Question 1

Define "course of performance," and discuss its relationship to decisions regarding whether goods conform to contract specifications.

Accepted Answer

Course of performance refers to the hist

Question 2

Honesty in fact means good faith in relation to transactions between parties ________

Accepted Answer

A)  who are not merchants. 
B)  who are merchants. 
C)  who are third party vendors. 
D)  buyers and sellers. 
E)  lessors and lessees 
A)  who are not merchants. 
B)  who are merchants. 
C)  who are third party vendors. 
D)  buyers and sellers. 
E)  lessors and lessees

Question 3

[Softball Trophies] To recognize softball players on his team, Eduardo ordered from Troy 10 trophies showing a softball player swinging a bat. The trophies were to be delivered on May 1st for an award dinner to be held on May 20th. Troy was at first unable to obtain trophies showing a softball player swinging a bat, but by May 13th, he did locate some trophies with a softball player holding a bat. The difference did not substantially impair the value of the trophies, and thinking that the trophies would be acceptable, Troy delivered them on May 14th. Eduardo glanced at the trophies, paid for them with a check, and said nothing. On May 16th Eduardo looked at the trophies more closely and decided that he did not like them. Eduardo canceled payment on his check, and Troy sued him for payment.
-Troy's failure to cure the problem will most likely have which effect?

Accepted Answer

A)  In order to receive payment, Troy must provide correct trophies; otherwise, he is not entitled to payment. 
B)  Eduardo's actions effectively prevented Troy from an opportunity to cure any defects and, therefore, Eduardo's actions cannot be said to have effectively rejected the goods, resulting in Eduardo owing payment to Troy. 
C)  Troy will be required to take a 50% reduction on the price to be paid for the goods. 
D)  Troy will be required to take a 30% reduction on the price to be paid for the goods. 
E)  Troy will be required to take a 20% reduction on the price to be paid for the goods. 
A)  In order to receive payment, Troy must provide correct trophies; otherwise, he is not entitled to payment. 
B)  Eduardo's actions effectively prevented Troy from an opportunity to cure any defects and, therefore, Eduardo's actions cannot be said to have effectively rejected the goods, resulting in Eduardo owing payment to Troy. 
C)  Troy will be required to take a 50% reduction on the price to be paid for the goods. 
D)  Troy will be required to take a 30% reduction on the price to be paid for the goods. 
E)  Troy will be required to take a 20% reduction on the price to be paid for the goods.

Question 4

If goods are identified at the time the parties entered into a contract and these goods are destroyed through no fault of the parties before risk passes to the buyer or lessee, under the UCC what is the result?

Accepted Answer

A)  The parties are excused from performance. 
B)  The seller has 7 days in which to cure. 
C)  The seller has 10 days in which to cure. 
D)  The seller has 30 days in which to cure. 
E)  The seller has 45 days in which to cure. 
A)  The parties are excused from performance. 
B)  The seller has 7 days in which to cure. 
C)  The seller has 10 days in which to cure. 
D)  The seller has 30 days in which to cure. 
E)  The seller has 45 days in which to cure.

Question 5

Which statement is correct regarding any right of inspection for lessees?

Accepted Answer

A)  The UCC provides for no right of inspection for lessees, and the right of inspection is only available to the lessor if it is provided for by contract. 
B)  The UCC provides for a right of inspection in regard to perishable items for lessees, but not otherwise. 
C)  The UCC provides for a right of inspection in regard to fragile items for lessees, but not otherwise. 
D)  The UCC provides for a right of inspection if the lessor and lessee have previously had disputes in regard to shipments, but not otherwise. 
E)  The UCC provides for a right of inspection for lessees. 
A)  The UCC provides for no right of inspection for lessees, and the right of inspection is only available to the lessor if it is provided for by contract. 
B)  The UCC provides for a right of inspection in regard to perishable items for lessees, but not otherwise. 
C)  The UCC provides for a right of inspection in regard to fragile items for lessees, but not otherwise. 
D)  The UCC provides for a right of inspection if the lessor and lessee have previously had disputes in regard to shipments, but not otherwise. 
E)  The UCC provides for a right of inspection for lessees.

Question 6

Sellers and lessors have the right to ________ problems with nonconforming goods, under sections of the UCC.

Accepted Answer

A)  cure or fix 
B)  defend and settle 
C)  deduct money and discuss 
D)  reject and sue for 
E)  refuse and deduct money for 
A)  cure or fix 
B)  defend and settle 
C)  deduct money and discuss 
D)  reject and sue for 
E)  refuse and deduct money for

Question 7

As a matter of law, should the perfect tender rule be rejected and replaced with the concept of substantial performance?

