BUSA311 - Exam 1 Study Guide

a, c, d

What factors influence the remedies available to a seller when the buyer breaches a contract? Choose 3 answers. a. Whether the buyer has rejected or accepted the goods b. What remedies the seller has already claimed for this breach c. Which party has possession of the goods d. whether or not the goods are in transit

b

Aiysha signs a contract with Farmer Charlie on February 1. Under the deal, she will pay $25,000 for Charlie's entire pumpkin crop on October 1. Charlie plants pumpkin seeds on March 1, and they begin to sprout on April 1. When are the pumpkins identified? a. February 1 b. March 1 c. April 1 d. October 1

Pulsar never offered a true cure. When the seller delivers defective goods and wishes to cure, it must take all steps—at its expense—to fix the problem. Pulsar could cure only by delivering, at its expense and in a timely manner, 50,000 conforming chips. Pulsar failed to cure, and Allied recovers the entire purchase price.

Allied Semi-Conductors International agreed to buy 50,000 computer chips from Pulsar, for a total price of $365,750. Pulsar delivered the chips, which Allied then sold to Apple Computer. But at least 35,000 of the chips proved defective, so Apple returned them to Allied, which sent them back to Pulsar. Pulsar agreed to replace any defective chips, but only after Allied, at its expense, tested each chip and established the defect. Allied rejected this procedure and sued. Who wins?

d

Angelo owns Computer Hut, where he sells computers, printers, scanners and copiers. Basil visits Angelo's store and purchases a computer and printer. While Basil is completing the purchase, he notices a mountain bike chained up in the corner of the store with a for-sale sign on it and inquires about the bike. Angelo explains to Basil that this is Angelo's personal mountain bike, and he has decided to sell it because he never has time to go biking. Basil agrees to buy the mountain bike for $300. If a dispute later arises between Angelo and Basil, Angelo would be held to the stricter standards of a merchant for: a. the sale of the mountain bike only. b. none of the sales. c. the sale of the computer, the printer, and the mountain bike. d. the sale of the computer and printer only.

The parties never described the goods. The goods are neither animals nor crops. However, when Arielle moved five of the screens to the warehouse, she "indicated which goods were going to the buyer." The goods were identified.

Arielle, an artist, has 25 hand-painted room screens in her studio. She contracts to sell five of them to Retailer for $5,000 each. The contract allows Arielle to choose which five she will sell. Arielle moves five screens from her studio to a warehouse, but a week later, a fire destroys the building and its contents. Two insurance companies dispute whether title to the screens has passed to Retailer. The warehouse insurer claims the goods were identified and title passed; Retailer's insurer says the goods were not identified and title never passed. The contract says nothing about identification. Have the goods been identified?

d

Assume that a year has passed, and Blackburn FC once again orders 10,000 soccer jerseys from Alpha, to be delivered on July 10. This time, non-conforming jerseys are delivered on July 10. Alpha thoroughly inspected the shirts before shipping and had no reason to spot the error. When Blackburn notifies Alpha of the problem, Alpha says that it intends to cure the defect. If Blackburn cannot show that it will suffer any serious harm, does the UCC require Blackburn to give Alpha a chance to cure this time? a. No, because the contract's deadline has passed. b. Yes, it must give Alpha until July 17 to cure. c. Yes, it must give Alpha until July 20 to cure. d. Yes, it must give Alpha a reasonable amount of time to cure.

"FOB cargo ship, Jacksonville, Florida" means that the seller bears all risks until the goods are placed in the carrier's possession. From that moment onward, the buyer bears the risk. The batteries were fine when delivered, so Duracell was off the hook once they were on board. Bradkeyne bears the loss.

