Q&A Hero

Q: What is the best possible solution for a bailee if there is a third-party, who claims to have superior rights to those of the bailor for possession of the bailed property? A. He should give the bailed property to the third person. B. He should give the bailed property to the bailor. C. He should bring the third-party claimant into a lawsuit along with the bailor. D. In such a case, the bailee will always get possession of the bailed property.

Q: In a bailment, the bailee is liable for loss or damage to the bailed property while it is in the hands of the bailee: A. under all circumstances; the bailee is the "insurer" of the goods. B. only if the bailee intentionally causes harm or loss to the goods. C. unless the bailee has given some consideration. D. only if he has a personal interest in the safety of the property.

Q: Boris borrowed Martha's lawnmower to cut his grass. Boris will be liable for damage to the lawnmower if he: A. owns a lawnmower and borrowed another from Martha. B. has not given Martha any consideration. C. did not use greater than ordinary care to protect it. D. he is sued by Martha.

Q: What is a lien? A. Compensation by a bailee for any damages to the bailed property. B. The charges for delivery of any bailed property. C. A charge against property to secure the payment of a debt. D. A bailment for mutual benefit.

Q: Nina lent her car, which she knew had bad brakes, to Heidi. However, she did not inform the latter about the defect. As Heidi was driving down the highway, she met with an accident due to the faulty brakes. In this case: A. Nina is not liable to Heidi because she was never asked about the brakes. B. Nina is liable to Heidi because she did not inform her of the defect. C. Heidi is liable to Nina because she had damaged Nina's car. D. Heidi is liable to Nina because she gave no consideration in return for the car.

Q: Explain the concept of buyer's right to cover.

Q: Arthur borrows a new pair of stereo speakers from Jim, his classmate, who stays in the campus hostel. After about a week, he goes to the hostel and leaves the speakers with Ryan, who lives on the floor adjacent to Jim's, asking him to give them to Jim. Ryan forgets to do so and loses the speakers. In such a situation: A. Ryan is liable to Jim; he should have been more careful. B. Arthur is liable to Jim; he is the bailee. C. Jim is not liable to anyone because he returned the speakers. D. It was Jim's responsibility to take the speakers back.

Q: Marjorie leaves her bag in the checkroom of a hotel which has an attendant. When she returns a few hours later, she finds her bag missing, the attendant on another duty, and a new sign outside the checkroom stating "Goods left at owner's risk". Which of the following is true if Marjorie tries to recover damages from the hotel? A. She will be unsuccessful because there was no bailment. B. She will be unsuccessful because the sign clearly says that goods are not the hotel's responsibility. C. She will be successful because the attendant did not inform her of the policy earlier. D. She will be successful because guests can claim any damages from the hotel they are staying in.

Q: What level of care must a bailee exercise in a bailment for his own exclusive benefit? A. Greater than ordinary care B. Less than ordinary care C. Ordinary care D. The same level of care that a prudent person exercises over his/her own property

Q: On May 1, 1999, S contracts to sell B a toaster that it warrants for five years. On May 5, 1999, S delivers the toaster to B. The toaster self-destructs on April 30, 2000, but B does not discover this until May 3, 2000. However, B does not sue S until May of 2003. Has B sued within the time period permitted by UCC statute of limitations? Why or why not?

Q: Ralf breaches a contract with Smith for making 1,000 Sport goggles. Smith decided to resell them to diminish its losses. Luckily, he got a huge market for that and collected a huge profit. The amount was far more than the contracted price with Ralf. However, now Ralf is demanding the share from profit. Will Ralf succeed?

Q: On May 1, S sells B 100 widgets on credit at a price of $1 per widget. S did so based on an April 10 letter from B asserting B's solvency. On May 7, B learns that S was insolvent when it received the widgets on May 1. On May 13, S demands the return of the goods from B. Is B obligated to return the goods to S?

