Question 1

Consuelo and Gabriela enter into a contract for a sale of saxophones and other brass instruments. Consuelo delivers, but Gabriela does not pay. Consuelo 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 general rule is that the seller can recover the purchase price plus incidental damages (e.g. storage costs, transportation costs) as damages for the buyer's breach of contract. Option A is incorrect because it suggests that the seller can recover lost profits, which is not always true. Option B is incorrect because the seller cannot claim any amount they wish, but only an amount that is reasonable and related to the breach. Option D is incorrect because the market price is not always a definitive measure of damages in a breach of contract case.

Question 2

Screen Perfect, Inc., and Vibrant View Stores enter into a contract for a sale of 3D HD TVs with certain specifications. Screen Perfect ships TVs that are not 3D but otherwise meet the specifications. Vibrant View
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

Since the TVs do not meet the agreed-upon specifications, Vibrant View can reject the entire shipment. However, if they choose to accept some of the TVs that do meet the specifications, they can negotiate with Screen Perfect for a partial refund or discount.

Question 3

Rocky and Slim enter into a contract for a sale of five rowboats. Circumstances 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

The answer of Rocky and Slim enter into a contract...

Question 4

Nash buys a car under a warranty from Rough Ride Motors. Nash soon discovers that the car has a defect that significantly affects its value and use. In all states and the District of Columbia, Nash may have remedies under
A) a lemon law.
B) a letter of credit.
C) Article 74 of the CISG.
D) the Automobile Dealers' Day in Court Act.

Accepted Answer

The lemon law is a state law that provides remedies to buyers of defective vehicles. This law requires the manufacturer to either replace or refund the purchase price of the vehicle if certain criteria are met, such as a significant defect that affects the safety, use, or value of the vehicle. This law is available in all states and the District of Columbia. Therefore, Nash may have remedies under a lemon law.

Question 5

Fact Pattern 21-A1
Internet Cafés, 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 assets to Bagel Bistros, Inc. Bagel Bistros refuses to assure Java that it will continue Internet’s contract.
-Refer to Fact Pattern 21-A1. Java 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 Java is fully paid.
D) do nothing.

Accepted Answer

Java has the right to terminate the contract if Internet Cafés plans to sell its assets and the new buyer (Bagel Bistros) refuses to continue the contract. Java can seek damages for breach of 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

Hydraulic Leasing Corporation (HLC) and Dockside Offloading Company enter into a contract for a lease of ten hydraulic lifts. Under the perfect tender rule, HLC must ship or tender goods to the lessee that
A) approximately conform to the contract description.
B) entirely conform to the contract description in most ways.
C) conform to the contract description in every way.
D) substantially conform to the contract description.

Accepted Answer

Under the perfect tender rule, the goods must conform to the contract description in every way. Any deviation from the agreed-upon specifications, no matter how minor, would be a breach of contract.

Question 8

Bayou Boats, Inc., contracts for the sale of seven swamp boats to Tidal Flats Fishing Tours. Bayou repudiates the contract. Tidal Flats's recovery of damages is measured at the time
A) Bayou advertised the goods.
B) Tidal Flats ordered the goods.
C) Tidal Flats learned of the breach.
D) Bayou knew that it would repudiate the contract.

Accepted Answer

Tidal Flats's recovery of damages is measured at the time they learned of the breach, as this is when they were first aware of the harm caused by Bayou Boats's repudiation of the contract. This is known as the time of the breach or the time of the injury. The other options (A, B, and D) are not relevant to the calculation of damages.

Question 9

Cheesy Pizza Company contracts to sell 1,000 cases of frozen pizzas to Roller Rinks, Inc., but refuses to deliver. Due to a spice shortage, Roller Rinks cannot obtain pizza elsewhere. Roller Rinks's right to recover the goods from Cheesy is the right of
A) cover.
B) cure.
C) replevin.
D) specific performance.

Accepted Answer

Replevin is the legal process a buyer can utilize to recover goods that have been wrongfully withheld by the seller. In this scenario, Roller Rinks cannot obtain pizza elsewhere due to a spice shortage and Cheesy Pizza Company has refused to deliver, which means Roller Rinks has the right to recover the goods from Cheesy through the legal process of replevin.