Bradkeyne International, Ltd., an English company, bought a large quantity of batteries from Duracell, Inc. The contract specified delivery "FOB cargo ship, Jacksonville, Florida." Duracell supervised the loading of the batteries onto a ship in Jacksonville in early July, and they arrived in England in August. When loaded onto the ship, the batteries were conforming goods that could be used for normal purposes. But on board the ship, excessive heat damaged them. By the time they reached England, they were worth only a fraction of the original price. Bradkeyne sued Duracell. Who loses?

d

Breeze Manufacturing agrees to purchase goods from Hawkins Inc. In what situation could Breeze reject a shipment of goods from Hawkins under the perfect tender rule? a. If Hawkins Inc. hires a carrier to deliver the goods that was different from the carrier the parties included in the contract. b. The industry practice is to allow for minor flaws, but Breeze and Hawkins did not specifically agree to that. c. If Breeze accepted flawed goods from Hawkins in the past. d. The goods do not meet the specifications detailed in the contract.

d

Brendan assembles gaming computers in his garage and sells them. He makes an agreement with Alpha Company under which Alpha will deliver 100 graphics cards. The agreement does not specify when payment is due. Which of the following is true? a. Brendan has no obligation to pay because there was no "meeting of the minds" and no contract was formed. b. Brendan must pay within ten days of making the agreement. c. Brendan must pay within ten days of accepting the graphics cards. d. Brendan must pay within a commercially reasonable time.

d.

Cara Fabricating Co. and Taso Corp. agreed orally that Taso would custom-manufacture a compressor for Cara at a price of $120,000. After Taso completed the work at a cost of $90,000, Cara notified Taso that the compressor was no longer needed. Taso is holding the compressor and has requested payment from Cara. Taso has been unable to resell the compressor for any price. Taso incurred storage fees of $2,000. If Cara refuses to pay Taso and Taso sues Cara, the most Taso will be entitled to recover is: a. $92,000. b. $105,000. c. $120,000. d. $122,000.

This contract neither stated a price nor allowed one party to determine it. That means that the price is a reasonable one at the time of delivery. A court will use market value, and any comparable sales, to determine the price.

Coffee Retailer sends a form to Cupper, ordering 100 cartons of specified coffee cups to be delivered the first of each month for six months. The order form says nothing about price. For three months, Cupper delivers on time and sends an invoice, which Retailer pays. On the fourth month, Cupper's invoice is 8 percent higher than before. Retailer refuses to pay the increase and informs Cupper that it will accept no more deliveries. Cupper sues. Retailer claims there was no enforceable contract. Cupper says there was a bargain and that it has the right to determine the price. Who is right?

(a). The "valid city certificate" phrase raises a new issue; it does not contradict anything in Cookie's offer. That means it is an additional term and becomes part of the deal unless Cookie insisted on its own terms, the additional term materially alters the offer, or Cookie promptly rejects it. Cookie did not insist on its terms, this is a minor addition, and Cookie never rejected it. The new term is part of a valid contract.

Cookie Co. offered to sell Distrib Markets 20,000 pounds of cookies at $1.00 per pound, subject to certain specified terms for delivery. Distrib replied in writing as follows: "We accept your offer for 20,000 pounds of cookies at $1.00 per pound, weighing scale to have valid city certificate." Under the UCC: A contract was formed between the parties. A contract will be formed only if Cookie agrees to the weighing scale requirement. No contract was formed because Distrib included the weighing scale requirement in its reply. No contract was formed because Distrib's reply was a counteroffer.

c

Dakotah is the cheerleading coach for Northfield High School. Dakotah places an order by telephone with Cheerleader Supply Inc. for thirty cheerleader uniforms. Each uniform is to be emblazoned with the Northfield High emblem and a cheerleader's name. The total cost of the uniforms is $900. Two weeks after placing the order, Dakotah realizes she ordered the wrong style of uniform, so she contacts Cheerleader Supply and attempts to cancel the order. Cheerleader Supply at this time is almost through completing the work on the order. Cheerleader Supply: a. can enforce the contract because the sale of goods does not have to be in writing to be enforceable. b. cannot enforce the contract because this is not a sale of goods, and, therefore, the U.C.C. does not apply. c. can enforce the contract, even though it is not in writing, because it is for specially manufactured goods. d. cannot enforce the contract, because sales of goods over $500 must be in writing to be enforceable.

