FIL 375 Exam 3: Ch 11, 12, 13, 14, 15
Under the UCC Sales Article, an action for breach of the implied warranty of merchantability by a part 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
A is the correct answer The implied warranty of merchantability applies only if the seller is a merchant in the type of good which was sold. This could be a difficult question because it relates to a personal injury claim under the warranty of merchantability. Most personal injury claims are brought under strict liability, which has different requirements. However, the requirement that the seller be a merchant of the type of good sold also applies to strict liability cases. Choice C is incorrect because the implied warranty of merchantability extends to parties other than the purchaser. Choices B and D are incorrect because an action based on breach of warranty is separate from other causes of action and does not require that the other causes of action also be successful.
Which of the following conditions, if present on an otherwise negotiable instrument, would affect the instrument's negotiability? A. The instrument is payable six months after the death of the maker. B. The instrument is payable at a definite time subject to an accelerated clause in the event of a default. C. The instrument is postdated D. The instrument contains a promise to provide additional collateral if there is a decrease in value of the exisiting collateral
A is the correct answer. A date six months after the maker's death is neither a definite time nor on demand, making the note nonnegotiable. The other conditions are acceptable.
Which of the following factors results in an express warranty with respect to a sale of goods? I. The seller's description of the goods as part of the basis of the bargain. II. The seller selects goods knowing the buyer's intended use. A. I only B. II only C. Both I and II D. Neither I or II
A is the correct answer. Any description of the goods, including pictures and models, result in an express warranty. The seller's knowledge of the buyer's intended use related to the implied warranty of fitness for a particular purpose and not to express warranties.
Bond fraudulently induced Teal to make a note payable to Wilk, to whom Bond was indebted. Bond delivered the note to Wilk. Wilk negotiated the instrument to Monk, who purchased it with knowledge of the fraud and after it was overdue. If Wilk qualifies as a holder in due course, which of the following statement is correct? A. Monk has the standing of holder in due course through Wilk B. Teal can successfully assert the defense of fraud in the inducement against Monk. C. Monk personally qualifies as a holder in due course. D. Teal can successfully assert the defense of fraud in the inducement against Wilk.
A is the correct answer. Because Wilk acquired the instrument from an HDC (the assumption in the last sentence of the question), the shelter doctrine gives her the rights of an HDC even though she does not qualify as an HDC herself.
Under the Sales Article of the UCC, which of the following statements is correct? A. The obligations of the parties to the contract must be performed in good faith B. Merchants and non-merchants are treated alike C. The contract must involve the sale of good for a price of more than $500 D. None of the provisions of the UCC may be disclaimed by agreement
A is the correct answer. Choice B is incorrect because although the UCC applied to both merchants and non-merchants, they are treated differently in some provisions. Choice D is incorrect because most provisions of the UCC can be disclaimed or modified by the terms of the contract, although the good faith requirement is one provision that cannot be disclaimed.
On February 15, Mazur Corp. contracted to sell 1,000 bushels of wheat to good Bread, Inc. at $6.00 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 $5.00 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 tract its anticipatory breach at any time before June 23 D. Good can successfully sue Mazur for specific performance
A is the correct answer. Good Bread committed an anticipatory breach of the contract when it notified Mazur that it would not accept or pay for the wheat. Upon anticipatory breach, the non-breaching party can immediately treat the contract as breached without waiting until the actual performance deadline. By treating the contract as breached, the seller can seek to resell the goods to a different buyer, and usually must seek to do so because of the duty to mitigate damages. The seller must notify the buyer of the intent to resell the goods unless they must be sold quickly due to spoilage or other deterioration in value. If successful in finding another buyer, the seller is entitled to recover the difference in the original contract price receive from the alternate buyer. This enables the seller to preserve the benefit of the bargain.
Under the Negotiable Instruments Article of the UCC, which of the following circumstance would prevent a person from becoming a holder in due course of an instrument? A. The person was notified that payment was refused. B. the person was notified that one of the prior endorsers was discharged. C. the note was collateral for a loan D. The note was purchased at a discount
A is the correct answer. None of the incorrect choices prevent a holder from becoming a holder in due course.