Accepted Answer

Student responses will vary. In favor of

Question 8

Which of the following did the appellate court recognize in SCM Group, U.S.A., Inc., v. Custom Designs & Manufacturing Co., Inc., the case in the text in which the plaintiff sued the defendant after the defendant refused to pay for equipment?

Accepted Answer

A)  That the issue of whether a reasonable time for inspection of goods has passed is generally a question of law for the judge, not the jury, to decide. 
B)  That an effective acceptance is not made unless the buyer affirmatively notifies the seller in writing that the goods were conforming. 
C)  That an effective acceptance is not made unless the buyer affirmatively notifies the seller in writing that the goods while not conforming were acceptable with appropriate deductions. 
D)  That an effective acceptance is not made unless the buyer affirmatively notifies the seller orally or in writing that the goods while not conforming were acceptable with appropriate deductions. 
E)  That a failure to reject results in liability not only for the contractual price, but also for damages suffered as a result. 
A)  That the issue of whether a reasonable time for inspection of goods has passed is generally a question of law for the judge, not the jury, to decide. 
B)  That an effective acceptance is not made unless the buyer affirmatively notifies the seller in writing that the goods were conforming. 
C)  That an effective acceptance is not made unless the buyer affirmatively notifies the seller in writing that the goods while not conforming were acceptable with appropriate deductions. 
D)  That an effective acceptance is not made unless the buyer affirmatively notifies the seller orally or in writing that the goods while not conforming were acceptable with appropriate deductions. 
E)  That a failure to reject results in liability not only for the contractual price, but also for damages suffered as a result.

Question 9

[Brea's Berries] Brea, a berry farmer, regularly supplies berries under an installment contract to Zelda's, a manufacturer of frozen desserts. Zelda's prefers its berries to be large, to provide the best quality for its products, and mandated that the contract contain a provision that each berry needed to be at least one inch in length. Zelda's rejected the latest shipment of berries, claiming that the majority of the berries did not meet the requisite length. Brea argues that Zelda cannot reject the entire shipment because it is only a trivial detail. Zelda responds that the size constitutes a substantial impairment in the goods and will make her products less desirable. She tells Brea she's cancelling the contract because she has to quickly find another supplier in order to complete a large order.
-Assuming the berries are nonconforming, does Zelda have any options other than simply canceling the contract?

Accepted Answer

A)  Yes, Zelda may reject the nonconforming berries subject to cure, or accept the nonconforming berries and adjust the contract accordingly. 
B)  Yes, but Zelda's only other option is to reject the nonconforming berries subject to cure. 
C)  Yes, but Zelda's only other option is to accept the nonconforming berries and adjust the contract accordingly. 
D)  Yes, but the course of dealing makes other options void. 
E)  No. 
A)  Yes, Zelda may reject the nonconforming berries subject to cure, or accept the nonconforming berries and adjust the contract accordingly. 
B)  Yes, but Zelda's only other option is to reject the nonconforming berries subject to cure. 
C)  Yes, but Zelda's only other option is to accept the nonconforming berries and adjust the contract accordingly. 
D)  Yes, but the course of dealing makes other options void. 
E)  No.

Question 10

[New Furniture] Kristin purchased $2,000 worth of furniture from Solid Wood Furniture. Through an arrangement with Solid Wood, Kristin financed the purchase through a financing company called Let Us Help You. Twenty-nine days after the goods were delivered to her, Kristin had a disagreement with Let Us Help You regarding the amount of interest she would be required to pay. She notified Solid Wood on that day that she was rejecting the goods. Solid Wood claimed that she did not properly reject the furniture and also that she failed to act in good faith, an obligation imposed equally on all parties to a transaction. Kristin says that she properly rejected; that, although the UCC imposes no duty of good faith, she acted in good faith; and that, in any event, she had an absolute right to return the goods.
-Who created the exceptions to the perfect tender rule?

Accepted Answer

A)  Courts, the U.S. Congress, and the UCC drafters 
B)  Federal court, but not state court 
C)  Courts and UCC drafters 
D)  Courts and the U.S. Congress 
E)  The U.S. Congress and UCC drafters 
A)  Courts, the U.S. Congress, and the UCC drafters 
B)  Federal court, but not state court 
C)  Courts and UCC drafters 
D)  Courts and the U.S. Congress 
E)  The U.S. Congress and UCC drafters