Risher was a merchant dealing in automobiles, meaning that Witcher did entrust the car to him. Parker was a BIOC: He acted in good faith, without knowing that the sale violated the agreement between Witcher and Risher. Parker wins, and he keeps the car.

Fay Witcher owned a Ford Bronco. Steve Risher operated a used-car lot. Witcher delivered his automobile to Risher, asking him to resell it if he could. Witcher specified that he wanted all cash for his car, not cash plus a trade-in. Risher sold the car to Richard Parker for $12,800, but he took a trade-in as part payment. Risher promised to deliver the Bronco's certificate of title to Parker within a few days but never did. He was also obligated to deliver proceeds of the sale to Witcher and, of course, he failed to do that. Parker claimed that the car was rightfully his. Witcher argued that Parker owned nothing because he never got the title and because Witcher never got his money. Who loses?

c

For a contract governed by the UCC sales article, which one of the following statements is correct? a. Merchants and non-merchants are treated alike. b. The contract may involve the sale of any type of personal property. c. The obligations of the parties to the contract must be performed in good faith. d. The contract must involve the sale of goods for a price of $500 or more.

The contract price $300,000 - the resale price 250,000 + incidental damages 2,000 - expenses saved 6,000 = Fork's damages $46,000

Fork manufactures forklift trucks. Fork agrees to sell ten trucks, for $30,000 each, to McKnife. Fork will store the trucks in a warehouse near McKnife for three months, when the buyer will collect them. Storage will cost Fork $2,000 per month. A week after signing the deal, before Fork has moved the trucks to the warehouse, McKnife notifies Fork it cannot pay for the trucks. Fork spends $2,000 advertising the machines and sells them for $25,000 each in a commercially reasonable manner. Fork then sues McKnife. Fork will win—but how much?

d

Homers Frozen Foods has a two-year contract with Johnson Farms to purchase all the russet potatoes that Johnson can produce for two dollars per kilogram. When the price of potatoes goes up during the second year of the contract, Johnson Farms breaches its contract with Homers and sells its potatoes to Land of Lakes Foods. Homers purchases the potatoes it needs from Homegrown Farms at a price of three dollars per kilogram. If Homers sues Johnson Farms for breach of contract, the likely result will be: a. Johnson Farms will have to pay Homers one dollar per kilogram for all potatoes purchased during the entire term of the contract. b. Johnson Farms will have to pay nothing, because a spike in market prices is a sufficient reason to terminate the contract. c. Johnson Farms will be ordered to specifically perform the contract. d. Johnson Farms will have to pay Homers one dollar per kilogram for the potatoes that Homers purchases from Homegrown Farms during the remainder of the contract.

The UCC governs this contract because the speakers are much more expensive than the labor. The contract does not have to be in writing because it is for less than $500. The agreement to use JBL speakers rather than Rockford Fosgates is enforceable, even without consideration for the change. Jacob will have to live with the deal, including the JBL speakers.

Jacob turns 18. For his birthday, he gets $500 cash and his grandmother's ancient minivan. And yes, it is the kind with wood paneling on the side. Jacob cannot do much about how the car looks, but he decides that he can at least make it sound awesome. So, he immediately takes the car to Big Mike's Custom Stereo. At Big Mike's, Jacob makes a verbal agreement to buy an amplifier and two Rockford Fosgate speakers and to have them installed at a cost of $499. The amp and speakers come to $420, and the installation charge is $79. He decides to have them installed while he waits. After an hour, a clerk finds him and says, "Hey, man, we're out of stock on those speakers. But I can get you some JBLs right now—same size, same price, just as loud." Jacob is eager to drive out with a new system and agrees to the speaker substitution. Moments later, Jacob finds the clerk and says, "Wait, I'm not sure about all of this. I don't think I want to buy any of it after all." Can Jacob get his money back, or is he stuck with his purchases?

