Question 1

UCC Section _____ requires good faith in the performance and enforcement of every contract.
A) 1-203
B) 2-205
C) 3-301
D) 3-302
E) 1-007

Accepted Answer

UCC Section 1-203 requires good faith in the performance and enforcement of every contract.

Question 2

What did the court rule in the case of Hubbard v. UTZ Quality Foods Inc., in which the buyer refused on the basis of color to accept potatoes that were the subject of an installment contract? A) That the failure to meet the proper color standard was not a substantial impairment. B) That the failure to meet the proper color standard was a substantial impairment but that it did not impair the contract. C) That the failure to meet the proper color standard amounted to a substantial impairment of the installments substantially impairing the whole contract. D) That the refusal to accept the potatoes was made in bad faith. E) That the tendering of the potatoes was made in bad faith.

Accepted Answer

According to the court "The failure to meet the proper color standard amounted to a 'substantial impairment' of the installments (2-612(2)), substantially impairing the whole contract (2-612(3))."

Question 3

Belinda orders a certain type of hybrid rose for her wedding. A disease sweeps through that type of rose, and the florist could only obtain the roses at great cost if at all. Which of the following is the appropriate term for the florist's best defense?
A) Commercial unreasonableness
B) Commercial impracticability
C) Substantial hardship
D) Unforeseen circumstances
E) Unreasonable bride

Accepted Answer

UCC Sections 2-615(a) and 2A-405(a) state that a delay in delivery or nondelivery, in whole or in part, is not a breach in circumstances in which performance has been made impracticable because a contingency has occurred that was not contemplated when the parties reached an agreement.

Question 4

Under the UCC a delay in delivery or nondelivery, in whole or in part, is not a breach in circumstances in which performance has been made ______ because a contingency has occurred that was not contemplated when the parties reached the agreement.
A) Unreasonable
B) Unprofitable
C) Less profitable
D) Impracticable
E) More difficult

Accepted Answer

UCC Sections 2-615(a) and 2A-405(a) state that a delay in delivery or nondelivery, in whole or in part, is not a breach in circumstances in which performance has been made impracticable because a contingency has occurred that was not contemplated when the parties reached an agreement.

Question 5

Whether goods conform to contract terms is a ____.
A) Question of fact
B) Question of law
C) Mixed question of law and fact
D) Question of law unless an installment contract is involved in which case it is a question of fact
E) Question of fact unless an installment contract is involved in which case it is a question of law

Accepted Answer

According to the court in Hubbard v. UTZ Quality Foods Inc., whether goods conform to contract terms is a question of fact.

Question 6

When may a buyer revoke acceptance if a nonconformity substantially impairs the value of goods?
A) For any reason within 24 hours of acceptance.
B) For any reason within 48 hours of acceptance.
C) For any reason within 7 days of acceptance.
D) For any reason within 30 days of acceptance.
E) Only if the buyer had a legitimate reason for the initial acceptance.

Accepted Answer

The buyer or lessee may revoke acceptance if the nonconformity substantially impairs the value of the goods but only if he or she had a legitimate reason for the initial acceptance.

Question 7

"Business Law Rocks." Business law teacher Penny ordered 50 T-shirts for her classes that said "Business Law Rocks" on the front. She wanted to give them out on the last day of class and contracted with Frank, who owned a T-shirt business, for the shirts to arrive by that day. The shirts arrived on Thursday, just before the last day of classes on Friday. Unfortunately, the shirts said "Business Law Yuck" on the front. Frank told Penny that he would remedy and fix the problem and that he had the right to do so. She told him, however, that she had to have the shirts the next day because the students would be gone after that. Penny had also ordered some pamphlets on employment law to be used the next fall semester. The seller had agreed to provide the pamphlets 30 days before spring semester ended. The seller, however, erred and sent pamphlets on environmental law which arrived 28 days before spring semester ended. The seller attempted to remedy the problem by sending the correct pamphlets on employment law, but they did not arrive until 27 days before spring semester ended. None of the parties had any prior dealings
-In claiming that he had the right to fix the problem, Frank was alluding to which of the following under the UCC?
A) The right to cure
B) The right to review
C) The right to perform
D) The right to claim
E) The right to reclaim

Accepted Answer

Under UCC Sections 2-508 and 2A-513, sellers and lessors have the right to cure or fix problems with nonconforming goods.

