Commercial Ch 22

The seller's right to cure does not affect the right of the buyer or lessee to reject goods.

False

The term cure refers to the right of the buyer to reject, adjust, or replace nonconforming goods.

False

There are no circumstances under which a contract can be tendered by multiple deliveries of goods.

False

Under the UCC, there are no exceptions to the perfect tender rule.

False

Under the perfect tender rule, if tender is not perfect, the seller is obligated to try again.

False

With an installment contract, a buyer or lessee can reject a single installment on any pretext.

False

Clear View Company, which is based in Delaware, agrees to sell fifty windows, currently stored in Florida, to Far Sight, Inc., which is based in Hawaii. Absent an agreement to the contrary, the place of delivery is in

Florida.

If goods in every respect conform to a contract, the buyer or lessee does not have a right to reject the goods.

True

If, before the time for performance, a buyer communicates an intent not to perform, the seller can consider the buyer in breach and pursue a remedy.

True

In contracts involving a carrier, a seller can complete performance through a shipment contract or a destination contract.

True

The principle of good faith applies to both parties to a sales contract.

True

The seller's or lessor's major obligation under a sales contract is to tender conforming goods to the buyer or lessee.

True

Under the UCC, parties to a contract can limit or exclude consequential damages.

True

Fact Pattern 22-1 Daily Bread Bakeries, Inc., contracts to buy all of its ingredient requirements for bread making, at a certain minimum per year, from Enriched Flour & Grain Corporation for six years. After three years, Daily Bread tells Enriched that it plans to sell its assets to Flat Bread Shops, Inc. Flat Bread refuses to assure Enriched that it will continue Daily Bread's contract. Refer to Fact Pattern 22-1. Enriched can

terminate the contract and seek damages.

Banquets & Parties (B&P) contracts to buy 1,000 uninflated balloons from Gas Bags, Inc., for $1 per item. When the market price decreases to 50 cents per balloon, B&P refuses to go through with the deal. Gas Bags can recover

$500.

Natural Eggs, Inc. agrees to supply Omelet Express with five hundred eggs. Natural Eggs can not reasonably ask Omelet Express to pick up the eggs at

2:00 a.m.

Bayou Boats, Inc., contracts for the sale of seven swamp boats to Eventide Fishing Tours. Bayou repudiates the contract. Eventide's recovery is measured at the time

Eventide learned of the breach.

A buyer who rightfully rejects nonconforming goods may obtain cover or cancel the contact, but may not seek damages.

False

A buyer's failure to cover will bar him or her from using any other remedies available under the UCC.

False

Under the UCC, a seller's tender of goods that do not conform in every way to a contract is still a valid tender.

False

Under the UCC, if a contract does not designate the place of delivery for the goods, the place of delivery is a location halfway between the seller's place of business and the buyer's place of business.

False

Unless otherwise agreed, inspection of goods can take place at any reasonable place and time and in any reasonable manner.

True

Unless the parties agree otherwise, the buyer or lessee has an absolute right to inspect the goods before making payment.

True

Until the time for performance under a contract expires, the seller has a right to cure.

True

When a seller refuses to deliver goods that are unique, a buyer can obtain specific performance.

True

An installment contract is a single contract that requires or authorizes delivery in two or more separate lots to be paid for in one payment.

False

An installment contract is breached if a seller tenders any nonconforming goods.

False

If a contract specifies a certain carrier, a substitution of a different carrier for any reason breaches the contract.

False

If either the goods or their tender fails to conform to the contract in any respect, the buyer or lessee must reject all of the goods.

False

In the absence of any specific agreements, the buyer or lessee must make payment after receipt of the goods.

False

Tender of delivery requires that the seller or lessor hold the goods at the buyer's or lessee's disposal, but not that the goods be conforming.

False

The doctrine of commercial impracticability only extends to problems that are unforeseen.

True

Fuel Connector Products, Inc., agrees to sell Go-Flo, Inc., a certain quantity of hose couplings and fittings, but the contract does not specify a place of delivery. Go-Flo is expected to pick up the goods. The place of delivery is

Fuel Connector's place of business.

Refined Mills orders "Grade A" oats from Sweet Valley Farm to grind and sell to Town Co-op Grocery. Sweet Valley ships "Grade B" grain, which Refined Mills accepts. To recover damages for the nonconformity, Refined Mills must give notice of the breach within a reasonable time to

Sweet Valley.

A shipment contract requires a seller to ship goods by a carrier.

True

Acceptance of goods precludes the buyer or lessee from exercising the right of rejection.

True

If a buyer breaches a contract, the seller can choose to simply cancel the contract.

True

If a buyer repudiates a contract, the seller can bring an action to recover damages.

True

If a lessee breaches a contract, the lessor can cancel the contract.

True

If goods identified to a contract are destroyed through no fault of either party, both parties are excused from performance.

True

Game Source Stores are open to consumers. The UCC requirement of good faith imposes

a higher duty on Game Source than on consumers.

Fact Pattern 22-1 Daily Bread Bakeries, Inc., contracts to buy all of its ingredient requirements for bread making, at a certain minimum per year, from Enriched Flour & Grain Corporation for six years. After three years, Daily Bread tells Enriched that it plans to sell its assets to Flat Bread Shops, Inc. Flat Bread refuses to assure Enriched that it will continue Daily Bread's contract. Refer to Fact Pattern 22-1. Flat Bread's refusal is

a repudiation of the contract.

