Deck 25: Sales Remedies

Question 1

A company may be considered insolvent under the Code if it is unable to pay its debts as they come due.

Answer 1

True

Question 2

Under the CISG, if the contract is avoided and the seller has resold the goods in a reasonable manner, he may recover the difference between the contract and resale prices.

Answer 2

True

Question 3

Robert paid William $1,000 for a rare first edition of an Edgar Allen Poe novel. The sales contract states that the book is to be delivered within ten days. William, however, refused to deliver the book as promised. In order to sue for the UCC remedy of specific performance, Robert must prove that money damages will not be adequate compensation for his loss.

Answer 3

False

Question 4

Dual purposes of remedies for breach of a contract for the sale of goods under the Code are compensation and deterrence of wrongdoing; therefore, compensatory and punitive damages are common remedies.

Question 5

Under the CISG, if the seller fails to perform any of his obligations under the contract or the CISG, the buyer may require the seller to perform or may fix an additional reasonable period of time for the seller to perform.

Question 6

Under the Code, damages have to be "calculable with mathematical precision."

Question 7

The Code's remedies are cumulative; therefore, a seller may both withhold delivery of the goods and identify goods to the contract.

Question 8

The Code defines cancellation as one party's ending a contract by that party's breach.

Question 9

If the buyer is insolvent and has not paid for goods received, the seller may reclaim the goods.

Question 10

A buyer may not recover consequential damages that could have been prevented by cover.

Question 11

Under Article 2A a lessor may recover compensation for loss to his residual interest in the goods caused by the lessee's default.

Question 12

A buyer who has rightfully rejected or justifiably revoked acceptance of goods that remain in her possession or control has a security interest in these goods to the extent any payment of the price has been made.

Question 13

Contract remedies provided as exclusive will not preclude Code remedies if circumstances cause the remedy to fail in its essential purpose.

Question 14

Breach of one installment of an installment contract is never considered to impair the value of the whole contract.

Question 15

Under the CISG, the aggrieved party in a breach of contract has no duty to mitigate the loss.

Question 16

One hundred crystal flower vases have been identified to the contract and a down payment of $1,000 of the $10,000 purchase price has been paid. If the seller becomes insolvent, the buyer may still pay $9,000 and get the goods.

Question 17

Upon the seller's breach, the buyer must protect himself by obtaining "cover" or he is barred from any other remedy under the Code.

Question 18

A contract between the seller and buyer may not provide for remedies in addition to or instead of those provided in the Code.

Question 19

Al agrees to sell goods to Betty for a contract price of $3,000 due on delivery. Betty wrongfully rejects the goods and refuses to pay anything. Al resells the goods in strict compliance with the Code for $2,000. He incurs incidental damages for sales commissions of $200 but saves $150 in expenses because of the resale. Al is entitled to recover
$1,050 from Betty.

Question 20

Replevin is an action at law to recover specific goods in the possession of the defendant which are being unlawfully withheld from the plaintiff.

Question 21

Which of the following is not a remedy of the buyer?

A) The buyer has the right of cover and to receive damages.
B) The buyer may have the right to obtain specific performance.
C) The buyer may have the right to recover incidental and consequential damages.
D) All of these may be remedies of the buyer.

Question 22

Upon rightful rejection or justifiable revocation of acceptance, the buyer loses all property interest in the goods.

Question 23

For purposes of the statute of limitations contained in Article 2, a cause of action generally accrues when a breach occurs, without regard to whether the injured party knows of the breach at that time.

Question 24

The right of the seller to stop delivery of the goods ceases when:

A) a negotiable document of title covering the goods is negotiated to the buyer.
B) the buyer receives the goods.
C) Either of these events occurs.
D) It never ceases.

Question 25

Specific performance is a remedy at law which seeks to compel the party in breach to perform the contract according to its terms.

Question 26

Upon the lessor's breach, the lessee may protect himself by leasing substitute goods.

Question 27

If a seller withholds delivery of goods to the buyer because of the buyer's failure to make timely payment, the seller may resell the goods and is accountable to the original buyer for any profit made on the resale.