Under the UCC Sales Article, which of the following statements is correct concerning a contract involving a merchant seller and a non-merchant buyer? A. Whether the UCC Sales Article is applicable does NOT depend on the price of the good involved B. Only the seller is obligated to perform in the contract in good faith C. The contract will be either a sale or return or sale on approval contract. D. The contract may NOT involve the sale of personal property with a price of more than $500.
A is the correct answer. The UCC applies to all contracts for the sale of goods regardless of the price of the goods, although contracts for an amount of $500 or more must be in writing under the Statute of Frauds. Choice B is incorrect because all parties must perform in good faith under the UCC, although the good faith standard for non-merchants is more lenient than that for merchants.
Vick bought a used boat from Ocean Marina that disclaimed "any and all warranties" in connection with the sale. ocean was unaware the boat had been stolen from Kidd. Vick surrendered it to Kidd when confronted with proof of the theft. Vick sued Ocean. Who is likely to prevail and why? 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 is the correct answer. The implied warranty of title can be disclaimed, but only by specifically mentioning the word "title" in the disclaimer or by a statement that the seller is selling "only that right, title, ownership, etc. that the owner has" in the goods sold. A statement disclaiming "all warranties" will not accomplish that.
Which of the following facts is most important in deciding who bears the risk of loss between merchants when goods are destroyed during shipment? A. The agreement of the parties B. Whether the goods are perishable C. Who has title at the time of the loss D. The terms of applicable insurance policies
A is the correct answer. The most important factor under the UCC for risk of loss is the contract's shipping terms. That does not appear as an answer choice, but because the contract's shipping terms are part of the agreement of the parties, choice A is the correct choice. Many candidate mistakenly believe that title is the most important factor. Choice D might be important in determining who actually bears a loss, but the rules for risk of loss are determined independently of insurance coverage of the parties. In reality, the risk of loss rules determine who will bear a loss if no one else (insurance, or common carries) covers the loss.
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, weighting scale to have valid city certificate." Under the UCC... A. A contract was formed between the parties B. A contract will be formed only if Cookie agrees to the weighing scale requirement C. No contract was formed because Distrib included the weighing scale requirement in its reply D. No contract was formed because Distrib's reply was a counteroffer
A is the correct answer. This question addresses the effect, under the UCC, of different or additional terms in the acceptance to an offer. Choice D is incorrect because unlike at common law, a contract is formed under the UCC. Whether the additional terms become part of the contract depends on the merchant status of the parties. This question requires only that the candidate know that under the UCC a contract will be formed in all cases. Choices B and C are essentially the same, and thus both incorrect.
Taylor signed and mailed a letter to Peel that stated: "Ship promptly 600 dozen grade A eggs." Taylor's offer A. May be accepted only by a prompt shipment B. May be accepted by either a prompt promise to ship or prompt shipment. C. Is invalid because the price term was omitted D. IS invalid because the shipping term was omitted
B is the correct answer. Either shipment or a promise to ship will operate as an acceptance. Choices C and D are incorrect because the UCC has gap filling provisions for contracts where certain terms are omitted.
Under the UCC Sales Article, a seller will be entitled to recover the full contract price from the buyer when the A. Goods are destroyed after title passed to the buyer B. Good are destroyed while risk of loss is with the buyer C. Buyer revokes its acceptance of the goods. D. Buyer rejects some of the goods.
B is the correct answer. If the risk of loss is on the buyer when the goods are destroyed, the goods cannot be resold, and the seller is entitled to receive the full contract price. Choice A is incorrect because risk of loss is not always on the party who has title to the goods. Under the UCC, risk of loss is primarily determined by the contract's shipping terms, not by title.
Which of the following negotiable instruments is subject to the UCC Negotiable Instruments Article? A. Corporate bearer and with a maturity date of January 1, 2001. B. Installment note payable o the first day of each month C. Warehouse receipt D. Bill of lading, payable to order
B is the correct answer. Int his question, the installment note described in the correct answer choice is negotiable, and subject to article 2, only if all negotiability requirements have been met, but the other three answer choices are never covered under Article 2. B is the best choice.
