D216 Unit 4: Contracts, with a focus on Sales and Leases of Goods (14%)
D9. Acorn Company, after deciding to go out of business, sells all of its inventory to Basket Company, and sells its business premises (a store with offices) to Cedar Company. The U.C.C. governs: a. Both sales, because they are all merchants. b. Both sales, because they are sales. c. The sale of the business premises. d. The sale of the inventory.
The sale of the inventory.
PA28. Under which scenario may the acceptance of substantially impaired defective goods be revoked? When the seller promises to cure and fails within a reasonable amount of time When the buyer notifies the seller after reselling the goods When the seller threatens to withhold future deliveries When the seller is insolvent
When the seller promises to cure and fails within a reasonable amount of time
D10. Diggle Company sends a purchase order to Echo Company to buy 50 widgets at $5 each, "or, as they are normally packaged by you, 10 boxes of 5 widgets." Echo sends back an acknowledgement that states it will send Diggle "50 widgets at $5 each, which in our new packaging of 10 per box, is 5 boxes." Do they have a contract, and if so, what are its terms? a. No, there is no contract because the offer and acceptance are not mirror images of each other. b. Yes, and the terms of the contract are that Echo will send 5 boxes containing 10 widgets in each box. c. Yes, and the terms of the contract are that Echo must send 10 boxes containing 5 widgets in each box. d. No, because the packaging is a material term.
Yes, and the terms of the contract are that Echo will send 5 boxes containing 10 widgets in each box.
D12. Helix Co. orders 5000 Grade A widgets from Intel Co, without specifying the price. Intel agrees to send them, and then sends 5000 Grade A widgets with an invoice. Do they have a contract? a. No, the price was not agreed upon. b. Yes, as long as the quantity and type of product is specified, the court can fill in the open terms relying on course of dealing, course of performance, and industry trade usage. c. Yes, as long as Helix does not timely object to the price. d. No, unless Helix specifically agrees to pay that price.
Yes, as long as the quantity and type of product is specified, the court can fill in the open terms relying on course of dealing, course of performance, and industry trade usage.
D15. Rex Adams is a small rancher in southwestern Oklahoma. As he is often quite cash-poor, he runs an account with the local feed store, and only settles up his account (that is, pays his bill) a couple of times a year. In November, Rex calls the feed store and says, "I need fifteen sacks of cattle feed." The store clerk said, "Sure thing." Rex drove to the store with his grandson, backed his truck up to the loading dock, and went inside to say he was there. The salesclerk, with Rex and the grandson's help, moved some sacks of feed to the loading dock, and then all three loaded the sacks onto the truck. Rex then pulled around the store and was driving out of the store's parking lot when the sacks fell off the truck and three of them burst open. Rex returns to the store and asks for three replacement sacks and says he should not have to pay for them. Will he? a. Yes, he was at fault for damaging the store's property. b. No, the store had the risk of loss until the sacks arrived at Rex's ranch. c. Yes, because the store already had delivered the sacks of grain as soon as they were identified at the store, and Rex owned them when they were damaged. d. Yes, because the store already had delivered the sacks of grain by making them available for Rex to put on his truck, and Rex owned them when they were damaged.
Yes, because the store already had delivered the sacks of grain by making them available for Rex to put on his truck, and Rex owned them when they were damaged.
D17. Tom Baker buys a large backpack at Able Luggage store. He tells the clerk he wants to use it to travel on a plane, and he wants to avoid checking any luggage, so he wants the largest size backpack that is allowed on domestic flights. The clerk sells him a backpack. That pack is in fact too big, when full, to be allowed as a carryon under FAA regulations, and when Tom's clothes are stuffed into it, the zipper separates and will not work. Were any warranties violated? a. Yes, the clerk made an express warranty by selling that backpack to Tom. b. Yes, the implied warranty of fitness for a particular purpose. c. Yes, the implied warranty of merchantability. d. Yes, both of the implied warranties are violated.
Yes, both of the implied warranties are violated.
Seacoast Transport Company pays Trucks & Trailers Inc. a stated price for the use of seven tractor-trailer rigs for a year. Under the UCC, this is a sale. a lease. a sublease. a contract for services.
a lease The key words in the question are "for the use" and "for a year". Use of a product over a period of time is indicative of a lease.