This is a bargain between two businesses, and courts rarely find clauses in such agreements unconscionable. The assumption is that sophisticated businesspeople understand what they are getting into and are able to protect themselves. If Jim Dan could run a golf course, the company was sophisticated enough to understand the simple disclaimer in this contract. Scotts wins.

Jim Dan, Inc., owned a golf course that had trouble with crabgrass. Jim Dan bought 20 bags of Scotts Pro Turf Goosegrass/Crabgrass Control for $835 and applied it to the greens. The Pro Turf caused over $36,000 in damage to the greens. Jim Dan sued Scotts. Scotts defended by claiming that it sold the Pro Turf with a clearly written, easy-to-read disclaimer that stated that in the event of damage, the buyer's only remedy would be a refund of the purchase price. Jim Dan, Inc., argued that the clause was unconscionable. Please rule.

c

Larue owns a horse ranch. Larue enters into a contract with Dora for the purchase of thirty saddles for his ranch to be delivered on a specific date. If the price of the saddles is not included in the contract, under the U.C.C.: a. Larue, the party purchasing the saddles, will supply the price at the time of delivery and must determine that price in good faith. b. Dora, the party furnishing the saddles, will supply the price at the time of delivery and must determine that price in good faith. c. the court will determine a reasonable price at the time for delivery. d. there is no valid contract because the contract is incomplete.

b

Lydia promises to sell ten designer evening gowns to Beth, owner of Beth's Prom Shop, for $5,000. Each gown is a one-of-a-kind original that Beth specifically picked out from Lydia's inventory. Lydia decides she can get more money for the gowns if she takes them to New York to sell, so Lydia notifies Beth's Prom Shop that she is canceling the deal. If Beth sues Lydia for breach of contract, the court will likely: a. award Beth $5,000 in compensatory damages. b. require Lydia to honor the contract and sell the evening gowns to Beth. c. award Beth the difference between $5,000 and the amount she will spend purchasing the evening gowns elsewhere. d. not grant Beth any kind of relief, because she can purchase evening gowns elsewhere.

It is difficult or impossible for sellers to disclaim written warranties, even if the promise and disclaimer are in different documents. A disclaimer that would unfairly surprise the buyer is void. Marcos relied on the sales brochure—as the company intended—and the seller will probably lose. Furthermore, most states give extra protection to consumers, knowing that they are less sophisticated buyers. A court is likely to find in favor of Marcos based on the seller's express warranty, as well as the implied warranties of merchantability and fitness.

Marcos's backyard pool, which measured 35 feet by 18 feet, needed a new filter. A sales brochure stated, "This filter will keep any normal backyard pool, up to 50 feet by 25 feet, clean and healthy all summer for a minimum of 5 years." Marcos signed a sales contract, which included this disclaimer: "The filter will work to normal industry standards. This is the only warranty. No other statements, written or oral, apply. Pools vary widely, and the Seller cannot guarantee any specific level of performance or cleanliness. Buyer agrees to this disclaimer." The filter failed to keep Marcos's pool clean, and he sued for breach of warranty. Who should win?

Additional terms become part of the agreement unless the original offeror insisted on its own terms, the new term materially alters the offer, or the offeror promptly rejects the new term. Martin's offer insisted on its own terms and Serge's arbitration clause does not become part of the agreement. Martin may litigate his dispute.

Martin, a diamond wholesaler, writes Serge, a jewelry retailer, offering to sell 75 specified diamonds for $2 million. Martin's offer sheet specifies the price, quantity, date of delivery, and other key terms. The sheet also states, "Offer is made on these terms and no other." Serge sends Martin his own purchase order, naming the diamonds, price, and so forth, but adding a clause requiring any disputes to be settled by a diamond-industry arbitrator. In the diamond industry, arbitration by such a person is standard. Martin does not object to the arbitration clause. Martin delivers the gems but Serge refuses to pay the full price, claiming that many of the stones are of inferior quality. Martin sues for the balance due, but Serge insists that any dispute must be settled by arbitration. May Martin litigate, or must he arbitrate the case?

