Question 1

Assuming proper proof, which of the following represents damages a buyer or lessee may recover in the event of a breach?

Accepted Answer

A)  Incidental damages but not consequential damages or remedial damages 
B)  Consequential damages but not incidental damages or remedial damages 
C)  Remedial damages but not consequential damages or incidental damages 
D)  Incidental damages and consequential damages, but not remedial damages 
E)  Incidental damages, consequential damages, and remedial damages 
A)  Incidental damages but not consequential damages or remedial damages 
B)  Consequential damages but not incidental damages or remedial damages 
C)  Remedial damages but not consequential damages or incidental damages 
D)  Incidental damages and consequential damages, but not remedial damages 
E)  Incidental damages, consequential damages, and remedial damages D

Question 2

[Fixture Mishap] Samantha owns a hardware shop that also sells expensive bathroom fixtures. Maddie, a whiz with tools, purchased some expensive fixtures for her bathroom for $400. Samantha had only one set of the fixtures that Maddie wanted. Although Maddie noticed a slight discoloration on one of the faucets, she went ahead with the contract because Samantha indicated that she would remedy the situation should the problem become worse. Because they were friends and attended the same church, Samantha gave Maddie 90 days in which to pay. A month later, and before she paid for the fixtures, Maddie called Samantha and told her that the fixtures were corroding, the discoloration had worsened, and the fixtures looked terrible. Samantha said that she would provide Maddie replacements, but six months later they had not arrived, and Samantha told Maddie that they were on back order. At that point, Maddie purchased fixtures elsewhere for $500 and informed Samantha that she could pick up the corroded fixtures at her front door. Samantha picked up the fixtures, and although they were obviously defective, Samantha was able to resell them for $100. Samantha told Maddie that she would have gladly provided fixtures that would not corrode if she had only a bit more time, that Maddie should have given her a chance to do so, and that as far as Samantha was concerned, Maddie owed her $300.
-Which of the following most accurately describes the action taken by Maddie?

Accepted Answer

A)  Maddie breached the contract 
B)  Maddie revoked acceptance and covered 
C)  Maddie canceled the contract and exchanged 
D)  Maddie substantially performed 
E)  Maddie engaged in a trade modification 
A)  Maddie breached the contract 
B)  Maddie revoked acceptance and covered 
C)  Maddie canceled the contract and exchanged 
D)  Maddie substantially performed 
E)  Maddie engaged in a trade modification B

Question 3

Fred's Fireplaces enters into a contract with Miguel's Patio Supply in which Miguel's agrees to purchase 20 fireplaces. The fireplaces are delivered, but a day after delivery, Fred discovers Miguel is insolvent. Fred reclaims the fireplaces. Did Fred's Fireplaces act appropriately?

Accepted Answer

A)  No because reclaiming the goods is permitted only if the quantity shipped is a large shipment. 
B)  No because filing a lawsuit is required before reclaiming the goods. 
C)  No because reclaiming the goods is appropriate in the event of breach only if the contract is for at least 50 units of goods. 
D)  No, because the UCC requires sellers to notify buyers within 100 days of reclaiming the goods in the event of a breach. 
E)  Yes, the UCC permits a seller to reclaim goods from an insolvent buyer. 
A)  No because reclaiming the goods is permitted only if the quantity shipped is a large shipment. 
B)  No because filing a lawsuit is required before reclaiming the goods. 
C)  No because reclaiming the goods is appropriate in the event of breach only if the contract is for at least 50 units of goods. 
D)  No, because the UCC requires sellers to notify buyers within 100 days of reclaiming the goods in the event of a breach. 
E)  Yes, the UCC permits a seller to reclaim goods from an insolvent buyer. E

Question 4

A seller who sells goods to another buyer after the original buyer breaches the contract, may receive which of the following damages?

