Business Law 10-12

If a court determines that a contract involving both goods and services is primarily a goods contract, any dispute over the deal will be decided under the UCC.

True

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

True

In entering into a contract with Marc for the sale of a cold storage warehouse, Nan fails to reveal the fact that the freezers do not consistently maintain a proper temperature. Most likely, this is fraudulent misrepresentation if

the fact is a serious defect known to Nan but not to Marc.

If a buyer wrongfully refuses to accept the goods, the seller can bring an action for damages equal to the difference between the contract and market prices at the time and place of tender.

True

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

automatically

Daisy enters into a contract with Evan for the construction of a Fast Food Café, according to a certain schedule. The parties perform some preparatory steps, but Evan materially and willfully fails to begin work on the specified date. To rescind the contract, Daisy must show that the parties can

be restored to the status quo.

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

does not apply

Home Furnishing Store's contract for a sale of its appliances provides that the only remedy for breach is replacement, repair, or refund of the purchase price. With respect to this provision, on a customer's suit for breach, a court is most likely to

enforce it

f contracting parties attach materially different meanings to a contract word or term subject to more than one reasonable interpretation, the contract is void.

false

Greg buys a skateboard from Hobby Shop. In a dispute arising from the sale, the shop will be considered to have the status of a merchant under the UCC if

it holds itself out by occupation as having knowledge and skill unique to the skateboard in the transaction.

Grass Farm LLC offers to sell fifty bales of hay at a certain price to Horse Stable Inc. The owner of the stable responds, "We agree if you agree to make it sixty bales for the price." Their contract is formed according to

none of the terms

Jill enters into a contract to buy a certain office building from Kim. At the closing, Kim refuses to transfer title. In a suit for breach, Jill should seek specific performance to

obtain the exact bargain promised in the contract

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.

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

resell the garages and recover any damages from Truck Service.

In a sale of oranges from Citrus Farm to Juice Factory Inc. to be delivered after the harvest, a fire destroys the fruit before it is picked. Under the UCC, the rights and liabilities of Citrus and Juice in this circumstance are generally determined by

the concepts of identification and risk of loss.

If, before the time for contract performance, one party communicates an intent not to perform, the other party can only wait to see if the repudiating party will decide to perform.

False

To qualify as a sale under the UCC, the price in the transaction must be payable in cash.

False

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

True

When the performance of a contract depends on the personal skill of the obligor, a delegation of the duty is prohibited.

True

Performance becomes commercially impracticable when a foreseeable, added burden of performing increases the cost slightly.

False

T/F-The measure of compensatory damages does not vary by type of contract.

False

A covenant not to compete imposed, as part of a sale of an ongoing business will be enforced even if the restrictions are unreasonable.

False

A merchant who is in the business of selling certain goods makes an implied warranty of merchantability every time she sells any type of merchandise.

False

In most states, a person whose employment is wrongfully terminated has no duty to take a similar job if one is available.

False

Under a construction contract that requires a builder to meet certain specifications, complete performance is required to avoid material breach.

True

Under the UCC, if a dispute occurs over the existence of a contract, a purchase order can be sufficient to indicate that there is a contract.

True

Under the United Nations Convention on Contracts for the International Sale of Goods, when the parties to an agreement do not specify a price term, or at least provide for its specification, normally no contract will exist.

True

When a buyer breaches a contract for a sale of land, the seller can recover the difference between the contract price and the market price of the land.

True

When a sales contract contemplates shipment of the goods but does not specify the arrangements, either party can make those arrangements.

False

The standard measure of compensatory damages is the value of the breaching party's actual performance.

False

The UCC provides that a sale or lease contract will fail for indefiniteness if more than one of its terms is left open.

False

Under the UCC, good faith can never be disclaimed.

False

When a buyer breaches a sales contract, the risk of loss remains with the seller to the extent of any deficiency in the buyer's insurance coverage.

False

If performance of a contract is not substantial, there is a material breach, which excuses the innocent, non-breaching party from performance.

True

For purposes of fraudulent misrepresentation, scienter clearly exists if a party asserting a fact knows it is not as stated.

True

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

the purchase price plus incidental damages.

