Quiz #4-Chapters 19-22

S agrees to sell B 10,000 widgets at a price of $1.00 per widget. After B breaches the contract, S resells the widgets for $0.90 per widget. This costs S an additional $100 in sales commissions. What amount can S recover from B?

$1,100

Stone, a merchant seller in Seattle contracted with Rose, a merchant buyer in Rochester, for the sale of goods to be shipped by truck. The terms of the contract were "F.O.B. Seattle". Stone made a contract for shipping and delivered the goods to the carrier. After leaving Seattle, the truck containing the goods was never seen again. Stone has demanded payment for the goods, and Rose has refused. Stone files a suit for payment of the goods. 2-509 Does Rose have to pay for the goods? Explain.

Rose must pay for the goods. Since the contract was F.O.B. Seattle, the risk was transferred to Rose when Stone conformed to the contract by delivering the goods to a trucking company in Seattle. Stone did not have to bear responsibility to deliver the goods to Rochester.

Bob contracts to sell Ben 15 bales of hay. A bale is the accepted commercial unit in hay transactions. Ben accepts only 9 1/5 of the 20 bales. Under the UCC, Ben is considered to have accepted:

10 bales.

In which of the following transactions is the buyer most unlikely to be entitled to specific performance of the contract?

A contract for purchasing 10,000 tons of wheat

Which of the following occurs when a buyer, after having a reasonable opportunity to inspect them, either indicates that he will take them or fails to reject them?

Acceptance of goods

_____ is the plaintiff's voluntary consent to a known danger.

Assumption of risk

S agrees to specially manufacture a machine for B. After S finishes the job, B breaches the contract. Knowing that there is no market for the machine, S does not try to resell it. Instead, S sues B for the price of the machine. Which of the following is true? Assume that there truly was no market for the machine.

S can recover the price of the machine from B.

Which of the following terms in a contract for the sale of goods requires the seller to insure the goods?

CIF

Steve is a large man who weighs 465 pounds. Steve goes to a store and says that he would like to buy a hammock suitable for someone like himself to sleep in. He makes it clear that it is up to the salesman to select a suitable hammock. The salesman selects a hammock that is perfectly suitable for a normally-sized person but that cannot support someone of Steve's weight. Relying on the salesman's recommendation, Steve buys the hammock. After he is injured when the hammock collapses because it cannot bear his weight, Steve sues the store. Assume that the store is a merchant with respect to hammocks. What is the best legal theory of liability Steve should sue under? Explain Will Steve be successful? Explain

Steve should sue under the theory of implied warranty of fitness for a particular purpose. He informed the salesperson of his specific needs in terms of weight, and the salesperson sold him a hammock which he claimed would meet Steve's needs.

Which of the following is used by sellers to eliminate any kind of liability that may be claimed by an injured buyer?

Disclaimer

If the delivery term of the contract is _____ the place at which the goods originate, the seller is obligated to deliver to the carrier goods that conform to the contract and are properly prepared for shipment to the buyer, and the seller must make a reasonable contract for transportation of the goods on behalf of the buyer.

FOB

When would the amount of liquidated damages agreed to by both parties in a contract be considered unconscionable?

If the amount were too small compared to the possible losses

Which of the following is a common way in which seller breach contracts?

Indicating that he does not intend to fulfill the obligations under the contract

Which of the following is true of price terms in a contract?

No contract is created if price terms are not agreed on.

Abe took his bicycle to a bicycle shop for repair. By mistake, a sales clerk sold Abe's bike to Leon. This was a sale in the ordinary course of business; neither the clerk nor Leon was aware that the bike belonged to Abe. Can Abe recover his bike from Leon?

No, because Abe entrusted his bike to the bike shop.

S agrees to sell B 10,000 widgets at a price of $1.00 per widget. After B breaches the contract, S resells the widgets for $1.10 per widget in a public sale. S also saved $200 in shipping costs. What amount does S owe B?

Nothing

A(n) _____ is a clause attempting to block recovery of certain damages.

remedy limitation

In a _____ contract, the goods are delivered to the buyer primarily for the buyer's use.

sale on approval

If the buyer has misrepresented his solvency to the seller in writing within three months before the delivery of the goods:

the 10-day limitation on the seller's right to reclaim the goods does not apply.

The goods required for the performance of a contract are destroyed without fault of either party prior to the time that the risk of loss passed to the buyer. In this case,

the contract is voided.

Goods are being sold by Anne in Seattle and shipped by ABC Railroad to Brian in Portland, Oregon. In this situation, the term "FOB Seattle" means that the risk of loss passes from the seller to the buyer when:

the goods are delivered to ABC Railroad in Seattle.

