Question 1

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,and there is no requirement that they give the seller/lessor prior notice of the defect. 
B) 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. 
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,and there is no requirement that they give the seller/lessor prior notice of the defect. 
B) 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. 
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. B

Question 2

What is the ultimate goal of contractual remedies?

Accepted Answer

A) To punish those who breach contracts. 
B) To deter parties from breaching contracts 
C) To compensate breach victims. 
D) To provide a private system of justice 
E) To enforce social order. 
A) To punish those who breach contracts. 
B) To deter parties from breaching contracts 
C) To compensate breach victims. 
D) To provide a private system of justice 
E) To enforce social order. B

Question 3

Which of the following statements is true concerning cancellation of a contract?

Accepted Answer

A) Cancelling a contract is a seller's only remedy if a buyer or lessee is in breach. 
B) No notice is required to cancel a contract. 
C) Canceling a contract is a remedy of last resort from the UCC"s perspective. 
D) Cancelling a contract is never permitted under the UCC. 
E) If a seller cancels a contract,he may not pursue any other remedies available under the UCC. 
A) Cancelling a contract is a seller's only remedy if a buyer or lessee is in breach. 
B) No notice is required to cancel a contract. 
C) Canceling a contract is a remedy of last resort from the UCC"s perspective. 
D) Cancelling a contract is never permitted under the UCC. 
E) If a seller cancels a contract,he may not pursue any other remedies available under the UCC. C

Question 4

What may a buyer/lessee do if the seller/lessor delivers nonconforming goods?

Accepted Answer

A) Reject the goods and obtain cover,but the buyer may not cancel the contract 
B) Cancel the contract only 
C) Reject the goods only 
D) Reject the goods,and then obtain cover or cancel the contract 
E) Obtain cover only 
A) Reject the goods and obtain cover,but the buyer may not cancel the contract 
B) Cancel the contract only 
C) Reject the goods only 
D) Reject the goods,and then obtain cover or cancel the contract 
E) Obtain cover only

Question 5

Which type of damages is identified before a breach occurs?

Accepted Answer

A) Reliance damages 
B) Liquidated damages 
C) Consequential damages 
D) Nominal damages 
E) Compensatory damages 
A) Reliance damages 
B) Liquidated damages 
C) Consequential damages 
D) Nominal damages 
E) Compensatory damages

Question 6

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 Altana was only entitled to receive cover,meaning substitution for the defective medication. 
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 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. 
E) That Altana was unable to recover anything because business people take a risk that some shipments will be bad. 
A) That Altana was only entitled to receive cover,meaning substitution for the defective medication. 
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 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. 
E) That Altana was unable to recover anything because business people take a risk that some shipments will be bad.

Question 7

Ciara purchased a new trampoline from Jump Around Trampolines.The purchase agreement she signed released Jump Around Trampolines from any consequential damages for personal injury.Unfortunately,the trampoline ripped while she was using it causing Ciara to fall and break her leg.She asked Jump Around for damages but the manager refused.The manager referenced her agreement whereby she signed away her rights to consequential damages for personal injury.Is the manager right,and why or why not?

Accepted Answer

The manager is incorrect because,while u

Question 8

Which of the following statements is true regarding Luke's claim that Maya had no right to sell the furniture he initially purchased?

Accepted Answer

A) Luke is incorrect but only if Maya can prove that she had no reason to believe that he was a credit risk prior to signing the contract of sale. 
B) Luke is incorrect.Maya had a right to resell the furniture. 
C) Luke is correct but only because of the special UCC exception for consumer goods. 
D) Luke is correct.Maya had no right to sell the furniture,but she retained the right to sue him for any deficiency. 
E) Luke is correct because of federal consumer protection laws. 
A) Luke is incorrect but only if Maya can prove that she had no reason to believe that he was a credit risk prior to signing the contract of sale. 
B) Luke is incorrect.Maya had a right to resell the furniture. 
C) Luke is correct but only because of the special UCC exception for consumer goods. 
D) Luke is correct.Maya had no right to sell the furniture,but she retained the right to sue him for any deficiency. 
E) Luke is correct because of federal consumer protection laws.

Question 9

Under UCC 2-7022),in which of the following circumstances may a seller reclaim goods when a buyer is in possession of goods and is in breach?

Accepted Answer

A) When the seller discovers the buyer is insolvent 
B) When the buyer is at least 5 days late on a payment 
C) When the buyer has received at least 30 days prior notification of reclamation 
D) When the buyer is at least 10 days late on a payment 
E) When the buyer has received at least 10 days prior notification of reclamation 
A) When the seller discovers the buyer is insolvent 
B) When the buyer is at least 5 days late on a payment 
C) When the buyer has received at least 30 days prior notification of reclamation 
D) When the buyer is at least 10 days late on a payment 
E) When the buyer has received at least 10 days prior notification of reclamation

Question 10

Liquidated damages are identified after a contract breach occurs.