Fruit of the Plant, Inc., agrees to sell a certain quantity of a high-quality grain seed to Grange Co-op. Fruit of the Plant can obtain only half of the quantity ordered, so the seller also ships a lesser quality seed in twice the amount of the remainder of the order for the same price. Grange Co-op rejects the lesser quality seed. With time for performance not yet expired, Fruit of the Plant can

attempt to cure the defect.

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

await performance, sue Soft, or suspend its own performance.

Asian Noodle Company contracts to sell 1,000 cases of rice noodles to Bob's Bistros, Inc., but refuses to deliver. Due to a rice shortage, Bob's Bistros cannot obtain the noodles elsewhere. The buyer's right to recover the goods from the seller is the right of

cover.

Precise Parts, Inc., and Quality Auto stores enter into a contract for a sale of auto parts that meet certain specifications. Precise Parts ships goods that do not comply. Quality Auto

can reject the entire shipment.

EconBank issues a letter of credit in favor of Facile Deals Inc., a U.S. firm, to facilitate an international sales contract to buy certain products from Global Goods, Ltd., a British company. Global is entitled to payment when it

complies with the terms and conditions of the letter of credit.

Business Rental Corporation (BRC) and Cartage Trucking Company enter into a contract for a lease of ten hydraulic lifts. Under the perfect tender rule, BRC must ship or tender goods to the lessee that

conform to the contract description in every way.

Pine Mills Inc. and Quality Lumber Company enter into a contract for a sale of plywood to be delivered under a destination contract. This contract requires Pine Mills, the seller, to

deliver the goods to a particular destination.

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

demand assurances of performance from the seller.

Steel Buildings, Inc., agrees to sell four portable garages to Truck Service Center. Five days later, the buyer refuses delivery and cancels the contract. The seller is entitled to

force the buyer to accept the garages.

Medical Supply Company and Health Care, Inc., enter into a contract for a sale of medical equipment and supplies. Under either a shipment contract or a destination contract, the seller must

give the buyer any necessary documents of title.

Quarry Equipment Corporation and Rock & Gravel Inc. enter into a lease of three bulldozers. Under the perfect tender rule, Quarry must ship or tender goods to Rock & Gravel that, with respect to the contract description, conform

in every way.

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

is excused from the performance of its contracts.

Speedy's Auto Parts orders twenty tires from Tough Tires, Inc. Ten of the tires are delivered in a damaged condition. Speedy's

may accept the shipment with a reduction in price.

Tarts & Pies Bakery contracts with Sweet Fruits for strawberries to be delivered by Refrigerated Trucking Company. On the day of delivery, the refrigeration on the trucks is not working. Sweet Fruits

may ship the strawberries to the buyer using a different carrier.

Beef Burgers, Inc. contracts to buy five hundred head of cattle from Cattle Ranch. Before the seller delivers, an outbreak of disease causes a quarantine of the ranch. In this circumstance, the perfect tender rule

no longer applies.

Elegant Carpets, Inc., and Fantastic Floors Stores enter into a contract for a sale of carpeting to be delivered under a shipment contract. This contract requires Elegant Carpets, the seller, to

place the goods into the hands of a carrier.

ABC Toy Store orders one hundred board games from Big Board Games Inc. When the games are delivered, they are all missing pieces. ABC rejects the shipment. To cure, Big Board Games must

promptly notify ABC of the intent to cure.

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

resell the goods and recover any damages from the buyer.

Precious Stones, Inc., and Sparkling Jewelry stores enter into a contract for a sale of gemstones. Precious Stones does not deliver. The buyer can normally recover as damages the difference between

the contract price and the market price.

TackMaker, Inc., and Silver Stallion Stables enter into a contract for a sale of bridles, saddlery, and other equine equipment. TackMaker delivers, but Silver Stallion does not pay. TackMaker can normally recover as damages

the purchase price plus incidental damages.

Dairy Goods agrees to sell a certain quantity of ice cream to Event Caterers, but their contract does not specify the address at which the goods are to be delivered. If the parties fail to specify the address before the delivery date

the seller is excused for any resulting delay.

On July 10, Pet Supply Store orders fifty small dog collars from Quality Collars, Inc. to be delivered by July 15. On July 13, Quality Collars tenders fifty large dog collars. Pet Supply rejects the shipment. Quality Collars has

until July 15 to cure.

Revocation of acceptance is effective on notice to the seller or lessor.

True

Tender must occur at a reasonable hour and in a reasonable manner.

True

River Gear Company and Scenic Trips, Inc., enter into a contract on August 1 for the sale of fifty inflatable river rafts. Scenic cancels the contract ten days later. River Gear is unable to sell the rafts to another buyer. River Gear can

recover the contract price but must hold the rafts for the buyer.

Field Farms and Gourmet Restaurant enter into a contract for a sale of produce. After Field Farms ships the lettuce but before the restaurant receives it, the buyer declares bankruptcy. The seller can stop delivery of the goods in transit

regardless of the quantity.

Okay Markets, Inc., rejects a shipment of turkey that does not conform to its contract with Poultry Processing Corporation, but is unable to obtain instructions from the seller. Okay Markets can

reship or store the goods for the seller.

Owen and Pablo enter into a contract for a sale of irrigation equipment. Pablo pays, but Owen does not deliver. Pablo can normally recover as damages the difference between

the contract price and the market price.