Question 1

Lock & Key Storage Pods and Maxi Discount Stores enter into a contract for a lease of ten storage pods of a certain size.Lock & Key delivers ten pods,but they are not the right size.Maxi Discount

Accepted Answer

Maxi Discount Stores can reject the entire shipment if the ten storage pods delivered by Lock & Key are not the right size. This is because the contract was for a specific size of storage pods, and if Lock & Key did not deliver as promised, Maxi Discount Stores does not have to accept the incorrect shipment.

Question 2

Repair Tools Company contracts to deliver fifty heavy-duty steel floor jacks to Serv-UR-Self Auto Stores on May 1 for which Serv-UR-Self agrees to pay.Repair Tools tells Serv-UR-Self on April 15 that delivery will be delayed until June 1.Serv-UR-Self may do all of the following except

Accepted Answer

Serv-UR-Self cannot force Repair Tools to deliver substitute goods before the time for the contract's performance because this would be considered a material alteration of the contract. The other options (B, C, D) are all valid courses of action for Serv-UR-Self in response to the delayed delivery.

Question 3

Sweet Fruits contracts with Fruits to You,Inc.,for two hundred pounds of strawberries to be delivered by Keep Kool Trucking,a trucking company with refrigerated trucks.On the day of delivery,the refrigeration units on Keep Kool's trucks are not working.Fruits to You

Accepted Answer

Fruits to You may still fulfill their obligation to Sweet Fruits by using another trucking company with refrigerated trucks. This solution would satisfy the requirements of the contract and ensure that Sweet Fruits receives the goods they ordered.

Question 4

Fact Pattern 22-B1 (Questions B18-B20 apply)
Economy Bank issues a letter of credit in favor of Finish & Refining Company,a U.S.firm,to facilitate an international sales contract to buy resources from Global Mining,Ltd.,a British company.
-Refer to Fact Pattern 22-B1.In this letter of credit,the account party is

Accepted Answer

The account party in the letter of credit is the beneficiary, in this case, Finish & Refining Company, the U.S. firm that will receive payment upon fulfilling the terms of the letter of credit. Global Mining is the seller of the resources and is not the account party. Economy Bank is the issuing bank and Great Britain is not a party to the transaction.

Question 5

Fact Pattern 22-B1 (Questions B18-B20 apply)
Economy Bank issues a letter of credit in favor of Finish & Refining Company,a U.S.firm,to facilitate an international sales contract to buy resources from Global Mining,Ltd.,a British company.
-Refer to Fact Pattern 22-B1.Economy Bank is bound to

Accepted Answer

As the issuer of the letter of credit, Economy Bank is bound to make payment to Global Mining when it presents the proper documents in accordance with the terms of the letter of credit. It does not have a duty to make sure that the parties perform the contract, nor does it have to verify with Finish & Refining that the transaction has been completed. It also cannot simply pay Global Mining whenever it asks to be paid, as payment must be made in accordance with the terms of the letter of credit.

Question 6

Shane's Auto Parts orders twenty tires from Tough Tires,Inc.The truck delivering the tires to Shane's is involved in an accident and ten of the tires are damaged.Shane's Auto Parts

Accepted Answer

According to the scenario, only ten out of the twenty delivered tires are damaged. Therefore, Shane's Auto Parts cannot reject the entire shipment as it still needs the undamaged ten tires. However, it has the option to inspect the tires and negotiate a reduction in price for the ten damaged ones. Therefore, the best choice is to accept the shipment with a reduction in price.

Question 7

Fuel Connector Products,Inc.,agrees to sell Go-Flo,Inc.,a certain quantity of hose couplings and fittings,but the contract does not specify a place of delivery.Go-Flo is expected to pick up the goods.The place of delivery is

Accepted Answer

Since the contract does not specify a place of delivery and Go-Flo is expected to pick up the goods, the place of delivery would default to Fuel Connector's place of business, where the goods would be available for pickup.

Question 8

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 Prefabricators is entitled to

Accepted Answer

Since Hiway refused delivery and cancelled the contract within a reasonable time, Garage Prefabricators can resell the garages to mitigate their damages. They can also recover any damages from Hiway such as the cost of resale and any loss in value. This is known as the right to resale and recover damages due to a breach of contract. Option A is not possible as Hiway has already cancelled the contract. Option B is incorrect as Garage Prefabricators can also resell the garages. Option D is incorrect as they can still recover damages from Hiway.

Question 9

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 has the right to sue for the purchase price plus incidental damages since Moving Services accepted the ramps but did not pay for them. This is a breach of contract and gives Loading Ramps the right to seek compensation for damages incurred as a result of the breach.