Question 8

"Baseball Trophies." To recognize baseball players on his team, Bobby ordered from Bruce 10 trophies showing a baseball player swinging a bat. The trophies were to be delivered on May 1st for an award dinner to be held on May 20th. Bruce was unable to obtain trophies showing a baseball player swinging a bat, but by May 13th, he did locate some trophies with a baseball player holding a bat. The difference did not substantially impair the value of the trophies, and thinking that the trophies would be acceptable, Bruce delivered them on May 14th. Bobby glanced at the trophies, paid for them with a check, and said nothing. On May 16th Bobby looked at the trophies more closely and decided that he did not like them. He canceled payment on Bruce's check, and Bruce sued him for payment.
-What is the most likely effect of Bruce's failure to cure the problem?
A) In order to receive payment, Bruce must provide correct trophies; otherwise, he is not entitled to payment.
B) Bobby's actions effectively prevented Bruce form an opportunity to cure any defects and, therefore, Bobby's actions cannot be said to have effectively rejected the goods resulting in him owing Bruce.
C) Bobby will be required to take a 50% reduction on the price to be paid for the goods.
D) Bobby will be required to take a 30% reduction on the price to be paid for the goods.
E) Bobby will be required to take a 20% reduction on the price to be paid for the goods.

Accepted Answer

As recognized in the case of DeJesus v. Cat Auto Tech Corp., "Defendant's failure to properly notify plaintiff of the nonconformity effectively prevented plaintiff from an opportunity to cure any defects, within the time limitations of this case, and therefore defendant's actions cannot be considered to have effectively rejected the goods herein."

Question 9

"Baseball Trophies." To recognize baseball players on his team, Bobby ordered from Bruce 10 trophies showing a baseball player swinging a bat. The trophies were to be delivered on May 1st for an award dinner to be held on May 20th. Bruce was unable to obtain trophies showing a baseball player swinging a bat, but by May 13th, he did locate some trophies with a baseball player holding a bat. The difference did not substantially impair the value of the trophies, and thinking that the trophies would be acceptable, Bruce delivered them on May 14th. Bobby glanced at the trophies, paid for them with a check, and said nothing. On May 16th Bobby looked at the trophies more closely and decided that he did not like them. He canceled payment on Bruce's check, and Bruce sued him for payment.
-Which of the following is the most likely result if Bruce claims he had reasonable grounds to believe the trophies were acceptable?
A) He would be correct because Bruce's payment by check for the goods upon their delivery provided Bobby with a measure of reliance that they would be acceptable.
B) He would be incorrect because Bruce did not confirm in writing that the trophies were acceptable.
C) He would be incorrect because Bruce did not confirm orally or in writing that the trophies were acceptable.
D) He would be correct because of the special UCC exception for sports-related items.
E) He would be correct because of the special UCC exception for school-related items.

Accepted Answer

As recognized in the case of DeJesus v. Cat Auto Tech Corp., "Defendant's payment by check for the goods upon their delivery provided the plaintiff with a measure of reliance that the same would be acceptable."

Question 10

"Business Law Rocks." Business law teacher Penny ordered 50 T-shirts for her classes that said "Business Law Rocks" on the front. She wanted to give them out on the last day of class and contracted with Frank, who owned a T-shirt business, for the shirts to arrive by that day. The shirts arrived on Thursday, just before the last day of classes on Friday. Unfortunately, the shirts said "Business Law Yuck" on the front. Frank told Penny that he would remedy and fix the problem and that he had the right to do so. She told him, however, that she had to have the shirts the next day because the students would be gone after that. Penny had also ordered some pamphlets on employment law to be used the next fall semester. The seller had agreed to provide the pamphlets 30 days before spring semester ended. The seller, however, erred and sent pamphlets on environmental law which arrived 28 days before spring semester ended. The seller attempted to remedy the problem by sending the correct pamphlets on employment law, but they did not arrive until 27 days before spring semester ended. None of the parties had any prior dealings
-Is Frank correct in that he has a right to remedy and fix the problem?
A) No, the UCC does not provide a party with the right to fix any problem.
B) No, while the UCC provides a party with the right to fix some problems, the problems with the T-shirts were too serious to afford Frank that right.
C) Yes, but only if he can provide correctly worded T-shirts by the next day, the last day set for performance.
D) Yes, Frank has up to 10 days under the UCC to fix any problem.
E) Yes, Frank has up to 20 days under the UCC to fix any problem.