Accepted Answer

A) True 
 B)False

Question 11

Which statement is true regarding the availability of liquidated damages in China?

Accepted Answer

A) Liquidated damages are available under the People's Republic of China Contract Law legislation,but only in amounts of up to 20% of the actual damages incurred by the breaching party. 
B) Through judicial mandate,China adopted the U.S.standard for the award of liquidated damages. 
C) Liquidated damages are available under the People's Republic of China Contract Law legislation,but Chinese judicial interpretation of the law limits liquidated damages to no more than 30 percent above the actual damages incurred by the nonbreaching party. 
D) Liquidated damages are available under the People's Republic of China Contract Law legislation,but Chinese judicial interpretation of the law limits liquidated damages to no more than 10 percent above the actual damages incurred by the nonbreaching party. 
E) Liquidated damages are not available in China. 
A) Liquidated damages are available under the People's Republic of China Contract Law legislation,but only in amounts of up to 20% of the actual damages incurred by the breaching party. 
B) Through judicial mandate,China adopted the U.S.standard for the award of liquidated damages. 
C) Liquidated damages are available under the People's Republic of China Contract Law legislation,but Chinese judicial interpretation of the law limits liquidated damages to no more than 30 percent above the actual damages incurred by the nonbreaching party. 
D) Liquidated damages are available under the People's Republic of China Contract Law legislation,but Chinese judicial interpretation of the law limits liquidated damages to no more than 10 percent above the actual damages incurred by the nonbreaching party. 
E) Liquidated damages are not available in China.

Question 12

Is Samantha likely correct in that she owes Maddie no obligation?

Accepted Answer

A) Yes,but only because the fixtures were incorporated into real property. 
B) Yes,Samantha is correct but only because a consumer transaction with a nonmerchant is involved. 
C) No,because Maddie had the right to revoke acceptance and cover. 
D) Yes,but only because the fixtures had not yet been paid for by the buyer. 
E) Yes,because that is the only remedy she must provide under any circumstances. 
A) Yes,but only because the fixtures were incorporated into real property. 
B) Yes,Samantha is correct but only because a consumer transaction with a nonmerchant is involved. 
C) No,because Maddie had the right to revoke acceptance and cover. 
D) Yes,but only because the fixtures had not yet been paid for by the buyer. 
E) Yes,because that is the only remedy she must provide under any circumstances.

Question 13

How does the basic premise of contract law differ from tort law?

Accepted Answer

A) Tort law and contract law have the same basic premise 
B) Contract actions are created to enforce the intentions of parties to an agreement;tort law is primarily designed to vindicate social policy 
C) Tort actions are created to enforce the intentions of parties to an agreement;contract law is primarily designed to vindicate social policy 
D) Contract actions are intended to allow the government to impose penalties for failure to follow contracts;tort law is intended to allow private individuals to impose penalties on each other for failure to fulfill a bargain. 
E) Tort actions are intended to allow the government to impose penalties;contract law is intended to allow private individuals to impose penalties on each other for failure to fulfill a bargain. 
A) Tort law and contract law have the same basic premise 
B) Contract actions are created to enforce the intentions of parties to an agreement;tort law is primarily designed to vindicate social policy 
C) Tort actions are created to enforce the intentions of parties to an agreement;contract law is primarily designed to vindicate social policy 
D) Contract actions are intended to allow the government to impose penalties for failure to follow contracts;tort law is intended to allow private individuals to impose penalties on each other for failure to fulfill a bargain. 
E) Tort actions are intended to allow the government to impose penalties;contract law is intended to allow private individuals to impose penalties on each other for failure to fulfill a bargain.

Question 14

What is the basic premise of contract law?

Accepted Answer

A) To promote interstate commerce 
B) To promote economic growth 
C) To encourage a free-market society and greater financial security for the parties 
D) To effectuate the expectations of the parties to an agreement 
E) To promote commerce 
A) To promote interstate commerce 
B) To promote economic growth 
C) To encourage a free-market society and greater financial security for the parties 
D) To effectuate the expectations of the parties to an agreement 
E) To promote commerce

Question 15

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

Question 16

Which of the following statements is true regarding any deduction in damages to which Luke is entitled?

