Question 1

When the time for performance under a contract expires, the right to cure also expires.

Accepted Answer

A) True 
 B)False

Question 2

Minerals Ltd. contracts to provide several manufacturers with tin. When a cartel of tin-producing countries suddenly embargoes future shipments of tin to Minerals so that it cannot fulfill its contracts, the distributor

Accepted Answer

A)   can substitute some other material for the tin.
B)   is excused from the performance of its contracts.
C)   is liable for breach of contract.
D)   must obtain tin in any way to meet the needs of its customers.E) B) and D)
F) B) and C)

Question 3

Pavers Inc. contracts to buy some heavy equipment from Earthmovers, Inc. Before either party performs, Earthmovers sells its assets to Excavation Corporation. On learning of the sale, Pavers is concerned about its contract with Earthmovers. Pavers should

Accepted Answer

A)   demand assurances of performance from the seller.
B)   consider the contract repudiated and sue the seller for breach.
C)   buy the equipment from a different firm and bill the seller for the price.
D)   buy the equipment from a different firm and bill Excavation for the price.E) B) and D)
F) None of the above

Question 4

Any use of delivered goods by the buyer-even for the limited purpose of testing them-constitutes acceptance.

Accepted Answer

A) True 
 B)False

Question 5

Rancho Stables orders ten saddles from Saddles, Inc. The sales contract states that if the tack is defective, Rancho will allow Saddles to repair or replace it instead of rejecting the shipment. When the gear arrives, it is defective. In this case, the perfect tender rule

Accepted Answer

A)   does not apply.
B)   applies to both parties.
C)   applies only to Saddles.
D)   applies only to Rancho.E) A) and D)
F) A) and C)

Question 6

Fiesta LLC contracts to buy 1,000 balloons from Gas Bags Inc. for $1 per item. When the market price decreases to 50 cents per balloon, Fiesta refuses to go through with the deal. Gas Bags can recover

Accepted Answer

A)   $1,500.
B)   $1,000.
C)   $500.
D)   $0.E) B) and C)
F) All of the above

Question 7

A seller who tenders nonconforming goods has reasonable grounds to believe that the buyer will accept the tender if it includes a price allowance.

Accepted Answer

A) True 
 B)False

Question 8

If contracting parties agree that defective goods will not be rejected if the seller or lessor can repair or replace them within a reasonable period of time, the perfect tender rule does not apply.

Accepted Answer

A) True 
 B)False

Question 9

The obligation of commercial reasonableness underlies every sales and lease contract.

Accepted Answer

A) True 
 B)False

Question 10

Riverside Mill and Standard Contractors enter into a contract for a sale of lumber. The mill knows the purpose for which the buyer will use the goods. Under the UCC, an implied warranty of fitness of a particular purpose arises if

Accepted Answer

A)   the buyer is relying on the seller to select suitable goods.
B)   the buyer asks for it.
C)   the seller is a merchant who deals in goods of the kind sold.
D)   the seller knows that the product is fit for any purpose.E) None of the above
F) A) and B)

Question 11

Pine Mills Inc. agrees to sell a certain quantity of plywood to Quality Lumber Company under a destination contract. Pine Mills must

Accepted Answer

A)   allow Quality Lumber to reject the plywood for any reason.
B)   deliver the plywood to a particular destination.
C)   inspect the plywood before tendering its delivery.
D)   place the plywood into the hands of Railway Transport, a carrier.E) C) and D)
F) A) and D)

Question 12

Builders Inc. and Concrete Supply Company enter into a contract for a sale of cement. Concrete delivers, but Builders does not pay. Concrete can recover as damages

Accepted Answer

A)   any profit lost minus any loss avoided.
B)   whatever amount Concrete wishes to claim.
C)   the purchase price plus incidental damages.
D)   the market price at the place at which Concrete delivered the goods.E) C) and D)
F) B) and C)

Question 13

The parties to a sales contract can limit or exclude consequential damages for any commercial loss-such as a business's lost profits or property damage.

Accepted Answer

A) True 
 B)False

Question 14

H2O Company contracts to sell pumps, tanks, and water storage systems to In-Flo Irrigation, Inc. Before the goods are delivered, In-Flo indicates that it will not be able to pay. H2O can

Accepted Answer

A)   force In-Flo to accept and pay for the goods.
B)   require In-Flo to find a buyer for the goods.
C)   resell the goods and recover any damages from In-Flo.
D)   do nothing.E) A) and B)
F) A) and C)

Question 15

Trucks & Trailers, Inc. (T&T) , and United Express Service enter into a contract for a lease of trucks. T&T is a merchant who deals in goods of the kind leased. Under the UCC, an implied warranty of merchantability arises

Accepted Answer

A)   automatically.
B)   only if the lessee asks for it.
C)   only if the lessor expresses such a warranty.
D)   only in conjunction with sales, not lease, contracts.E) B) and C)
F) A) and B)

Question 16

Loading Ramps Inc. contracts to sell sixteen loading ramps to Moving Service Inc. Loading Ramps ships the ramps, which Moving Service accepts but does not pay for. Loading Ramps can

Accepted Answer

A)   sue to recover the purchase price plus incidental damages.
B)   sue to recover the purchase price minus incidental damages.
C)   resell the ramps to any buyer willing to repossess them from Moving Service.
D)   require Moving Service to revoke its acceptance of the ramps.E) A) and D)
F) A) and C)

Question 17

Real Stones, Inc., and Sparkling Jewelry Stores enter into a contract for a sale of gemstones. Real Stones does not deliver. Sparkling can recover as damages the difference between

Accepted Answer

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 contracting parties' places of business.E) A) and B)
F) B) and D)

Question 18

If a buyer wrongfully refuses to pay for goods, the seller can reclaim them and resell them, without crediting the sale proceeds to the buyer.