Accepted Answer

Sellers and lessors can repair, adjust, or replace defective or nonconforming goods as long as they give prompt notice of the intent to cure and go ahead and cure within the contract time for performance. Under UCC 2-508(2) and 2A-513(2), the seller or lessor can still exercise the right to cure once the contract time for performance has passed as long as the seller or lessor has reasonable grounds to believe that the nonconforming tender would be acceptable to the buyer or lessee. In the hypothetical at issue, Frank had no reason to believe that the nonconforming tender would be acceptable.

Question 11

Which of the following governs the inspection process?
A) The seller has an absolute right to dictate the date, time, and method of inspection.
B) The buyer has an absolute right to dictate the date, time, and method of inspection.
C) The seller has an absolute right to dictate the date and time of inspection, but the buyer has the right to dictate the method of inspection.
D) The buyer has an absolute right to dictate the date and time of inspection, but the seller has the right to dictate the method of inspection.
E) The inspection must take place at a reasonable time and place, in a reasonable way.

Accepted Answer

The concept of reasonableness governs the inspection process. For example, inspection must take place at a reasonable time and place, in a reasonable way.

Question 12

"New Furniture." Penny purchased $3,000 worth of furniture from Good Wood Furniture. Through an arrangement with Good Wood, Penny financed the purchase through a financing company called Let Us Help You. Twenty-nine days after the goods were delivered to her, Penny had a disagreement with Let Us Help You regarding the amount of interest she would be required to pay. She notified Good Wood on that day that she was rejecting the goods. Good Wood claimed that she did not properly reject the furniture and also that she failed to act in good faith, an obligation imposed equally on all parties to a transaction. Penny says that she properly rejected; that, although the UCC imposes no duty of good faith, she acted in good faith; and that, in any event, she had an absolute right to return the goods.
-Which of the following is true regarding Penny's claim that the UCC imposes no obligation of good faith conduct?
A) Penny is correct in this instance because while the UCC generally imposes a duty of good faith, that duty is inapplicable during the initial 30 days after a purchase when a buyer has the right to revoke acceptance for a good or a bad reason.
B) Penny is correct in this instance because while the UCC generally imposes a duty of good faith, that duty is inapplicable in relation to third-party financing.
C) Penny is correct only if she can establish that the goods were overpriced resulting in the right to disregard any obligation of Good Wood.
D) Penny is correct only if she can establish that Good Wood Furniture itself failed to act in good faith.
E) Penny is incorrect.

Accepted Answer

UCC Section 1-203 requires good faith in the performance and enforcement of every contract.

Question 13

"New Furniture." Penny purchased $3,000 worth of furniture from Good Wood Furniture. Through an arrangement with Good Wood, Penny financed the purchase through a financing company called Let Us Help You. Twenty-nine days after the goods were delivered to her, Penny had a disagreement with Let Us Help You regarding the amount of interest she would be required to pay. She notified Good Wood on that day that she was rejecting the goods. Good Wood claimed that she did not properly reject the furniture and also that she failed to act in good faith, an obligation imposed equally on all parties to a transaction. Penny says that she properly rejected; that, although the UCC imposes no duty of good faith, she acted in good faith; and that, in any event, she had an absolute right to return the goods.
-Which of the following is the correct regarding Good Wood's contention that the duty of good faith is imposed on all parties equally?
A) Good Wood is incorrect because the UCC imposes no duty of good faith.
B) Good Wood is incorrect because the UCC mandated duty of good faith requires honesty in fact in regard to all transactions regardless of the parties involved.
C) Good Wood is incorrect because the UCC mandated duty of good faith imposes a higher duty than honesty of fact in regard to sellers, that of reasonable negotiation considering the position of buyers.
D) Good Wood is incorrect because the UCC mandated duty of good faith imposes a higher duty than honesty of fact in transactions involving amounts in excess of $500, that of reasonable conduct considering all circumstances.
E) Good Wood is incorrect because the UCC mandated duty of good faith imposes a higher duty than honesty in fact on merchants, that of reasonable commercial standards of fair dealing.

Accepted Answer

UCC Section 1-203 requires good faith in the performance and enforcement of every contract. Good faith means honesty in fact. When the parties are merchants, the UCC imposes a higher standard. Between merchants, the UCC imposes not only honesty in fact but also reasonable commercial standards of fair dealing. This second requirement is often called commercial reasonableness.

