Question 1

Rugged Boats,Inc. ,and Whitewater Rafting enter into a contract for a sale of six custom-made rubber rafts.Whitewater pays for the goods,but Rugged does not deliver.Whitewater can use replevin as a remedy if

Accepted Answer

Replevin is a remedy that allows a buyer to recover goods wrongfully withheld by the seller. Whitewater can use replevin if they are unable to cover, meaning they cannot obtain substitute goods.

Question 2

Fact Pattern 21-B1 
First State Bank issues a letter of credit in favor of Oboe Company,an American firm,to facilitate an international sales contract to buy resources from Lapland Mining,Ltd. ,a Finnish company.
-Refer to Fact Pattern 21-B1.First State Bank is bound to

Accepted Answer

The issuing bank's obligation under a letter of credit is to make payment to the beneficiary (Lapland Mining) when the proper documents are presented. The issuing bank does not have a duty to ensure performance of the contract or verify completion of the transaction with the buyer (Oboe Company). The bank is not obligated to pay on demand from Lapland.

Question 3

Hi-Tech Company contracts to sell fiber optic cable to Internet Services,Inc.Hi-Tech may bring an action to recover the purchase price and inci?dental damages if Internet

Accepted Answer

Hi-Tech can recover the purchase price and incidental damages if Internet accepts the cable but fails to pay for it, as acceptance obligates payment.

Question 4

Fact Pattern 21-B1 
First State Bank issues a letter of credit in favor of Oboe Company,an American firm,to facilitate an international sales contract to buy resources from Lapland Mining,Ltd. ,a Finnish company.
-Refer to Fact Pattern 21-B1.In this letter of credit,the ben?eficiary is

Accepted Answer

The beneficiary of a letter of credit is the party in whose favor the letter is issued, which in this case is Lapland Mining, Ltd., the Finnish company.

Question 5

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

Accepted Answer

Since Dino refused delivery and canceled the contract, City Auto & Truck Sales has the right to resell the car and recover any damages from Dino. This is because when a buyer refuses delivery, the seller is entitled to either resell the item and recover damages or hold the buyer liable for damages. In this case, the best option for City Auto & Truck Sales would be to resell the car and seek damages from Dino.

Question 6

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

Accepted Answer

Under a destination contract, the seller must deliver the goods to a particular destination, which is specified in the contract. The seller is responsible for arranging the transportation and ensuring that the goods are delivered to the agreed-upon location. The buyer has no obligation to take possession of the goods until they arrive at the specified destination.

Question 7

Nu-Tec Company contracts to sell fiber optic cable to Online Services,Inc.Nu-Tec ships the cable,which Online accepts but does not pay for.Nu-Tec can

Accepted Answer

Nu-Tec can sue Online Services to recover the purchase price of the cable along with any incidental damages resulting from the breach of contract. This is the most common remedy for breach of contract known as "damages."

Question 8

Gleaming 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

Accepted Answer

When a contract does not specify a place of delivery, the default rule under the Uniform Commercial Code (UCC) is that the place of delivery is the seller's place of business.

Question 9

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

Accepted Answer

Under the perfect tender rule, the seller is required to deliver goods that conform to the contract description in every way, including quality, quantity, and delivery. Any nonconformity gives the buyer the right to reject the goods. Therefore, Natural Seed Company must ship or tender seeds that conform to the contract description in every way.

Question 10

Leather & Suede Stores,Inc. ,rejects a shipment of goods that does not conform to its contract with Genuine Cowhide Corporation,but is unable to obtain instructions from the seller.Leather & Suede can

Accepted Answer

Since Leather & Suede Stores, Inc. is unable to obtain instructions from the seller, the best option would be to reship or store the goods for the seller until further instructions are received. This ensures that the goods are not destroyed or retained without payment, and also allows for the possibility of curing the goods to conform to the contract if the seller provides instructions for doing so.

Question 11

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

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 12

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

Accepted Answer

Under the doctrine of stoppage in transit, the seller has the right to stop delivery of the goods in transit and reclaim possession of them if the buyer becomes insolvent or otherwise breaches the contract. The quantity of the goods does not matter in this case. Therefore, Office Supply can stop delivery of the goods regardless of the quantity.

Question 13

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

Accepted Answer

West Coast Trucking Company can reject the entire shipment because VLA failed to deliver the cargo-sized vans as per the contract. It is a breach of contract and West Coast Trucking Company is entitled to reject the entire shipment.

Question 14

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

Accepted Answer

Under the Uniform Commercial Code (UCC), the obligation of good faith cannot be disclaimed by any party involved in a commercial transaction.

Question 15

BBQ,Inc. ,makes and sells grills to Grill Mart,a retailer,which sells one of the grills to Hope,a consumer.Their contracts limit consequential damages for personal inju?ries arising from a breach of warranty.This is prima facie un?conscionable with respect to

Accepted Answer

The limitation of consequential damages for personal injuries arising from a breach of warranty is prima facie unconscionable with respect to Hope, the consumer. This is because such a limitation would limit their ability to seek redress for any harm caused to them due to a defective product. It would be unfair to hold a consumer responsible for any personal injury they might suffer as a result of a product defect. Therefore, this limitation is unconscionable with respect to Hope. It may not necessarily be unconscionable with respect to BBQ or Grill Mart, as they are both commercial entities who may have negotiated the limitation of consequential damages in their contracts.

Question 16

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

Accepted Answer

Stuffy has several options when Relax-o notifies them of the delay. They can choose to wait for the delivery, sue Relax-o for breach of contract, or suspend their own performance. Since Stuffy has not yet paid for the chairs, they could choose to suspend their own performance until the chairs are delivered. Ultimately, the best choice will depend on the specific circumstances and what Stuffy feels is the most appropriate course of action.

Question 17

Fact Pattern 21-B1 
First State Bank issues a letter of credit in favor of Oboe Company,an American firm,to facilitate an international sales contract to buy resources from Lapland Mining,Ltd. ,a Finnish company.
-Refer to Fact Pattern 21-B1.Lapland is entitled to payment when it

Accepted Answer

Lapland Mining, Ltd. is entitled to payment when they comply with the terms and conditions of the letter of credit issued by First State Bank. This means that they must meet all of the requirements outlined in the letter of credit before they can receive payment.

Question 18

Text Publishers,Inc. ,contracts for a sale of textbooks to University Bookstores,Inc.Viable Shipping Corporation,the carrier,transports the books to Warehouse Storage Company.Text's right to stop delivery is lost when University's rights to the goods are acknowledged by

Accepted Answer

The answer of Text Publishers,Inc. ,contracts for a sale of...

Question 19

Coverall Paints agrees to sell Grade A-1 latex outdoor paint to Dropcloth Painters to be delivered May 8.On May 7,Coverall tenders Grade B-2 paint,which Dropcloth.rejects.Two days later,Coverall tenders Grade C-3 paint with an offer of a price allowance.Coverall has

Accepted Answer

The answer of Coverall Paints agrees to sell Grade A-1...

Question 20

Gunmakers Pride Corporation contracts for the sale of twelve hunting rifles to Hunters Supply store.Gunmakers delivers nonconforming goods.Acceptance will be presumed unless Hunters Supply rejects the goods

Accepted Answer

According to the Uniform Commercial Code (UCC) section 2-606, acceptance of nonconforming goods will be presumed unless the buyer rejects the goods within a reasonable time after delivery. Therefore, Hunters Supply must reject the nonconforming goods within a reasonable time after delivery to avoid being presumed to have accepted them.

Quiz 21: A: Performance Breach of Sales Lease Contracts