Accepted Answer

A)  The difference between the resale price and the contract price, plus incidental damages and minus expenses saved. 
B)  The difference between the resale price and the contract price only. 
C)  The difference between the resale price and the contract price minus expenses without any allowance for incidental damages. 
D)  The difference between the resale price and the contract price, plus incidental damages, with no deduction for expenses saved. 
E)  Damages are not available because a seller has no rights to resell goods when the original buyer is in breach. The remedy is a suit for damages. 
A)  The difference between the resale price and the contract price, plus incidental damages and minus expenses saved. 
B)  The difference between the resale price and the contract price only. 
C)  The difference between the resale price and the contract price minus expenses without any allowance for incidental damages. 
D)  The difference between the resale price and the contract price, plus incidental damages, with no deduction for expenses saved. 
E)  Damages are not available because a seller has no rights to resell goods when the original buyer is in breach. The remedy is a suit for damages.

Question 5

If the seller cancels a contract if a buyer is in breach, the seller cannot pursue remedies available under the UCC.

Accepted Answer

A) True 
 B)False

Question 6

How do lemon laws in Canada compare to lemon laws in the U.S.?

Accepted Answer

A)  They are generally the same as lemon laws in the U.S. 
B)  They allow for replacement of defective parts but do not provide for a new car unless the plaintiff agrees to pay the difference between the amount received for the used car when sold and the amount charged for the new car. 
C)  They guarantee a buyer of a lemon car a new car and allow for punitive damages. 
D)  They guarantee the buyer of a lemon a return of all consideration an allow punitive damages. 
E)  Canada does not have a lemon law such as we have in the U.S. 
A)  They are generally the same as lemon laws in the U.S. 
B)  They allow for replacement of defective parts but do not provide for a new car unless the plaintiff agrees to pay the difference between the amount received for the used car when sold and the amount charged for the new car. 
C)  They guarantee a buyer of a lemon car a new car and allow for punitive damages. 
D)  They guarantee the buyer of a lemon a return of all consideration an allow punitive damages. 
E)  Canada does not have a lemon law such as we have in the U.S.

Question 7

A non-breaching seller, Jasmin is seeking a remedy because her buyer Hussain fails to pay and pick up goods. What remedy does she have?

Accepted Answer

A)  A suit for incidental damages 
B)  Resale 
C)  Liquidated damages 
D)  Cover 
E)  A suit for consequential damages 
A)  A suit for incidental damages 
B)  Resale 
C)  Liquidated damages 
D)  Cover 
E)  A suit for consequential damages

Question 8

Fred's Fireplaces enters into a contract with Miguel's Patio Supply in which Miguel's agrees to purchase 20 fireplaces. Miguel fails to pay and Fred's Fireplaces sells the fireplaces to Phillips Outdoor Store instead. However, Phillips Outdoor Store pays $500 less than Miguel had agreed to pay. What rights does Fred have?

Accepted Answer

A)  None because he chose to sell the goods. 
B)  None because he did not notify Miguel before selling the fireplaces to someone else. 
C)  None because Miguel did not agree to allow him to sell the fireplaces to Phillip. 
D)  He can sue Miguel for the entire amount Miguel was supposed to pay for the fireplaces. 
E)  He can sue Miguel for $500, the difference between the resale price and the contract price. 
A)  None because he chose to sell the goods. 
B)  None because he did not notify Miguel before selling the fireplaces to someone else. 
C)  None because Miguel did not agree to allow him to sell the fireplaces to Phillip. 
D)  He can sue Miguel for the entire amount Miguel was supposed to pay for the fireplaces. 
E)  He can sue Miguel for $500, the difference between the resale price and the contract price.

Question 9

The UCC allows for buyers and lessees to recover goods identified in the contract if the seller or lessor becomes insolvent within ________ after receiving the first payment due under the agreement.

Accepted Answer

A)  7 days 
B)  15 days 
C)  30 days 
D)  10 days 
E)  60 days 
A)  7 days 
B)  15 days 
C)  30 days 
D)  10 days 
E)  60 days

Question 10

What a buyer must do in obtaining cover?

Accepted Answer

In obtaining cover, the buyer must (1) d

Question 11

Specific performance usually requires that the seller or lessor cover.

Accepted Answer

A) True 
 B)False

Question 12

Henry and Xavier are merchants under the UCC and are determining what should be included in their liquidated damages clauses. Xavier wants to include punitive damages as part of their contract. What is the UCC rule regarding punitive damages?

