incidental damages but not consequential damages or remedial damages
B) Consequential damages but not incidental damages or remedial damages
C) Remedial damages but not consequential damages or incidental damages
D) Incidental damages and consequential damages, but not remedial damages
E) Incidental damages, consequential damages, and remedial damages

Accepted Answer

Buyers and lessees are entitled to incidental and consequential damages.

Question 5

Which of the following is the preferred remedy for nonbreaching sellers when buyers fail to pay and pick up goods?
A) Suit for incidental damages
B) Cover
C) Liquidated damages
D) Resale
E) Suit for consequential damages

Accepted Answer

Resale is the preferred remedy for nonbreaching sellers (or re-lease for nonbreaching lessors) in that it provides an easy means to determine damages (resale price - contract price + resale costs = damages).

Question 6

Which of the following is true regarding when the UCC allows buyers and lessees to seek the remedy of specific performance?
A) The UCC only allows buyers and lessees to seek the remedy of specific performance when goods are unique.
B) The UCC only allows buyers and lessees to seek the remedy of specific performance when a remedy at law is inadequate.
C) The UCC only allows buyers and lessees to seek the remedy of specific performance when goods are worth more than $500.
D) The UCC allows buyers and lessees to seek the remedy of specific performance when goods are unique, when a remedy at law is inadequate, or when goods are worth more than $500.
E) The UCC allows buyers and lessees to seek the remedy of specific performance when goods are unique or when a remedy at law is inadequate, but not because the goods are worth more than $500.

Accepted Answer

UCC Sections 2-716(1) and 2A-521(1) allow buyers and lessees to seek the remedy of specific performance when either (1) the goods are unique or (2) a remedy at law is inadequate.

Question 7

Which of the following was the result in Almetals Inc., v. Wickeder Westfalenstahl, GMBH, the case in the text involving the sale of a specialty metal in which the plaintiff sued the defendant for breach of contract seeking specific performance?
A) That specific performance was unavailable because real estate was not involved.
B) That specific performance was unavailable because a foreign defendant was involved and jurisdiction for specific performance was, therefore, lacking.
C) That specific performance was unavailable because the goods at issue were scarce.
D) That specific performance was unavailable because a requirements contract was involved.
E) That specific performance was the appropriate remedy because the goods at issue were unique with no known alternative sources of supply.

Accepted Answer

According to the court, "Specific performance under UCC § 2-716 is the appropriate remedy because the varieties of clad metal supplied by Wickeder pursuant to the parties' requirements contract are unique and there are no known alternative sources of supply, but only speculation as to a possible alternative source for .2% or .3% of the product."

Question 8

Under UCC 2-702(2), under which of the following circumstances may a seller reclaim goods when a buyer is in possession of goods and is in breach?
A) When the seller discovers the buyer is insolvent
B) When the buyer is at least 5 days late on a payment
C) When the buyer is at least 10 days late on a payment
D) When the buyer has received at least 10 days prior notification of reclamation
E) When the buyer has received at least 30 days prior notification of reclamation

Accepted Answer

UCC 2-702(2) allows a seller to reclaim goods when it discovers the buyer is insolvent.

Question 9

Which of the following may a buyer/lessee do when the seller/lessor delivers nonconforming goods?
A) Reject the goods only
B) Obtain cover only
C) Cancel the contract only
D) Reject the goods, and then obtain cover or cancel the contract
E) Reject the goods and obtain cover, but the buyer may not cancel the contract

Accepted Answer

UCC Sections 2-601 and 2A-519 allow the buyer or lessee to reject the goods. The buyer or lessee may then obtain cover or cancel the contract.

Question 10

Assuming a buyer that is solvent has breached a contract by not paying for goods that are in transit, which of the following may occur?
A) The carrier may stop delivery on the entire shipment.
B) The carrier may stop delivery only if the quantity shipped is a large shipment such as a carload or truckload.
C) The carrier may stop delivery only if a signed writing exists by which the buyer agreed to the remedy of stopping shipment.
D) The carrier may stop delivery only if ordered to do so by the bankruptcy judge.
E) The carrier may not stop delivery under any circumstances.

Accepted Answer

UCC Sections 2-705(1) and 2A-526(1) allow a seller or lessor to stop delivery of goods that are in transit. If the buyer/lessee is solvent, however, the carrier or bailee can stop delivery only if the quantity shipped is a large shipment (e.g., a carload or truckload).