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. a sublease. a lease. a contract for services.
a sale The UCC defines a sale as "the passing of title [evidence of ownership rights] from the seller to the buyer for a price". The price may be payable in cash or in other goods or services. If the transaction were concerned with land or intangible assets, the UCC would not apply.
Embers Corporation orders 12 fire extinguishers from Firefighting Inc., which delivers the equipment. This is most likely a contract for services. a lease of goods. a sale of goods. a gift.
a sale of goods
Juan offers to pay Sari to deliver certain documents within thirty minutes. Sari can accept the offer only by completing the task within the deadline. If she does, Juan and Sari will have a bilateral contract. a void contract. a unilateral contract. an unenforceable contract.
a unilateral contract Unilateral contract = Promise - Act (performance)
Trucking LLC enters into a contract to deliver a certain quantity of potatoes to United Foods's refrigerated warehouse in exchange for a specified payment. Trucking delivers the potatoes to the location. United's duty to pay is discharged. qualified. absolute. conditioned.
absolute Trucking has performed exactly as agreed. This is called complete performance. As such, United has an absolute duty to pay in order to fulfill their contract obligations. Should they fail to pay, they will be in breach and Trucking may seek relief.
Jess, a salesperson for Kitchens Inc., shows Lane, a buyer for Metro Diner, display items in Kitchens' showroom, stating that any purchased equipment will match the display. This is an implied warranty. puffery. an express warranty. a statement of opinion.
an express warranty
Nature's Eggs Inc. agrees to supply Omelet Express with five hundred eggs. Nature's Eggs can reasonably ask Omelet Express to pick up the eggs at - no time—as a seller, Nature's Eggs must deliver the goods. - any hour. - any reasonable hour. - no specific time
any reasonable hour In a sales contract the seller has the obligation to make the goods available to the buyer; the buyer has the obligation to pay for those goods. Performance of the obligations of the contract do not require unreasonable actions or considerations.
Chair Company contracts to deliver a dozen suites of dining room tables and chairs to Furniture Store on May 1. On April 15, Chair tells Furniture that delivery will be delayed until June 1. Furniture may - only suspend its own performance. - await performance, sue Chair, or suspend its own performance. - only sue Chair for breach of contract. - only await Chair's performance for a commercially reasonable time.
await performance, sue Chair, or suspend its own performance The basic obligation of the seller or lessor is to transfer and deliver conforming goods. The basic obligation of the buyer or lessee is to accept and pay for conforming goods in accordance with the contract.
Jamal and Keri enter into a contract for Jamal to renovate Keri's house by a certain date. Jamal never performs. After the applicable limitations period has passed, Keri decides to bring a suit against Jamal for breach. This suit - can be brought up within 20 years, based on state law. - must be filed between four and five years after Keri decides to sue. - can no longer be brought. - can be filed within four years of notice to Jamal that Keri decided to sue.
can no longer be brought This is an example of discharge by operation of law. The limitations period for bringing suits for breach of oral contracts usually is 2 to 3 years, and for written contracts, 4 to 5 years. Parties generally have 10 to 20 years to file for recovery of amounts awarded in judgments, depending on state law.
Dom enters into a contract to buy Ezra's office building for a certain price subject to an appraiser's evaluation of the structure's condition. If the appraiser deems the condition to be substandard, the parties' obligations will be altered. performed. discharged. breached.
discharged In this case the contract would be discharged by mutual agreement between Dom and Ezra because they agreed to an independent appraiser evaluation of the condition of the structure. When the appraiser deemed the condition substandard, the contract is discharged.
Megan contracts to sell Nonny her horse for $4,000. This contract will be fully discharged when Megan and Nonny exchange the horse for the money. execute a bill of sale. agree that the deal is fair. sign a receipt.
exchange the horse for the money The great majority of contracts are discharged by performance. The contract comes to an end when both parties fulfill their respective duties by performing the acts they have promised.