a

Mulligan Pro Shop agrees to provide 10,000 grade AAAAA golf balls to Golf Kingdom each month for the next four months. For the first three months, Mulligan delivers 10,000 grade A golf balls instead, and Golf Kingdom accepts the delivery. In month four, Mulligan again delivers 10,000 grade A golf balls to Golf Kingdom, and Golf Kingdom rejects the shipment. If Mulligan sues Golf Kingdom for breach of contract: a. Mulligan will win, because Golf Kingdom accepted the prior nonconforming shipments. b. Golf Kingdom will win, because usage of trade is an exception to the perfect tender rule. c. Golf Kingdom will win, because the goods were not perfectly tendered. d. Mulligan will win, because it tendered the entire 10,000 golf balls.

a.

On February 15, Mazur Corp. contracted to sell 1,000 bushels of wheat to Good Bread, Inc. at $6 per bushel with delivery to be made on June 23. On June 1, Good advised Mazur that it would not accept or pay for the wheat. On June 2, Mazur sold the wheat to another customer at the market price of $5 per bushel. Mazur had advised Good that it intended to resell the wheat. Which of the following statements is correct? a. Mazur can successfully sue Good for the difference between the resale price and the contract price. b. Mazur can resell the wheat only after June 23. c. Good can retract its anticipatory breach at any time before June 23. d. Good can successfully sue Mazur for specific performance.

d

On Monday, Wolfe paid Aston Co., a furniture retailer, $500 for a table. On Thursday, Aston notified Wolfe that the table was ready to be picked up. On Saturday, while Aston was still in possession of the table, it was destroyed in a fire. Who bears the loss of the table? a. Wolfe because Wolfe had title to the table at the time of loss b. Aston unless Wolfe is a merchant c. Wolfe unless Aston breached the contract d. Aston because Wolfe had not yet taken possession of the table

The contract was silent about which goods were involved, neither animals nor plants were involved, and Glow never segregated the lamps. The lamps were never identified to the contract; the correct answer is (b).

On September 10, Bell Corp. entered into a contract to purchase 50 lamps from Glow Manufacturing. Bell prepaid 40 percent of the purchase price. Glow became insolvent on September 19 before segregating, in its inventory, the lamps to be delivered to Bell. Bell will not be able to recover the lamps because: a. Bell is regarded as a merchant. b. The lamps were not identified to the contract. c. Glow became insolvent fewer than ten days after receipt of Bell's prepayment. d. Bell did not pay the full price at the time of purchase.

b

Sam obtains a fancy Patek Philippe watch from Greg by fraud. It has a retail price of $10,000. He sells it to Melissa for $9,000. She believes he owns the watch. Melissa ______ a bona fide purchaser. Sam disappears. If Greg discovers that she has the watch and demands that it be returned, Melissa ________ have to give the watch to Greg. a. is; will b. is; will not c. is not; will d. is not; will not

b

Tanya is in the business of selling rubber mats. Ralph is in the business of selling real estate. Logan is in the business of selling stocks and bonds. Article 2 of the U.C.C. governs the sale of the items sold by: a. Tanya, Ralph, and Logan. b. Tanya only. c. Ralph and Tanya only. d. Ralph only.

c, d

What factors are important for a buyer to determine when deciding which remedies apply when a seller breaches a sales contract? Choose 2 answer choices. a. The location of the buyer because this determines jurisdiction. b. Whether the goods have been completed and are ready to ship c. Whether the seller delivered nonconforming goods d. Whether the seller failed to deliver the goods

a

What is the term for the action of a buyer who, upon learning that the seller will not perform the seller's duty under a contract, makes arrangements to purchase the same goods from a different source? a. cover b. cure c. replevin d. replacement

a

What is the term for the doctrine under which a seller must deliver goods that conform exactly to the terms of the contract? a. the perfect tender rule b. exact acceptance c. the mirror image rule d. commercially acceptable cure