Question 11

[Toshi's Dolls] Toshi owns a specialty doll store and purchases dolls regularly from Yolanda, a doll distributor. For the past few years, Toshi and Yolanda have signed yearly contracts that set forth the terms of the agreement. Although delivery terms are set forth in the agreement, if the delivery comes a day or two late or if Yolanda substitutes doll purses for shoes, Toshi does not complain, as she knows the next shipment will have more shoes than purses. Yolanda has added a new line of designer dolls, and Yolanda asks Toshi to sign a separate agreement with regard to the new doll line which includes a clause that accessories must conform to the order only as to quantity. Toshi's first order of the new line includes a large shipment of dolls and doll purses, but no doll shoes. The first delivery of the new doll line is scheduled to arrive on December 1, however, it arrives on December 2 and includes very few doll shoes and instead includes many doll purses. Yolanda refuses to accept the late shipment and calls Toshi to complain and also tells her that some of the dolls have ugly faces and she is worried they will not sell. Yolanda says that Toshi's been in the doll industry for years and should know that some dolls have flaws on their faces and she has to accept the dolls faces as they are.
-Under which exception to the UCC's perfect tender rule is Yolanda able to provide the dolls with facial flaws without violating the perfect tender rule?

Accepted Answer

A)  Usage of trade 
B)  Commercially impracticable 
C)  Destroyed goods 
D)  Course of dealing 
E)  Course of performance 
A)  Usage of trade 
B)  Commercially impracticable 
C)  Destroyed goods 
D)  Course of dealing 
E)  Course of performance

Question 12

Which statement is correct regarding any right of inspection for buyers?

Accepted Answer

A)  The UCC provides for no right of inspection for buyers, and the right of inspection is only available to the buyer if it is provided for by contract. 
B)  The UCC provides for a right of inspection in regard to perishable items for buyers, but not otherwise. 
C)  The UCC provides for a right of inspection in regard to fragile items for buyers, but not otherwise. 
D)  The UCC provides for a right of inspection if the buyer and seller have previously had disputes in regard to shipments, but not otherwise. 
E)  The UCC provides for a right of inspection for buyers. 
A)  The UCC provides for no right of inspection for buyers, and the right of inspection is only available to the buyer if it is provided for by contract. 
B)  The UCC provides for a right of inspection in regard to perishable items for buyers, but not otherwise. 
C)  The UCC provides for a right of inspection in regard to fragile items for buyers, but not otherwise. 
D)  The UCC provides for a right of inspection if the buyer and seller have previously had disputes in regard to shipments, but not otherwise. 
E)  The UCC provides for a right of inspection for buyers.

Question 13

Victor, a major supplier of computers is selling computers to Liken, a buyer for a large chain store. Under the UCC, Victor is required to tender ________ goods to Liken.

Accepted Answer

A)  optimal 
B)  transforming 
C)  conforming 
D)  normal 
E)  exceptional 
A)  optimal 
B)  transforming 
C)  conforming 
D)  normal 
E)  exceptional

Question 14

Which statement is correct regarding whether a buyer and lessee may make a partial acceptance?

Accepted Answer

A)  Buyers and lessees may make partial acceptances at any time. 
B)  The buyer may make a partial acceptance when goods are nonconforming and the seller has failed to cure the defects, but a lessee may not make a partial acceptance. 
C)  The lessee may make a partial acceptance when goods are nonconforming and the lessor has failed to cure the defects, but a buyer may not make a partial acceptance. 
D)  The buyer or lessee may make a partial acceptance when goods are nonconforming and the seller or lessor has failed to cure the defects. 
E)  Neither buyers nor lessees may make partial acceptances because either the whole must be accepted or rejected. 
A)  Buyers and lessees may make partial acceptances at any time. 
B)  The buyer may make a partial acceptance when goods are nonconforming and the seller has failed to cure the defects, but a lessee may not make a partial acceptance. 
C)  The lessee may make a partial acceptance when goods are nonconforming and the lessor has failed to cure the defects, but a buyer may not make a partial acceptance. 
D)  The buyer or lessee may make a partial acceptance when goods are nonconforming and the seller or lessor has failed to cure the defects. 
E)  Neither buyers nor lessees may make partial acceptances because either the whole must be accepted or rejected.

Question 15

[Smeared cupcakes] Kai orders forty decorated cupcakes from Liu's bakery next door to be sold in his restaurant. During delivery, Lui trips and the box tips over. When Kai opens the box to inspect the cupcakes, the frosted decorations on the cupcakes are smeared.
-Which of the following are the obligations of buyers and lessees?