Holiday Corporation sells Idyll brand campers and trailers. Under most circumstances, Holiday will be presumed to have warranted that its title to the goods is - good and valid. - a warranty of title is not presumed. - only such as the seller has acquired in the goods. - the same as every other merchant who deals in goods of the kind.
good and valid Under the UCC, three types of title warranties—good title, no liens, and no infringements—can automatically arise in sales and lease contracts. In most sales, sellers warrant that they have good and valid title to the goods sold and that the transfer of the title is rightful [UCC 2-312(1)(a)]. A warranty of title arises automatically when the seller or lessor is a merchant. A merchant-seller or lessor warrants that the buyer or lessee takes the goods free of infringements from any copyright, trademark, or patent claims of a third person [UCC 2-312(3), 2A-211(2)].
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 Coffee responds with an acknowledgment of the deal. - if it is signed by Coffee. - under no circumstances. - if it is signed by Bean.
if it is signed by Bean The electronic signature in an email is sufficient to meet the requirement that the offer be both written and signed.
Bon, an agent for City Motors Inc., e-mails Dale on May 1 that the dealer will sell to her a 2018 Ford pick-up truck for $25,000 between May 1 and July 1. Bon's offer to Dale is irrevocable until Dale responds. revocable on the payment of consideration to Dale. irrevocable for the stated period. revocable at any time.
irrevocable for the stated period This case is an illustration of a firm offer made to Dale by Bon for a specified period. The email constitutes a written and signed firm offer and Bon would be in breach of contract if he sells the truck to another party during the specified period.
Restaurant Food Inc. intends to sell a certain quantity of beef for $1,100. In an e-mail, however, the firm's sales representative mistakenly offers to sell the beef to Steak House for $1,000. Steak's manager immediately accepts. The seller - can rescind the deal and recover damages for the mistake. - is bound to the deal at the offered price. - is bound to the deal but can charge the intended price. - can rescind the deal.
is bound to the deal at the offered price A unilateral mistake is made by only one of the parties. In general, a unilateral mistake does not give the mistaken party any right to relief from the contract. Normally, the contract is enforceable. (text 13-1a Mistakes)
Open Range agrees to sell Pinewood Ranch a remote parcel of land for $15,000. Both parties believe the land to be worthless, but beneath it is shale rock containing oil. A court would - rescind the contract on the basis of a mistake of quality. - rescind the contract on the basis of a mistake of value. - not rescind the contract. - rescind the contract on the basis of a mistake of opinion.
not rescind (revoke, cancel) the contract
Art and Antiquities, LLC orders 5 pieces of rare imperial jade from Art Brokers, Inc. In order to meet the terms of the sale, Art and Antiquities pays in full prior to shipment. When the shipment does not arrive in the expected time, Art and Antiquities contacts Art Brokers who responds that they have decided not to sell and offers to return the payment. Art and Antiquities can: - recover damages equal to the difference between the agreed price and the market price. - obtain specific performance. - reject the next shipment from Art Brokers. - replevy the goods.
obtain specific performance
Elegant Carpet Inc. agrees to sell a certain quantity of carpeting to Fabulous Floor stores under a shipment contract. Elegant must - place the goods in the hands of a carrier. - inspect the goods before shipping it. - deliver the goods to a particular destination. - allow the buyer to reject the goods for any reason.
place the goods in the hands of a carrier
ABC Hardware Store orders one hundred power hand-drills from Drilling Tools Inc. When the hand-drills are delivered, they are all missing pieces. ABC rejects the shipment. To exercise a right to cure, Drilling must - promptly notify ABC of the intent to cure. - pick up the nonconforming tools before the end of the business day. - pay a cure fee. - enter into a new contract with ABC.
promptly notify ABC of the intent to cure
ABC Hardware orders a shipment of hammers and saws from Tools R Us for a special DIY event that they are planning. ABC agrees to pay for the tools on delivery. Tools R Us accepts the order but fails to deliver. ABC Hardware then purchases the hammers and saws from Enzo's Tools, but the tools do not arrive in time for the event. ABC can: - obtain the hammers and saws in event of insolvency. - obtain specific performance. - recover consequential damages. - do nothing.
recover consequential damages Consequential damages to compensate for indirect losses (such as lost profits) resulting from the breach that were reasonably foreseeable at the time of contract formation. Both ABC and Tools R Us knew that the items were needed for a special event. With that opportunity missed, ABC lost the profits they expected.