d

What is the term for the right of a seller, under the Uniform Commercial Code (UCC), to correct a delivery of goods that do not conform to contractual terms within the period specified by the contract in order to avoid a breach of contract action? a. cover b. specific performance c. replevin d. cure

d

What key factor determines what remedies are available for a seller in a sales contract when there is a breach by the buyer? a. Whether the goods have been completed and are ready to ship b. Whether the goods conform to the contract specifications c. The location of the buyer because this determines jurisdiction d. The location of the goods involved in the breach

b

What must an aggrieved buyer prove to obtain the remedy of specific performance in the event of a breach by the seller? a. that the price offered for the goods is fair b. that the goods are unique and a substitute will not be equal c. that the buyer has attempted to cover d. that the seller is insolvent

a, c, d

What remedies are available to a buyer when a seller refuses to deliver the goods that are the subject of a contract? Choose 3 answers a. The buyer may sue to obtain specific performance if the goods are unique or if damages are an inadequate remedy b. The buyer may cancel all other contracts with this seller on the grounds of anticipatory breach c. The buyer may buy other goods and recover damages from the seller d. The buyer may cancel the contract

a,b, c

What remedies are available to a seller when the buyer breaches a contract before the goods are delivered to the buyer? Choose 3 answers a. The seller may withhold delivery of the goods b. The seller may resell the goods and sue to recover damages c. The seller may cancel the contract d. The seller may sue to obtain specific performance

a, b

What rights does the perfect tender rule give buyers of goods? Choose 2 answer choices. a. The right to reject the seller's goods if the goods are not exactly as described in the contract b. The right to accept delivery of all of the goods c. The right to reject goods that conform to the contract specifications d. The right to reject goods if they are not delivered as agreed

a

Which of the following conditions must be met for an implied warranty of fitness for a particular purpose to arise? The warranty must be in writing. The seller must know that the buyer was relying on the seller in selecting the goods. a. I only b. II only c. Both I and II d. Neither I nor II

If the seller reasonably believed the goods were conforming, it may cure within a reasonable time after the deadline. If the court believes that Timely's spelling error was unreasonable, the company has no right to cure. However, a basic goal of the Code is a fully performed contract. A court is likely to declare that the error was excusable and the new delivery date adequate for Xuberant's purpose. Timely will probably win.

Xuberant Inc. orders 2,000 wristwatches from Timely Co. The watches, with Xuberant's logo on the face, are to be delivered by September 15 so that Xuberant can give them away at its September 25 sales convention. Timely tests the watches and is satisfied they work. But when Xuberant receives them, on September 15, the company rejects them because its name is misspelled. Timely offers to correct the error and deliver the new watches by September 22, but Xuberant refuses and sues. Likely outcome?

b

Ahmir agrees to purchase a shipment of oriental rugs from Oriental Rug Company for the price of $50,000, to be delivered on August 15. On July 15, Ahmir notifies Oriental that he no longer wants to purchase the rugs. Oriental spends $1,000 to advertise the rugs and obtains a new purchaser who buys the rugs for $40,000. Oriental then sues Ahmir for breach of contract. If Oriental is successful in its breach of contract suit against Ahmir, Oriental may receive: a. $10,000 from Ahmir. b. $11,000 from Ahmir. c. $50,000 from Ahmir. d. nothing from Ahmir, because Oriental was successful in reselling the rugs.

b

Hyster Material Handling sells 300 order pickers to Amazon. The order pickers cost $25,000 each, and each comes with a maintenance contract that costs $2,000 per year. After six months, a dispute arises between the parties when Hyster fails to perform all the monthly maintenance required under the contract, and Hyster decides to sue. Because the contract covers both goods and services, to determine what law applies to this contract the court will: a. apply the merchant test and determine that the common law applies. b. apply the predominant-factor test and determine that UCC Article 2 applies. c. apply the predominant-factor test and determine that the common law applies. d. apply the merchant test and determine that UCC Article 2 applies.

