Question 1

Rajid, an immigrant who speaks little English, enters into a contract to pay $300 per month for ten years to purchase an auto from Travel Motor Co. The appraised retail value of the car is $5000. What legal remedy would release Rajid from his contract?

Accepted Answer

An unconscionable contract is one that gives an unfair advantage to one of the parties. Unequal bargaining power, the absence of a meaningful choice by one party, and unreasonably one-sided terms, when put together, indicate unconscionability.

Question 2

In a tender of payment, the:

Accepted Answer

Tender of payment means offering to turn the necessary money over to the seller, by any means or in any manner that is commonly used in the ordinary course of business.

Question 3

Gino, a used car salesman, tells BillyBob while test driving a restored '64 Mustang, "BillyBob, this car is a chick magnet!" So BillyBob buys the Mustang, but later is not satisfied because no girls want to go riding with BillyBob. BillyBob threatens to sue Gino. What result?

Accepted Answer

Warranties are based on statements of fact. Therefore, the opinions of salespersons and their exaggerated and persuasive statements (such as Gino's) do not create express warranties. Courts have long indulged the temptation of salespersons to use sales puffery to extol their merchandise beyond the point of fact.

Question 4

Tyler has always had a "180 day full warranty" from Business Sales Company when purchasing office equipment over the past five years. On this occasion, Tyler purchased a big screen LED TV from Business Sales that broke thirty days after Tyler purchased it. Business Sales asserts that it did not provide a 180 day full warranty on the TV and has no legal liability. Which of the following is true of this situation?

Accepted Answer

Implied warranties may arise from the ways in which the parties have dealt in the past or by usage of trade.

Question 5

____________ damages are reasonable expenses that indirectly result from the breach, such as expenses incurred in stopping delivery of goods, transporting goods, and caring for goods after the buyer's breach.

Accepted Answer

Incidental damages are the reasonable expenses that indirectly result from a breach of contract, such as expenses incurred in stopping delivery of goods, transporting goods, and caring for goods after the buyer's breach.

Question 6

When a buyer has a right to inspect the goods, the right usually must be exercised:

Accepted Answer

The buyer has the right to inspect the goods before accepting or paying for them, except when goods are shipped c.o.d., or when the contract provides for payment against a document of title. The inspection may take place after the goods arrive at their destination.

Question 7

Samantha purchased a used computer system from Office Rental, Inc. who was updating its computers. Later, Big Bank asserted the right to repossess the used computer system from Samantha since it had a lien on all of Office Rental's business equipment to secure an unpaid loan. Samantha was unaware of this lien. What are Samantha's legal rights?

Accepted Answer

Warranty of title includes an implied promise that the goods will be delivered free of any liens (claims of others) about which the buyer has no knowledge. When anyone buys goods that turn out to be stolen, the rightful owner will be entitled to the return of those goods. The innocent purchaser may sue the seller for breach of warranty of title.

Question 8

Lori went into an electronics store that had a sign posted on the wall declaring "All sales final!" She told the salesperson that she was looking for an iPod with Pandora, so that she could listen to streaming music while working out in her wifi-enabled health club. The salesperson selected a wifi-capable iPod and told Lori that she could receive Pandora as long as the fitness center had wifi. The next day, when Lori tried to use the iPod at the fitness center with wifi, she found that she could only hear static. Which of the following is true of this situation?

Accepted Answer

Sometimes buyers will have the seller select goods for them, rather than select them themselves. They rely on the seller's knowledge and experience to choose the product after telling the seller of the particular use they have for the goods. This arrangement creates an implied warranty of fitness for a particular purpose which, in this case, trumps the store's "all sales are final" statement.

Question 9

Brenner entered into a written contract with the Inkblot Corporation for $1,000 worth of office supplies. Inkblot subsequently sent Brenner some supplies that were not requested in the contract. Brenner noticed that the order did not match the contract, but he accepted the nonconforming goods. Which of the following is true of this situation?

Accepted Answer

The seller is not legally required to cure improper tender when a buyer accepts nonconforming goods, although the buyer may later sue the seller for breach of contract.

Question 10

Harvey orders high-end stoves and ranges from Bosch to sell in his appliance store, Harvey's Appliances. When the stoves arrive, Harvey discovers that the stoves are not what he ordered. Bosch can:

Accepted Answer

Sellers may cure an improper tender or delivery of goods with the correct goods, if the time for performance has not yet expired. If the time for performance has expired, the seller is allowed to have an additional amount of time to substitute a conforming tender if the seller has reasonable grounds to believe that the goods that were delivered were acceptable. In all cases, sellers have a duty to notify buyers that they are going to cure the improper tender or delivery.