Steel Buildings Inc. agrees to sell four portable garages to Truck Service Center. Five days later, Truck refuses delivery and cancels the contract. Steel is entitled to - resell the garages and recover any damages from Truck. - force Truck to accept the garages. - resell the garages but not recover any damages from Truck. - recover any damages from Truck but not resell the garages.
resell the garages and recover any damages from Truck
Erma enters into a contract to buy a tract of riverfront 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. - the amount that Erma invested in the project to the date of the closing. - the difference between the contract and market prices of the land. - nothing—Forest Acres still owns the land.
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 - not liable on the bid because he underestimated the cost of repairs. - not liable on the bid because the need for repair is not a material fact. - still liable on the bid. - not liable on the bid because the auctioneer misrepresented the value.
still liable on the bid
Bike Shop sells a trail bike to Ciena. When Ciena rides the bike, the frame breaks apart. The cause is something that Bike Shop did not know about and could not have discovered. This is a breach of - puffery. - the implied warranty of merchantability. - an express warranty. - a warranty of title.
the implied warranty of merchantability
Renew Inc. contracts to resurface the pools at Swim Park by June 1. Renew knows that if performance is not timely, Swim Park will have to delay its seasonal opening. Renew finishes the job June 15. In a suit for breach, Swim Park can recover - the difference between the contract and market prices for the work. - nothing—the work is done. - the loss of profit from the delayed opening. - the cost of the new pools.
the loss of profit from the delayed opening
Builder Inc. and Concrete Supply Company enter into a contract for a sale of cement. Concrete delivers, but Builder does not pay. Concrete can recover as damages - any profit lost minus any loss avoided. - the market price at the place at which Concrete delivered the goods plus incidental damages. - the purchase price plus incidental damages. - whatever amount Concrete wishes to claim.
the market price at the place at which Concrete delivered the goods plus incidental damages. If a buyer repudiates (refuse to pay or recognize) a contract or wrongfully refuses to accept the goods, a seller can bring an action to recover the damages sustained.
Jo owns a condominium that she leases to Kia. Jo employs Maria to manage the condominium. Jo gives her daughter Liu $450 on her sixteenth birthday. Jo sells her car to her neighbor Steve for $1,500. Article 2 of the UCC covers the sale to Steve. the gift to Liu. The employment of Maria. the lease to Kia
the sale to Steve UCC does not cover real estate contract, service contract, employment contract, and gift. The leases covered by UCC are for personal property, or what the Code calls "goods," such as machinery, equipment, and vehicles. The UCC does not cover real estate leases.
Dona offers to sell her used sofa, chair, coffee table, end table, and lamp to Etta for $700. Etta responds that she will pay that price if Dona's TV set is included. Neither party is a merchant. Their contract is formed according to - the terms of the original offer. - under no circumstances. - the new terms of the acceptance. - whatever is reasonable.
the terms of the original offer In the law of contracts, the mirror image rule, also referred to as an unequivocal and absolute acceptance requirement, states that an offer must be accepted exactly with no modifications. The offeror is the master of their own offer. An attempt to accept the offer on different terms instead creates a counter offer, and this constitutes a rejection of the original offer. Therefore, they proceed according to the terms of the original offer.
Grinders Mill agrees to sell to Harvest Company a certain quantity of refined grains. Some of the other terms in the deal are left open. In the case of a dispute, a court will generally presume whatever is reasonable. nothing. whatever favors the plaintiff. whatever favors the non-breaching party.
whatever is reasonable The court will weigh the evidence in the case and the terms of the contract and render a decision based on what is reasonable.
U4_B_6: What is a warranty in sales and lease law? - The good faith of the parties as stated in the Uniform Commercial Code (UCC) - An assurance by the seller about the quality and features of the goods being sold - Money advances or cash deposits made as stated in a contract - The possession of the collateral object of the contract
An assurance by the seller about the quality and features of the goods being sold
U4_B_3 If two parties agreed on mail for their communication in their offer, under the majority rule, and without any other terms stipulated, when is the acceptance deemed to be valid? - When it is emailed to the offeror, if received first - During receipt by the offeror - During delivery to the post office - When it is written by the offeree
During delivery to the post office - Under the mailbox rule, the offeree validly accepts when delivered to the post office.