Under the Sales Article of the UCC, a firm offer will be created only if the A. Offer states the time period during which it will remain open. B. Offer is made by a merchant in a signed writing. C. Offeree gives some form of consideration D. Offeree is a merchant
B is the correct answer. The correct choice concisely states the three requirements of a firm offer, and is an easy question for candidates who know the rule.
Under the Sales Article of the UCC, and unless otherwise agreed to, the seller's obligation to the buyer is to A. Deliver the goods to the buyer's place of business. B. Hold conforming goods and give the buyer whatever notification is reasonably necessary to enable the buyer to take delivery. C. Deliver all goods called for in the contract to a common carrier. D. Set aside conforming goods for inspection by the buyer before delivery.
B is the correct answer. The gap filling rule where a contract does not specify anything with respect to delivery is for the buyer to pick up the goods at the seller's place of business. In addition, the seller must give reasonable notification to the buyer. Choices A and D are incorrect because there is no obligation to deliver the goods to the buyer unless the contract specifically provides for it.
Which of the following conditions must be met for an implied warranty of fitness for a particular purpose to arise in connection with a sale of goods? I. The warranty must be in writing. II. The seller must know that the buyer was relying on the seller in selection the goods. A. I only B. II only C. Both I and II D. Neither I or II
B is the correct answer. The seller must have known that the buyer was relying on the seller in selecting the appropriate good for the warranty of fitness for a particular purpose to apply. Because it is an implied warranty, there is no requirement that it be in writing. Implied warranties arise automatically without any statement, oral or written, by the seller.
Under the Sales Article of the UCC, the warranty of title A. Provides that the seller cannot disclaim the warranty if the sale is made to a bona fide purchaser for value. B. Provides that the seller deliver the goods free from any lien of which the buyer lacked knowledge when the contract was made. C. Applies only if it is in writing and signed by the seller D. Applies only if the seller is a merchant
B is the correct answer. The warranty of title is an implied warranty which warrants that good title is being conveyed to the buyer. The warranty of good title includes a requirement that the goods be free from any security interest. If the existence of a security interest is disclosed to the buyer, the warranty is not breached. Choice A is incorrect because it is possible to disclaim the warranty of title. Choice D is incorrect because the warranty of title applies to all sellers.
Under the Negotiable Instruments Article of the UCC, which of the following statements best describes the effect of a person endorsing a check "without recourse"? A. The person has no liability to prior endorsers B. The person makes no promise or guarantee of payment on dishonor C. Ther person gives no warranty protection to later transferees D. The person converts the check into order paper.
B is the correct answer. This question illustrates the importance of reading the question carefully and choosing the option that best answers the question. Choice A, read in isolation, is a correct statement. Endorsers generally do not have liability to prior endorsers. Choice A is incorrect here because that fact is not a consequence of using the words "without recourse." Choice C is incorrect because the words "without recourse" do not negate warranty liability, and the signature accompanying the words "without recourse" extends the warranty liability to all later transferees.
To satisfy the UCC Statute of Frauds regarding the sale of goods, which of the following must generally be in writing? A. Designation of the parties as buyer and seller B. Delivery terms C. Quantity of the goods D. Warranties to be made.
C is the correct answer. The UCC has gap-filling rules for situation where certain terms, such as the price or delivery terms, are missing. Because it is usually not possible to determine what a "reasonable" quantity would be, lack of a quantity term generally results in no contract.
For a person to be a holder in due course of a promissory note A. The note must be payable in U.S. currency to the holder B. The holder must be the payee of the note C. The note must be negotiable D. All prior holders must have been holders in due course
C is the correct answer. The holder in due course doctrine applies only if an instrument is negotiable. Choice A is incorrect because an instrument must be payable in money, but it need not be United States currency.