Accepted Answer

A)  That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 20 percent of the purchase price or $500, whichever is less, as punitive damages. 
B)  That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 20 percent of the purchase price or $500, whichever is more, as punitive damages. 
C)  That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 30 percent of the purchase price or $1,000, whichever is less, as punitive damages. 
D)  That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 30 percent of the purchase price or $1,000, whichever is more, as punitive damages. 
E)  The UCC does not address punitive damages, other than voiding liquidated damages that are punitive in nature. 
A)  That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 20 percent of the purchase price or $500, whichever is less, as punitive damages. 
B)  That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 20 percent of the purchase price or $500, whichever is more, as punitive damages. 
C)  That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 30 percent of the purchase price or $1,000, whichever is less, as punitive damages. 
D)  That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 30 percent of the purchase price or $1,000, whichever is more, as punitive damages. 
E)  The UCC does not address punitive damages, other than voiding liquidated damages that are punitive in nature.

Question 13

Tort law is primarily designed to vindicate social policy, while contract actions are created to enforce the intentions of the parties to the agreement.

Accepted Answer

A) True 
 B)False

Question 14

What are the rights of the parties under the UCC to provide for remedies in addition to those provided by the UCC?

Accepted Answer

A)  Parties to a commercial sales agreement may provide for remedies in addition to those provided by the UCC. 
B)  Parties to a commercial sales agreement may not provide for remedies in addition to those provided by the UCC. 
C)  Parties to a commercial sales agreement may provide for remedies in addition to those provided by the UCC only if both sides are represented by an attorney. 
D)  Parties to a commercial sales agreement may provide for remedies in addition to those provided by the UCC only if both parties are merchants. 
E)  Parties to a commercial sales agreement may provide for remedies in addition to those provided by the UCC only in transactions involving over $10,000 in value. 
A)  Parties to a commercial sales agreement may provide for remedies in addition to those provided by the UCC. 
B)  Parties to a commercial sales agreement may not provide for remedies in addition to those provided by the UCC. 
C)  Parties to a commercial sales agreement may provide for remedies in addition to those provided by the UCC only if both sides are represented by an attorney. 
D)  Parties to a commercial sales agreement may provide for remedies in addition to those provided by the UCC only if both parties are merchants. 
E)  Parties to a commercial sales agreement may provide for remedies in addition to those provided by the UCC only in transactions involving over $10,000 in value.

Question 15

In the case that opened the chapter, Abbott Industries supplied 1.2 million tubes of bad eye medication to Altana, a customer, for resale. What did the court rule regarding the liability of Abbott Industries?

Accepted Answer

A)  That Abbott industries was liable for the cost of the recall and destruction of the defective medication, for the costs of employee overtime, and for lost future sales because Altana was unable to meet its contractual obligations. 
B)  That Abbott industries was liable for the cost of the recall and destruction of the defective medication, for the costs of employee overtime, and for lost future sales even though Altana was able to meet its contractual obligations. 
C)  That Abbott industries was liable for the cost of the recall and destruction of the defective medication and for the costs of employee overtime, but not for lost future sales because Altana was able to meet its contractual obligations. 
D)  That Altana was only entitled to receive cover, meaning substitution for the defective medication. 
E)  That Altana was unable to recover anything because business people take a risk that some shipments will be bad. 
A)  That Abbott industries was liable for the cost of the recall and destruction of the defective medication, for the costs of employee overtime, and for lost future sales because Altana was unable to meet its contractual obligations. 
B)  That Abbott industries was liable for the cost of the recall and destruction of the defective medication, for the costs of employee overtime, and for lost future sales even though Altana was able to meet its contractual obligations. 
C)  That Abbott industries was liable for the cost of the recall and destruction of the defective medication and for the costs of employee overtime, but not for lost future sales because Altana was able to meet its contractual obligations. 
D)  That Altana was only entitled to receive cover, meaning substitution for the defective medication. 
E)  That Altana was unable to recover anything because business people take a risk that some shipments will be bad.

Question 16

When buyers or lessees want to accept nonconforming goods and then seek monetary damages, which of the following is true?