U4_A_4: What is considered a basic obligation of the buyer? - Delivering the conforming goods - Repairing defective goods - Paying for the goods tendered - Transferring the conforming goods
Paying for the goods tendered
U4_A_7: What must a seller or lessor (merchant or nonmerchant) know for the implied warranty of fitness for a particular purpose to arise in the sale or lease of goods? - The ordinary purpose for which a buyer or lessee will use the goods and the price agreed upon with the seller or lessor - The reliance the buyer or lessee placed on the seller or lessor's skill and judgment and the price agreed upon - The particular purpose for which a buyer or lessee will use the goods and the reliance the buyer or lessee placed on the seller or lessor's skill and judgment - The certainty of the place and time of delivery, by choosing a fit carrier party and the particular purpose for which a buyer or lessee will use the goods
The particular purpose for which a buyer or lessee will use the goods and the reliance the buyer or lessee placed on the seller or lessor's skill and judgment
PA22. The doctrine of substantial performance states that a party, who in good faith, performs substantially all the terms of a contract can enforce the contract against the other party. What is a basic requirement for performance to qualify as substantial? - The performance may vary greatly from the performance promised in the contract. - The performance must not create substantially the same benefits as those promised in the contract. - There is an intentional failure to comply with the contract terms. - There is a minor omission that can be remedied by monetary damages.
There is a minor omission that can be remedied by monetary damages.
U4_B_1: An individual tells another person that he will trade his 2016 car for her 2006 car. Which term is likely missing for an effective offer? - Age of the parties - Timing for the trade - Amount of money to be paid - Identification of the cars
Timing for the trade
Sofia purchases a new vehicle from a neighborhood car dealer. The vehicle warranty specifically states that there is a bumper to bumper warranty for the first 30,000 and an engine and drivetrain warranty for 100,000 miles. The warranty documentation supplied with the car specifies that wear items such as brake pads, belts, wipers and bulbs and oil changes are excluded. After 25,000 miles, Sofia's car needs new brake pads. She is told that this is not covered by the warranty. This exclusion is an example of: - a breach of the express warranty. - a breach of the warranty of title. - a breach of the implied warranty of fitness for a particular use. - a warranty disclaimer.
a warranty disclaimer
Marketing Inc. offers to create a campaign to increase N'Ice Cream Inc.'s online business. N'Ice agrees to pay for the service. These parties have an express contract. no contract. an implied contract. a formal contract.
an express contract In an express contract the terms of the agreement are fully and explicitly stated in words, oral or written.
Beryl enters into a contract with Clay for a guided tour of Deep Canyon. Clay represents that he is an experienced, knowledgeable guide, when in reality he has never been in the canyon. Most likely, Beryl - can rescind the deal based on fraudulent misrepresentation. - might recover damages for the mistake. - could exert duress to obtain a new guide. - must comply with the contract because the representation is an opinion.
can rescind (revoke) the deal based on fraudulent misrepresentation
PA23. A client owed an accountant $2,500 for an accounting service provided. The client believed that the services the accountant provided cost less than $2,500 because they did not seem difficult, based on the client's judgment. When the accountant demanded payment, the client sent a check for $2,250 marked "tendered in full satisfaction." The accountant endorsed and cashed the check. Which type of settlement agreement is this? Accord and satisfaction Bargained-for exchange Novation Mutual rescission
Accord and satisfaction
D18. Baker, a sales agent for Able Company, told a customer, Custer, the following: "These widgets are the best on the market. They are machined to perfection. In fact, all of our widgets are machined to a tolerance of .0005 mm." What, if any, warranties does Able make to Custer? a. An implied warranty of merchantability, and an express warranty that the widgets are "the best on the market," "machined to perfection," and "machined to a tolerance of .0005mm." b. An express warranty that the widgets are "the best on the market," "machined to perfection," and "machined to a tolerance of .0005mm." c. An express warranty that the widgets "machined to a tolerance of .0005mm." d. An implied warranty of merchantability, and an express warranty that the widgets are "machined to a tolerance of .0005mm."
