Q&A Hero

Q: "Tool For You" (TFY) is a company that sells power tools to consumers. The sales contract of TFY states that TFY will not be liable for any consequential damages that the consumer suffers as a result of using power tools purchased from them. Harry purchased a table saw from TFY for use in his hobby of woodworking. Harry was injured when the saw blade flew off. He wants to sue TFY but is not sure whether the contract provision limiting consequential damages will be enforced and seeks your opinion. Will he succeed? A. No, because this was a sale of a potentially dangerous product. B. No, because Harry is a consumer. C. Yes, because Harry agreed to this provision in the contract of sale. D. Yes, because the UCC allows parties to agree to limitations on damages.

Q: The Statute of Limitation provision of the UCC holds that for contracts for the sale of goods (in the absence of contractual agreement to the contrary) the period of time within which a lawsuit must be commenced is: A. one year. B. two years. C. three years. D. four years.

Q: Which of the following is a condition necessary for an agreement for liquidated damages to be enforced? A. If actual damages would be difficult to prove in the event of a breach of the contract B. If the amount is large enough to be considered penal C. If the amount is considered unconscionable D. If there is no breach of the contract agreed upon by both parties

Q: Bart agreed to deliver fruits worth $1,000 to a retail store. Bart and the store owner agree that if delivery is not made on time, Bart will pay the store some amount as liquidated damages, for the lost sales. Which of the following amounts would most likely be considered unconscionable if they settle for it? A. $200 B. $5,000 C. $5 D. $400

Q: Bart agreed to deliver fruits worth $1,000 to a retail store. Bart and the store owner agree that if delivery is not made on time, Bart will pay the store some amount as liquidated damages, for the lost sales. Which of the following amounts would most likely be considered penal if they settle for it? A. $200 B. $25,000 C. $10 D. $650

Q: Because all goods are fungible, specific performance is not available under the UCC.

Q: Specific performance requires that the seller is obligated to give the buyer the requisite goods covered by the contract.

Q: What is the basic objective of the Code remedies for breach of contract? A. To help the injured person recover consequential damages arising from the breach of contract. B. To put in place a mechanism that allows for repeat performance of the contract on modified terms. C. To help the injured person claim punitive damages arising from the breach of contract. D. To put the injured person in the same position that he would have been in if the contract had been performed.

Q: If the parties agree on a reasonable amount of damages that will be paid to the injured party, this amount is known as _____. A. liquidated damages B. unconscionable damages C. penal damages D. unenforceable damages

Q: If the seller fails or refuses to deliver the goods called for in the contract, the buyer can purchase substitute goods and recover as damages from the seller.

Q: Under UCC section 2-712 the buyer is required to seek cover, or buy substitute goods, during a breach of contract dispute.

Q: The buyer cannot recover any incidental damages.

Q: Consequential damages do not include an injury to a person or property caused by a breach of warranty.

Q: If the seller delivers defective goods to the buyer, the buyer can recover the value of the goods as warranted minus the value of the goods received.

Q: If the buyer and seller have agreed to the manner in which the resale is to be made, the courts will enforce the agreement unless it is found to be unconscionable.

Q: The seller is obligated to resell the goods in cases where the buyer refuses to accept goods that conform to the contract.

Q: Even if the buyer has misrepresented his solvency to the seller in writing within three months before the delivery of the goods, the 10-day limitation on the seller's right to reclaim the goods still applies.

Q: If the seller has justifiably withheld delivery of the goods because of the buyer's breach, the buyer may recover any money or goods he has delivered to the seller over and above the agreed amount of liquidated damages.

Q: The UCC has incorporated the Common Law concept of rescission as a remedy available to a buyer in a breach of contract dispute.

Q: Under the UCC if a liquidated damage clause in a contract turns out to be non-enforceable then the injured party can sue for actual damages.

Q: The UCC provides that a lawsuit for breach of a sales contract must be filed within a year after the breach occurs.

Q: Under the UCC the parties to a contract can shorten the statute of limitations on a breach of contract but cannot extend it longer than four years.

Q: If the seller is in the process of manufacturing the goods when the buyer breaches the contract, one of the seller's options is to complete manufacture of the goods and then resell them so long as this minimizes the loss to the seller.

Q: Even if a buyer breaches a contract, the seller is accountable to the buyer for any profit that the seller makes on a resale.

Q: Under the UCC an injured party in a contract dispute cannot recover punitive damages.

Q: Edna Boyle contracts with The Melonville Times to advertise her garage sale to be held this Saturday. The ad is to run in the Friday and Saturday morning edition. If the ad does not run on time, The Melonville Times agrees to pay Edna $50.00. This liquidated damages clause is most likely enforceable.