a

Blackburn FC orders 10,000 soccer jerseys from Alpha Co. to sell in its stadium store. They are to be delivered on July 10. When they arrive early on July 2, Blackburn is disappointed because the collars, which are supposed to be white, are blue. Blackburn notifies Alpha of the error. Alpha says that it wants a chance to "make it right." If Alpha delivers another shipment of 10,000 conforming jerseys on July 10, Blackburn . a. absolutely must accept the new shipment b. must accept the new shipment if Alpha offers a reasonable discount c. must accept the new shipment if it has suffered no measurable losses d. may accept the new shipment, but has the option to reject it

b, d

If a buyer has rejected goods, a seller may resell the goods and recover from the buyer: Choose 2 answers a. nothing b. the difference between the resale price and the contract price c. the full price d. incidental damages

a

In which of the following cases must the contract modification have additional consideration to be binding? a. Tony's boss promises him a higher salary because he did a good job. b. Tiana's Toys agrees to upgrade Tal's order of tricycles to expedited shipping. c. Both require new consideration. d. Neither requires new consideration.

b, d

Marathon Shoe Store Inc. gives notice to HighFlyer Shoe Co. that Marathon cannot pay for its current shoe order and would like to cancel. HighFlyer has not yet finished making the shoes. What options does HighFlyer have to address the breach of contract by Marathon? Choose 2 answer choices. a. HighFlyer can force Marathon to accept delivery and pay for the shoes. b. HighFlyer can cease manufacturing any unfinished goods and sell the goods for salvage value. c. HighFlyer can withhold payment. d. HighFlyer can complete manufacturing and sell the goods, and can sue for any difference between the contract price and the sales price.

Royal delivered a used car to a used-car dealer. That is entrustment. It is true that both dealers understood that Pamela was to pay Royal—but she did not know that. Entrustment protects good-faith buyers, and Pamela wins.

Pamela went to University Used Auto and asked if the company had a Lincoln Navigator. University had no such SUV, but a sales representative told Pamela that he would find her one. The representative contacted Royal auto dealership, which sold new and used cars. Royal agreed to supply University with the SUV, on the understanding that an interested buyer would pay Royal, which in turn would give a finder's fee to University. The companies had worked this way in the past. Royal delivered a Navigator as requested. But when the used-car company sold the vehicle to Pamela, the company instructed her to pay University directly, which she did. Royal sued Pamela, seeking the car, and the court had to determine whether there had been an entrustment. Royal argued that it never entrusted the Navigator to University because the parties agreed to require payment to Royal.

b

Smith contracted in writing to sell Peters a used laptop for $600. The contract did not specifically address the time for payment, place of delivery, or Peters' right to inspect the computer. Which of the following statements is correct? a. Smith is obligated to deliver the computer to Peters' home. b. Peters is entitled to inspect the computer before paying for it. c. Peters may not pay for the computer using a personal check unless Smith agrees. d. Smith is not entitled to payment until 30 days after Peters receives the computer.

b

The Palace Restaurant purchases goods from Pluto Restaurant Supply House on a regular basis. Pluto breaches the contract with Palace when Pluto runs out of the cooking equipment Palace agreed to purchase. What remedy is NOT available to Palace? a. Purchase substitute goods from another party b. Reclaim the goods from Pluto's other customers c. Recover incidental damages d. Right to cancel the contract

a

Under the UCC sales article, an action for breach of the implied warranty of merchantability by a party who sustains personal injuries may be successful against the seller of the product only when: a. the seller is a merchant of the product involved. b. an action based on negligence can also be successfully maintained. c. the injured party is in privity of contract with the seller. d. an action based on strict liability in tort can also be successfully maintained.