Question 10

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 11

Field Gardens and Gourmet Restaurant, Inc., enter into a contract for a sale of lettuce. When Field learns that Gourmet is insolvent, Field 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

According to the Uniform Commercial Code (UCC), Field has the right to stop delivery of goods in transit if the buyer becomes insolvent. There is no minimum quantity requirement for this right to apply. Therefore, regardless of the quantity, Field can stop delivery.

Question 12

Amble Country Stables contracts to buy 1,000 horseshoes from Burleigh Blacksmith, Inc., for $1 per shoe. When the market price decreases to 50 cents per shoe, Amble refuses to go through with the deal. Burleigh can recover
A) $1,500.
B) $1,000.
C) $500.
D) $0.

Accepted Answer

Burleigh can recover the difference between the contract price and the market price, which is $500 (1,000 shoes x $0.50 difference per shoe). Therefore, the correct choice is C.

Question 13

Owen and Pablo enter into a contract for a sale of fifty Western saddles. 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

Pablo can normally recover as damages the difference between the contract price and the market price. This means that if Owen fails to deliver the saddles, Pablo can recover the amount by which the market price of the saddles on the date of delivery is higher than the contract price. This is because the damages are designed to put Pablo in the position he would have been in had Owen fulfilled his obligations under the contract.

Question 14

Recycle Packaging, Inc., agrees to sell 50,000 6-ounce yogurt containers to Organic Dairy Company. Recycle can obtain only 20,000 of the 6-ounce containers, but also ships 30,000 more expensive 8-ounce containers for the same price. Organic rejects the 8-ounce containers. With time for performance not yet expired, Recycle can
A) attempt to cure the defect.
B) cancel the contract.
C) recover the purchase price plus incidental damages.
D) resell or dispose of the goods and hold Organic liable for any loss.

Accepted Answer

Recycle can attempt to cure the defect by either finding 30,000 additional 6-ounce containers or offering a discount on the purchase price for the 8-ounce containers to compensate for the difference in cost. This would fulfill their obligation under the contract and avoid a breach of contract. Cancelling the contract or reselling/disposing of the goods without Organic's consent would likely result in a breach of contract and potential legal action. Recovering the purchase price plus incidental damages is not a viable option since the contract has not yet been fully performed.

Question 15

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 delivery is in
A) California.
B) Delaware.
C) Florida.
D) Hawaii.

Accepted Answer

The answer of Clear Day Company, which is based in...

Question 16

Mitch and Nadine enter into a contract for a sale of seventy-six specially made motion detectors. When Nadine does not deliver within a reasonable time after the agreed delivery date, Mitch files a suit for breach. Nadine asserts the doctrine of commercial impracticability. This doctrine extends only to problems that are
A) foreseen.
B) preventable.
C) unforeseen.
D) ordinarily assumed by a seller or lessor.

Accepted Answer

The doctrine of commercial impracticability extends only to unforeseen problems that could not have been anticipated or prevented. Nadine's failure to deliver the motion detectors within a reasonable time could not have been anticipated and falls within this category.

Question 17

Double D Ranch and Esau enter into a contract on August 1 for the sale of 200 cattle. Esau cancels the contract ten days later. Double D is unable to sell the cattle to another buyer. Double D can
A) force Esau to accept the cattle and pay for them.
B) recover the contract price from Esau but must hold the cattle for him.
C) recover the contract price from Esau and keep the cattle.
D) recover the contract price from Esau but must destroy the cattle.

Accepted Answer

When a party breaches a contract, the non-breaching party is entitled to recover damages. In this case, Double D Ranch can recover the contract price from Esau. However, Double D Ranch must hold the cattle for Esau because cattle is a unique product and cannot be easily resold to another buyer. Therefore, choice B is the best option. Choice A is not possible because Double D Ranch cannot force Esau to accept the cattle. Choice C is not possible because Double D Ranch cannot keep the cattle and also recover the contract price. Choice D is not possible because destroying the cattle would be a waste and an unreasonable solution.

Question 18

Fact Pattern 21-A1
Internet Cafés, 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 assets to Bagel Bistros, Inc. Bagel Bistros refuses to assure Java that it will continue Internet’s contract.
-Refer to Fact Pattern 21-A1. Bagel Bistros's refusal is
A) a justified response based on Bagel Bistros'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

Bagel Bistros's refusal to assure Java that it will continue Internet’s contract is a repudiation of the contract. Bagel Bistros's refusal shows that it has no intention of performing under the contract, and this constitutes a breach of the contract. Java can now treat the contract as terminated and seek damages.