When a seller breaches a contract for a sale of goods, knowing the buyer plans to resell the goods, the buyer can recover the lost profits from the planned resale.

True

T/F-A seller who places goods at the disposal of a buyer had tendered delivery but cannot yet demand payment.

False

The Uniform Commercial Code requires parties to form sales and lease contracts with the same formality used in forming other types of contracts.

False

To satisfy the UCC's Statute of Frauds, a writing indicating an intent to form a sales contract must be signed by both parties

False

Soto contracts to buy an oven from Restaurant Appliances Inc. for $5,000, but the seller fails to deliver. Soto buys a similar oven from another dealer for $6,500. Soto's measure of damages is

$1,500, plus any additional expense to obtain the oven.

Baez is employed by Credit Agency Inc. On the termination of Baez's position, Credit Agency pays Baez $10,000 to agree not to disclose the employer's confidential information. Later, Baez sells the information to Debt Records LLC for $100,000. In a suit for breach, Credit Agency is most likely to recover

10,000 from Baez

The UCC imposes certain special business standards on merchants because of their commercial expertise.

True

The UCC imposes on merchants

certain special business standards.

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 bar of soap is unmerchantable if stepping on it would cause its user to slip and fall.

False

A buyer can revoke his or her acceptance if, despite assurances by the seller that the goods would conform, the buyer was aware of their nonconformity before acceptance.

False

A court will grant specific performance as a remedy only when the legal remedy is adequate.

False

Any use of delivered goods by the buyer—even for the limited purpose of testing them—constitutes acceptance. a. True b. False

False

Expenses incurred because of a breach of contract to obtain performance from another source are not recoverable in a suit for breach.

False

If a contract for a sale of goods leaves the quantity term open, there is a basis for determining a remedy.

False

If a contract states that repair or replacement is the exclusive remedy, then it is, even if repair or replacement is not possible.

False

If a creditor repossesses goods from a buyer who bought the goods knowing they were subject to a prior claim, the buyer can recover from the seller for breach of warranty.

False

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

False

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

Fast Bikes' promise becomes part of the basis of the bargain.

Grocers Mart buys one hundred cases of berries from Hilltop Farms. The parties agree that the berries will be transported "F.O.B. Hilltop Farms" via Refrigerated Trucking Company. Refrigerated's truck and the berries are lost in a fire following an accident. The loss of the berries is suffered by

Grocers

Repair Service enters into a contract to fix washing machines in Soapy Suds Company's coin-operated laundries. Repair breaches the contract. Soapy is awarded compensatory damages. The purpose is to

Provide soapy with funds for its loss of bargain.

Runners Feet, a shoe store, orders one hundred pair of athletic shoes from Speedster Inc. Absent a contrary agreement between the parties, title will pass to Runners Feet when

Speedster physically delivers the goods.

A buyer can revoke his or her acceptance if it was predicated on a reasonable assumption that the goods' nonconformity would be cured, and the nonconformity was not cured.

True

A buyer will be deemed to have accepted delivered goods if, after a reasonable opportunity to inspect the goods, the buyer does not reject them.

True

An agreement to transfer the right to possess and use goods for a commercial purpose for a period of time in exchange for payment is a lease.

True

An excessive price for the goods and unequal bargaining power can indicate to a court that a sales contract is unconscionable.

True

Talk, Inc., offers to buy from Ultra Corporation 1,000 phones with certain features. Without notifying Talk, Ultra timely ships phones with fewer features. With respect to the offer, this shipment is an acceptance and

a breach

State University provides housing on campus and in some adjacent off-campus neighborhoods. To lease a university house or apartment, a person must be a student at State. This requirement is

a condition

Brooke is an art collector and hires a broker to buy and sell artworks on her behalf. Under the UCC, in those transactions, Brooke has the status of

a merchant

Clean Clinic offers to buy from Dental Supplies Company a specific quantity of a certain type of floss for a stated price. Dental can accept the offer by

a promise to ship or a prompt shipment of the goods.