Q: Under the UCC, a remedy limitation blocking recovery of personal injury caused by consumer goods is prima facie unconscionable.

Q: Wanda contracted to sell Mike 100 boxes of ball bearings. The contract did not specify a place of delivery. The ball bearings now reside at Wanda's place of business. Wanda refuses to ship the 100 boxes to Mike, and Mike refuses to come to Wanda's place of business to pick them up. Who is right? Why?

Q: Ace Appliances, an appliance store, orders 100 toasters from Consolidated Electric (CE). The toasters CE ships to Ace, however, are not the ones Ace ordered. Hence, Ace rejects them. CE then insists that Ace return them, at the expense of Ace. Can CE make Ace return the toasters? If so, who pays the cost of returning the toasters?

Q: Jody, a consumer, ordered a computer from Dwindex Technologies. After Jody validly rejected the computer due to its nonconformity to the contract, Dwindex insisted that Jody return it. Jody refused, and instead just held the computer for Dwindex to retrieve it. Is Jodie obligated to return the computer?

Q: List a few scenarios under which sellers may be excused from performing contractual obligations.

Q: The objective of the UCC in regards to remedies for contract breach is to punish the offending party.

Q: The goods required for the performance of a contract are destroyed without fault of either party prior to the time that the risk of loss passed to the buyer. In this case, A. the contract cannot be cancelled. B. the contract is voided. C. the seller will not be excused. D. the seller has to make good for the loss.

Q: If unforeseen conditions cause a partial inability to make delivery of the goods and thus make performance impracticable, then: A. the seller is readily excused from making delivery. B. the seller can unilaterally annul the contract. C. the seller must allocate production in any fair and reasonable manner among his customers. D. the buyer is required to fully take the risk of loss.

Q: Explain the term usage of trade. What happens if there is a conflict between the express terms of the contract and trade usage?

Q: General contract law uses the test of _____ for determining when a person is excused from performing contractual obligations. A. commercial impracticability B. superior knowledge C. frustration of purpose D. impossibility

Q: In most situations, the UCC uses the test of _____ for determining when a person is excused from performing contractual obligations. A. commercial impracticability B. superior knowledge C. frustration of purpose D. impossibility

Q: A buyer who is not a merchant rejects nonconforming goods that are not perishable. He: A. may destroy the goods. B. must sell the goods for the seller. C. must hold the goods till the seller is willing to take them back. D. need not return the goods to the seller.

Q: Under the UCC section 2-612 what may the seller offer to do if the goods shipped were rejected due to nonconformity? A. Replace the defective goods B. Seek commercial arbitration of the dispute C. Charge the buyer for the shipping and cost of remaking the goods D. Refuse to take the defective goods back

Q: After entering into a contract, a buyer becomes concerned that the other party may not be able to perform his contract obligations. The buyer demands assurance from the other party that the contract will be performed. What is the maximum time period that the buyer would have to wait before considering the other party has repudiated the contract? A. 90 days B. 10 days C. 30 days D. 365 days

Q: If the party who repudiated the contract changes his mind, the repudiation can be withdrawn: A. before the other party has cancelled the contract. B. after the other party has materially changed position. C. at any point in time. D. even if the contract has been cancelled.

Q: If one party has concerns about another party and seeks assurances under the UCC to the sales contract, how long does the other have to respond before the contract is considered repudiated? A. 180 days B. 14 days C. 30 days D. 90 days

Q: If a buyer has a basis for rejecting a delivery of goods, the buyer: A. should not ask the seller to reship conforming goods. B. will still be liable to the seller for breach of the sales contract. C. need not give the seller notice of the rejection. D. must act within a reasonable time after delivery.

Q: Where the goods are to be delivered in installments, an installment delivery may be rejected only if the nonconformity substantially affects the value of that delivery and: A. if payment is to be made as per the contract price. B. if the nonconformity cannot be corrected by the seller. C. if the buyer accepted the goods with full knowledge of the nonconformity. D. if payment has already been made.

Q: Which of the following should a buyer who is a merchant do if the rejected goods are perishable? A. The buyer must make a reasonable effort to sell the goods. B. The buyer should store the goods for the seller. C. The buyer should reship them to the seller. D. The buyer should immediately make the payment.

Q: A buyer who is not a merchant rejects nonconforming goods. He: A. must return the goods to the seller. B. must sell the goods for the seller. C. must hold the goods for the seller for a reasonable time. D. may destroy the goods.