On May 2, Mason orally contracted with Acme Appliances to buy for $480 a washer and dryer for household use. Mason and the Acme salesperson agreed that delivery would be made on July 2. On May 5, Mason telephoned Acme and requested that the delivery date be moved to June 2. The Acme salesperson agreed with this request. On June 2, Acme failed to deliver the washer and dryer to Mason because of an inventory shortage. Acme advised Mason that it would deliver the appliances on July 2 as originally agreed. Mason believes that Acme has breached its agreement with Mason. Acme contends that its agreement to deliver on June 2 was not binding. Acme's contention is A. Correct, because Mason is NOT a merchant and was buying the appliances for household use B. Correct, because the agreement to change the delivery date was NOT in writing C. Incorrect, because the agreement to change the delivery date was binding D. Incorrect, because Acme's agreement to change the delivery date is a firm offer that CANNOT be withdrawn by Acme.
C is the correct answer. The oral modification is binding because the contract, as modified, as for less than $500, therefore was not required to be in writing. Furthermore, no new consideration is necessary for modifications under the UCC. Choice D is incorrect because this situation is nowhere close to a firm offer. Beware of incorrect answer choices like this where a totally inapplicable rule or doctrine given as an answer choice can trip up unprepared candidates.
Jefferson Hardware ordered three hundred Ram hammers from Ajax Hardware. Ajax accepted the order in writing. On the final date allowed for delivery, Ajax discovered it did not have enough Ram hammers to fill the order. Instead, Ajax sent three hundred Strong hammers. Ajax stated on the invoice that the shipment was sent only as an accommodation. Which of the following statements is correct? A. Ajax's not of accommodation cancels the contract between Jefferson and Ajax B. Jefferson's order can only be accepted by Ajax's shipment of the good ordered. C. Ajax's shipment of Strong hammers is a breach of contract. D. Ajax's shipment of Strong hammers is a counteroffer and NO contract exists between Jefferson and Ajax
C is the correct answer. This is a difficult question. An accommodation shipment operates as a counteroffer only where the seller has not already accepted the offer by promising to ship conforming goods. Here, because the seller has already accepted the offer (the order from Jefferson), shipment of goods other than those called for in the contract is a breach. Choice D would be correct if only Ajax had not already accepted the order by promising to ship conforming goods.
A $5,000 promissory note payable to the order of Neptune is discounted to Bane by blank endorsement for $4,000. King steals the note from Bane and sells it to Ott who promises to pay King $4,500. After paying King $3,000, Ott learns that King stole the note. Ott makes no further payment to King. Ott is: A. A holder in due course to the extent of $5,000 B. An ordinary holder to the extent of $4,500 C. A holder in due course to the extent of $3,000. D. An ordinary holder to the extent of $0.
C is the correct answer. To be an HDC, Ott must have taken the note without notice of claims or defenses. The true owner, Bane, has a claim against it, but Ott was unaware of the theft when he took the note. However, another requirement to be an HDC is that value be given, which means that any promised payment must actually have been made. Here, Ott had actually paid only $3,000 for the instrument before he learned tha tit had been stolen. Even if he had paid additional amounts after learning of the theft (a foolish thing to do), he would be an HDC only to the extent of $3,000, the value given before receiving notice of the theft.
Rowe Corp. purchased good from Stair Co. that were shipped C.O.D. Under the Sales Article of the UCC, which of the following rights does Rowe have? A. The right to inspect the goods before paying. B. The right to possession of the goods before paying. C. The right to reject nonconforming goods. D. The right to delay payment for a reasonable period of time.
C is the correct answer. Under a C.O.D. the buyer is not entitled to possess or inspect the goods until they have been paid for. The buyer is still able to reject nonconforming good, but under a C.O.D. contract such a rejection normally would occur only after payment has been made.
Vex Corp. executed a promissory note payable to Tamp, Inc. The note was collateralized by some of Vex's business assets. Tamp negotiated the note to Miller for value. Miller endorsed the note in blank and negotiated it to Bilco for value. Before the note became due, Bilco agreed to release Vex's collateral. Vex refused to pay Bilco when the note became due. Bilco promptly notified Miller and Tamp of Vex's default. Which of the following statements is correct? A. Bilco will be unable to collect form Miller because Miller's endorsement was in blank B. Bilco will be able to collect from either Tamp or miller because Bilco was a holder in due course C. Bilco will be unable to collect from either Tamp or Miller because of Bilco's release of the collateral D. Bilco will be able to collect form Tamp because Tamp was the original payee
C is the correct answer. When Bilco release the collateral, it impaired the right of recourse, specifically the right against the collateral, in the event that the instrument was not paid. Choice B is incorrect because the discharge of Tamp and Miller is unaffected by Bilco's HDC status.
