Question 1

Genuine Seed Company and Hillside Farmers Cooperative enter into a contract for a sale of hybrid seeds. Under the perfect tender rule, Genuine Seed must ship or tender seeds to Hillside that
A) approximately conform to all of the details of the contract.
B) entirely conform to the contract except in one or two details.
C) exactly conform to the contract in every detail.
D) substantially conform to the contract in most details.

Accepted Answer

Under the perfect tender rule, the seller is obligated to deliver goods that exactly conform to the contract in every detail. Any deviation can be considered a breach of contract, giving the buyer the right to reject the goods.

Question 2

Sid and Tony enter a contract for a sale of Sid's collection of electric guitars. Before the time for performance, Sid tells Tony that he does not want to deliver the guitars. Anticipatory repudiation is
A) a breach of contract.
B) a compromise between two parties who are unable to perform.
C) a remedy available only to a breaching party.
D) a remedy available only to a nonbreaching party.

Accepted Answer

Anticipatory repudiation occurs when one party communicates to the other party before the time of performance that they will not fulfill their obligations under the contract. This communication is considered a breach of contract and gives the nonbreaching party the right to terminate the contract and claim damages.

Question 3

Pep Paints agrees to sell to Quality Painters Grade A-1 latex outdoor paint to be delivered May 8. On May 7, Pep tenders Grade B-2 paint. Quality re?jects the Grade B-2 paint. Two days later, Pep tenders Grade C-3 paint with an offer of a price allowance. Pep has
A) additional, unlimited time to cure.
B) a reasonable, additional time to cure.
C) one more day to cure.
D) no more time to cure.

Accepted Answer

Pep has breached the contract by tendering grade B-2 paint, and the rejection by Quality confirms that the contract has not been varied. Therefore, Pep has no more time to cure and is obligated to deliver Grade A-1 paint by May 8. The subsequent offer of Grade C-3 paint with a price allowance is not a cure but a new offer, which Quality is free to accept or reject.

Question 4

International Gem Corporation agrees to sell Jewelry Outlets, Inc. (JOI), fifty new diamonds, but the contract does not specify a place of delivery. JOI is expected to pick up the goods. The place of delivery is
A) International's place of business.
B) JOI's place of business.
C) the Annual Gems and Jewels Convention.
D) the U.S. Postal Service office nearest to JOI's place of business.

Accepted Answer

In the absence of a specified place of delivery in a contract, the default rule under the Uniform Commercial Code (UCC) is that the place of delivery is the seller's place of business.

Question 5

Business Rental Corporation (BRC) and Cartage Trucking Company enter into a contract for a lease of ten hydraulic lifts. Under the perfect tender rule, BRC must ship or tender goods to the lessee that
A) approximately conform to all of the details of the contract.
B) entirely conform to the contract except in one or two details.
C) exactly conform to the contract in every detail.
D) substantially conform to the contract in most details.

Accepted Answer

Under the perfect tender rule, the goods must exactly conform to the contract in every detail. This means that any deviation, no matter how minor, can result in a breach of contract. Therefore, BRC must ship or tender the ten hydraulic lifts that meet all the requirements specified in the contract.

Question 6

Primo Pools Company and Aquatic Recreation, Inc., enter into a contract for a sale of prefabricated swimming pools. Under either a shipment contract or a destination contract, the seller must
A) allow the buyer to reject the goods for any reason.
B) deliver the goods to a particular destination.
C) place the goods into the hands of a carrier.
D) provide the buyer with any necessary documents of title.

Accepted Answer

The answer of Primo Pools Company and Aquatic Recreation, Inc.,...

Question 7

Design Architects, Inc., and Excel Supply Company contract for a sale of office furniture. Design Architects, which is insolvent, breaches the contract. Excel can stop delivery of the goods in transit
A) only if the quantity is at least a carload.
B) only if the quantity is at least a planeload.
C) only if the quantity is at least a truckload.
D) regardless of the quantity.

Accepted Answer

Excel Supply Company can stop delivery of the goods in transit regardless of the quantity as the contract has been breached by Design Architects, which is insolvent. The right to stop delivery is available to the buyer under the Uniform Commercial Code (UCC) in case of a breach of contract by the seller.

Question 8

Food Packaging, Inc., agrees to sell 50,000 6-ounce yogurt containers to Golden Dairy Company. Food can obtain only 20,000 of the 6-ounce contain?ers, but also ships 30,000 more expensive 8-ounce containers for the same price. Under these circumstances, Golden
A) cannot reject delivery, and Food cannot later replace the containers.
B) cannot reject delivery, but Food can later replace the containers.
C) may reject delivery, and notice to Golden of Food's intent to cure will give Food a reasonable time to replace the containers.
D) may reject delivery, but Food cannot later replace the containers.

Accepted Answer

According to the UCC rules, if the seller fails to deliver the goods as per the contract, the buyer has the right to reject the delivery. However, in this case, Food Packaging, Inc. has a right to cure the defective delivery by providing the Golden Dairy Company with reasonable notice to replace the 6-ounce containers. Therefore, Golden Dairy Company may reject the delivery but Food Packaging, Inc. has the option to cure the defective delivery.

