Question 1

VuPlay Company contracts to deliver one hundred 60-inch 3D HD television sets to a new retail customer, Watchbox Store, on May 1, with payment to be made on delivery. VuPlay tenders delivery in its own truck. Watchbox's manager notices that some of the cartons have scrape marks. Watchbox's owner phones VuPlay's office and asks whether the sets might have been damaged as they were being loaded. VuPlay assures Watchbox that the sets are in perfect condition. Watchbox tenders VuPlay a check, which VuPlay refuses, claiming that the first delivery to new customers is always for cash. Watchbox promises to pay the cash within two days. VuPlay leaves the sets with Watchbox, which stores them in its warehouse pending its "Grand Opening Sale" on May 15. Two days later, Watchbox's stocker opens some of the cartons and discovers that a number of the sets are damaged beyond ordinary repair. VuPlay claims Watchbox has accepted the sets and is in breach by not paying on delivery. Will VuPlay succeed on these claims? Explain.

Accepted Answer

The answer of VuPlay Company contracts to deliver one hundred...

Question 2

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
A) ​Bayou advertised the goods.
B) ​Eventide ordered the goods.
C) ​Eventide learned of the breach.
D) ​Bayou knew that it would repudiate the contract.

Accepted Answer

Eventide's recovery for repudiation of a contract is measured at the time when they learned of the breach. This is because it is at this point that they were aware of the breach and could take action to mitigate their damages. The other options (A, B, and D) are not relevant to measuring Eventide's recovery for this specific situation.

Question 3

EconBank issues a letter of credit in favor of Facile Deals Inc., a U.S. firm, to facilitate an international sales contract to buy certain products from Global Goods, Ltd., a British company. Global is entitled to payment when it
A) ​enters into the contract with the buyer.
B) ​verifies that the buyer has the money to pay for the purchase.
C) ​complies with the terms and conditions of the letter of credit.
D) ​asks to be paid.

Accepted Answer

The letter of credit provides a guarantee of payment from the bank to Global Goods, Ltd. as long as they comply with the terms and conditions specified, which typically include providing the required documents and meeting the shipping and delivery requirements. Therefore, Global is entitled to payment when they comply with the terms and conditions of the letter of credit, as specified in the contract with EconBank and Facile Deals Inc.

Question 4

Okay 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. Okay Markets can
A) ​destroy the goods.
B) ​cure the goods to make them conform to the contract.
C) ​retain the goods without paying for them.
D) ​reship or store the goods for the seller.

Accepted Answer

Under the Uniform Commercial Code (UCC), when a buyer rejects non-conforming goods and cannot obtain instructions from the seller, the buyer has the option to reship or store the goods for the seller's account. Destroying the goods, curing the goods, or retaining the goods without paying for them are not actions generally permitted without specific agreement or further instructions from the seller.

Question 5

Refined Mills orders "Grade A" oats from Sweet Valley Farm to grind and sell to Town Co-op Grocery. Sweet Valley ships "Grade B" grain, which Refined Mills accepts. To recover damages for the nonconformity, Refined Mills must give notice of the breach within a reasonable time to
A) ​Sweet Valley.
B) ​Town Co-op.
C) ​no one.
D) ​the appropriate state government agency.

Accepted Answer

Refined Mills must give notice of the breach to Sweet Valley, the seller, as they are the party responsible for shipping the non-conforming goods. This allows Sweet Valley the opportunity to cure the breach or provide a remedy to Refined Mills. Town Co-op is not responsible for the non-conforming goods and therefore does not need to receive notice. The state government agency would only be involved if there were legal or regulatory issues involved, which is not mentioned in the scenario.

Question 6

Banquets & Parties (B&P) contracts to buy 1,000 uninflated 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
A) ​$1,500.
B) ​$1,000.
C) ​$500.
D) ​$0.

Accepted Answer

Gas Bags can recover the difference between the contract price and the market price at the time of the breach, which is 50 cents per balloon. Therefore, Gas Bags can recover $500 (500 cents x 1,000 balloons) from B&P for their breach of contract.

Question 7

Owen and Pablo enter into a contract for a sale of irrigation equipment. Pablo pays, but Owen does not deliver. Pablo can normally recover as damages the difference between
A) ​any loss avoided and any profit gained.
B) ​the actual price and the hoped-for price.
C) ​the contract price and the market price.
D) ​the current prices in the parties' locations.

Accepted Answer

The normal measure of damages for a breach of contract in a sale of goods is the difference between the contract price and the market price at the time and place of delivery. This means that Pablo can recover the amount that he would have gained if Owen had fulfilled his end of the contract. Option A is too broad and Option B is not a commonly accepted measure of damages. Option D is irrelevant as it does not address the issue of damages.

Question 8

Asian Noodle Company contracts to sell 1,000 cases of rice noodles to Bob's Bistros, Inc., but refuses to deliver. Due to a rice shortage, Bob's Bistros cannot obtain the noodles elsewhere. The buyer's right to recover the goods from the seller is the right of
A) ​cover.
B) ​cure.
C) ​tender.
D) ​specific performance.