Question 11

Which of the following is the right of a buyer and lessee to substitute goods for those due under a sales or lease agreement?
A) Swap
B) Rearrange
C) Cover
D) Shift
E) Reallocate

Accepted Answer

Under UCC Sections 2-712 and 2A-518, buyers and lessees are allowed to cover, or substitute, goods for those due under the sales or lease agreement.

Question 12

Which of the following is true regarding buyers or lessees who want to accept nonconforming goods and then seek monetary damages?
A) Buyers and lessees are allowed to do so in order to receive the benefit of the bargain, but they must give the seller/lessor reasonable notice of the defect.
B) Buyers and lessees are allowed to do so in order to receive the benefit of the bargain, and there is no requirement that they give the seller/lessor prior notice of the defect.
C) Buyers may do so in order to receive the benefit of the bargain so long as reasonable notice of the defect is given, but lessees may not.
D) Lessors may do so in order to receive the benefit of the bargain so long as reasonable notice of the defect is given, but sellers may not.
E) Buyers and lessees may do so only if the seller/lessor agrees to the retention of the nonconforming goods and does not request their return.

Accepted Answer

Under UCC Sections 2-607, 2-714, and 2A-519, buyers or lessees are allowed to accept nonconforming goods and then seek monetary damages to give them the benefit of the bargain. The buyer/lessee must give the seller/lessor reasonable notice of the defect.

Question 13

Regarding the "Case Opener," what did the court rule regarding the liability of Abbott Industries following its supply of 1.2 million tubes of bad eye medication to Altana, a customer, for resale?
A) That Abbott industries was liable for the cost of the recall and destruction of the defective medication, for the costs of employee overtime, and for lost future sales because Altana was unable to meet its contractual obligations.
B) That Abbott industries was liable for the cost of the recall and destruction of the defective medication, for the costs of employee overtime, and for lost future sales even though Altana was able to meet its contractual obligations.
C) That Abbott industries was liable for the cost of the recall and destruction of the defective medication and for the costs of employee overtime, but not for lost future sales because Altana was able to meet its contractual obligations.
D) That Altana was only entitled to receive cover, meaning substitution for the defective medication.
E) That Altana was unable to recover anything because business people take a risk that some shipments will be bad.

Accepted Answer

Employing a test that requires the breaching party (Abbott) to put the nonbreaching party (Altana) in the position it would have been in had there not been a breach, the court found that in addition to costs for recall and destruction, Abbott was liable to Altana for the overtime payments to employees in order to make up the lost batch and satisfy Altana's contractual customers. However, when the issue of future sales was considered, the court ruled that despite Abbott's breach, Altana was still able to fulfill all of its existing contracts. To award any money to Altana on loss of future sales would be speculative and an unfair windfall to Altana.

Question 14

Which of the following is true regarding revocation of accepted nonconforming goods?
A) Once goods have been accepted, they may not be rejected.
B) A buyer has an absolute right within 10 days after delivery in which to revoke acceptance of nonconforming goods.
C) A buyer has an absolute right within 48 hours after delivery in which to revoke acceptance of nonconforming goods.
D) A buyer has an absolute right within 30 days after delivery in which to revoke acceptance of nonconforming goods.
E) While there is no set time limit, the UCC sometimes allows a buyer to revoke acceptance of nonconforming goods.

Accepted Answer

UCC Sections 2-608 and 2A-517 sometimes allow the buyer or lessee to revoke acceptance of nonconforming goods. For instance, in Case 24-1, Hodess rejected acceptance of the nonconforming coils U.S.A. provided. Hodess was allowed to reject acceptance because it had made a reasonable assumption that the nonconformity would be cured but then the nonconformity was not cured within a reasonable amount of time.

Question 15

Under UCC 2A-525(2) when may a lessor reclaim goods when a lessee in possession of the goods is in breach?
A) When the lessor discovers the lessee is insolvent
B) When the lessee fails to make payments according to the lease terms
C) When the lessee has received at least 10 days prior notification of reclamation
D) When the lessor discovers a significant reduction in the lessee's credit score
E) When the lessor can establish a valid contract for actual purchase of the goods

Accepted Answer

UCC 2A-525(2) allows a lessor to reclaim goods when the lessee fails to make payments according to the lease terms.

