Question 1

River Gear Company and Scenic Trips, Inc., enter into a contract on August 1 for the sale of fifty inflatable river rafts. Scenic cancels the contract ten days later. River Gear is unable to sell the rafts to another buyer. River Gear can

Accepted Answer

River Gear can recover the full contract price because Scenic Trips breached the contract by canceling it. However, River Gear must hold the rafts for the buyer, as they are still the property of Scenic Trips until the contract is resolved.

Question 2

Colby contracts in writing (by e-mail) to sell his Dodge-brand pick-up truck to Efrem for $10,500. Colby agrees to deliver the truck on Monday morning, and Efrem promises to pay the $10,500 on Monday. On Thursday, Efrem e-mails Colby that he changed his mind and will not buy the truck. Colby does not respond. Over the weekend, Efrem changes his mind again and tenders $10,500 to Colby on Monday. Colby has not sold the truck to another party but refuses the tender and refuses to deliver. Efrem claims that Colby has breached their contract. Colby contends that Efrem's repudiation released him from his duty to perform under the contract. Who is correct, and why?

Accepted Answer

The answer of Colby contracts in writing (by e-mail) to...

Question 3

Tack Inc. and Stallion Stables enter into a contract for a sale of stable equipment. Tack delivers, but Stallion does not pay. Tack can normally recover as damages

Accepted Answer

Tack Inc. can recover the purchase price plus any incidental damages because Stallion Stables failed to pay for the delivered goods, which is a breach of contract.

Question 4

Loading Ramps Plus Inc. contracts to sell sixteen aluminum loading ramps to Moving Services, Inc. Loading Ramps ships the ramps, which Moving Services accepts but does not pay for. Loading Ramps can

Accepted Answer

Loading Ramps can sue Moving Services to recover the purchase price plus incidental damages. This is because Moving Services accepted the ramps, creating a binding contract between the parties. Moving Services' failure to pay for the ramps constitutes a breach of contract, and Loading Ramps can seek remedies under the law, including damages to cover their losses.

Question 5

Bayou Boats, Inc., contracts for the sale of seven swamp boats to Eventide Fishing Tours. Bayou repudiates the contract. Eventide's recovery is measured at the time

Accepted Answer

Eventide's recovery is measured at the time they learn of the breach, which is when they can begin to mitigate their damages and attempt to find a replacement for the swamp boats.

Question 6

Refined Mills orders "Grade A" oats from Sweet Valley Farms to grind and sell to Town Co-op Grocery. Sweet Valley ships "Grade B" oats, which Refined Mills accepts after a reasonable inspection believing it to be Grade A. Once Refined Mills discovers that the oats are Grade B, it

Accepted Answer

Refined Mills can revoke its acceptance of the oats because they were nonconforming goods, and the nonconformity substantially impairs the value of the goods. The acceptance was based on the reasonable belief that the goods conformed to the contract.

Question 7

Banquets & Parties (B&P) contracts to buy 1,000 balloons from Gas Bags, Inc., for $1 per item. When the market price decreases to 50 cents per balloon, B&P refuses to go through with the deal. Gas Bags can recover as contract damages

Accepted Answer

Gas Bags can recover the difference between the contract price and the market price at the time of breach, which is $1 - $0.50 = $0.50 per balloon. For 1,000 balloons, this amounts to $500.

Question 8

Owen and Pablo enter into a contract for a sale of fifty Western saddles. Owen delivers, but Pablo does not pay. Owen can normally recover as damages the difference between

Accepted Answer

Owen can recover the difference between the contract price and the market price at the time and place of tender, which is a standard measure of damages in a sale of goods contract when the buyer fails to pay.

Question 9

Asian Noodle Company contracts to sell 1,000 cases of rice noodles to Bob's Bistros, Inc., but refuses to deliver. Bob's right to obtain substitute goods for those that were due under the contract is the right to obtain

Accepted Answer

Bob's Bistros, Inc. has the right to obtain substitute goods, which is known as "cover," as a remedy for Asian Noodle Company's failure to deliver the rice noodles. This is the most appropriate option as specific performance and cure are not relevant in this situation and tender is the act of offering to perform the contract, which has already been breached by Asian Noodle Company.

Question 10

Precious Stones, Inc., and Sparkling Jewelry stores enter into a contract for a sale of gemstones. Precious does not deliver. The buyer can normally recover as damages the difference between

Accepted Answer

The buyer can recover damages based on the difference between the contract price and the market price at the time they learned of the breach, which is a standard measure of damages in sales contracts.

Question 11

Open-Air Markets, Inc., rejects a shipment of turkey that does not conform to its contract with Poultry Processing Corporation, but is unable to obtain instructions from the seller. Open-Air Markets can

Accepted Answer

Open-Air Markets can reship or store the goods for the seller if they do not conform to the contract and they cannot obtain instructions from the seller. This is a reasonable course of action to mitigate damages and handle the non-conforming goods responsibly.

Question 12

Signal Sets Company contracts to deliver one hundred television sets to a new retail customer, Tuner TV Store, on May 1, with payment to be made on delivery. Signal tenders delivery in its own truck. Tuner's manager notices that some of the cartons have scrape marks. Tuner's owner phones Signal's office and asks whether the sets might have been damaged as they were being loaded. Signal assures Tuner that the sets are in perfect condition. Tuner tenders Signal a check, which Signal refuses, claiming that the first delivery to new customers is always for cash. Tuner promises to pay the cash within two days. Signal leaves the sets with Tuner, which stores them in its warehouse pending its " Grand Opening Sale " on May 15. Two days later, Tuner's stocker opens some of the cartons and discovers that a number of the sets are damaged beyond ordinary repair. Signal claims Tuner has accepted the sets and is in breach by not paying on delivery. Will Signal succeed on these claims? Explain.

Accepted Answer

The answer of Signal Sets Company contracts to deliver one...

Quiz 19: Performance and Breach