quiz

Wonder Widgets agrees to sell Bill Buyer 10,000 of its "Grade A" widgets at a price of $3.00 per widget. After Wonder breaches the contract by failing to deliver, Bill buys substitute widgets at a price of $3.20 per widget. Bill also incurs $200 in reasonable expenses associated with the purchase. Bill then sues Wonder for $2200 ($2000 for the additional price he had to pay and $200 for the additional expenses). What, if anything, can Bill actually recover?

$2200

What is the usual UCC time limitation for claiming express and implied warranty after the sale of a product?

4 years

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

A contract for purchasing a Picasso painting

Feeble, a business law professor who has never sold a car before, sells his 1995 Honda Civic to Wanda. This sale is governed by.

Article 2 of the UCC.

Under Article 2 of the UCC, why does it matter whether a party to a contract is a merchant?

Because merchants sometimes are treated differently than other parties.

Bobby goes to buy a CD player from Sammy's Electronics. In testing one model, Bobby notices that the "scan" function does not allow scanning once a selection from a CD is playing. Bobby purchases the model despite this without mentioning the defect to Sammy. Bobby takes the CD player to his office where he uses it for three months before deciding that he wants to return it. Under these facts

Bobby has accepted the CD player.

Several firms within an industry are involved in manufacturing a harmful product. It is impossible to prove which firm produced the product and caused injury. Identify the type of liability that shall arise in these circumstances.

Industry wide Liability

P contracted with S for supply of jeans on credit. The supply is conforming to the terms of the contract. However, P does not want the jeans now. Can P reject the goods?

No, because the goods are in conformity with the contract.

Maple Interiors, located in Boston, contracted to sell and ship sofas to Peach Furniture, located in Atlanta. The contract stated that the goods were to be shipped "F.O.B. Boston, via XYZ railroad". Maple delivered the sofas to XYZ railroad. They were shipped from Boston but never seen again. Both Peach and Maple had assumed that the other party had the risk of loss, so neither had obtained insurance. Who must bear this loss?

Peach must bear the loss because the risk passed to it after the sofas were delivered to XYZ railroad.

In which of the following situations does title pass when goods are delivered and tendered to the buyer?

The contract requires the seller to "deliver" goods to the buyer.

A department store sells a TV set to Wilson, who pays with a bad check. Wilson immediately sells the TV to Davis for $500. Davis knew nothing about how Wilson acquired the TV from the store. Davis has good title to the TV and will prevail against the store if it sues Davis for the TV or its value.

True

If the Uniform Commercial Code recognizes the fact that the parties to sales contract frequently omit terms from their agreements or state ambiguous terms, then the UCC

can fill in the blanks with reference to common trade practices.

Under a(n) _____, the seller's bank agrees to assume liability on the letter of credit.

confirmed letter of credit

If a seller fails to deliver goods called for in the contract, the buyer may purchase substitute goods and recover as damages the difference between the contract price and the cost of the substituted goods. This is known as

cover

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

disclaimer

A bicycle manufacturer sells 100 bikes to Bill's Bike Shop. The contract says that Bill's may return any bike not sold within six months, and he will be reimbursed for them. Bill's Bike Shop burns down in one week after the delivery of the bikes, which are destroyed in the fire. Bill's bears the risk of loss for the 100 bikes

false

An owner of Café Coffee declares that his restaurant has the world's best cup of coffee. This is an express warranty.

false

Consequential damages do not include an injury to a person or property caused by a breach of warranty.

false

Even if a buyer breaches a contract, the seller is accountable to the buyer for any profit that the seller makes on a resale.

false

Generally, the UCC uses the test of impossibility to determine if a person can be excused from performing his contractual obligations.

false

Lisa took her computer to ABC Computer Sales and Repair, Inc. ABC mistakenly sold her computer to Rafi. Lisa may successfully sue Rafi for return of the computer.

false

Parties to sale contracts are not necessarily required to act in a commercially reasonable manner and good faith

false

The importance of the terms FOB and FAS in contracts for the sale of goods is that they obligate the buyer to pay immediately upon delivery of the goods.

false

Under Article 2 of the UCC, consideration is necessary for the modification of a contract.

false

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

Johnny LaRue sells men's jackets to men's clothing stores, including Melonville Man. Melonville Man orders a selection of men's jackets from LaRue's catalog, asking that LaRue select an assortment of goods for the buyer. LaRue takes advantage of this opportunity to get rid of the odd-sized jackets and those in pastel colors that are no longer popular. LaRue

has violated the good faith requirement under sales contracts.

A(n) _____ is created by operation of law rather than the seller's express statements.

implied warranty

Sue delivers defective widgets to Boz. The widgets were not as warranted. In seeking to recover damages from Sue, Boz

may recover the difference between the value of the goods received and the value of the goods.

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

Which of the following will generally not be the basis of an express warranty?

puffery

Which damages are especially awarded by the court to punish the defendant?

punitive

In an "output" contract

the buyer must accept any amount that is reasonably proportionate to any stated estimate in the contract.

Joe is going on a "survival hike" in the desert. He goes to a sporting goods store, describes the hike, and asks the salesman to select suitable hiking boots for him. The boots the salesman suggests are well made and are appropriate for normal hiking, but are not suitable for Joe's planned ordeal. Relying on the salesman's selection, Joe buys the boots. After he suffers personal injury because the boots prove inadequate for the survival hike, Joe sues the store. Joe can recover under

the implied warranty of fitness.

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.

If the seller discovers that the buyer is insolvent, he has

the right to stop the delivery of any goods that he has shipped to the buyer.

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

there is no duty to warn

A buyer or a seller who has reason to be concerned about the other party's performance can demand assurance from the other party that the contract will be performed. However if such assurance is not forthcoming within 30 days, the other party is considered to have repudiated the contract.

true

A remedy limitation is more likely to be declared unconscionable in consumer cases involving personal injury.

true

Edna Boyle contracts with The Melonville Times to advertise her garage sale to be held this Saturday. The ad is to run in the Friday and Saturday morning edition. If the ad does not run on time, The Melonville Times agrees to pay Edna $50.00. This liquidated damages clause is most likely enforceable.

true

If a buyer has accepted nonconforming goods from the seller, he must give the seller timely notice that the goods are nonconforming in order to hold the seller responsible.

true

If a seller gives a written warranty for a product to a consumer, the warranty must be designated in the nature of full or limited warranty.

true

If the buyer and seller have agreed to the manner in which the resale is to be made, the courts will enforce the agreement unless it is found to be unconscionable.

true

If the goods conform to the contract, the buyer must pay the expenses of inspection.

true

If the seller delivers defective goods to the buyer, the buyer can recover the value of the goods as warranted minus the value of the goods received.

true

If the seller fails or refuses to deliver the goods called for in the contract, the buyer can purchase substitute goods and recover as damages from the seller.

true

If the seller is in the process of manufacturing the goods when the buyer breaches the contract, one of the seller's options is to complete manufacture of the goods and then resell them so long as this minimizes the loss to the seller.

true

If there is a conflict between the express terms of the contract and the past course of dealing between the parties, the express terms of the contract prevail.

true

In order to be liable under the implied warranty of merchantability, a seller must be a merchant.

true

Once a buyer has accepted goods, he cannot later reject them unless at the time they were accepted, the buyer had reason to believe that the nonconformity would be cured.

true

The buyer may reject an installment delivery only if the nonconformity substantially affects the value of that delivery and cannot be corrected by the seller in a timely fashion.

true

Under Article 2, a remedy limitation blocking recovery of personal injury caused by consumer goods is prima facie unconscionable.

true

Goods that are not "merchantable" are

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