Question 19

Nature's Foods, Inc., orders "Grade A" oil from Olive Grove Farms to process and sell to Pic 'N Pay Grocers. Olive Grove ships "Grade B" oil, which Nature's Foods accepts. To recover damages for the nonconformity, Nature's Foods must give notice of the breach within a reasonable time to
A) Olive Grove.
B) Pic 'N Pay.
C) no one.
D) the appropriate government agency.

Accepted Answer

Nature's Foods, Inc., must give notice of the breach within a reasonable time to Olive Grove Farms as they are the party that did not provide the agreed upon product. Pic 'N Pay Grocers is not directly involved in the transaction and therefore is not responsible for the nonconforming product. The appropriate government agency is also not involved in this situation.

Question 20

Richman Manufacturing Company contracts to sell sweaters to Sweet Sweaters store. Before the sweaters are delivered, Sweet Sweaters indicates that it will not be able to pay. Richman can
A) force Sweet Sweaters to accept and pay for the sweaters.
B) require Sweet Sweaters to find a buyer for the sweaters.
C) resell the sweaters and recover any damages from Sweet Sweaters.
D) do nothing.

Accepted Answer

Richman Manufacturing Company can resell the sweaters and recover any damages from Sweet Sweaters as per the doctrine of mitigation of damages. The company can also negotiate a settlement with Sweet Sweaters or pursue legal action for breach of contract but forcing them to accept and pay for the sweaters is not a viable option. Requiring Sweet Sweaters to find a buyer for the sweaters is also not an appropriate solution as it was Richman Manufacturing Company's responsibility to find a buyer. Doing nothing would result in loss for the company.

Quiz 21: Performance Breach of Sales Lease Contracts

Consuelo and Gabriela enter into a contract for a sale of saxophones and other brass instruments. Consuelo delivers, but Gabriela does not pay. Consuelo can normally recover as damages

Screen Perfect, Inc., and Vibrant View Stores enter into a contract for a sale of 3D HD TVs with certain specifications. Screen Perfect ships TVs that are not 3D but otherwise meet the specifications. Vibrant View

Rocky and Slim enter into a contract for a sale of five rowboats. Circumstances 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

Nash buys a car under a warranty from Rough Ride Motors. Nash soon discovers that the car has a defect that significantly affects its value and use. In all states and the District of Columbia, Nash may have remedies under

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

Hydraulic Leasing Corporation (HLC) and Dockside Offloading Company enter into a contract for a lease of ten hydraulic lifts. Under the perfect tender rule, HLC must ship or tender goods to the lessee that

Bayou Boats, Inc., contracts for the sale of seven swamp boats to Tidal Flats Fishing Tours. Bayou repudiates the contract. Tidal Flats's recovery of damages is measured at the time

Cheesy Pizza Company contracts to sell 1,000 cases of frozen pizzas to Roller Rinks, Inc., but refuses to deliver. Due to a spice shortage, Roller Rinks cannot obtain pizza elsewhere. Roller Rinks's right to recover the goods from Cheesy is the right of

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

Field Gardens and Gourmet Restaurant, Inc., enter into a contract for a sale of lettuce. When Field learns that Gourmet is insolvent, Field can stop delivery of the goods in transit

Amble Country Stables contracts to buy 1,000 horseshoes from Burleigh Blacksmith, Inc., for $1 per shoe. When the market price decreases to 50 cents per shoe, Amble refuses to go through with the deal. Burleigh can recover

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

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 delivery is in

Double D Ranch and Esau enter into a contract on August 1 for the sale of 200 cattle. Esau cancels the contract ten days later. Double D is unable to sell the cattle to another buyer. Double D can

Nature's Foods, Inc., orders "Grade A" oil from Olive Grove Farms to process and sell to Pic 'N Pay Grocers. Olive Grove ships "Grade B" oil, which Nature's Foods accepts. To recover damages for the nonconformity, Nature's Foods must give notice of the breach within a reasonable time to

Richman Manufacturing Company contracts to sell sweaters to Sweet Sweaters store. Before the sweaters are delivered, Sweet Sweaters indicates that it will not be able to pay. Richman can