Exam 21: Performance of Sales Contracts

The buyer can usually inspect the goods before payment except when they are shipped _____.

PC Corp. entered into a contract with KPL University (KPLU) to supply 500 PCs for use in KPLU's new computer facility. A week before the PCs were to be delivered, KPLU indicated that it would not go through with the purchase. PC Corp. immediately stopped assembling the computers for KPLU and sold the already assembled computers to another buyer. Three days later, KPLU decided to go through with the purchase and asked PC Corp. to deliver the 500 PCs on the delivery date as agreed in the contract. Is PC Corp. obligated to deliver the PCs as required by the contract? Why or why not?

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

The buyer and seller must act in good faith in the performance of a sales contract.

If a buyer becomes concerned that the seller may not be able to perform required contract obligations, the buyer:

To reject goods, the buyer must notify the seller of the rejection and specify the defect or nonconformity.

Kanbar Novelties is a wholesaler of costumes and costume accessories in the U.S. Gwen's Barrow is retail store in Iowa that sells Halloween costumes. Gwen's Barrow placed an order for 75 ninja swords, made of glass, from Kanbar Novelties. Kanbar placed the swords in cardboard boxes and shipped them by railroad, without wrapping them in protective material. Moreover, Kanbar failed to indicate that the box contained fragile goods. As a result, there was no care taken to ensure that the box was handled safely. The box was placed under other heavier goods which crushed the glass swords in the box. Kanbar claimed that its obligations ended with the delivery to the carrier and that the risk of loss was on Gwen's Barrow. What argument would you make in favor of Gwen's Barrow?

If the goods delivered by the seller do not conform to the contract, _____.

If a contract does not require a seller to deliver the goods to a buyer's place of business but merely to ship the goods to the buyer, the seller:

If the buyer and seller do not have an agreement for where the goods are to be delivered, the goods should be delivered at the _____.

Which of the following is true of the buyer's right of inspection?

If the goods required for the performance of a contract are destroyed without fault of either party prior to the time the risk of loss passed to the buyer, then the contract is voided.

If a buyer accepts any part of a commercial unit of goods, she is considered to have accepted the whole unit.

The buyer and seller may agree on the place where the goods will be delivered. If no such agreement is made, then the goods are to be delivered at the seller's place of business.

_____ refers to a party's decision to suspend its performance under a contract when the other party indicates that it does not wish to fulfill its obligations under the contract.

Ryan owns a department store called One Stop. He made an order of eggs from his usual wholesaler. The eggs arrived, but they were too old to be sold at the store. He rejected the goods and promptly notified the wholesaler. What are Ryan's responsibilities regarding the rejection of the spoiled goods?

The fact that a buyer may have to pay for goods before inspecting them does not deprive the buyer of remedies against the seller if the goods do not conform to the contract.

Campus Bus Service entered into a contract with Smith Bus Company to purchase 10 buses. One week before Campus Bus was scheduled to receive the buses, a fire destroyed Smith's warehouse and the buses inside. As a result, Campus Bus had to purchase its buses at a slightly higher cost from another manufacturer. Campus Bus sues Smith Bus for damages for breach of contract under these circumstances. Assume Campus Bus did not bear the risk of loss of the goods under the contract. In this scenario, _____.

Once a party has waived rights to a portion of a contract that has not yet been performed, that party may retract the waiver:

Liu orders a music player from Spark Appliances and intends on using it during her upcoming vacation. She notices a button missing from its console but accepts the order because she is leaving town the next day. Liu returns from her vacation a week later, takes the music player to Spark and rejects the purchase because of the missing button. Does Liu have a right to reject the purchase? Explain what is most likely to happen in this scenario.