Q: On May 1, S sells goods to B. B immediately resells the goods to C, who buys in good faith and pays cash. On May 2, S learns that B was insolvent when it accepted the goods. On May 3, therefore, S demands return of the goods from B. B says: "Sorry about that, but I sold them to C." Can S recover the goods from C?

Q: A buyer is entitled to the remedy of specific performance when: A. the contract is between merchants. B. the contract is for unique goods. C. the contract is for goods where the price is $500 or more. D. the contract requires delivery in installments.

Q: Which of the following means that the buyer can require the seller to give the buyer the exact goods covered by the contract? A. Specific performance B. Trade usage C. Implicit guarantee D. Trade warranty

Q: In which of the following transactions is the buyer most likely to be entitled to specific performance of the contract? A. A contract for purchasing a tanker of crude oil B. A contract for purchasing 1,000 tons of wheat C. A contract for purchasing 100,000 light bulbs D. A contract for purchasing a Picasso painting

Q: In which of the following transactions is the buyer most unlikely to be entitled to specific performance of the contract? A. A contract for purchasing a historical artifact B. A contract for purchasing 10,000 tons of wheat C. A contract for purchasing a Rembrandt painting D. A contract for purchasing a 1910 Ford

Q: Which of the following is an example of a consequential damage? A. Expense that a buyer incurs in receiving and inspecting goods shipped by the seller that do not conform to those called for in the contract. B. Charge that the buyer has to pay in obtaining substitute goods. C. An injury to a person caused by a breach of warranty. D. Expense that a buyer incurs in storing nonconforming goods shipped by the seller.

Q: Joe agreed on April 1 to sell and deliver 1,000 bushels of wheat to a grain elevator on June 1 for $10 per bushel. He then refused to deliver on June 1 because the market price was then $15 per bushel. How much can the grain elevator recover in damages from Joe? A. Nothing B. $5,000 C. $1,000 D. $1,500

Q: Sue delivers defective widgets to Boz. The widgets were not as warranted. In seeking to recover damages from Sue, Boz: A. does not have to give Sue notice of the defect. B. must give up since he accepted the goods. C. would never be entitled to consequential or incidental damages. D. may recover the difference between the value of the goods received and the value of the goods.

Q: In the eventuality of nondelivery by the seller, which of the following would be reduced from the amount of damages claimed from the seller? A. The difference between the contract price of the goods and their market price at the time he learns of the seller's breach B. Incidental damages C. Expenses saved D. Consequential damages

Q: Wonder Widgets agrees to sell Bill Buyer 10,000 of its "Grade A" widgets at a price of $3.00 per widget. After Wonder breaches the contract by failing to deliver, Bill buys substitute widgets at a price of $3.20 per widget. For this purchase, Bill incurs $200 in reasonable expenses and saves $100 in shipping expenses. Bill then sues Wonder for $2,200. What, if anything, can Bill actually recover? A. Nothing B. $200 C. $2,100 D. $2,200

Q: Which section of the UCC indicates that upon breach of a contract a buyer can purchase substitute goods also called cover? A. 2-712 B. 3-301 C. 1-102 D. 2-450

Q: _____ include expenses that the buyer incurs in receiving, inspecting, transporting, and storing goods shipped by the seller that do not conform to those called for in the contract. A. Unconscionable damages B. Incidental damages C. Penalties D. Consequential damages

Q: _____ include any reasonable expenses or charges that the buyer has to pay in obtaining substitute goods in case of a breach of contract on the part of the seller. A. Incidental damages B. Unconscionable damages C. Penalties D. Consequential damages

Q: A buyer claiming lost profits caused by the seller's breach of contract is claiming for _____. A. incidental damages B. unconscionable damages C. penalties D. consequential damages

Q: Which section of the UCC governs liquidated damages in a contract dispute? A. 2-718 B. 1-102 C. 3-103 D. 2-745

Q: Which of the following is a common way in which seller breach contracts? A. Indicating that he does not intend to fulfill the obligations under the contract B. Delivering goods that do not conform to the contract C. Agreeing to extended credit periods depending on the buyer's credit record D. Failing to take delivery of the goods

Q: If a seller fails to deliver goods called for in the contract, the buyer may purchase substitute goods and recover as damages the difference between the contract price and the cost of the substituted goods. This is known as: A. cover. B. action for the price. C. specific performance. D. incidental damages.