Question 9

Elegant Carpets, Inc., and Fantastic Floors Stores enter into a contract for a sale of carpeting. Under a shipment contract, the seller must
A) allow the buyer to reject the goods for any reason.
B) deliver the goods to a particular destination.
C) inspect the goods before shipping them.
D) place the goods into the hands of a carrier.

Accepted Answer

Under a shipment contract, the seller's responsibility is to place the goods into the hands of a carrier. The carrier then assumes responsibility for delivery of the goods to the buyer. The buyer does not have the right to reject the goods for any reason, and the seller is not required to deliver the goods to a particular destination or inspect the goods before shipping them.

Question 10

On May 1, City Auto & Truck Sales agrees to sell a car to Dino. Five days later, Dino refuses delivery and cancels the contract. City is enti?tled to
A) force Dino to accept the car.
B) recover any damages from Dino but not resell the car.
C) resell the car and recover any damages from Dino.
D) resell the car but not recover any damages from Dino.

Accepted Answer

Since Dino cancelled the contract, City Auto & Truck Sales can resell the car and recover any damages from Dino. This is because Dino breached the contract by refusing delivery and cancelling the contract, so City Auto & Truck Sales has the right to recover any damages incurred as a result of Dino's breach.

Question 11

According the court in Case 22.1, Maple Farms, Inc. v. City School District of Elmira, the defense of commercial impracticability will not excuse the performance of a contractual obligation when there is an increase in the seller's costs while the contract is in force
A) unless the increase in the seller's costs is substantial.
B) under any circumstances.
C) unless the increase in the seller's costs makes it impossible for the seller to perform without losing money.
D) unless the increase in the seller's costs was not foreseeable at the time the contract was formed.

Accepted Answer

The defense of commercial impracticability can excuse performance if the increase in costs was not foreseeable at the time the contract was formed, making it an unexpected and substantial burden.

Question 12

Screen Perfect, Inc., and TV Stores enter into a contract for a sale of high-definition television sets. Screen Perfect ships goods that do not exactly conform to the contract in some details. TV Stores
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

TV Stores can reject the entire shipment if the goods do not conform to the contract in essential details. This is because nonconformity in essential matters constitutes a breach of contract, entitling the buyer to reject the entire shipment. However, if the nonconformity is minor, TV Stores cannot reject the entire shipment and must accept the conforming portion of the goods.

Question 13

Clear Day Company, which is based in Delaware, agrees to sell fifty windows, currently stored in Florida, to Great Vu, Inc., which is based in Hawaii. Absent an agreement to the contrary, the place of deliv?ery is in
A) California.
B) Delaware.
C) Florida.
D) Hawaii.

Accepted Answer

The place of delivery would be where the goods are currently stored, which is Florida.

Question 14

Vehicle Leasing Agency (VLA) and Wander Trucking Company enter into a contract for a lease of eight cargo vans. VLA delivers eight vans, but they are not cargo-sized. Wander
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

Wander Trucking Company can reject the entire shipment since the vans delivered by VLA do not meet the specifications of cargo-sized vans as per the terms of the contract.

Question 15

Price-Cut Discount Stores are open to consumers. The UCC requirement of good faith imposes
A) a higher duty on consumers than Price-Cut.
B) a higher duty on Price-Cut than on consumers.
C) no duty on either Price-Cut or consumers.
D) the same duty on Price-Cut and consumers.

Accepted Answer

The answer of Price-Cut Discount Stores are open to consumers....

Question 16

Timber Mills Corporation and Ur-Choice Lumberyards enter into a contract for a sale of plywood. Under a destination contract, the seller must
A) allow the buyer to reject the goods for any reason.
B) deliver the goods to a particular destination.
C) inspect the goods before tendering their delivery.
D) place the goods into the hands of a carrier.

Accepted Answer

Under a destination contract, the seller is responsible for delivering the goods to a specific destination agreed upon with the buyer. The buyer has the right to reject the goods if they do not conform to the contractual terms, but this is subject to the terms of the contract. The seller is not required to inspect the goods before delivery, and it is not necessary for the seller to place the goods into the hands of a carrier, although this is typically how the goods are transported to their destination.

Question 17

Fact Pattern 22-A1 
Internet Cafes, Inc., contracts to buy all of its requirements for coffee, at a minimum of 1 million pounds per year, from Java Corporation for six years. After three years, Internet tells Java that it plans to sell its company to Kwik Eateries, Inc. Kwik refuses to assure Java that it will continue Internet's contract.
-Refer to Fact Pattern 22-A1. Kwik's refusal constitutes
A) a justified response based on Kwik's relation to the contract.
B) an assignment of Internet's rights under the contract.
C) a reasonable suspension of performance under the contract.
D) a repudiation of the contract.

Accepted Answer

Kwik's refusal to assure Java that it will continue Internet's contract amounts to a repudiation of the contract. A repudiation occurs when one party to a contract indicates that it will not perform its contractual obligations. In this case, Kwik's refusal to assume the contract with Java indicates that it is not willing to perform Internet's obligations, which amount to a breach of contract.

