LREB Chap 18 - Remedies for Breach of Sales and Lease Contracts
Blue Rorschach Inc. has an immediate requirement for 80 laptops and contracts with Zenzo Electronics 80 Dell laptops at $550 each. But Zenzo Electronics breaches the contract and fails to deliver the laptops. Blue Rorschach then immediately contracts Dell Computers, buys 100 laptops at $600 per laptop, and then sues Zenzo Electronics for the breach of contract. What is the amount of legal damages that Blue Rorschach can recover from Zenzo because of the breach of contract? A) $4,400 B) $5,000 C) $4,000 D) $44,000
$4,000
Which of the following is true for a buyer's right of inspection? A) Cost of inspection is shared by the seller and buyer if goods are conforming. B) Cost of inspection can be recovered from the seller if goods are nonconforming. C) Goods can only be inspected before shipment is made by the seller. D) Inspection has to be performed after the goods in the contract have been accepted.
Cost of inspection can be recovered from the seller if goods are nonconforming.
Which of the following is true for a seller's right to dispose of goods from a breach of contract? A) Any profit made on the resale or release of the goods has to be shared with the original buyer. B) Incidental charges can be recovered from the original buyer. C) The seller cannot resell the goods unless the original buyer agrees to it. D) The buyer can only dispose of goods that have already been delivered.
Incidental charges can be recovered from the original buyer.
________ is an action a party to a sales or lease contract is required by law to carry out. A) Obligation B) Breach C) Capture D) Revocation
Obligation
) ________ is the right of a seller or lessor to demand the return of goods from the buyer or lessee under specified situations. A) Right to dispose of goods B) Right to recover damages C) Right to recover purchase price D) Right to reclaim goods
Right to reclaim goods
Which of the following is true for the perfect tender rule under installment contracts? A) The buyer cannot seek remedies against the seller for accepting noncorforming goods. B) The seller cannot invoke the right to cure rule. C) The buyer can reject a shipment only if it impairs the value of the entire contract. D) The buyer can reject replacements or cured goods.
The buyer can reject a shipment only if it impairs the value of the entire contract.
Which of the following is true for a perfect tender rule delivery? A) The seller can reject delivery of certain parts of the goods. B) The buyer can only reject parts of the goods and not the whole shipment. C) The buyer can seek remedies for accepting nonconforming goods. D) The seller can seek remedies for noncorforming goods that were accepted by the buyer.
The buyer can seek remedies for accepting nonconforming goods.
Mansfield Dairies entered into a contract with Aratez Inc., a dairy product food processing company, to provide dairy products for a period of four years. The contract included a provision for a one-year limitation period in case of breach. But with less than a year left on the contract, Mansfield Dairies stopped shipment of milk products to Aratez Inc. Under the UCC statute of limitations, which of the following would be true with reference to Aratez Inc.'s right to bring a lawsuit against Mansfield Dairies for breach of contract? A) The lawsuit could be filed anytime within one year from the breach. B) The lawsuit could only be filed after the expiration of the contract. C) The lawsuit could not be filed as there was less than a year left to complete the contract. D) The lawsuit could be filed any time within four years from the breach.
The lawsuit could be filed anytime within one year from the breach.
What is the right to cure in sales or lease contracts? A) The right of the buyer to ask for a replacement of nonconforming goods. B) The right of the seller to ship nonconforming goods on grounds of prior acceptance. C) The right of the seller to fix nonconforming goods. D) The right of the buyer to reject shipment of conforming goods.
The right of the seller to fix nonconforming goods.
Which of the following is true of a contract in which the goods were destroyed, of no fault of the buyer or seller, before the title to goods passed to the buyer? A) The buyer has to still pay for the destroyed goods. B) The seller and buyer are excused from contractual obligations. C) The buyer can successfully claim for replacements from the seller. D) The seller is obligated to make a new shipment as the previous contract.
The seller and buyer are excused from contractual obligations.
Which of the following is essential for a revocation of acceptance to be effective? A) The seller must be notified of the revocation within a reasonable time. B) The seller's promise to timely cure of the nonconformity is not met. C) The nonconformity must be discovered before acceptance is given. D) The nonconformity substantially impairs the value of the goods to the buyer.
The seller must be notified of the revocation within a reasonable time.
