Question 1

Phoenix,a salesperson for Quality Fruit,Inc.,showsRobert,a buyer for Sweet Home Fruit Company,samples of peaches,stating that any ship-ment will match the samples. This statement is
A)an express warranty.
B)a warranty of title.
C)puffery.

Accepted Answer

Phoenix's statement is an express warranty because they are making a specific promise about the quality of the product.

Question 2

Global Talk Corporation sells phones and other mobile devices. Under most cir-cum-stances,Global Talk will be presumed to have warranted that its title to the goods is
A)the same as each brand's name.
B)none of the choices-a warranty of title is not presumed.
C)good and valid.
D)the best that money can buy.

Accepted Answer

According to the Uniform Commercial Code, in the absence of explicit language to the contrary, a seller of goods is presumed to have good and valid title to those goods. Therefore, under most circumstances, Global Talk Corporation will be presumed to have warranted that its title to the goods is good and valid.

Question 3

Owen and Pablo enter into a contract for a sale of fifty Western saddles. 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 breach of contract for the sale of goods is the difference between the contract price and the market price at the time and place of delivery, which in this case would be the price of the Western saddles in the relevant market where Owen should have delivered them. Option A is incorrect because it refers to the measure of damages for breach of contract for general damages, not for the sale of goods. Option B is incorrect because the hoped-for price is irrelevant, and the actual price is only relevant if it is below the market price. Option D is incorrect because it refers to prices in different locations, which are not relevant in this case.

Question 4

Blanche,a salesperson for Custom Restaurant Equipment,Inc.,showsDylan,a buyer for Eat n' Dine Company,display items in Custom's showroom,stating that any purchased equipment will match the display. This statement is
A)an express warranty.
B)an implied warranty.
C)puffery.

Accepted Answer

This is an example of an express warranty, as Blanche is making a specific representation to Dylan regarding the products being sold.

Question 5

On May 1,Garage Prefabricators,Inc.,agrees to sell four portable garages to Hiway Truck Service Center. Five days later,Hiway refuses delivery and cancels the contract. Garage Prefabricatorsis enti-tled to
A)force Hiway to accept the garage.
B)recover any damages from Hiway but not resell the garage.
C)resell the garage and recover any damages from Hiway.
D)resell the garage but not recover any damages from Hiway.

Accepted Answer

When a buyer breaches a contract by refusing delivery, the seller can resell the goods and recover any damages from the buyer. Therefore, Garage Prefabricators, Inc. can resell the portable garages to another buyer and recover any damages from Hiway Truck Service Center. Option A is not applicable because the seller cannot force the buyer to accept the goods. Option B is partially correct because the seller can recover damages, but the option mentions that the seller cannot resell the garage which is not true. Option D is incorrect as seller can indeed recover damages from the buyer.

Question 6

Precision Parts,Inc.,and QuikFix Auto stores enter into a contract for a sale of specific auto parts. Precision Partsships parts that do not meet the specifications. QuikFix Auto
A)cannot reject the entire shipment.
B)can reject the entire shipment.
C)must accept the entire shipment.
D)must reject the entire shipment.

Accepted Answer

QuikFix Auto has the right to reject the entire shipment as Precision Parts has failed to deliver goods that meet the specified requirements in the contract. However, it is important to review the terms and conditions of the contract to ensure that there are no limitations or clauses that affect QuikFix Auto's right to reject the shipment.

Question 7

Vehicle Wholesale Company and Walt's Retail Motors enter into a contract for a sale of used cars. Vehicle Wholesale assures Walt's that it has valid title to the vehicles. Under the UCC,warranties of title arise
A)automatically in most sales contracts.
B)only if the buyer asks for such a warranty.
C)only if the seller expresses such a warranty.
D)only in conjunction with lease contracts,not sales contracts.

Accepted Answer

Under the UCC, warranties of title automatically arise in every sales contract unless expressly disclaimed. Therefore, option A is the correct answer. The buyer does not need to ask for such a warranty and it is not necessary for the seller to express it. Additionally, warranties of title apply to both sales and lease contracts, not just the latter.

Question 8

River Gear Company and Tours & Trips,Inc.,enter into a contract on August 1 for the sale of fifty inflatable river rafts. Tours & Trips cancels the con-tract ten days later. River Gear is unable to sell the rafts to another buyer. River Gear can
A)force Tours & Tripsto accept the rafts and pay for them.
B)recover the contract price from Tours & Tripsbut must hold the rafts for it.
C)recover the contract price from Tours & Tripsand keep the rafts.
D)recover the contract price from Tours & Tripsbut must destroy the rafts.

Accepted Answer

Since Tours & Trips cancelled the contract within a reasonable time, River Gear can recover the contract price from Tours & Trips, but must hold the rafts for it. This is because River Gear has a duty to mitigate its damages by attempting to resell the rafts to another buyer. It cannot simply keep the rafts and recover the contract price from Tours & Trips.

Question 9

Greg,a salesperson for Home Improvement Center,tells Irena,"This is the best floor sander I've ever seen." This statement is
A)an express warranty.
B)an implied warranty.
C)a warranty of title.
D)puffery.