Accepted Answer

A) Luke is entitled to a deduction for the delivery expenses only if he can show that Maya agreed in writing to deduct those expenses in the event of a breach. 
B) Luke is not entitled to any deduction because he was the breaching party. 
C) Luke is entitled to a deduction for the delivery expenses only if he can establish that Maya either knew or should have known that he would be unable to pay for the furniture. 
D) Luke is entitled to a deduction for the delivery expenses because that was a savings to Maya. 
E) Luke is entitled to a deduction for the delivery expenses because Maya breached the contract by not delivering the furniture to him and then pursuing an action for damages. 
A) Luke is entitled to a deduction for the delivery expenses only if he can show that Maya agreed in writing to deduct those expenses in the event of a breach. 
B) Luke is not entitled to any deduction because he was the breaching party. 
C) Luke is entitled to a deduction for the delivery expenses only if he can establish that Maya either knew or should have known that he would be unable to pay for the furniture. 
D) Luke is entitled to a deduction for the delivery expenses because that was a savings to Maya. 
E) Luke is entitled to a deduction for the delivery expenses because Maya breached the contract by not delivering the furniture to him and then pursuing an action for damages.

Question 17

Which of the following provide remedies to buyers of defective cars?

Accepted Answer

A) Apple laws 
B) Roadside laws 
C) Clunker laws 
D) Lemon laws 
E) Peach laws 
A) Apple laws 
B) Roadside laws 
C) Clunker laws 
D) Lemon laws 
E) Peach laws

Question 18

Matt,who owned an appliance store,contracted with Stella to supply all the new equipment for Stella's new restaurant.Stella wanted all the equipment by October 15th in order to get the restaurant started in time for the holidays.Matt and Stella entered into an agreement by which Matt would pay Stella $300 per day for every day he was late in providing the appliances.Which of the following is a true statement regarding the section of the agreement involving the late charges?

Accepted Answer

A) It is known as a penalty provision which will be enforced by a court so long as the plaintiff can establish proof of compensatory damages in at least the amount of recovery requested. 
B) It is known as an invalid provision which will not be enforced. 
C) It is known as a liquidated damages provision which will be enforced by a court so long as it is not so far out of reasonable range as to be punitive in nature. 
D) It is known as a punitive damages provision which will be enforced by a court only if wrongdoing or fraud on the part of the defendant can be established. 
E) It is known as a consequential damages provision which will be enforced by a court only if incidental damages can be established. 
A) It is known as a penalty provision which will be enforced by a court so long as the plaintiff can establish proof of compensatory damages in at least the amount of recovery requested. 
B) It is known as an invalid provision which will not be enforced. 
C) It is known as a liquidated damages provision which will be enforced by a court so long as it is not so far out of reasonable range as to be punitive in nature. 
D) It is known as a punitive damages provision which will be enforced by a court only if wrongdoing or fraud on the part of the defendant can be established. 
E) It is known as a consequential damages provision which will be enforced by a court only if incidental damages can be established.

Question 19

A seller or lessor is allowed to sell goods to another buyer when the original buyer is in breach and the goods have not yet been delivered.

Accepted Answer

A) True 
 B)False

Question 20

Fred's Fireplaces enters into a contract with Miguel's Patio Supply in which Miguel's agrees to purchase 20 fireplaces.This is considered a small order.Miguel,who is still running a business and who is still solvent,fails to pay for the fireplaces.Fred's Fireplaces stops delivery as the fireplaces are on the way to Miguel.Did Fred's Fireplaces act appropriately?

Accepted Answer

A) No because filing a lawsuit is required before stopping delivery of goods in transit. 
B) No because stopping delivery of goods in transit is permitted when the buyer is solvent only if the quantity shipped is large. 
C) 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. 
D) Yes,a seller may stop delivery any time. 
E) 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. 
A) No because filing a lawsuit is required before stopping delivery of goods in transit. 
B) No because stopping delivery of goods in transit is permitted when the buyer is solvent only if the quantity shipped is large. 
C) 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. 
D) Yes,a seller may stop delivery any time. 
E) 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.

Exam 24: Remedies for Breach of Sales and Lease Contracts

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

What is the ultimate goal of contractual remedies?

Which of the following statements is true concerning cancellation of a contract?

What may a buyer/lessee do if the seller/lessor delivers nonconforming goods?

Which type of damages is identified before a breach occurs?

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?

Which of the following statements is true regarding Luke's claim that Maya had no right to sell the furniture he initially purchased?

Under UCC 2-7022),in which of the following circumstances may a seller reclaim goods when a buyer is in possession of goods and is in breach?

Liquidated damages are identified after a contract breach occurs.

Which statement is true regarding the availability of liquidated damages in China?

Is Samantha likely correct in that she owes Maddie no obligation?

How does the basic premise of contract law differ from tort law?

What is the basic premise of contract law?

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 statements is true regarding any deduction in damages to which Luke is entitled?

Which of the following provide remedies to buyers of defective cars?

A seller or lessor is allowed to sell goods to another buyer when the original buyer is in breach and the goods have not yet been delivered.

An Introduction to Dynamic Business Law

Business Ethics

The Uslegal 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