Q: In which of the following situations can a buyer revoke acceptance of nonconforming goods? A. The buyer accepted them with the knowledge of the nonconformity, because they were the only option available in the market. B. The buyer accepted the goods because of the seller's assurances that it would cure the defect. C. The price of the goods fell in the general market. D. The buyer accepted the nonconforming goods because the seller couldn't cure the defect.

Q: In which of the following situations can a buyer revoke acceptance of nonconforming goods? A. The buyer accepted them without knowledge of the nonconformity because of the difficulty of discovering the nonconformity. B. The buyer accepted them with the knowledge of the nonconformity, because they were the only option available in the market. C. The price of the goods fell in the general market. D. The buyer accepted the nonconforming goods because the seller couldn't cure the defect.

Q: Which of the following is not an option for the buyer if the goods delivered by the seller do not conform to the contract? A. Reject all of the goods B. Accept all of them C. Accept only part of a commercial unit and reject the rest D. Accept any commercial units and reject the rest

Q: Which of the following can a buyer do if the goods delivered by the seller do not conform to the contract? A. Accept only part of a commercial unit and reject the rest B. Accept all of them but not make the payment C. Accept a commercial unit and withhold payment for the accepted portion D. Accept any commercial units and reject the rest

Q: In which of the following situations can a buyer revoke acceptance of nonconforming goods? A. The buyer accepted them with the knowledge of the nonconformity, because they were the only option available in the market. B. The buyer accepted the nonconforming goods because the seller couldn't cure the defect. C. The price of the goods fell in the general market. D. The nonconformity substantially impaired the value of the goods.

Q: Bobby goes to buy a CD player from Sammy's Electronics. In testing one model, Bobby notices that the "scan" function does not allow scanning once a selection from a CD is playing. Bobby purchases the model despite this without mentioning the defect to Sammy. Bobby takes the CD player to his office where he uses it for three months before deciding that he wants to return it. Under these circumstances: A. Bobby has rejected the CD player. B. Bobby has accepted the CD player. C. if Bobby informs Sammy of the defect now, he can reject the CD player. D. a court will not consider Bobby to have accepted the CD player because it is defective.

Q: Section 2-608 of the UCC governs gives the buyer what right in sales contracts? A. The right to revoke a sales contract within a reasonable period for nonconformity B. The right to accept fewer units from the seller in order to make the agreement profitable C. The right to place sales agreement on hold till new credit can be obtained D. The right to pay less that agreed upon price if the agreement is not profitable

Q: Bob contracts to sell Ben 15 bales of hay. A bale is the accepted commercial unit in hay transactions. Ben accepts only 9 1/5 of the 20 bales. Under the UCC, Ben is considered to have accepted: A. all 20 bales. B. 10 bales. C. 9 bales. D. nothing.

Q: Bob contracts to sell Ben 15 bales of hay at $10 per bale. A bale is the accepted commercial unit in hay transactions. Ben accepts only 9 1/5 of the 20 bales. Ben will have to pay _____. A. $100 B. $95 C. $150 D. $15

Q: UCC section 2-301 outlines what basic duty of the buyer? A. To pay a price on the goods that gives seller a profit B. To designate an agent in each state the buyer operates C. To accept and pay for goods shipped by the seller D. To be honest to creditors regarding the sales contract

Q: Which of the following occurs when a buyer, after having a reasonable opportunity to inspect them, either indicates that he will take them or fails to reject them? A. Rejection of goods B. Assignment of goods C. Revocation of rights D. Acceptance of goods

Q: Which instrument enables the seller's bank to just act as an agent for collection of the due amount from the buyer? A. Confirmed letter of credit B. Advised letter of credit C. Negotiable bill of lading D. Draft

Q: Under a(n) _____, the seller's bank agrees to assume liability on the letter of credit. A. confirmed letter of credit B. advised letter of credit C. negotiable bill of lading D. revocable letter of credit

Q: If the goods are covered by a negotiable warehouse receipt, then the: A. seller must notify the bailee about the buyer. B. seller must endorse the receipt and give it to the buyer. C. seller must obtain bailee's consent before selling his goods. D. seller must release the goods to the buyer.

Q: If the shipping terms are cash on delivery (COD), then the buyer: A. need not pay for the goods if inspection is not allowed. B. must pay for the goods if it is obvious without inspection that the goods do not conform to the contract. C. must pay the expenses of inspection if the goods do not conform to the contract. D. must pay for the goods before inspecting them unless they are marked "Inspection Allowed."

Q: If all or part of the price of goods is payable in real property, then: A. only the transfer of goods is covered by the law of sales of goods. B. both the transfer of goods and the real property is covered by the law of real property. C. both the transfer of goods and the real property is covered by the law of sales of goods. D. only the transfer of the real property is covered by the law of real property.