Accepted Answer

A)  Cure defects, and accept and pay for conforming goods in accordance with the contract. 
B)  Inspect the goods, cure defects, and accept and pay for conforming goods in accordance with the contract. 
C)  Accept and pay for conforming goods in accordance with the contract. 
D)  Accept and pay for conforming goods in accordance with the contract, ordinarily after inspecting the goods. 
E)  Inspect the goods and pay for conforming goods in accordance with the contract. 
A)  Cure defects, and accept and pay for conforming goods in accordance with the contract. 
B)  Inspect the goods, cure defects, and accept and pay for conforming goods in accordance with the contract. 
C)  Accept and pay for conforming goods in accordance with the contract. 
D)  Accept and pay for conforming goods in accordance with the contract, ordinarily after inspecting the goods. 
E)  Inspect the goods and pay for conforming goods in accordance with the contract.

Question 16

[Toshi's Dolls] Toshi owns a specialty doll store and purchases dolls regularly from Yolanda, a doll distributor. For the past few years, Toshi and Yolanda have signed yearly contracts that set forth the terms of the agreement. Although delivery terms are set forth in the agreement, if the delivery comes a day or two late or if Yolanda substitutes doll purses for shoes, Toshi does not complain, as she knows the next shipment will have more shoes than purses. Yolanda has added a new line of designer dolls, and Yolanda asks Toshi to sign a separate agreement with regard to the new doll line which includes a clause that accessories must conform to the order only as to quantity. Toshi's first order of the new line includes a large shipment of dolls and doll purses, but no doll shoes. The first delivery of the new doll line is scheduled to arrive on December 1, however, it arrives on December 2 and includes very few doll shoes and instead includes many doll purses. Yolanda refuses to accept the late shipment and calls Toshi to complain and also tells her that some of the dolls have ugly faces and she is worried they will not sell. Yolanda says that Toshi's been in the doll industry for years and should know that some dolls have flaws on their faces and she has to accept the dolls faces as they are.
-Can Toshi reject the dolls because of Yolanda's late delivery?

Accepted Answer

A)  Yes, under the perfect tender rule, the seller must conform to the specifications of the contract. 
B)  Yes, because the delivery must comply with contract specifications. 
C)  Probably not, because the course of performance of this contract creates an exception to the perfect tender rule. 
D)  Probably not, because the course of dealings between the parties creates an exception to the perfect tender rule. 
E)  Probably not, because the usage of trade exception is inapplicable. 
A)  Yes, under the perfect tender rule, the seller must conform to the specifications of the contract. 
B)  Yes, because the delivery must comply with contract specifications. 
C)  Probably not, because the course of performance of this contract creates an exception to the perfect tender rule. 
D)  Probably not, because the course of dealings between the parties creates an exception to the perfect tender rule. 
E)  Probably not, because the usage of trade exception is inapplicable.

Question 17

[Business Law Rocks] Business law instructor Courtney ordered 50 T-shirts for her classes that said "Business Law Rocks" on the front. She wanted to distribute them on the last day of class and contracted with Tyler, who owned a T-shirt business, for the shirts to arrive by that day. The shirts arrived on Thursday, the day before the last class on Friday. Unfortunately, the shirts said "Business Law Yuck" on the front. Tyler told Courtney that he would remedy and fix the problem and that he had the right to do so. She told him, however, that she had to have the shirts the next day because the students would be gone after that. Courtney had also ordered some pamphlets on employment law to be used the next fall semester. The seller had agreed to provide the pamphlets 30 days before spring semester ended. The seller, however, erred and sent pamphlets on environmental law, which arrived 28 days before spring semester ended. The seller attempted to remedy the problem by sending the correct pamphlets on employment law, but they did not arrive until 27 days before spring semester ended. None of the parties had any prior dealings.
-Which statement is true in regard to the efforts of the seller of the employment law pamphlets to remedy the problem with the incorrect pamphlets?

Accepted Answer

A)  The seller could not exercise the right to cure once the contract time for performance had ended because the seller did not provide prompt notice of his intent to cure and did not have reasonable grounds to believe that the nonconforming tender of environmental pamphlets would be acceptable to Courtney. 
B)  The seller could likely exercise the right to cure once the contract time for performance had ended because the seller would have had reasonable grounds to believe that Courtney would not have objected to the tender of the correct item at the time it was tendered. 
C)  The seller correctly acted to remedy the problem because he had up to 10 days under the UCC to fix any problem. 
D)  The seller correctly acted to remedy the problem because he had up to 20 days under the UCC to fix any problem. 
E)  The seller could not act to remedy the problem because he did not have assurance from Courtney in writing that she would allow additional time in which to cure. 
A)  The seller could not exercise the right to cure once the contract time for performance had ended because the seller did not provide prompt notice of his intent to cure and did not have reasonable grounds to believe that the nonconforming tender of environmental pamphlets would be acceptable to Courtney. 
B)  The seller could likely exercise the right to cure once the contract time for performance had ended because the seller would have had reasonable grounds to believe that Courtney would not have objected to the tender of the correct item at the time it was tendered. 
C)  The seller correctly acted to remedy the problem because he had up to 10 days under the UCC to fix any problem. 
D)  The seller correctly acted to remedy the problem because he had up to 20 days under the UCC to fix any problem. 
E)  The seller could not act to remedy the problem because he did not have assurance from Courtney in writing that she would allow additional time in which to cure.