Question 16

What does the UCC provide regarding the availability of punitive damages?
A) That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 20 percent of the purchase price or $500, whichever is less, as punitive damages.
B) That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 20 percent of the purchase price or $500, whichever is more, as punitive damages.
C) That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 30 percent of the purchase price or $1,000, whichever is less, as punitive damages.
D) That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 30 percent of the purchase price or $1,000, whichever is more, as punitive damages.
E) Nothing other than in its voiding of liquidated damages that are punitive in nature.

Accepted Answer

Although the UCC does not mention the availability of punitive damages, other than in its voiding of liquidated damages that are punitive in nature, an issue that remains unsettled is the awarding of punitive damages against a breaching party who intentionally or egregiously breaches the contract.

Question 17

Which of the following includes lost profits so long as those damages are not too speculative?
A) Punitive damages
B) Consequential damages
C) Remedial damages
D) Nominal damages
E) Control damages

Accepted Answer

Consequential damages include damages for lost profits as long as these damages are not too speculative.

Question 18

Which of the following is true of lemon laws in Canada?
A) They are generally the same as lemon laws in the U.S.
B) They allow for replacement of defective parts but not a new car unless the plaintiff agrees to pay the difference between the amount received for the used car when sold and the amount charged for the new car.
C) They guarantee a buyer of a lemon a new car.
D) They guarantee the buyer of a lemon a return of all consideration.
E) Canada does not have a lemon law such as is known in the U.S. Instead, an arbitration program is run through which a buyer may lodge complaints.

Accepted Answer

Canada does not have lemon laws. Instead, each province runs an arbitration program through which a buyer can lodge complaints against a carmaker for selling a car that the consumer perceives as being damaged goods.

Question 19

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?
A) The carrier may stop delivery on the entire shipment.
B) The carrier may stop delivery only if the quantity shipped is a large shipment such as a carload or truckload.
C) The carrier may stop delivery only if a signed writing exists by which the buyer agreed to the remedy of stopping shipment.
D) The carrier may stop delivery only if ordered to do so by the bankruptcy judge.
E) The carrier may not stop delivery under any circumstances.

Accepted Answer

UCC Sections 2-705(1) and 2A-526(1) allow a seller or lessor to stop delivery of goods that are in transit. If the buyer/lessee is insolvent, the carrier/bailee can stop delivery regardless of the quantity shipped.

Question 20

Which of the following provide remedies to buyers of defective cars?
A) Apple laws
B) Lemon laws
C) Clunker laws
D) Roadside laws
E) Peach laws

Accepted Answer

In the United States, lemon laws exist to provide remedies for buyers of defective cars when sellers have limited the remedies otherwise provided by the UCC.

Quiz 24: Remedies for Breach of Sales and Lease Contracts

Which of the following usually requires that the seller or lessor deliver the particular goods identified in the contract?

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

Under the UCC buyers and lessees may recover goods identified in the contract if the seller or lessor becomes insolvent within ______ after receiving the first payment due under the agreement.

Assuming proper proof, which of the following represents damages a buyer or lessee may recover in the event of a breach?

Which of the following is the preferred remedy for nonbreaching sellers when buyers fail to pay and pick up goods?

Which of the following is true regarding when the UCC allows buyers and lessees to seek the remedy of specific performance?

Which of the following was the result in Almetals Inc., v. Wickeder Westfalenstahl, GMBH, the case in the text involving the sale of a specialty metal in which the plaintiff sued the defendant for breach of contract seeking specific performance?

Under UCC 2-702(2) , under which of the following circumstances may a seller reclaim goods when a buyer is in possession of goods and is in breach?

Which of the following may a buyer/lessee do when the seller/lessor delivers nonconforming goods?

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

Which of the following is the right of a buyer and lessee to substitute goods for those due under a sales or lease agreement?

Which of the following is true regarding buyers or lessees who want to accept nonconforming goods and then seek monetary damages?

Regarding the "Case Opener," what did the court rule regarding the liability of Abbott Industries following its supply of 1.2 million tubes of bad eye medication to Altana, a customer, for resale?

Which of the following is true regarding revocation of accepted nonconforming goods?

Under UCC 2A-525(2) when may a lessor reclaim goods when a lessee in possession of the goods is in breach?

What does the UCC provide regarding the availability of punitive damages?

Which of the following includes lost profits so long as those damages are not too speculative?

Which of the following is true of lemon laws in Canada?

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?

Which of the following provide remedies to buyers of defective cars?