Accepted Answer

This statement is not a legally binding warranty and is considered sales puffery, which is exaggerated or subjective language used to promote a product.

Question 10

Hydro Source Company contracts to sell pumps,tanks,and water storage systems to InFlo Irrigation,Inc. Before the goods are delivered,InFlo indicates that it will not be able to pay. Hydro Source can
A)forceInFlo to accept and pay for the goods.
B)requireInFlo to find a buyer for the goods.
C)resell the goods and recover any damages from InFlo.
D)do nothing.

Accepted Answer

Hydro Source can resell the goods and recover any damages from InFlo. This is often referred to as "cover" under the Uniform Commercial Code. Hydro Source can resell the goods in a commercially reasonable manner and recover the difference between the contract price and the resale price from InFlo. This is an efficient way to minimize damages and move on from a bad deal. Option A is not feasible as a seller cannot force a buyer to accept and pay for goods. Option B is also not practical as it puts the burden of finding a buyer on InFlo. Option D is not a viable choice for a business as it would result in a loss of revenue.

Question 11

Daily Bread Bakeries,Inc.,contracts to buy all of its ingredient requirements for bread making,at a certain minimum per year,from Enriched Flour & Grain Corporation for six years. After three years,Daily Bread tells Enriched that it plans to sell its assets to Flat Bread Shops,Inc. Flat Bread refuses to assure Enriched that it will continue Daily Bread's contract.
-Refer to Fact Pattern 22-1. Flat Bread's refusal is
A)a justified response based on Flat Bread's relation to the contract.
B)an assignment of Daily Bread's rights under the contract.
C)a reasonable suspension of performance under the contract.
D)a repudiation of the contract.

Accepted Answer

Flat Bread's refusal to assure Enriched that it will continue Daily Bread's contract can be considered as a repudiation of the contract. Repudiation occurs when a party indicates that it will not perform its obligations under the contract. Flat Bread's refusal to continue the contract can be seen as a breach of the contract and Enriched may have grounds to sue for damages.

Question 12

Daily Bread Bakeries,Inc.,contracts to buy all of its ingredient requirements for bread making,at a certain minimum per year,from Enriched Flour & Grain Corporation for six years. After three years,Daily Bread tells Enriched that it plans to sell its assets to Flat Bread Shops,Inc. Flat Bread refuses to assure Enriched that it will continue Daily Bread's contract.
-Refer to Fact Pattern 22-1. Enriched can
A)assign its rights under the contract but cannot terminate it.
B)terminate the contract and seek damages.
C)suspend performance under the contract until Enriched is fully paid.
D)do nothing.

Accepted Answer

Enriched can terminate the contract and seek damages as Daily Bread has breached the contract by not fulfilling its minimum purchase requirement for the remaining three years. Enriched is entitled to terminate the contract and seek compensation for its losses.

Question 13

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 right to obtain substitute goods for those that were due under the contract is the right to obtain
A)cover.
B)cure.
C)tender.
D)specific performance.

Accepted Answer

Bob's Bistros, Inc.'s right to obtain substitute goods for those that were due under the contract is the right to obtain cover. This means they can purchase rice noodles from another supplier to replace the ones that were supposed to be delivered by Asian Noodle Company.

Question 14

Roadway Paving Company contracts to buy some paving equipment from Stonework Earthmovers,Inc. Before either party performs,Stonework sells its assets to T-Square Corporation. On learning of the sale,Roadway is concerned about its contract with Stonework. Roadway should
A)demand assurances of performance from Stonework.
B)consider the contract repudiated and sue Stonework for breach.
C)buy the equipment from a different firm and bill Stonework for the price.
D)buy the equipment from a different firm and bill T-Square for the price.

Accepted Answer

Roadway should demand assurances of performance from Stonework before taking any further steps. The sale of assets does not necessarily release Stonework from its contractual obligations, and it is possible that T-Square has assumed those obligations as part of the sale. By requesting assurances of performance, Roadway can determine whether Stonework intends to fulfill its contractual duties or whether it has assigned them to T-Square. This will help Roadway determine its next course of action, which may include seeking performance from Stonework or seeking damages for breach of contract.

Question 15

Refined Mills orders "Grade A" oats from Sweet Valley Farms 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 Farms because they are the ones who shipped nonconforming goods. The town co-op and state government agency are not involved in the transaction and therefore do not need to be notified.

Question 16

Pebble Leasing Corporation and Quarry Rock & Gravel Company enter into a lease of three excavators. Under the perfect tender rule,Pebble Leasing must ship or tender goods to Quarry Rock & Gravel that,with respect to the contract description,conform
A)to the best of Pebble's ability under the circumstances.
B)reasonably.
C)in every way.
D)substantially.

Accepted Answer

The perfect tender rule requires the goods to conform to the contract description in every way. This means that there can be no deviation or nonconformity with the agreed terms, and any failure to meet the standard constitutes a breach of contract.