Accepted Answer

A)  Buyers and lessees are allowed to do so in order to receive the benefit of the bargain, but they must give the seller/lessor reasonable notice of the defect. 
B)  Buyers and lessees are allowed to do so in order to receive the benefit of the bargain, and there is no requirement that they give the seller/lessor prior notice of the defect. 
C)  Buyers may do so in order to receive the benefit of the bargain so long as reasonable notice of the defect is given, but lessees may not. 
D)  Lessors may do so in order to receive the benefit of the bargain so long as reasonable notice of the defect is given, but sellers may not. 
E)  Buyers and lessees may do so only if the seller/lessor agrees to the retention of the nonconforming goods and does not request their return. 
A)  Buyers and lessees are allowed to do so in order to receive the benefit of the bargain, but they must give the seller/lessor reasonable notice of the defect. 
B)  Buyers and lessees are allowed to do so in order to receive the benefit of the bargain, and there is no requirement that they give the seller/lessor prior notice of the defect. 
C)  Buyers may do so in order to receive the benefit of the bargain so long as reasonable notice of the defect is given, but lessees may not. 
D)  Lessors may do so in order to receive the benefit of the bargain so long as reasonable notice of the defect is given, but sellers may not. 
E)  Buyers and lessees may do so only if the seller/lessor agrees to the retention of the nonconforming goods and does not request their return.

Question 17

Fred's Fireplaces enters into a contract with Miguel's Patio Supply in which Miguel's agrees to purchase 20 fireplaces. Miguel fails to pay and Fred's Fireplaces withholds delivery. Did Fred's Fireplaces act appropriately?

Accepted Answer

A)  No because withholding delivery is never appropriate. 
B)  No because filing a lawsuit is required before withholding delivery. 
C)  No because withholding delivery is appropriate in the event of breach only if the contract is for at least 50 units of goods. 
D)  No, because the UCC requires sellers to notify buyers within 100 days of withholding an order in the event of a breach. 
E)  Yes, because the UCC allows a seller to withhold delivery when a buyer breaches the contract. 
A)  No because withholding delivery is never appropriate. 
B)  No because filing a lawsuit is required before withholding delivery. 
C)  No because withholding delivery is appropriate in the event of breach only if the contract is for at least 50 units of goods. 
D)  No, because the UCC requires sellers to notify buyers within 100 days of withholding an order in the event of a breach. 
E)  Yes, because the UCC allows a seller to withhold delivery when a buyer breaches the contract.

Question 18

Which of the following is NOT something the buyer must do in obtaining cover?

Accepted Answer

A)  Demonstrate good faith in obtaining the substitute goods. 
B)  Pay a reasonable amount for the substitute goods 
C)  Ensure the goods are identical to the original goods 
D)  Act without unreasonable delay in purchasing the substitute goods 
E)  Purchase goods that are reasonable substitutes 
A)  Demonstrate good faith in obtaining the substitute goods. 
B)  Pay a reasonable amount for the substitute goods 
C)  Ensure the goods are identical to the original goods 
D)  Act without unreasonable delay in purchasing the substitute goods 
E)  Purchase goods that are reasonable substitutes

Question 19

Fred's Fireplaces enters into a contract with Miguel's Patio Supply in which Miguel's agrees to purchase 20 fireplaces. Miguel fails to pay and Fred's Fireplaces, upon discovering that Miguel is insolvent, stops delivery as the fireplaces are on the way to Miguel. Did Fred's Fireplaces act appropriately?

Accepted Answer

A)  No because stopping delivery of goods in transit is never appropriate . 
B)  No because filing a lawsuit is required before stopping delivery of goods in transit. 
C)  No because stopping delivery of goods in transit is appropriate in the event of breach only if the contract is for at least 50 units of goods. 
D)  No, because the UCC requires sellers to notify buyers within 100 days of stopping delivery of goods in transit in the event of a breach. 
E)  Yes, because the UCC allows a seller to stop delivery of goods that are in transit. 
A)  No because stopping delivery of goods in transit is never appropriate . 
B)  No because filing a lawsuit is required before stopping delivery of goods in transit. 
C)  No because stopping delivery of goods in transit is appropriate in the event of breach only if the contract is for at least 50 units of goods. 
D)  No, because the UCC requires sellers to notify buyers within 100 days of stopping delivery of goods in transit in the event of a breach. 
E)  Yes, because the UCC allows a seller to stop delivery of goods that are in transit.