________ is a rule which provides that an action for breach of any written or oral sales or lease contract must commence within four years after the cause of action accrues. A) Perfect tender rule B) Specific performance decree C) Replevin D) UCC statute of limitations
UCC statute of limitations
A(n) ________ can be obtained in writing from the other party if there is an indication that a contract will be breached by that party. A) adequate assurance of performance B) replevy C) right to obtain specific performance D) good faith agreement
adequate assurance of performance
What is the similarity between a buyer's remedy of capture and replevy? A) both are invoked when the buyer has to cover B) both are invoked for accepting nonconforming goods C) both helps the buyer to receive damages D) both helps the buyer recover goods from the seller
both helps the buyer recover goods from the seller
Failure of a party to perform an obligation in a sales or lease contract is known as ________. A) revocation B) breach C) acceptance D) replevin
breach
Which one of the following is a remedy for buyers in cases where the seller or lessor tenders nonconforming goods, and the buyer or lessee accepts them? A) cover and then recover damages B) deduct damages from the unpaid purchase or rent price C) replevy the goods D) sue for specific performance
deduct damages from the unpaid purchase or rent price
) A(n) ________ is a sales contract that requires the seller to deliver goods to the buyer's place of business or another specified location. A) consignment contract B) option contract C) shipment contract D) destination contract
destination contract
Unless otherwise agreed to by the parties, which of the following is true for when a credit period starts, if the buyer purchases goods on credit sale from the seller? A) from the time the goods are shipped B) from the time the buyer receives the goods C) from the time the contract is signed by the buyer D) from the time the buyer accepts the shipment
from the time the goods are shipped
Which of the following constitutes an acceptance by the buyer? A) if the buyer asks for inspection of goods upon its arrival B) if the buyer does not pass the title of the goods to another buyer C) if the buyer fails to reject the goods within a reasonable time after delivery D) if the buyer accepts nonconforming goods
if the buyer fails to reject the goods within a reasonable time after delivery
Which of the following is grounds for revoking an acceptance? A) if the seller makes a timely cure of nonconforming goods B) if the goods were accepted after the nonconformity was discovered C) if the buyer has accepted only one commercial unit from the entire unit D) if the nonconformity substantially impairs the value of the goods to the buyer
if the nonconformity substantially impairs the value of the goods to the buyer
In which of the following does a seller have the right to stop delivery of goods in transit regardless of the size of the shipment? A) if the buyer repudiates the contract B) if the buyer has payments due C) if the seller learns of the buyer's insolvency D) if the seller has been ordered for specific performance
if the seller learns of the buyer's insolvency
Damages that will be paid upon a breach of contract, but that are established in advance are known as ________. A) capture B) replevy C) installment damages D) liquidated damages
liquidated damages
Which of the following would be considered as a breach of contract? A) acceptance of nonconforming goods by a buyer B) nonacceptance of conforming goods by a buyer C) delivery of conforming goods by a seller D) non-delivery of goods to a buyer that has a document of title
nonacceptance of conforming goods by a buyer
A person buying goods from the place where the goods are manufactured would be an example of ________ delivery. A) noncarrier case B) carrier case C) shipment contract D) destination contract
noncarrier case
In a destination contract, delivery is completed when the shipment ________. A) reaches the destination specified in the contract B) is inspected by the buyer and approved C) is handed over to the carrier by the seller D) is in transit to the destination specified in the contract
reaches the destination specified in the contract
The term ________ refers to an action by a buyer or lessor to recover scarce goods wrongfully withheld by a seller or lessor. A) revocation B) replevin C) accommodation D) damages
revocation
Blue Rorschach Inc. has an immediate requirement for 80 laptops and contracts with Zenzo Electronics 80 Dell laptops at $550 each. But Zenzo Electronics breaches the contract and fails to deliver the laptops. Blue Rorschach then immediately contracts Dell Computers, buys 100 laptops at $600 per laptop, and then sues Zenzo Electronics for the breach of contract. What legal right to remedy did Blue Rorschach exercise when contracting Dell Computers and suing Zenzo for failure of delivery of goods? A) right to replevy goods B) right to cover C) right to recover damages for accepted nonconforming goods D) right to obtain specific performance
right to cover