Question 14

Which of the following is true regarding the efforts of the seller of the employment law pamphlets to remedy the problem with the incorrect pamphlets?
A) The seller could not exercise the right to cure once the contract time for performance had ended because the seller did not have reasonable grounds to believe that the nonconforming tender of environmental pamphlets would be acceptable to Penny.
B) The seller could likely exercise the right to cure once the contract time for performance had ended because the seller would have had reasonable grounds to believe that Penny would not have objected to the tender of the correct item at the time it was tendered.
C) The seller correctly acted to remedy the problem because he had up to 10 days under the UCC to fix any problem.
D) The seller correctly acted to remedy the problem because he had up to 20 days under the UCC to fix any problem.
E) The seller could not act to remedy the problem because he did not have assurance from Penny in writing that she would allow additional time in which to cure.

Accepted Answer

Sellers and lessors can repair, adjust, or replace defective or nonconforming goods as long as they give prompt notice of the intent to cure and go ahead and cure within the contract time for performance. Under UCC 2-508(2) and 2A-513(2), the seller or lessor can still exercise the right to cure once the contract time for performance has passed as long as the seller or lessor has reasonable grounds to believe that the nonconforming tender would be acceptable to the buyer or lessee. Here, the seller did not cure within the contract time for performance and had no right to cure after the contract time for performance due to the lack of reasonable grounds to believe that the nonconforming tender would be acceptable.

Question 15

"Baseball Trophies." To recognize baseball players on his team, Bobby ordered from Bruce 10 trophies showing a baseball player swinging a bat. The trophies were to be delivered on May 1st for an award dinner to be held on May 20th. Bruce was unable to obtain trophies showing a baseball player swinging a bat, but by May 13th, he did locate some trophies with a baseball player holding a bat. The difference did not substantially impair the value of the trophies, and thinking that the trophies would be acceptable, Bruce delivered them on May 14th. Bobby glanced at the trophies, paid for them with a check, and said nothing. On May 16th Bobby looked at the trophies more closely and decided that he did not like them. He canceled payment on Bruce's check, and Bruce sued him for payment.
-Considering only the issue involving the time set for delivery, what is the likely effect of Bobby delivering the trophies after the agreed upon time?
A) Bruce has the right to rely on the failure of Bobby to deliver the trophies in a timely manner and will likely prevail.
B) Bruce's payment for the trophies without inspection and after the time called for by the contract likely waived the performance provisions of the contract regarding the time for delivery.
C) Bruce did not waive the performance provisions of the contract regarding the time for delivery because he paid by check.
D) Bruce did not waive the performance provisions of the contract regarding the time for delivery only because he canceled the check before it was cashed by Bobby.
E) Bruce cannot rely upon the performance provisions of the contract regarding the time for delivery because he did not object within 24 hours of the delivery of the trophies and, therefore, did not meet the UCC 24-hour rule.

Accepted Answer

As recognized in the case of DeJesus v. Cat Auto Tech Corp., "Defendant's payment for the goods without inspection on the day of delivery, approximately two weeks after the time called for by the contract, effectively waived the performance provisions of the contract regarding the time of delivery."

Question 16

Which of the following is true under the UCC regarding the right of a seller or lessor to presume acceptance?
A) Sellers and lessors do not have the right to presume acceptance.
B) The seller may presume acceptance if the buyer fails to reject goods within 48 hours, but the lessor may not presume acceptance.
C) The lessor may presume acceptance if the lessee fails to reject goods within 48 hours, but the seller may not presume acceptance.
D) Both lessors and sellers may presume acceptance if buyers or lessees fail to reject good within 48 hours.
E) Both lessors and sellers may presume acceptance if buyers or lessees fail to reject good within a reasonable period of time.

Accepted Answer

UCC Sections 2-602(1), 2-606(1), and 2A-515(1)(b) allow the seller or lessor to presume acceptance if the buyer or lessee fails to reject the goods within a reasonable period of time.

Question 17

Unless the parties agree otherwise, the buyer or lessee typically inspects goods ______ paying.
A) Before
B) Immediately after
C) Within 24 hours after
D) Within 48 hours after
E) Within 7 days after

Accepted Answer

Before paying for and accepting the goods, buyers/lessees ordinarily inspect the goods to make sure they conform to the specifications in the parties' agreement.