Question 20

List the various options discussed in the text that may be available to a buyer/lessee when the seller/lessor is in breach.

Accepted Answer

When the seller/lessor is in breach, the

Exam 24: Remedies for Breach of Sales and Lease Contracts

Assuming proper proof, which of the following represents damages a buyer or lessee may recover in the event of a breach?

Fred's Fireplaces enters into a contract with Miguel's Patio Supply in which Miguel's agrees to purchase 20 fireplaces. The fireplaces are delivered, but a day after delivery, Fred discovers Miguel is insolvent. Fred reclaims the fireplaces. Did Fred's Fireplaces act appropriately?

A seller who sells goods to another buyer after the original buyer breaches the contract, may receive which of the following damages?

If the seller cancels a contract if a buyer is in breach, the seller cannot pursue remedies available under the UCC.

How do lemon laws in Canada compare to lemon laws in the U.S.?

A non-breaching seller, Jasmin is seeking a remedy because her buyer Hussain fails to pay and pick up goods. What remedy does she have?

The UCC allows for buyers and lessees to recover goods identified in the contract if the seller or lessor becomes insolvent within ________ after receiving the first payment due under the agreement.

What a buyer must do in obtaining cover?

Specific performance usually requires that the seller or lessor cover.

Henry and Xavier are merchants under the UCC and are determining what should be included in their liquidated damages clauses. Xavier wants to include punitive damages as part of their contract. What is the UCC rule regarding punitive damages?

Tort law is primarily designed to vindicate social policy, while contract actions are created to enforce the intentions of the parties to the agreement.

What are the rights of the parties under the UCC to provide for remedies in addition to those provided by the UCC?

In the case that opened the chapter, Abbott Industries supplied 1.2 million tubes of bad eye medication to Altana, a customer, for resale. What did the court rule regarding the liability of Abbott Industries?

When buyers or lessees want to accept nonconforming goods and then seek monetary damages, which of the following is true?

Fred's Fireplaces enters into a contract with Miguel's Patio Supply in which Miguel's agrees to purchase 20 fireplaces. Miguel fails to pay and Fred's Fireplaces withholds delivery. Did Fred's Fireplaces act appropriately?

Which of the following is NOT something the buyer must do in obtaining cover?

List the various options discussed in the text that may be available to a buyer/lessee when the seller/lessor is in breach.

An Introduction to Dynamic Business Law

Business Ethics

The Us Legal System

Alternative Dispute Resolution

Constitutional Principles

International and Comparative Law

Crime and the Business Community

Tort Law

Negligence and Strict Liability

Product Liability

Liability of Accountants and Other Professionals

Intellectual Property

Introduction to Contracts

Agreement

Consideration

Capacity and Legality

Legal Assent

Contracts in Writing

Third-Party Rights to Contracts

Discharge and Remedies

Introduction to Sales and Lease Contracts

Title, Risk of Loss, and Insurable Interest

Performance and Obligations Under Sales and Leases

Warranties

Negotiable Instruments: Negotiability and Transferability

Negotiation, Holder in Due Course, and Defenses

Liability, Defenses, and Discharge

Checks and Electronic Fund Transfers

Secured Transactions

Other Creditors Remedies and Suretyship

Bankruptcy and Reorganization

Agency Formation and Duties

Liability to Third Parties and Termination

Forms of Business Organization

Partnerships: Nature, Formation, and Operation

Partnerships: Termination and Limited Partnerships

Corporations: Formation and Financing

Corporations: Directors, Officers, and Shareholders

Corporations: Mergers, Consolidations, Terminations

Corporations: Securities and Investor Protection

Employment and Labor Law

Employment Discrimination

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

The Nature of Property, Personal Property, and Bailments

Real Property

Landlord-Tenant Law

Insurance Law

Wills and Trusts

Filters