The common law placed the risk of loss on _____ at the time of the loss.

the party that had technical title

In a "mixed" contract for the sale of both goods and services, the court will apply the contract rules of the UCC or of the common law, depending on whether:

the predominant purpose of the contract is goods or services.

In the case of a product where the risks are open and obvious, many courts hold that:

there is no duty to warn.

Goods that are not "merchantable" are:

unfit for the ordinary use for which such goods are used.

Customs and practices of the business that are known by people in the business and that are usually assumed by parties to a contract for goods of that type are known as _____.

usage of trade

A seller who has a _____ has the power to pass good title to a good faith purchaser for value.

voidable title

If a buyer rejects tender of the goods, title to those goods:

will automatically be revested in the seller.

Joe buys some watermelon seed from a seed manufacturer's catalogue. The catalogue describes the seed Joe buys as "top quality." Joe strongly relies upon this statement in making the purchase. The seed turns out to be worthless, and Joe sues the manufacturer for breach of express warranty. You are the attorney representing the manufacturer. Which of the following is your best argument for escaping liability?

That the alleged warranty was merely sales talk.

Mary Smith was a rancher in the business of buying and selling, horses and cattle. When Gene Baker began buying race horses for investment purposes, he entered into an agreement with Smith to board the horses at Smith's ranch. Mike Perry bought two breeding mares from Smith, unaware that they actually belonged to Baker. Perry sold one horse to Gary Jones. Both Perry and Jones arranged to board the horses with Smith. When Baker removed the horses from Smith's farm, Perry and Jones filed a suit in state court against him seeking to recover the horses alleging they were the owners of the horses. Question: To whom do the horses belong and why? UCC § 2-403

The UCC allows for an exception to the rule that a buyer cannot receive better title to goods than the seller had. A person who buys goods in the ordinary course of a dealer's business takes free of any claim of a person who entrusted those goods to the dealer. So Baker entrusted his horses to Smith. Perry purchased horses from Smith in the normal course of Smith's business as a dealer, so Perry's purchase is free from any claim that Baker may have on the horses. Baker may go after Smith in court to compensate him for his loss.

Which of the following is most important in determining who bears the risk of loss in a sale of goods contract?

The agreement of the parties.

In which of the following situations can a buyer revoke acceptance of nonconforming goods?

The nonconformity substantially impaired the value of the goods.

Under the product liability theory of strict liability as expressed in the Restatement (Second) of torts, what is an essential fact that must be present if strict liability may be used in a lawsuit as the basis for recovery?

The product must be unreasonably dangerous.

What does tender of delivery mean?

The seller must make the goods available to the buyer.

What is the basic objective of the Code remedies for breach of contract?

To put the injured person in the same position that he would have been in if the contract had been performed.

Wanda contracted to sell Mike 100 boxes of ball bearings. The contract did not specify a place of delivery. The ball bearings are at Wanda's place of business. Mike claims Wanda must ship the goods to him. Wanda refuses to ship the 100 boxes to Mike, and claims Mike must pick them up. Question: Who is Correct? Explain. 2-308

Wanda is correct. If the contract does not specify delivery terms then the goods are to be considered delivered at the Seller's place of business.

Adam decides to eat food despite knowing that it is adulterated and brags about it to Dee. Later Adam falls sick from infection. Adam sues the supplier of the said food for injury suffered by him. The defense which can be taken by the food supplier is:

assumption of risk.

If the party who repudiated the contract changes his mind, the repudiation can be withdrawn:

before the other party has canceled the contract.

Baker and Able signed a contract which required Able to purchase 600 books from Baker at 90¢ per book. Subsequently, Able, in good faith, requested that the price of the books be reduced to 80¢. Under the circumstances, the oral agreement is:

enforceable, and proof of it will be admissible into evidence.

The Statute of Limitation provision of the UCC holds that for contracts for the sale of goods (in the absence of contractual agreement to the contrary) the period of time within which a lawsuit must be commenced is:

four years.

In the case of a merchant, _____ means honesty in fact as well as the observance of reasonable commercial standards of fair dealing in the trade.

good faith

To satisfy the UCC Statute of Frauds, a written agreement for the sale of goods must:

indicate that a contract for sale has been made.

If the shipping terms are cash on delivery (COD), then the buyer:

must pay for the goods before inspecting them unless they are marked "Inspection Allowed."

A buyer who is not a merchant rejects nonconforming goods that are not perishable. He:

need not return the goods to the seller.