Question 18

Rocky and Slim enter into a contract for a sale of five rowboats. Circumstance make it difficult for Rocky to perform, and the contract is breached. Slim looks for remedies. Unlike the common law, under the UCC, remedies are
A) cumulative.
B) exclusive.
C) limited.
D) unlimited.

Accepted Answer

Under the UCC, remedies are cumulative, meaning that a party can pursue multiple remedies simultaneously or sequentially to address a breach of contract.

Question 19

Relax Chair Company contracts to deliver 100 chairs to Stuffy Furnishings Store on May 1 for which Stuffy agrees to pay. Relax tells Stuffy on April 15 that delivery will be delayed until June 1. Stuffy may
A) await performance, sue Relax, or suspend its own performance.
B) only await Relax's performance for a commercially reasonable time.
C) only sue Relax for breach of contract.
D) only suspend its own performance.

Accepted Answer

Stuffy has three options according to the contract: waiting for Relax's performance, suing Relax, or suspending its own performance. Since Relax has breached the contract by delaying delivery, Stuffy has the right to choose one of these options.

Question 20

Super Resources, Inc., sells unprocessed minerals to commercial proc?essors in Texas. With regard to the UCC's good faith requirement, Super can
A) avoid it only by a conspicuous written disclaimer.
B) avoid it only by oral disclaimer.
C) avoid it with or without a disclaimer.
D) not disclaim it.

Accepted Answer

The UCC's good faith requirement cannot be disclaimed. It is a fundamental obligation in commercial transactions under the UCC.

Quiz 22: Performance Breach of Sales Lease Contracts

Genuine Seed Company and Hillside Farmers Cooperative enter into a contract for a sale of hybrid seeds. Under the perfect tender rule, Genuine Seed must ship or tender seeds to Hillside that

Sid and Tony enter a contract for a sale of Sid's collection of electric guitars. Before the time for performance, Sid tells Tony that he does not want to deliver the guitars. Anticipatory repudiation is

Pep Paints agrees to sell to Quality Painters Grade A-1 latex outdoor paint to be delivered May 8. On May 7, Pep tenders Grade B-2 paint. Quality re?jects the Grade B-2 paint. Two days later, Pep tenders Grade C-3 paint with an offer of a price allowance. Pep has

International Gem Corporation agrees to sell Jewelry Outlets, Inc. (JOI) , fifty new diamonds, but the contract does not specify a place of delivery. JOI is expected to pick up the goods. The place of delivery is

Business Rental Corporation (BRC) and Cartage Trucking Company enter into a contract for a lease of ten hydraulic lifts. Under the perfect tender rule, BRC must ship or tender goods to the lessee that

Primo Pools Company and Aquatic Recreation, Inc., enter into a contract for a sale of prefabricated swimming pools. Under either a shipment contract or a destination contract, the seller must

Design Architects, Inc., and Excel Supply Company contract for a sale of office furniture. Design Architects, which is insolvent, breaches the contract. Excel can stop delivery of the goods in transit

Food Packaging, Inc., agrees to sell 50,000 6-ounce yogurt containers to Golden Dairy Company. Food can obtain only 20,000 of the 6-ounce contain?ers, but also ships 30,000 more expensive 8-ounce containers for the same price. Under these circumstances, Golden

Elegant Carpets, Inc., and Fantastic Floors Stores enter into a contract for a sale of carpeting. Under a shipment contract, the seller must

On May 1, City Auto & Truck Sales agrees to sell a car to Dino. Five days later, Dino refuses delivery and cancels the contract. City is enti?tled to

According the court in Case 22.1, Maple Farms, Inc. v. City School District of Elmira, the defense of commercial impracticability will not excuse the performance of a contractual obligation when there is an increase in the seller's costs while the contract is in force

Screen Perfect, Inc., and TV Stores enter into a contract for a sale of high-definition television sets. Screen Perfect ships goods that do not exactly conform to the contract in some details. TV Stores

Clear Day Company, which is based in Delaware, agrees to sell fifty windows, currently stored in Florida, to Great Vu, Inc., which is based in Hawaii. Absent an agreement to the contrary, the place of deliv?ery is in

Vehicle Leasing Agency (VLA) and Wander Trucking Company enter into a contract for a lease of eight cargo vans. VLA delivers eight vans, but they are not cargo-sized. Wander

Price-Cut Discount Stores are open to consumers. The UCC requirement of good faith imposes

Timber Mills Corporation and Ur-Choice Lumberyards enter into a contract for a sale of plywood. Under a destination contract, the seller must

Rocky and Slim enter into a contract for a sale of five rowboats. Circumstance make it difficult for Rocky to perform, and the contract is breached. Slim looks for remedies. Unlike the common law, under the UCC, remedies are

Relax Chair Company contracts to deliver 100 chairs to Stuffy Furnishings Store on May 1 for which Stuffy agrees to pay. Relax tells Stuffy on April 15 that delivery will be delayed until June 1. Stuffy may

Super Resources, Inc., sells unprocessed minerals to commercial proc?essors in Texas. With regard to the UCC's good faith requirement, Super can