Q: The buyer usually can inspect goods before payment except: A. where payment is made by check. B. when the goods are perishable. C. where the goods are shipped COD. D. when the buyer pays in a foreign currency.

Q: A buyer makes payment for goods accepted using a check. If the bank refuses to pay the check, the buyer: A. has still satisfied the duty to pay for the goods. B. must give the goods back to the seller. C. has the right to retain the goods. D. can be excused from the obligation.

Q: If no agreement is made on the place where the goods will be delivered, then the goods are to be delivered at: A. a neutral location. B. the buyer's place of business. C. the buyer's warehouse. D. the seller's place of business.

Q: Pam enters into a contract with Jack to sell him 300 bales of hay. The bushels are kept in her warehouse, which is about 100 miles away from her place of business. The contract makes no express mention of the place of delivery. The place of delivery in such cases is: A. Pam's place of business. B. Pam's house. C. Pam's warehouse. D. Jack's house.

Q: What does tender of delivery mean? A. The seller must make the goods available to the buyer. B. The buyer must accept and pay for the goods if they conform to the contract. C. Where delivery is to be made in lots, the seller can demand the price of each lot upon delivery. D. The goods are to be delivered at the buyer's place of business.

Q: Is it possible for a party that has waived rights to a portion of the contract not yet performed to retract the waiver? Why? A. Yes. The party will be able to immediately assert the late payments as grounds for later canceling the contract. B. Yes. The party can give reasonable notice to the other party that strict performance will be required. C. No. Once a party has waived rights to a portion of the contract, it will not be able to assert this as grounds for later canceling the contract. D. Yes. The contract is assumed to be made in good faith.

Q: Which of the following observations is true under the UCC? A. Consideration is not required to support a modification of a contract for the sale of goods. B. If there is a conflict between the express terms of the contract and trade usage, the trade usage will prevail. C. The buyer or the seller cannot delegate their duties to someone else under any circumstance. D. The UCC does not alter the basic contract law when applied to performance of contracts.

Q: UCC section 1-203 makes what form of requirement on the buyer and seller? A. Both must act in good faith B. Both must have signed the sales agreement C. Both buyer and seller must be residents of same state D. Both must have placed a security interest down on the contract

Q: Pete contracts to sell Jill 100 widgets. The 100 widgets are located at Pete's business. The contract does not state a place of delivery. The place of delivery is: A. Jill's place of business. B. Jill's home. C. Pete's place of business. D. Pete's home, if this is different from his place of business.

Q: If there is a conflict between the express terms of the contract and the past course of dealing between the parties, the: A. past course of dealing between the parties will prevail. B. express terms of the contract prevail. C. contract is voided. D. seller is excused.

Q: Customs and practices of the business that are known by people in the business and that are usually assumed by parties to a contract for goods of that type are known as _____. A. usage of trade B. warranties C. courses of action D. fair norms

Q: If there is a conflict between the express terms of the contract and trade usage, the: A. past course of dealing between the parties will prevail. B. seller is excused. C. contract is voided. D. express terms of the contract prevail.

Q: Sam agrees to make partial deliveries of goods over three months to Winston. The first delivery was late by two weeks. Why should Winston object to this late delivery? A. Winston may be required to pay in advance for future deliveries. B. Winston may waive his rights to cancel the contract if other deliveries are late. C. Sam may cancel the contract. D. Sam may be excused from performing all his contractual obligations.

Q: If the goods required for the performance of a contract are destroyed without fault of either party prior to the time that the risk of loss passed to the buyer, the contract is voided.

Q: Which of the following is defined to mean "honesty in fact" in performing the duties assumed in the contract or in carrying out the transaction? A. Course of dealing B. Usage of trade C. Caveat emptor D. Good faith

Q: In the case of a merchant, _____ means honesty in fact as well as the observance of reasonable commercial standards of fair dealing in the trade. A. course of dealing B. usage of trade C. good faith D. caveat emptor

Q: Johnny LaRue sells men's jackets to men's clothing stores, including Melonville Man. Melonville Man orders a selection of men's jackets from LaRue's catalog, asking that LaRue select an assortment of goods for the buyer. LaRue takes advantage of this opportunity to get rid of the odd-sized jackets and those in pastel colors that are no longer popular. LaRue: A. has stuck to the express terms of the sales contract. B. has violated the good faith requirement under sales contracts. C. has followed the usual trade practice. D. has properly modified the contract.

Q: If a buyer has a basis for rejecting a delivery of goods then the buyer can act whenever the buyer wishes to reject the goods after the delivery.