To establish a course of action based on strict liability in tort for personal injuries that result from the use of a defective product, one of the elements the injured party must prove is that the seller A. Was aware of the defect in the product B. Sold the product to the injured party C. Failed to exercise due care D. Sold the product in a defective condition
D is the correct answer. Any party who sold a product when it was in a defective condition can be held liable for any injuries arising from the defect. A defendant can use the intervening event defense if she can show that the defect first occurred in the product after it left her hands. Choice A is incorrect because a defendant's knowledge of a defect need not be proven. Choice B is incorrect because a defendant's knowledge of a contract need not be proven. Choice C is incorrect because lack of due care need not be proven.
Under the Sales Article of the UCC, which of the following events will release the buyer from all its obligation under a sales contract? A. Destruction of the goods after risk of loss passed to the buyer. B. Impracticability of delivery under the terms of the contract. C. Anticipatory repudiation by the buyer that is retracted before the seller cancels the contract. D. Refusal of the seller to give written assurance of performance when reasonably demanded by the buyer.
D is the correct answer. Choice A is incorrect because the sellers duty to pay for the goods would not be discharged. Choice B is incorrect because it is possible that the impracticality of delivery was caused by the buyer, and it is possible that alternate delivery arrangements can be made. Choice C is incorrect because the retraction of the anticipatory repudiation would reinstate the seller's obligations so long as the seller has not yet canceled the contract.
A maker of a note will have a real defense against a holder in due course as a result of any of the following conditions except A. Discharge in bankruptcy B. Forgery C. Fraud in the execution D. Lack of consideration
D is the correct answer. Lack of consideration is a personal defense. The incorrect answer choices all identify real defenses.
Larch Corp. manufactured and sold Oak a stove. The sale documents included a disclaimer of warranty for personal injury. The stove was defective. It exploded causing serious injuries to Oak's spouse. Larch was notified one week after the explosion. Under the UCC Sales article, which of the following statements concerning Larch's liability for personal injury to Oak's spouse would be correct? A. Larch cannot be liable because of a lack of privity with Oak's spouse B. Larch will not be liable because of a failure to give proper notice C. Larch will be liable because the disclaimer was not a disclaimer of all liabilty D. Larch will be liable because liability for personal injury cannot be disclaimed.
D is the correct answer. Liability for personal injuries cannot be disclaimed. One reason for this is that many of the persons inured by a product, as in this question, were not a party to the contract of sale and could not know of any disclaimer.
Robb, a minor, executed a promissory note payable to bearer and delivered it to Dodsen in payment for a stereo system. Dodsen negotiated the note for value to Mellon by delivery along and without endorsement. Mellon endorsed the note in blank and negotiated it to Bloom for value. Bloom's demand for payment was refused by Robb because the note was executed when Robb was a minor. Bloom gave prompt notice of Robb's default to Dodsen and Mellon. None of the holders of the note were aware of Robb's minority. Which of the following parties will be liable to Bloom? A. Dodsen and Mellon B. Just Dodsen C. Neither Dodsen nor Mellon D. Just Mellon
D is the correct answer. Mellon incurred secondary liability by endorsing the note in blank. He could have avoided this liability by igving a restrictive endorsement, "without recourse." Dodsen made transfer warranties when he transferred the note to Mellon, but because Dodsen's transfer was without his signature, those warranties applied only to the immediate transferee, Mellon.
High sues the manufacturer, wholesaler, and retailer for bodily injuries cause by a power saw High purchased. Which of the following statements is correct under strict liability theory? A. Contributory negligence on High's part will always be a bar to recovery. B. The manufacturer will avoid liability if it can show it followed the custom of the industry. C. Privity will be a bar to recovery insofar as the wholesaler did not have a reasonable opportunity to inspect. D. High may recover even if he cannot show any negligence was involved.