An implied warranty of merchantability, and an express warranty that the widgets are "machined to a tolerance of .0005mm"
PA24. A seller wishes to sell his old sedan for $10,000. The buyer, who was in desperate need of a car, saw the ad and called the seller to ask questions about the car. The buyer seemed very interested in the car and agreed to buy it. However, nothing was said about the time of delivery. Three days passed and the seller started to fear that the buyer will not buy the car. The seller called the buyer at 3:00 am and demanded that she pick up the car within 25 minutes and also threatened to sue her for breach of contract. What can this buyer claim against this seller's demand? The price is too high. She needed to see the car in person before making the purchase. They needed to perfect the contract at the Department of Motor Vehicles (DMV). It was an unreasonable hour and manner.
It was an unreasonable hour and manner.
D14. Carson Widgets, in Enid, Oklahoma, ordered 100 new Hi-Grade widgets from Jumbo Widgets, Inc. on credit, agreeing to pay 10% of the purchase price at the signing of the agreement, and to pay the remainder of the price of the widgets within 60 days of delivery. The agreement's terms stated, "FOB Carson Widgets." The 100 widgets were placed on a delivery truck owned by Ace Trucking Company. While the widgets are on the truck traveling from the factory in Michigan to Oklahoma, a man named Ronald Jackson, driving drunk, veered into the Ace truck's lane. To avoid a possibly fatal accident, the Ace truck driver quickly ran his truck off the road onto the right shoulder. Unfortunately, 30 of the widgets were damaged, but this was not discovered until all 100 were taken off the truck at Carson. Carson refused to accept the damaged widgets. Who suffers the loss of the damaged widgets? a. Carson Widgets b. Jumbo Widgets, Inc. c. Ace Trucking d. Ronald Jackson
Jumbo Widgets, Inc
U4_B_10: How do liquidated damages differ from penalties? - Liquidated damages are for damages difficult to estimate. - Penalties are more common in contracts with entertainers. - Penalties are for reasonable damages anticipated by the parties. - Penalties are meant to make the nonbreaching party whole.
Liquidated damages are for damages difficult to estimate. Liquidated damage clauses are for damages difficult to estimate at the time of contracting, unlike penalties that seek to penalize.
PA26. A collector agreed to sell a rare collection of baseball cards to a buyer for $2,000 after several weeks of negotiation and discussion. After the sale, the buyer and collector do additional independent research and both learn that the baseball cards are worth only $20. What is the court's decision if this buyer sues this collector? No damages Rescission Compensatory damages Punitive damages
No damages
Macy offers to sell his fitness watch for $50 to Nona. Nona promises to pay Macy the price. Later, they exchange the watch for the funds. A contract was created when Nona paid for the watch. Macy offered to sell the watch. Macy delivered the watch. Nona promised to pay for the watch.
Nona promised to pay for the watch. Bilateral contract = Promise - Promise
D13. Able Company agrees to sell Baker Company $300 worth of bananas. What effect does the Statute of Frauds have on this agreement? a. None. b. The contract must be in writing, with all terms spelled out. c. There must be a writing with the price and the quantity. d. There must be a writing with the price, quantity, and signed by the seller.
None.
Len contracts to work for Media Corporation during May for $4,500. On April 30, Media cancels the contract. Len then accepts a similar job with New Ads Inc., which pays $3,500. Len files a suit against Media. As compensatory damages, Len can recover $1,000. $4,500. $3,500. $0.
$1,000
D1. Contract law primarily developed in: a. Courts through the common law b. Statutes c. Regulations d. The Constitution
Courts through the common law
U4_A_3: A 14-year-old signs a lease for a one-bedroom apartment with a landlord. The 14-year-old promises to pay $1,000 in rent on the first of each month for 12 months. During the terms of this lease, which type of contract did the 14-year-old sign? A voidable contract A void contract A valid contract An executed contract
A voidable contract
PA25. Which situation is considered as a perfect tender rule? Substantial performance Commercial impracticability Destruction of goods Conformance of goods
Conformance of goods
Bee is an employee of Credit Agency Inc. On the termination of Bee's position, Credit pays Bee $10,000 to agree not to disclose the employer's confidential information. Later, Bee sells the information to Debt Records LLC for $100,000. In a suit for breach, Credit is most likely to recover $100,000 from Debt. all future profits from Debt. $110,000 from Bee. $10,000 from Bee.