Question 18

Which of the following is true regarding whether a buyer and lessee may make a partial acceptance?
A) Buyers and lessees may make partial acceptances at any time.
B) The buyer may make a partial acceptance when goods are nonconforming and the seller has failed to cure the defects, but a lessee may not make a partial acceptance.
C) The lessee may make a partial acceptance when goods are nonconforming and the lessor has failed to cure the defects, but a buyer may not make a partial acceptance.
D) The buyer or lessee may make a partial acceptance when goods are nonconforming and the seller or lessor has failed to cure the defects.
E) Neither buyers nor lessees may make partial acceptances because either the whole must be accepted or rejected.

Accepted Answer

UCC Sections 2-601(c) and 2A-509(1) allow the buyer or lessee to make a partial acceptance when the goods are nonconforming and the seller or lessor has failed to cure the defects.

Question 19

"New Furniture." Penny purchased $3,000 worth of furniture from Good Wood Furniture. Through an arrangement with Good Wood, Penny financed the purchase through a financing company called Let Us Help You. Twenty-nine days after the goods were delivered to her, Penny had a disagreement with Let Us Help You regarding the amount of interest she would be required to pay. She notified Good Wood on that day that she was rejecting the goods. Good Wood claimed that she did not properly reject the furniture and also that she failed to act in good faith, an obligation imposed equally on all parties to a transaction. Penny says that she properly rejected; that, although the UCC imposes no duty of good faith, she acted in good faith; and that, in any event, she had an absolute right to return the goods.
-Which of the following is true regarding the claim of Good Wood that Penny failed to properly reject the goods?
A) Good Wood is incorrect because under the UCC Penny had 30 days in which to reject the goods.
B) Good Wood is incorrect only if Penny can establish that Let Us Help You miscalculated the amount of interest she owed.
C) Good Wood is incorrect only if Penny can show that the goods were overpriced.
D) Good Wood is correct only if Good Wood can show that the goods were priced at reasonable market value.
E) Good Wood is correct.

Accepted Answer

Penny accepted the goods. UCC Section 2-608 indicates that the buyer who has accepted goods may later revoke the acceptance only if the buyer can show that the defects substantially impair the value of the goods. That is not true in this example.

Question 20

Sally contracted with Ben, who operates a farm in Guatemala, for the importation of some great coffee beans for her coffee shop. The contract provided that Ben would be sure the coffee arrived by September 1^st, in time for an open house Sally had planned. Sally was not worried because Ben had always delivered on a timely basis in the past. Ben was busy and was late getting the beans in transit. The beans did not arrive until September 2^nd. Sally shipped them back and refused to pay. Ben sued. What is Sally's best defense? A) That Ben failed to substantially perform. B) That Ben failed to materially perform. C) That Ben violated the perfect tender rule. D) That Ben's beans were not that good and that she decided to go with another brand. E) She has no defense because he was only one day late, and she should pay.

Accepted Answer

UCC Sections 2-601 and 2A-509 embrace the perfect tender rule. These sections indicate that if goods or tender of delivery fail in any respect to conform to the contract, the buyer/lessee has the right to accept the goods, reject the entire shipment, or accept part and reject part.

Quiz 23: Performance and Obligations Under Sales and Leases

UCC Section _____ requires good faith in the performance and enforcement of every contract.

What did the court rule in the case of Hubbard v. UTZ Quality Foods Inc., in which the buyer refused on the basis of color to accept potatoes that were the subject of an installment contract?

Belinda orders a certain type of hybrid rose for her wedding. A disease sweeps through that type of rose, and the florist could only obtain the roses at great cost if at all. Which of the following is the appropriate term for the florist's best defense?

Under the UCC a delay in delivery or nondelivery, in whole or in part, is not a breach in circumstances in which performance has been made ______ because a contingency has occurred that was not contemplated when the parties reached the agreement.

Whether goods conform to contract terms is a ____.

When may a buyer revoke acceptance if a nonconformity substantially impairs the value of goods?

Which of the following governs the inspection process?

Which of the following is true regarding the efforts of the seller of the employment law pamphlets to remedy the problem with the incorrect pamphlets?

Which of the following is true under the UCC regarding the right of a seller or lessor to presume acceptance?

Unless the parties agree otherwise, the buyer or lessee typically inspects goods ______ paying.

Which of the following is true regarding whether a buyer and lessee may make a partial acceptance?