Practice test 2
A builder ordered 100 squares of shingles from a home-supply store for installation on the roofs of homes that he was building. The builder agreed to a price of $120 per square. Delivery was set for no later than noon on the following Monday to the construction site. The truck from the store with the ordered shingles arrived at 1:00 p.m. the following Monday. The builder rejected the shipment due to its failure to arrive on time. The store, which regularly sold 600 squares of shingles per week, resold the squares that had been rejected by the builder, at a price of $110 per square. The store would have made a profit of $3,000 had the builder accepted the shingles. If the store sues the builder for breach of contract, how much can the store recover from the builder? A Nothing B $1,000, the contract price minus the resale price C $3,000, the store's lost profit on the initial sale D $4,000, to recover the store's total expectation damages
*Answer choice A is correct.* Because the builder did not breach the contract, the builder is not liable to the store for damages. The sale of the shingles is a sale of goods and therefore is governed by the Uniform Commercial Code (UCC), even though the builder planned to incorporate the shingles into homes being constructed. Under the UCC, a buyer may reject the goods if the seller fails to make a perfect tender, which includes a timely delivery of the goods. Unlike under the common law, substantial performance of a contractual obligation is not sufficient. -Answer choice B is incorrect. Although this is one measure of expectation damages of a seller of goods, the store is not entitled to damages because the builder as buyer was entitled to a perfect tender of the goods, which the store failed to make by its late delivery of the shingles. -Answer choice C is incorrect. Lost profits are a measure of a seller's expectation damages if the seller is a lost-volume seller, as the store in this case is with regard to the shingles. This remedy would be available to the store had the builder breached the contract, but the builder did not. -Answer choice D is incorrect because, even if the store had been entitled to expectation damages, it could not recoup both measures of its expectation damages.
A homeowner entered into a written agreement with a company to build a swimming pool in the homeowner's backyard for $40,000, to be paid upon completion of the pool. The company delegated its duty to an independent contractor. The independent contractor began the excavation for the pool, but after realizing that the costs would be higher than anticipated, it abandoned the project. The homeowner hired a partnership to complete the pool for $50,000. Can the homeowner sue the company for its expectation damages of $10,000? A. No, because the high costs rendered performance under the contract impracticable. B. No, because the company was released from liability. C. Yes, because the homeowner did not consent to the delegation. D. Yes, because the independent contractor did not perform.
*Answer choice D is correct.* Generally, obligations under a contract can be delegated. When obligations are delegated, the delegator is not released from liability, and recovery can be had against the delegator if the delegate does not perform, unless the other party to the contract agrees to release that party and substitute a new one (a novation). Merely consenting to a delegation does not create a novation. In this case, the independent contractor abandoned the project. Therefore, the homeowner can sue the company, the delegator, for its expectation damages. *Answer choice A is incorrect because* impracticability is not available merely when the costs of performance under the contract are higher than expected. Answer choice B is incorrect. The facts do not indicate that a novation occurred that would release the company from liability under the contract with the homeowner. Answer choice C is incorrect. The homeowner's consent was not necessary for a proper delegation to the independent contractor under these circumstances.
In a diversity action, when state sub law determines existence of a claim or defense
state law also governs the effect of presumptions related to that claim