Question 11

Jess buys a microwave oven with a manufacturer's full one-year written warranty. If Jess discovers that the microwave oven does not work properly during this time, the manufacturer is obligated to:

Accepted Answer

A full warranty is one in which a defective product will be repaired without charge within a reasonable time after a complaint has been made about it. If it cannot be repaired within a reasonable time, the consumer may have either a replacement of the product or a refund of the purchase price.

Question 12

Tom orders $24,000 worth of premium bicycles from Budnitz, a premium bicycle manufacturer, to sell in his Tom's Bike store. After the bicycles are loaded into the freight truck and are on their way to Tom, Budnitz discovers that Tom is insolvent and unlikely to be able to pay for them. Budnitz has the right to:

Accepted Answer

If, after shipping the goods, the seller discovers that the buyer is insolvent (unable to pay debts), the seller may withhold or stop delivery of the goods. This right is known as stoppage in transit and is permitted after goods have been shipped, but before they have reached their destination.

Question 13

Gerald orders 1,000 cupcakes from Haddock Bakers for a Christmas Eve party. However, Haddock fails to deliver the cupcakes as per the schedule mentioned in the contract, and does not send any notification to Gerald. Gerald orders the cupcakes from Marlene's Cakes that evening. Gerald's order from Marlene's Cakes is called a ____________.

Accepted Answer

The buyer may cover the sale-that is, buy similar goods from someone else-without unreasonable delay. The buyer may then sue the seller for the difference between the agreed price and the cost of the purchase.

Question 14

Which of the following is true of a shipment contract?

Accepted Answer

In a shipment contract, the seller must put the goods in the possession of a carrier and contract with that carrier for their transportation. Any necessary documents must be sent to the buyer, who must be promptly notified of the shipment. Today, these documents are increasingly sent by email or other electronic means.

Question 15

In a written contract, Hogan agrees to sell Jason kitchen cabinets and to deliver them before December 21. On October 21, two months before the delivery is expected, Hogan tells Jason that he will not sell him the cabinets. Which of the following can Jason do in this situation?

Accepted Answer

Anticipatory repudiation under the UCC occurs when either party repudiates the contract before the time for performance. In that event, the injured party may take action immediately, if waiting would be unjust or cause a material inconvenience.

Question 16

Bridget contracts with Hunter to purchase $30,000 worth of goods for her store. Hunter wants a clause in the contract stating that neither party will sue the other after one year from the date of breach of contract. Which of the following is true of this situation?

Accepted Answer

In general, an action for breach of a sales contract must be brought within four years after the date of the breach. The parties may, if they wish to do so, provide for a shorter time period-not less than one year-in their sales agreement.

Question 17

Auto Rebuilders, Inc. orders original 1995 model parts for a Ford Mustang Cobra from Car Wreckers, Inc. Car Wreckers boxes the parts for shipment, but finds another purchaser who is willing to pay more and refuses to ship the parts to Auto. Auto is unable to find the parts for sale elsewhere, but is uncertain about what legal remedy to pursue. What remedy is best suited for this situation?

Accepted Answer

A writ of replevin is a court action that allows a person entitled to goods to recover them from someone who has them wrongfully. Buyers have a right of replevin for goods that have been identified in the contract if, after a reasonable effort, they are unable to buy the goods elsewhere.

Question 18

Which of the following is true of an exclusion of the implied warranty of fitness for a particular purpose?

Accepted Answer

To exclude the implied warranty of fitness for a particular purpose, the exclusion must be in writing and also be conspicuous.

Question 19

Which of the following is true of rejection of goods by the buyer?

Accepted Answer

A rejection occurs when a buyer refuses to accept delivery of goods tendered. A rejection must be done within a reasonable time after delivery or tender to the buyer. After a rejection, the buyer must notify the seller of the particular defect in the goods, so as to give the seller an opportunity to correct the defect. If the goods are in the buyer's possession, the buyer must hold them with reasonable care long enough for the seller to remove them.

Question 20

A(n) ____________ is any written warranty that does not meet all of the requirements for a full warranty.

Accepted Answer

A limited warranty is any written warranty that does not meet all of the requirements for a full warranty. The consumer is not given the absolute, free-of-charge repair or replacement of a defective product, as in the full warranty. Something less than a complete remedy is given to the consumer.

Quiz 14: Sales Contracts Rights, Duties, Breach, and Warranties