Question 18

Goods that conform to UCC specifications are called UCC Specific Goods.

Accepted Answer

A) True 
 B)False

Question 19

[Toshi's Dolls] Toshi owns a specialty doll store and purchases dolls regularly from Yolanda, a doll distributor. For the past few years, Toshi and Yolanda have signed yearly contracts that set forth the terms of the agreement. Although delivery terms are set forth in the agreement, if the delivery comes a day or two late or if Yolanda substitutes doll purses for shoes, Toshi does not complain, as she knows the next shipment will have more shoes than purses. Yolanda has added a new line of designer dolls, and Yolanda asks Toshi to sign a separate agreement with regard to the new doll line which includes a clause that accessories must conform to the order only as to quantity. Toshi's first order of the new line includes a large shipment of dolls and doll purses, but no doll shoes. The first delivery of the new doll line is scheduled to arrive on December 1, however, it arrives on December 2 and includes very few doll shoes and instead includes many doll purses. Yolanda refuses to accept the late shipment and calls Toshi to complain and also tells her that some of the dolls have ugly faces and she is worried they will not sell. Yolanda says that Toshi's been in the doll industry for years and should know that some dolls have flaws on their faces and she has to accept the dolls faces as they are.
-What is Yolanda's best defense as to why the doll shoes and purses do not conform perfectly to the order?

Accepted Answer

A)  The perfect tender rule 
B)  An exception to the perfect tender rule was outlined in the parties' agreement. 
C)  Trade usage. 
D)  Course of performance provides an exception to the perfect tender rule. 
E)  The substitution of additional purses for shoes did not substantially impair the value of the good. 
A)  The perfect tender rule 
B)  An exception to the perfect tender rule was outlined in the parties' agreement. 
C)  Trade usage. 
D)  Course of performance provides an exception to the perfect tender rule. 
E)  The substitution of additional purses for shoes did not substantially impair the value of the good.

Question 20

How often is the right to inspection waived?

Accepted Answer

A)  The right to inspect is frequently waived by the buyer's conduct. 
B)  The right to inspect is often waived by the buyer's conduct and frequently held by courts to have been waived by the buyer's conduct. 
C)  The right to inspect is seldom waived or held by courts to have been waived unless the buyer expressly waives the right. 
D)  The right to inspect is often held by courts to have been waived. 
E)  Buyers often expressly waive their right to inspect. 
A)  The right to inspect is frequently waived by the buyer's conduct. 
B)  The right to inspect is often waived by the buyer's conduct and frequently held by courts to have been waived by the buyer's conduct. 
C)  The right to inspect is seldom waived or held by courts to have been waived unless the buyer expressly waives the right. 
D)  The right to inspect is often held by courts to have been waived. 
E)  Buyers often expressly waive their right to inspect.

Exam 23: Performance and Obligations Under Sales and Leases

Define "course of performance," and discuss its relationship to decisions regarding whether goods conform to contract specifications.

Honesty in fact means good faith in relation to transactions between parties ________

If goods are identified at the time the parties entered into a contract and these goods are destroyed through no fault of the parties before risk passes to the buyer or lessee, under the UCC what is the result?

Which statement is correct regarding any right of inspection for lessees?

Sellers and lessors have the right to ________ problems with nonconforming goods, under sections of the UCC.

As a matter of law, should the perfect tender rule be rejected and replaced with the concept of substantial performance?

Which of the following did the appellate court recognize in SCM Group, U.S.A., Inc., v. Custom Designs & Manufacturing Co., Inc., the case in the text in which the plaintiff sued the defendant after the defendant refused to pay for equipment?

Which statement is correct regarding any right of inspection for buyers?

Victor, a major supplier of computers is selling computers to Liken, a buyer for a large chain store. Under the UCC, Victor is required to tender ________ goods to Liken.

Which statement is correct regarding whether a buyer and lessee may make a partial acceptance?

Goods that conform to UCC specifications are called UCC Specific Goods.

How often is the right to inspection waived?

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

Remedies for Breach of Sales and Lease Contracts

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

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