D is the correct answer. Negligence need not be proven in a strict liability products liability case. Choice A is incorrect because contributory negligence by the plaintiff usually does not prevent recovery for the injuries suffered. Choice B is incorrect because a defendant cannot escape liability because the defect (here, usually a design defect) was also present in all or most of the similar products of competitors. If industry custom were a defense, then competitors would have an incentive to design equally dangerous products. Choice C is incorrect because the existence of the defect when the product is sold is all that the plaintiff must prove. Note that answer choice C says "Privity" will be a bar to recover. The CPA exam sometimes use the word "privity" when they mean "lack of privity". Remember that privity simply means being in a contractual relationship. Choice C is actually referring to lack of privity. Beware of this poor use of terminology.
Which of the following is required to make an instrument negotiable? A. State date of issue B. An endorsement by the payee C. Stated location for payment D. Payment only in legal tender
D is the correct answer. The legal tender can be any recognized currency. This is an easy question if the requirements for negotiability have been memorized, and one common sense might not lead to the correct answer.
Cey Corp. entered into a contract to sell parts to Deck, Ltd. The contract provided that the goods would be shipped FOB Cey's warehouse. Cey shipped parts different from those specified in the contract. Deck rejected the parts. A few house after Deck informed Cey that the parts were rejected, they were destroyed by fire in Deck's warehouse. Cey believed that the parts were conforming to the contract. Which of the following statements is correct? A. Regardless of whether the parts were conforming, Deck will bear the loss because the contract was a shipment contract. B. If the parts were nonconforming, Deck had the right to reject them, but the risk of loss remains with Deck until Cey take possession of the parts. C. If the parts were conforming, risk of loss does NOT pass to Deck until a reasonable period of time after they are deliver to Deck. D. If the parts were nonconforming, Cey will bear the risk of loss, even though the contract was a shipment contract.
D is the correct answer. The risk of loss rules are changed when a party breaches the contract, generally to the detriment of the breaching party. If a seller breaches by delivering nonconforming goods, the risk of loss stays on the seller until the nonconformity is cured or the buyer accepts the goods with the nonconformity, neither of which happened here. The seller's belief that the goods were conforming is not relevant; whether they actually conform is. Choice A is incorrect because with a breach the risk of loss would remain on the breaching seller even in a shipment contract. Note the structure of answer choices B, C, and D, where a further assumption is made about facts of the question.
Under the Sales Article of the UCC, which of the following statements is correct regarding the warranty of merchantability arising when there has been a sale of goods by a merchant seller? A. The warranty must be in writing. B. The warranty arises when the buyer relies on the seller's skill in selecting the goods purchased. C. The warranty cannot be disclaimed. D. The warranty arises as a matter of law when the seller ordinarily sells the goods purchased.
D is the correct answer. The warranty of merchantability is an implied warranty, and thus arises automatically in a sale by a merchant. Choice A is incorrect because no writing is needed for implied warranties. Choice B is incorrect because the reliance on the seller's skill in selecting a product related to the implied warranty of fitness for a particular purpose. Choice C is incorrect because it is possible to disclaim the warranty of merchantability.
To the extent that a holder of a negotiable promissory note is a holder in due course, the holder takes the note free of which of the following defenses? A. minority of the maker where it is a defense to enforcement of a contract. B. Forgery of the maker's signature C. Discharge of the maker in bankruptcy D. Nonperformance of a condition precedent
D is the correct answer. This question also seeks a personal defense, but unlike the previous question, does not ask directly. An HDC takes an instrument free of personal, but not real, defenses. Nonperformance of a condition is the only personal defense among the answer choices.
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
D is the correct answer. Where a seller cannot resell the goods to another buyer, the seller is entitled to recover the full purchase price from the breaching buyer. Such a lawsuit is known as an action for the price. In addition, the seller is entitled to recover other reasonable costs related to the breach. Choice A is incorrect because the seller is entitled to recover the benefit of the bargain by recovering the entire contract price, not merely the cost of the goods.