$10,000 from Bee
U4_A_9: A customer enters into a contract with a vendor for the purchase of 10 widgets for $60. If the vendor refuses to sell, and the customer buys substitute widgets for $90 from other sellers, not including incidental damages, how much can this customer claim in damages? $90 $6 $60 $30
$30 - The customer may claim the difference between the cost of cover, $90, less the contract price, $60, for $30 in damages.
Fiesta LLC contracts to buy 1,000 balloons from Gas Bags Inc. for $1 per item. When the market price decreases to 50 cents per balloon, Fiesta refuses to go through with the deal. Gas Bags can recover $500. $0. $1,000. $1,500.
$500
PA19. On April 1, Peter sent a letter to his friend Monica, offering to buy 200 of her puff pastries for $100. After he sent the letter, Peter realized that his neighbor Joelle was selling her puff pastries for only $75. Peter sends a second letter to Monica by express mail, stating that he withdraws his former offer to buy her puff pastries. The second letter is delivered to Monica's home on April 3, and the first letter is delivered to Monica's business on April 6. Which act has Peter completed? A counteroffer A revocation An option contract An acceptance
A revocation
U4_A_8: What is the measure of damages when a buyer refuses to accept the nonperishable goods as sold? Special damages Cost of delivery Difference between resale price and market price Difference between contract price and market price
Difference between contract price and market price
PA21. Under the Uniform Commercial Code, and without the parties agreeing to the contrary in the contract, when is a title passed from the seller to the buyer for the sale of goods? - During delivery of the goods to a shipping company - During receipt of the goods by a buyer - During physical acceptance of the goods by a buyer - During receipt of the goods by a buyer and delivery of physical title to a shipping company
During delivery of the goods to a shipping company
D11. Framers Co. orders 5000 Grade A widgets from Graham Co. After Graham receives that order it sends 5000 Grade B widgets, without ever communicated with Framers. This is: a. Graham's counteroffer. b. Graham's rejection of the contract Framers offered. c. Graham's acceptance of Framer's offer, with new terms—Grade B instead of Grade A widgets. d. Graham accepting Framer's offer, and then breaching the contract to which it agreed.
Graham accepting Framer's offer, and then breaching the contract to which it agreed.
U4_B_4: In January, a national company issued a memo informing employees that employees who successfully complete the accounting certification by the end of the year will receive a $500 bonus. One employee who enrolled in the certification review course in the summer passed the exams in November. When is the national company liable to this employee? - In the summer, when the employee enrolled in the certification review course - By the end of the year, the stated time for performance in the contract - In January, when the offer was made - In November, when the employee passed the exams
In November, when the employee passed the exams
U4_A_1: A landlord offers a 12-month lease to a tenant for the third floor of the landlord's three-story home. The landlord provides the tenant only with the final page of the lease to sign, stating that the rest of the contract is all legalese and boilerplate. The lease provided that the tenant would have to submit to arbitration. Which claim could this tenant bring to set aside the lease? Procedural unconscionability Substantive unconscionability Rescission Accord and satisfaction
Procedural unconscionability The tenant's lack of opportunity to read and review parts of the contract will likely qualify as procedural unconscionability, likely allowing the tenant remedies for any harm.
U4_A_10: In which situation may a buyer obtain specific performance? - Sale of a publicly traded security - Purchase of 50 drill bits - Only a seller being able to claim specific performance - Purchase of an original portrait
Purchase of an original portrait
D16. On August 1, Cargull Company contracts to buy David Davis's winter wheat crop that is yet to be planted. Davis plants his crop right after Labor Day. If all goes well, Davis will harvest the wheat in late May, and tender delivery to Cargull. When does Cargull have an insurable interest in the crop? a. August 1 b. Right after Labor Day when the crop is planted. c. In late May when the crop is harvested. d. When Davis tenders delivery of his harvest.
Right after Labor Day when the crop is planted.