Question 17

Oh! Wow! 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. Oh! Wow! Marketscan
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

The best choice in this situation is to reship or store the goods for the seller as it is not appropriate to destroy the goods or retain them without paying for them. Attempting to cure the goods could also result in additional expenses for Oh! Wow! Markets, Inc. Therefore, reshipping or storing the goods for the seller is the most appropriate course of action until instructions can be obtained.

Question 18

Loading Ramps Plus Inc. contracts to sell sixteen aluminum loading ramps to Moving Services,Inc. Loading Ramps ships the ramps,which Moving Servicesaccepts but does not pay for. Loading Ramps can
A)sue to recover the purchase price plus inci-dental damages.
B)sue to recover the purchase price minus inci-dental damages.
C)resell the ramps to any buyer willing to reclaim them from Moving Services.
D)require Moving Servicesto revoke its acceptance of the ramps.

Accepted Answer

Loading Ramps Plus Inc. can sue Moving Services, Inc. to recover the purchase price of the ramps plus incidental damages. This is because Moving Services accepted the ramps but did not pay for them, which constitutes a breach of contract. As a result, Loading Ramps can seek legal action to recover the payment for the ramps and any additional damages incurred as a result of the breach.

Question 19

Beef Burgers,Inc. contracts to buy five hundred head of cattle from Calf & CowFarms. Before Calf & Cow delivers,an outbreak of disease causes a quarantine of the farm. In this circumstance,the perfect tender rule
A)applies to both parties.
B)no longer applies.
C)applies only to Beef Burgers.
D)applies only to Calf & Cow.

Accepted Answer

The perfect tender rule only applies when both parties are able to perform their obligations under the contract. In this case, Calf & Cow is unable to deliver the cattle due to the quarantine, which means they are not able to perform their obligations. Therefore, the perfect tender rule no longer applies to either party.

Question 20

Arnold buys a backhoe from Big Dig Equipment Inc. Arnold is unaware that Credit Collection Company holds a lien against the backhoe when he buys it. If Credit Collection repossesses the backhoe,Arnold can
A)recover from Big Dig for breach of warranty.
B)do nothing.
C)file criminal charges against Big Dig and Credit Collection.
D)recover damages from Credit Collection for breach of warranty.

Accepted Answer

Arnold can recover from Big Dig for breach of warranty because when Big Dig sold the backhoe to Arnold, they implicitly warranted that the title was clear of any liens or claims, such as the one held by Credit Collection Company.

Quiz 22: Performance and Breach of Sales and Lease Contracts

Phoenix,a salesperson for Quality Fruit,Inc.,showsRobert,a buyer for Sweet Home Fruit Company,samples of peaches,stating that any ship-ment will match the samples. This statement is

Global Talk Corporation sells phones and other mobile devices. Under most cir-cum-stances,Global Talk will be presumed to have warranted that its title to the goods is

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

Blanche,a salesperson for Custom Restaurant Equipment,Inc.,showsDylan,a buyer for Eat n' Dine Company,display items in Custom's showroom,stating that any purchased equipment will match the display. This statement is

On May 1,Garage Prefabricators,Inc.,agrees to sell four portable garages to Hiway Truck Service Center. Five days later,Hiway refuses delivery and cancels the contract. Garage Prefabricatorsis enti-tled to

Precision Parts,Inc.,and QuikFix Auto stores enter into a contract for a sale of specific auto parts. Precision Partsships parts that do not meet the specifications. QuikFix Auto

Vehicle Wholesale Company and Walt's Retail Motors enter into a contract for a sale of used cars. Vehicle Wholesale assures Walt's that it has valid title to the vehicles. Under the UCC,warranties of title arise

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

Greg,a salesperson for Home Improvement Center,tells Irena,"This is the best floor sander I've ever seen." This statement is

Hydro Source Company contracts to sell pumps,tanks,and water storage systems to InFlo Irrigation,Inc. Before the goods are delivered,InFlo indicates that it will not be able to pay. Hydro Source can

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 right to obtain substitute goods for those that were due under the contract is the right to obtain

Roadway Paving Company contracts to buy some paving equipment from Stonework Earthmovers,Inc. Before either party performs,Stonework sells its assets to T-Square Corporation. On learning of the sale,Roadway is concerned about its contract with Stonework. Roadway should

Refined Mills orders "Grade A" oats from Sweet Valley Farms 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

Pebble Leasing Corporation and Quarry Rock & Gravel Company enter into a lease of three excavators. Under the perfect tender rule,Pebble Leasing must ship or tender goods to Quarry Rock & Gravel that,with respect to the contract description,conform

Oh! Wow! 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. Oh! Wow! Marketscan

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

Beef Burgers,Inc. contracts to buy five hundred head of cattle from Calf & CowFarms. Before Calf & Cow delivers,an outbreak of disease causes a quarantine of the farm. In this circumstance,the perfect tender rule

Arnold buys a backhoe from Big Dig Equipment Inc. Arnold is unaware that Credit Collection Company holds a lien against the backhoe when he buys it. If Credit Collection repossesses the backhoe,Arnold can