Q: Wonder Widgets agrees to sell Bill Buyer 10,000 of its "Grade A" widgets at a price of $3.00 per widget. After Wonder breaches the contract by failing to deliver, Bill buys substitute widgets at a price of $3.20 per widget. Bill also incurs $200 in reasonable expenses associated with the purchase. Bill then sues Wonder for $2,200. What, if anything, can Bill actually recover? A. Nothing B. $200 C. $2,000 D. $2,200

Q: If the buyer has misrepresented his solvency to the seller in writing within three months before the delivery of the goods: A. the 10-day limitation on the seller's right to reclaim the goods does not apply. B. the seller should actually repossess the goods within the 10-day period. C. the seller's right to reclaim the goods is not subject to the rights of prior purchasers in the ordinary course of the buyer's business. D. the seller's right to reclaim the goods is not subject to the rights of creditors with a perfected lien on the buyer's inventory.

Q: If the seller discovers that the buyer is insolvent, he has: A. no right to stop the delivery of any goods that he has shipped to the buyer. B. the right to stop the delivery of any goods that he has shipped to the buyer. C. the right to ask the buyer to pay double compensation. D. no right to do anything against the buyer.

Q: If the seller has justifiably withheld delivery of the goods because of the buyer's breach, the buyer may: A. not recover any money nor goods he has delivered to the seller. B. not recover the goods. C. recover only goods which he has not delivered. D. recover any money or goods he has delivered to the seller over and above the agreed amount of liquidated damages.

Q: S agrees to sell B 10,000 widgets at a price of $1.00 per widget. After B breaches the contract, S resells the widgets for $1.10 per widget in a public sale. S also saved $200 in shipping costs. What amount does S owe B? A. $1,200 B. $1,300 C. $1,000 D. Nothing

Q: S agrees to specially manufacture a machine for B. After S finishes the job, B breaches the contract. Knowing that there is no market for the machine, S does not try to resell it. Instead, S sues B for the price of the machine. Which of the following is true? Assume that there truly was no market for the machine. A. S can recover only the input price invested in making the machine. B. No recovery, because S was obligated to make an effort to resell the partially completed machine for scrap. C. No recovery, because here S was obligated to sue B for his lost profit on the deal. D. S can recover the price of the machine from B.

Q: Ace Computers (AC) is a manufacturer. It entered into a contract with a retailer, Reliable Computer (RC) for the sale of 100 new XYZ model computers at $1,000 each, for delivery in 6 months. AC would thus make a profit of $50,000. Six months later however, the XYZ model has become almost obsolete; its market price is only $100 at that time. RC refuses to accept or pay for those computers. If AC sues, how much should it be entitled to in damages? (Ignore any incidental expenses or cost savings to AC.) A. Nothing; when the XYZ model became almost obsolete, this excused RC from the contract. B. $50,000, the profit AC would have made had RC not breached the contract. C. $90,000, the difference between market price and contract price. D. $140,000, the lost profit plus the difference between market price and contract price.

Q: Ace Computers (AC) is a manufacturer. It entered into a contract with a retailer, Reliable Computer (RC) for the sale of 100 new XYZ model computers at $1,000 each, for delivery in 6 months. AC would thus make a profit of $50,000. Six months later however, the XYZ model has become almost relatively obsolete; its market price is only $600 at that time. RC refuses to accept or pay for those computers. If AC sues, how much should it be entitled to in damages? (Ignore any incidental expenses or cost savings to AC.) A. Nothing; when the XYZ model became almost obsolete, this excused RC from the contract. B. $50,000, the profit AC would have made had RC not breached the contract. C. $40,000, the difference between market price and contract price. D. $90,000, the lost profit plus the difference between market price and contract price.