e

Under the UCC, to tender delivery, a seller must . a. make the goods available at a reasonable time b. keep the goods available for a reasonable period c. deliver to the buyer any documents that it needs to take possession d. All of these e. None of these

a

Vick bought a used boat from Ocean Marina that disclaimed "any and all warranties." Ocean was unaware that the boat had been stolen from Kidd. Vick surrendered it to Kidd when confronted with proof of the theft. Vick sued Ocean. Who prevails? a. Vick because the implied warranty of title has been breached b. Vick because a merchant cannot disclaim implied warranties c. Ocean because of the disclaimer of warranties d. Ocean because Vick surrendered the boat to Kidd

a, b, d

What actions are valid exceptions to the perfect tender rule? Choose 3 answers a. The seller may choose a different means of delivery if the agreed upon means becomes unavailable or impractical b. The contract is unenforceable if the goods which had been identified to the contract are destroyed. c. The seller may adjust the price if his or her costs have risen more than 1% d. The seller has the right to cure nonconforming goods within the contract time for performance

b

Which of the following transactions is not governed by Article 2 of the UCC? a. Purchasing an automobile for $35,000 b. Leasing an automobile worth $35,000 c. Purchasing a sound system worth $501 d. Purchasing a sound system worth $499

The purchases of the iPad and the barbecue grill are covered by Article 2 of the UCC. Both agreements involve goods. The figure of $500 is relevant to whether the Statute of Frauds applies to the agreements, but it is not material to the threshold question of whether Article 2 applies in the first place. All sales of goods, from ferrets to Ferraris, fall under Article 2. The teeth whitening is a service and not a sale of goods. It is not governed by Article 2.

While shopping at his local mall, Milan buys an iPad for $399, a barbecue grill for $509, and then pays $25 to have his teeth whitened. Which of Milan's transactions are governed by Article 2 of the UCC?

b

Wilson and Everett have a contract under which Everett is to supply to Wilson 5,000 sets of bicycle spokes by September 15. The contract provides that any lawsuit for breach of contract must be brought within three months of the breach. Everett delivers the 5,000 bicycle spokes to Wilson on September 15. Wilson refuses the delivery, however, because half of the spokes are broken. Everett refuses, after repeated requests from Wilson, to replace the shipment. On January 10, Wilson files a lawsuit against Everett for breach of contract. Wilson's lawsuit against Everett for breach of contract: a. will be dismissed because the contract limits the time in which to bring such a lawsuit to three months. b. will not be dismissed because parties cannot reduce the period for bringing such a lawsuit to less than one year. c. will be dismissed because, under the U.C.C., the statute of limitations for bringing such a lawsuit is within thirty days after the action accrues. d. will not be dismissed because, under the U.C.C., the statute of limitations for bringing such a lawsuit is within four years after the action accrues.

Liquidated damages are enforceable in an amount that is reasonable in light of the harm and the difficulties of proving actual loss. Your clause may certainly compensate you for lost goodwill among domestic retailers and for harm to your efforts at establishing the brand in Europe. Make good-faith estimates of those losses—if the clause gives you too much compensation, a court may void it altogether. Lost profits per case sold in the United States are probably easy to calculate and should not be part of the liquidated damages clause.

You have a red wine problem. Your California vineyard has strong sales throughout the United States, and it is time to expand into Europe. To penetrate foreign markets, you offer your product at steep discounts to a Swiss importer. Your intent is that the importer will sell your wine inexpensively to retailers, so that low prices will entice consumers. The danger, though, is that the importer will return the wine to the United States and undersell your own product in an established market, taking advantage of your advertising and infuriating established dealers. Such a resale could occur before your wine ever left the country. What can you do to keep this problem from fermenting?

d

Partial acceptance of goods is permitted: a. only when delivery is made under an installment contract b. only if the buyer has already given the seller the opportunity to cure c. when there is more than 10 items d. when the goods can be divided into commercial units

c

Under a sales contract governed by the UCC, which of the following statements is correct? a. Unless both the seller and the buyer are merchants, neither party is obligated to perform the contract in good faith. b. The contract will not be enforceable if it fails to expressly specify a time and a place for delivery of the goods. c. The seller may be excused from performance if the goods are accidentally destroyed before the risk of loss passes to the buyer. d. If the price of the goods is less than $500, the goods need not be identified to the contract for title to pass to the buyer.