Accepted Answer

The answer of Asian Noodle Company contracts to sell 1,000...

Question 9

​TackMaker, Inc., and Silver Stallion Stables enter into a contract for a sale of bridles, saddlery, and other equine equipment. TackMaker delivers, but Silver Stallion does not pay. TackMaker can normally recover as damages
A) ​any profit lost minus any loss avoided.
B) ​whatever amount the seller wishes to claim.
C) ​the purchase price plus incidental damages.
D) ​the market price at the place at which the seller delivered the goods.

Accepted Answer

The UCC provides that a seller can recover the purchase price and incidental damages in the event that the buyer breaches the contract by failing to pay. Therefore, in this scenario, TackMaker can recover the purchase price of the goods sold (i.e. the amount that Silver Stallion was supposed to pay) as well as any incidental damages that TackMaker incurred as a result of Silver Stallion's breach (such as storage costs or shipping and handling fees). Option A, any profit lost minus any loss avoided, is a common measure of damages in contract law but is not applicable here. Option B, whatever amount the seller wishes to claim, is incorrect as damages must be reasonable and related to the breach. Option D, the market price at the place at which the seller delivered the goods, is not the correct measure of damages in this case, as it is not relevant to the seller's actual losses.

Question 10

Precious Stones, Inc., and Sparkling Jewelry stores enter into a contract for a sale of gemstones. Precious Stones does not deliver. The buyer can normally recover as damages the difference between
A) ​any loss avoided and any profit gained.
B) ​the actual price and the hoped-for price.
C) ​the contract price and the market price.
D) ​the current prices in the parties' locations.

Accepted Answer

The buyer can normally recover as damages the difference between the contract price and the market price. This is because the market price represents the actual value of the goods at the time of breach, and the buyer should be able to recover the amount that they lost due to the seller's failure to perform. Option A is incorrect because it is too broad and does not necessarily reflect the actual damages suffered by the buyer. Option B is incorrect because it is overly subjective and based on the buyer's subjective expectations rather than objective market conditions. Option D is incorrect because it does not reflect the actual damages suffered by the buyer and is based on irrelevant factors.

Question 11

Erin contracts in writing to sell her Ford-brand pick-up truck to Garth for $10,500. Erin agrees to deliver the truck on Friday, and Garth promises to pay the $10,500 on the following Monday. On Thursday, Garth tells Erin that he changed his mind and will not buy the truck. Over the weekend, Garth changes his mind again and tenders $10,500 to Erin on Monday. Erin has not sold the truck to another party but refuses the tender and refuses to deliver. Garth claims that Erin has breached their contract. Erin contends that Garth's repudiation released her from her duty to perform under the contract. Who is correct, and why?

Accepted Answer

The answer of Erin contracts in writing to sell her...

Question 12

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
A) ​force the buyer to accept the rafts and pay for them.
B) ​recover the contract price but must hold the rafts for the buyer.
C) ​recover the contract price and keep the rafts.
D) ​recover the contract price but must destroy the rafts.

Accepted Answer

Scenic Trips, Inc. breached the contract by canceling it ten days later. As a result, River Gear Company can recover the contract price but must hold on to the rafts until it can find another buyer. This is because River Gear has a duty to mitigate its damages, which means they must try to limit the losses they suffer as a result of the breach. If River Gear cannot mitigate its damages, then it may be able to recover the contract price and keep the rafts. However, in this case, it is stated that River Gear was unable to sell the rafts to another buyer, so they must hold on to them until they can find a buyer or Scenic Trips decides to accept the rafts and pay for them.

Quiz 22: Performance and Breach of Sales and Lease Contracts

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

EconBank issues a letter of credit in favor of Facile Deals Inc., a U.S. firm, to facilitate an international sales contract to buy certain products from Global Goods, Ltd., a British company. Global is entitled to payment when it

Okay 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. Okay Markets can

Refined Mills orders "Grade A" oats from Sweet Valley Farm to grind and sell to Town Co-op Grocery. Sweet Valley ships "Grade B" grain, which Refined Mills accepts. To recover damages for the nonconformity, Refined Mills must give notice of the breach within a reasonable time to

Banquets & Parties (B&P) contracts to buy 1,000 uninflated 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

Owen and Pablo enter into a contract for a sale of irrigation equipment. Pablo pays, but Owen does not deliver. Pablo can normally recover as damages the difference between

Asian Noodle Company contracts to sell 1,000 cases of rice noodles to Bob's Bistros, Inc., but refuses to deliver. Due to a rice shortage, Bob's Bistros cannot obtain the noodles elsewhere. The buyer's right to recover the goods from the seller is the right of

​TackMaker, Inc., and Silver Stallion Stables enter into a contract for a sale of bridles, saddlery, and other equine equipment. TackMaker delivers, but Silver Stallion does not pay. TackMaker can normally recover as damages

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

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

TackMaker, Inc., and Silver Stallion Stables enter into a contract for a sale of bridles, saddlery, and other equine equipment. TackMaker delivers, but Silver Stallion does not pay. TackMaker can normally recover as damages