Question 10

Fact Pattern 22-B1 (Questions B18-B20 apply)
Economy Bank issues a letter of credit in favor of Finish & Refining Company,a U.S.firm,to facilitate an international sales contract to buy resources from Global Mining,Ltd.,a British company.
-Refer to Fact Pattern 22-B1.Global Mining is entitled to payment when it

Accepted Answer

Global Mining is entitled to payment when they comply with the terms and conditions of the letter of credit, which is the agreement between Economy Bank and Finish & Refining Company. Therefore, the correct choice is C.

Question 11

Beef Burgers,Inc.contracts to buy five hundred steers from Fattening Feedlots.Before Fattening Feedlots can deliver the steers,there is an outbreak of disease in the feedlot,and all the cattle are quarantined,which makes performance impracticable.In this situation,the perfect tender rule

Accepted Answer

The perfect tender rule states that the seller must deliver goods that conform to the contract in every detail, and any deviation from the contract terms constitutes a breach of contract. However, in this situation, the outbreak of disease in the feedlot is beyond the control of both parties and makes performance impracticable. Therefore, the perfect tender rule does not apply, and both parties are excused from their obligations under the contract.

Question 12

Sun Power,Inc.,sells solar power cells and panels to commercial dealers in the Southwest.With regard to the UCC's good faith requirement,Sun Power can

Accepted Answer

The UCC's good faith requirement is a fundamental obligation that cannot be disclaimed by any party involved in a commercial transaction.

Question 13

On July 10,Pet Supply Store orders fifty small dog collars from Quality Collars,Inc.to be delivered by July 15.On July 13,Quality Collars tenders fifty large dog collars.Pet Supply rejects the shipment.Quality Collars has

Accepted Answer

Quality Collars has until July 15 to cure because that is the original delivery date agreed upon, and they have the opportunity to correct the mistake and deliver the correct items by that date.

Question 14

BBQ,Inc.,makes and sells grills to Cook's Choice and Grill Mart,retailers of kitchen appliances,outdoor cooking equipment,and related utensils.Their contracts limit consequential damages when the loss is commercial in nature.This is prima facie unconscionable with respect to

Accepted Answer

Limiting consequential damages in commercial contracts is generally not considered unconscionable, as businesses are presumed to have equal bargaining power and the ability to negotiate terms.

Question 15

Almond Farms contracts for the sale of a certain quantity of nuts to Bulk Natural Foods Stores.Almond Farms delivers nonconforming goods.Acceptance will be presumed unless Bulk Natural Foods rejects the goods

Accepted Answer

According to the scenario, acceptance will be presumed unless Bulk Natural Foods rejects the goods within a reasonable time after delivery, as nonconforming goods have been delivered. Therefore, option A is the correct answer. Option B and D are irrelevant to the context. Option C is also incorrect as non-perishable goods also have a certain shelf life, and hence a reasonable time for rejection of goods must be stated.

Question 16

GR8 Daze Products,Inc.,and Hot Springs Spas Stores enter into a contract for a sale of hot tubs.Under a shipment contract,the seller must

Accepted Answer

Under a shipment contract, the seller's obligation is to place the goods into the hands of a carrier, not to deliver them to a particular destination or allow the buyer to reject them for any reason.

Question 17

Garden Field Farms and Haute Gourmet Restaurant,Inc.,enter into a contract for a sale of lettuce.After Garden Field ships the lettuce but before Haute Gourmet receives it,the buyer declares bankruptcy.Garden Field can stop delivery of the goods in transit

Accepted Answer

Under the Uniform Commercial Code (UCC), if the buyer declares bankruptcy before receiving the goods, the seller has the right to stop delivery of the goods in transit regardless of the quantity. This is because the seller's right to stop delivery arises from the buyer's breach of contract or default, not from any specific quantity or volume of goods.

Question 18

Energy Products Corporation and First Response Preparedness.com enter into a contract for a sale of portable generators.Under a destination contract,the seller must

Accepted Answer

Under a destination contract, the seller must deliver the goods to a particular destination agreed upon in the contract. Therefore, option B is the correct choice. Option A is incorrect because a destination contract does not allow the buyer to reject the goods for any reason. Option C is incorrect because inspection is not a requirement of a destination contract. Option D is also incorrect because the seller does not have to place the goods in the hands of a carrier in a destination contract.

Question 19

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

Accepted Answer

Oh! Wow! Markets can reship or store the goods for the seller if the goods do not conform to the contract and they cannot obtain instructions from the seller. This is a reasonable action to take when the seller is unresponsive.

Question 20

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

Accepted Answer

Under the perfect tender rule, the seller (BRC) is obligated to deliver goods that conform to the contract description in every way. This means that there can be no significant deviations from the agreed-upon terms, even if those deviations are relatively minor. The lessee (Cartage Trucking Company) has the right to reject any shipment that does not meet this standard.

Quiz 22: Performance Breach of Sales Lease Contracts