Q: Which of the following is true about the seller's right to reclaim goods from an insolvent buyer? A. This right is superior to the rights of a good faith purchaser for value of the goods. B. The seller must make a demand for the goods within ten days of their receipt by the buyer. C. The seller must physically repossess the goods within ten days of their receipt by the buyer. D. The buyer must have misrepresented his solvency to the seller in writing within three months before delivery of the goods.

Q: Which of the following is not one of the seller's remedies, once the buyer breaches a contract for the sale of goods? A. Canceling the contract B. Recovering the profit the seller would have made on the sale C. Recovering the goods' purchase price D. Recovering the profit on the sale and the purchase price of goods rejected

Q: In case of resale of goods arising out of a breach of contract, if the seller sets aside goods intended for the contract or completes the manufacture of such goods, he is: A. not obligated to try to resell the goods to someone else. B. obligated to try to resell the goods to someone else. C. obligated to enter into future contracts with the buyer. D. obliged to destroy the goods.

Q: S agrees to sell B 10,000 widgets at a price of $1.00 per widget. After B breaches the contract, S resells the widgets for $0.90 per widget. This costs S an additional $100 in sales commissions. What amount can S recover from B? A. Nothing B. $100 C. $1,100 D. $1,000

Q: S agrees to sell B 10,000 widgets at a price of $1.00 per widget. After B breaches the contract, S resells the widgets for $0.90 per widget. However, this costs S an additional $100 in sales commissions. S saved $200 in shipping costs as the new customer was located closer to its factory. What amount can S recover from B? A. $900 B. $100 C. $1,100 D. $1,000

Q: Which of the following is true of the period during which parties can file a lawsuit for breach of a sales contract? A. The parties can extend it for a period longer than six years after the breach occurs. B. The parties to a contract may shorten this period to one year after the breach occurs. C. The parties are free to determine the period during which the lawsuit can be filed. D. The lawsuit must be filed within two years after the breach occurs.

Q: Russ purchases a new television set from Trista's TVs. The television set carries a four-year express warranty. It was purchased on November 1, 2002 and delivered on November 3, 2002. On February 3, 2007, after four years and three months of service, the set collapsed due to a defect covered by the warranty. Russ had discovered this defect on November 5, 2002 when he turned the television set on for the first time. When did the Code's statute of limitations begin to run? A. November 1, 2002 B. November 3, 2002 C. November 5, 2002 D. February 3, 2007

Q: What section of the UCC governs Statute of Limitations in contract disputes? A. 2-703 B. 1-102 C. 2-725 D. 2-301

Q: Which of the following is a common way in which a buyer may breach a contract? A. By wrongfully returning goods B. By agreeing to an extension of the credit period C. By delivering a faulty product D. By refusing to accept goods which are obviously damaged

Q: When would the amount of liquidated damages agreed to by both parties in a contract be considered unconscionable? A. If the amount is reasonable. B. If the amount of losses was easy to estimate while drafting the contract. C. If the amount were too small compared to the possible losses. D. If the amount were too big to be considered penal.

Q: Liability for consequential damages resulting from a breach of contract may also be limited or excluded by agreement. Will this limitation or exclusion be always enforced? A. Yes, it will always be enforced. B. No, it will not be enforced if it would be unconscionable. C. Yes, if both parties agreed to it in the contract. D. Yes, it will be enforced in case of injury caused to a person by consumer goods.

Q: Any attempt to limit consequential damages for injury caused to a person by consumer goods is considered prima facie _____. A. unconscionable B. reasonable C. punitive D. penal

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: 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: 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: 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: 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 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: 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: 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: 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?