Which of the following is a recourse for sellers, under the UCC, in case of shipment of noncorforming or defective goods? A) tender of delivery B) right to cure C) perfect tender rule D) replevin
right to cure
Klint Microsystems, a microprocessor manufacturer, was contracted by Zeitar Studios to manufacture specially designed microchips to be used in an audio engineering process. Zeitar was to pay Klint $300,000 as per the contract. Klint decided to redesign their existing microchips and make them suitable for Zeitar. While the finished microchips were being shipped via a carrier, Klint was informed of Zeitar's insolvency. Klint cancelled the shipment before it was delivered. Klint then resold the chips to another Studio where they had to settle for $150,000, as the chips were now only suitable for specific audio engineering processes. What right to remedy did Klint exercise when selling the microchips to another studio? A) right to claim lost profits B) right to cover C) right to dispose of goods D) right to recover damages
right to dispose of goods
Which of the following is a buyer right to remedy? A) right to recover damages for nondelivery B) right to dispose of goods C) right to replevy goods D) right to obtain specific performance
right to dispose of goods
Pollard entered into a sales contract to purchase a specific Picasso painting from Jenson for $15 million. When Pollard tenders payment, Jenson refuses to sell the painting to the buyer. Which of the following legal rights to remedy can Pollard exercise to retrieve the Picasso painting from Jenson?
right to obtain specific performance
Which of the following is a right to remedy that a seller can claim while the goods are in possession of the buyer? A) right to dispose of goods B) right to withhold delivery of goods C) right to stop delivery of goods in transit D) right to reclaim goods
right to reclaim goods
Klint Microsystems, a microprocessor manufacturer, was contracted by Zeitar Studios to manufacture specially designed microchips to be used in an audio engineering process. Zeitar was to pay Klint $300,000 as per the contract. Klint decided to redesign their existing microchips and make them suitable for Zeitar. While the finished microchips were being shipped via a carrier, Klint was informed of Zeitar's insolvency. Klint cancelled the shipment before it was delivered. Klint then resold the chips to another Studio where they had to settle for $150,000, as the chips were now only suitable for specific audio engineering processes. What right to remedy did Klint exercise when they stopped shipment to Zeitar? A) right to dispose of goods B) right to stop goods in transit C) right to obtain specific performance D) right to recover purchase rent
right to stop goods in transit
The right of a seller or lessor to refuse to send goods to a buyer or lessee upon breach of a sales or lease contract by the buyer or lessee or the insolvency of the buyer or lessee is known as the ________. A) right to recover purchase rent B) right to reclaim goods C) right to withhold delivery D) right to dispose of goods
right to with hold delivery
A sales contract that requires the seller to send the goods to the buyer but not to a specifically named destination is known as a(n) ________. A) shipment contract B) destination contract C) option contract D) consignment contract
shipment contract
Klint Microsystems, a microprocessor manufacturer, was contracted by Zeitar Studios to manufacture specially designed microchips to be used in an audio engineering process. Zeitar was to pay Klint $300,000 as per the contract. Klint decided to redesign their existing microchips and make them suitable for Zeitar. While the finished microchips were being shipped via a carrier, Klint was informed of Zeitar's insolvency. Klint cancelled the shipment before it was delivered. Klint then resold the chips to another Studio where they had to settle for $150,000, as the chips were now only suitable for specific audio engineering processes. What legal action can Klint take against Zeitar? A) sue and recover lost profits B) sue to recover purchase price C) get a court order asking for specific performance D) exercise the buyer's right to cover
sue and recover lost profits
) The obligation of a seller to transfer and deliver goods to the buyer or lessee in accordance with a sales or lease contract is known as ________. A) the rule of capture B) deliverance C) replevin D) tender of delivery
tender of delivery
Unless otherwise agreed, when is payment due between a buyer and seller in a shipment contract? A) when the shipment is in transit B) when the goods are delivered C) when the contract was signed D) when the shipment is handed over to the carriers
when the goods are delivered
When is a delivery considered completed in a shipment contract? A) when the buyer receives the shipment B) when the seller hands over the shipment to the carrier C) when the shipment reaches the destination that the buyer specified D) when the seller notifies the buyer of the shipment in transit
when the seller hands over the shipment to the carrier