Mining Corporation purchases the business assets of Open Pit Inc., including its equipment and supplies, for an agreed-to price, payable in installments. Under the UCC, this transaction is

a sale

Outdoor Outfitters Store contracts to buy fifty tents from Pitched Camp, Inc. Unless the contract states otherwise, this is assumed to be

a shipment contract

Rene contracts with Scot to pay him $5,000 for repairs to Rene's lake cabin. After Scot performs, Rene tells him that she cannot pay him in full immediately. They sign an agreement in which Rene promises to pay $2,500 now instead of $5,000 later. This is

an accord and satisfaction

Apps LLC enters into a contract with Birk, the chief executive officer of Corporate Sales Inc., to create an app for the firm. To fulfill the contract, Apps hires Dave as a student intern. With respect to the app contract, Dave is

an incidental beneficiary

Bottling Company enters into a contract with Chug's Brewery to provide certain bottling and delivery services. Before Bottling starts to work, the market price rises for the fuel for glass ovens. Bottling tells Chug's that due to the added cost it will not perform their deal. Bottling's contractual obligation to Chug's is

breached

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.

East Bay Café orders seafood from Fresh Catch Company. Fresh places the goods at East's disposal. Fresh's performance under the contract is

complete

Text & Talk Corporation sells phones. Under most circumstances, Text & Talk will be presumed to have warranted that its title to the goods is

good and valid

Bean Processor Inc. agrees to ship a certain quantity of coffee beans to Coffee Café LLC. Bean sends to Coffee an e-mail indicating that the parties intended to form a contract. Against Bean, as a contract, the e-mail will be sufficient

if it is signed by Bean

Business Rents LLC and Cartage Trucking Inc. enter into a contract for a lease of ten hydraulic lifts. Under the perfect tender rule, Business Rents must ship or tender lifts to Cartage that, with regard to the contract specifications, conform

in every way

Bon, an agent for City Motors Inc., e-mails Dale on May 1 that the dealer will sell her a 2018 Ford pick-up truck for $25,000 between May 1 and July 1. Bon's offer to Dale is

irrevocable for the stated period.

Leah and Mason are parties to a contract for the sale of Mason's day care facility to Leah. Before the deal closes, they agree to substitute Nell for Leah as a party to the deal. This does not require

performance of the original contract by all of the parties.

Elegant Carpets, Inc., agrees to sell a certain quantity of carpeting to Fantastic Floors stores under a shipment contract. Elegant Carpets must

place the carpeting into the hands of Great States Trucking, a carrier.

ABC Hardware Store orders one hundred power hand-drills from Best Tools Inc. When the hand-drills are delivered, they are all missing pieces. ABC rejects the shipment. To exercise a right to cure, Best Tools must

promptly notify ABC of the intent to cure.

Erma enters into a contract to buy a tract of lakefront property from Forest Acres to build and sell a residential development. Forest Acres fails to close the sale. Erma's remedy is most likely

specific performance

At an auction, Ben bids on a 1957 Chevy coupe, believing that it is worth more than the price asked. When the car proves to need more repairs than Ben estimated, and thus is worth less as is, Ben is

still liable on the bid.

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

the contract price and the market price

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

the seller is a merchant who deals in goods of the kind sold.

An implied warranty can arise as a result of a well-recognized trade custom that a court could infer the parties intended to apply to their contract.

true

Beef, Inc. raises calves to sell. Beef breeds its cows in April, and the cows calve in February of the following year. In January, Cold Cuts Inc. contracts with Beef to buy fifty calves. Identification takes place in

April, when the calves are conceived.

Parties to sales and lease contracts are not free to agree to terms different from those stated in the UCC. a. True b. False

False

Candy Corporation orders Double Chocolate Bars from Edible Distribution Company. Edible identifies the goods. Before they are shipped to Candy, an insurable interest in the goods exists in

both Candy and Edible.

Home Redo, Inc., and Ivy enter into a contract for a sale of cabinets and countertops. Home Redo, a merchant who deals in goods of the kind sold, notes that its goods come with an implied warranty of merchantability. Under the UCC, this means that the goods are reasonably

fit for the ordinary purpose for which such goods are used.

If the acceptance to a sales contract between non-merchants includes terms different from those in the offer, no contract is formed under the UCC.

False