U4_A_2: An LLC promises to buy all the units that it requires from another business, which agrees to produce and sell these units to the LLC. Which type of contract have these two businesses executed? Output contract Nonsales contract Requirements contract Firm offer contract
Requirements contract Requirements contract = buyer is in control.
U4_B_9: Which element does fraudulent misrepresentation require? Nominal damages Misrepresentation of any fact Scienter Bilateral mistake of fact
Scienter The intent to deceive, or scienter, is an essential element for a valid fraudulent misrepresentation claim.
U4_A_6: To which party does a warranty impose a duty? Lessee Carrier Seller Buyer
Seller
PA27. A used car salesperson tells a buyer that the used car will last for at least five more years, if not many more. Which type of statement did this salesperson provide? Statement of fact Statement of opinion Statement of value Statement of purpose
Statement of opinion
U4_B_7: Express warranties arise when a seller or lessor indicates which, under UCC 2-313 and 2A-210? - The goods conform to an affirmation of fact. - The goods conform partially to any description of them. - The seller has a good and valid title to the goods sold. - The goods do not conform to any sample or model of the goods shown to the buyer or lessee.
The goods conform to an affirmation of fact
U4_B_2: Beth offered to sell her house to Dennis. Before Dennis could respond, a tornado completely destroyed Beth's house. What is the destruction's effect on Beth's offer? - The offer is voidable in favor of Dennis. - The offer is valid. - The offer is terminated. - The offer is unilateral.
The offer is terminated
PA20. When an offeree changes the quantity of items to be exchanged from the offeror's initial offer, what is the likely effect for the parties? The offeree and offeror must go to court to resolve it. The offeree may unilaterally accept and ratify the contract. The offer is void. The offeree's response is a counteroffer.
The offeree's response is a counteroffer.
U4_B_8: Which requirement of a contract is a "meeting of the minds" part of the legal standard? Rescission Scienter Voluntary consent Compensatory damages
Voluntary consent The parties to a contract must agree on the same terms, at approximately the same time (a "meeting of the minds"), and this consent is part of a contract formation.
U4_A_5: When is acceptance demonstrated? - When the buyer is inspecting the goods - When the buyer rejects the goods within a reasonable time - When the lessee indicates by words to the lessor that the goods are nonconforming - When the buyer starts reselling the goods
When the buyer starts reselling the goods - A buyer will be deemed to have accepted the goods if they perform any act inconsistent with the seller's ownership, such as the use or resale of the goods.
D2. Edward stood up in front of a classroom, right after the lecture ended, and said, "I will sell my laptop to the first person to give me $150 cash." Frances immediately pulled out her pocketbook and gave Edward the money. This is: a. not a binding contract because it was not written. b. not a binding contract because Frances did not say she accepted the offer. c. a binding bilateral contract. d. a binding unilateral contract.
a binding unilateral contract
The primary source for contract law is common law. social values. expectations. personal interests.
common law Common law is the source for much of US law, Contract law is based on common law as well. Contract law can be modified or replaced by statutory law such as the Universal Commercial Code, or by administrative agency regulations.
Office Express orders 100 smartphones from Electronic Supply for $500 per phone. Electronic Supply sends 100 flip phones instead. Office Express has the right to: revoke acceptance. stop the delivery of the good in transit. replevy the goods. reject the shipment.
reject the shipment
Real Stones Inc. and Sparkling Jewelry stores enter into a contract for a sale of gemstones. The seller fails to deliver. Sparkling can recover as damages the difference between - the actual price and the hoped-for price. - the current prices in the contracting parties' places of business. - the contract price and the market price. - any loss avoided and any profit gained.
the contract price and the market price
Keisha contracts to buy appliances from Crazy Carlos Appliances. Keisha agrees to pay half within 5 days of the order and the remainder upon delivery. Keisha fails to pay the first 50%. Carlos can: - obtain specific performance. - recover as damages the full purchase price plus incidental damages. - claim the difference between market price and purchase price. - withhold delivery.
withhold delivery Carlos still had the appliances in his warehouse. Carlos is entitled to withhold delivery of the appliances until Keisha pays at least the 50% she agreed to as partial payment. He can then withhold final delivery, placement in the house, until she makes the final payment as well.