Accepted Answer

A) True 
 B)False

Question 19

Eliza buys a new motorcycle from Fast Bikes, Inc. The most important factor in determining whether an express warranty is created is whether

Accepted Answer

A)   Eliza expresses to Fast Bikes what she wants warranted.
B)   Eliza's desire for the cycle becomes part of her motivation to deal.
C)   Fast Bikes expresses to Eliza what it expects of its customers.
D)   Fast Bikes' promise becomes part of the basis of the bargain.E) A) and B)
F) A) and C)

Question 20

If a seller fails to deliver the goods, the buyer can purchase other goods to substitute for those due under the contract, but cannot then sue for consequential damages.

Accepted Answer

A) True 
 B)False

Exam 21: Performance and Breach of Sales and Lease Contracts

Trucks & Trailers, Inc. (T&T) , and United Express Service enter into a contract for a lease of trucks. T&T is a merchant who deals in goods of the kind leased. Under the UCC, an implied warranty of merchantability arises

Correct AnswerverifiedShow Answer

Any use of delivered goods by the buyer-even for the limited purpose of testing them-constitutes acceptance.

Correct AnswerverifiedShow Answer

Rancho Stables orders ten saddles from Saddles, Inc. The sales contract states that if the tack is defective, Rancho will allow Saddles to repair or replace it instead of rejecting the shipment. When the gear arrives, it is defective. In this case, the perfect tender rule

Correct AnswerverifiedShow Answer

The parties to a sales contract can limit or exclude consequential damages for any commercial loss-such as a business's lost profits or property damage.

Correct AnswerverifiedShow Answer

When the time for performance under a contract expires, the right to cure also expires.

Correct AnswerverifiedShow Answer

Real Stones, Inc., and Sparkling Jewelry Stores enter into a contract for a sale of gemstones. Real Stones does not deliver. Sparkling can recover as damages the difference between

Correct AnswerverifiedShow Answer

The obligation of commercial reasonableness underlies every sales and lease contract.

Correct AnswerverifiedShow Answer

Minerals Ltd. contracts to provide several manufacturers with tin. When a cartel of tin-producing countries suddenly embargoes future shipments of tin to Minerals so that it cannot fulfill its contracts, the distributor

Correct AnswerverifiedShow Answer

Fiesta LLC contracts to buy 1,000 balloons from Gas Bags Inc. for $1 per item. When the market price decreases to 50 cents per balloon, Fiesta refuses to go through with the deal. Gas Bags can recover

Correct AnswerverifiedShow Answer

If contracting parties agree that defective goods will not be rejected if the seller or lessor can repair or replace them within a reasonable period of time, the perfect tender rule does not apply.

Correct AnswerverifiedShow Answer

Eliza buys a new motorcycle from Fast Bikes, Inc. The most important factor in determining whether an express warranty is created is whether

Correct AnswerverifiedShow Answer

If a buyer wrongfully refuses to pay for goods, the seller can reclaim them and resell them, without crediting the sale proceeds to the buyer.

Correct AnswerverifiedShow Answer

H2O Company contracts to sell pumps, tanks, and water storage systems to In-Flo Irrigation, Inc. Before the goods are delivered, In-Flo indicates that it will not be able to pay. H2O can

Correct AnswerverifiedShow Answer

Pavers Inc. contracts to buy some heavy equipment from Earthmovers, Inc. Before either party performs, Earthmovers sells its assets to Excavation Corporation. On learning of the sale, Pavers is concerned about its contract with Earthmovers. Pavers should

Correct AnswerverifiedShow Answer

Builders Inc. and Concrete Supply Company enter into a contract for a sale of cement. Concrete delivers, but Builders does not pay. Concrete can recover as damages

Correct AnswerverifiedShow Answer

Riverside Mill and Standard Contractors enter into a contract for a sale of lumber. The mill knows the purpose for which the buyer will use the goods. Under the UCC, an implied warranty of fitness of a particular purpose arises if

Correct AnswerverifiedShow Answer

A seller who tenders nonconforming goods has reasonable grounds to believe that the buyer will accept the tender if it includes a price allowance.

Correct AnswerverifiedShow Answer

Pine Mills Inc. agrees to sell a certain quantity of plywood to Quality Lumber Company under a destination contract. Pine Mills must

Correct AnswerverifiedShow Answer

If a seller fails to deliver the goods, the buyer can purchase other goods to substitute for those due under the contract, but cannot then sue for consequential damages.

Correct AnswerverifiedShow Answer

Loading Ramps Inc. contracts to sell sixteen loading ramps to Moving Service Inc. Loading Ramps ships the ramps, which Moving Service accepts but does not pay for. Loading Ramps can

Correct AnswerverifiedShow Answer

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