Question 28

According to the UCC, if the buyer of defective goods recovers incidental damages, he will be unable to recover compensatory damages.

Question 29

Exclusion of consequential damages for personal injuries resulting from breach of warranty in the sale of consumer goods is prima facie unconscionable.

Question 30

The contract between the buyer and the seller may expressly limit or exclude consequential damages so long as the contract is not unconscionable.

Question 31

Which of the following would not be a remedy available to the seller on account of buyer's breach?

A) Stop delivery of the goods by the carrier
B) Require the financially sound buyer to return the goods
C) Recover the price
D) Cancel the contract

Question 32

The seller may recover the full contract price when:

A) there is no ready market available for the resale of the goods identified to the contract.
B) the buyer has accepted the goods.
C) conforming goods have been lost or damaged after the risk of loss passed to the buyer.
D) Any of these situations occurs.

Question 33

Under Article 2A, a lessor retains title to the goods and therefore has the right to recover possession of them upon default by the lessee.

Question 34

Where the seller fails to make delivery, the buyer can cancel the contract, but he must give the seller notice of his cancellation.

Question 35

The seller may resell the goods identified to a contract:

A) only at a public sale.
B) only at a private sale.
C) at a public or private sale.
D) at a public sale only if notice is given to the buyer.

Question 36

The bankruptcy and the equity definitions of insolvency are the same.

Question 37

The statute of limitations provided by Article 2 is five years, which can be reduced or extended by the parties' contract.

Question 38

The right of the buyer to recover from an insolvent seller the goods in which he has a special property interest existed at common law before being included in the Code.

Question 39

A seller may default in three different ways and the Code provides remedies, each of which is available for any type of default.

Question 40

Incidental damages do not include expenses in connection with effecting cover.

Question 41

A seller's incidental damages for a buyer's breach would include all but the cost to:

A) store the widgets in buyer's city
B) ship widgets back to seller
C) initially ship the widgets to buyer
D) reload widgets onto seller's truck at buyer's city

Question 42

Which of the following is correct with respect to consequential damages under the Code?

A) Consequential damages include damages for destruction of a warehouse caused by the explosion of nonconforming goods.
B) Consequential damages include damages for lost profits from a contract to resell goods which the seller never delivers.
C) Particular needs of the buyer need to be made known to the seller before the seller can be held responsible for consequential damages relating to those needs.
D) All of these are correct.

Question 43

Any action for breach of a sales contract must be begun within:

A) four years after the cause of action accrued.
B) five years after the cause of action accrued.
C) whatever period of time the parties have set in their contract.
D) two years of when the breach actually occurred or within five years of its discovery.

Question 44

Buyer breaches a contract for the sale of goods and seller resells the goods, although the seller acts in bad faith and not in a commercially reasonable manner. Because of the seller's actions, the seller:

A) can recover from the buyer the difference between the resale price and the contract price, plus incidental damages.
B) may only recover damages for nonacceptance or repudiation.
C) may choose between the remedy for resale and the remedy of recovery of damages for nonacceptance or repudiation.
D) is denied any remedies.

Question 45

Which of the following is not a remedy available to an unpaid seller against the buyer?

A) Recovery of the price
B) Cover and suit for damages
C) Recovery of incidental damages
D) Cancellation of the contract

Question 46

After a breach by the seller, buyer may replevy the goods that have been identified to the contract if:

A) he acts within 30 days.
B) he cannot, after a reasonable effort, buy replacement goods.
C) the seller is insolvent.
D) the goods have an unsatisfied security interest.

Question 47

The fair market value of a 10-foot fishing boat is $1,000. In a special promotion, J's Marina purchases a 10-foot fishing boat for $900. The boat is badly scratched when it arrives. J's Marina, however, accepts the shipment and notifies the seller of the defect. The boat as delivered has a value of $800. If the damaged boat is a breach of warranty by the seller, the buyer may recover from the seller:

A) $100.
B) $100 plus incidental and consequential damages.
C) $200.
D) $200 plus incidental and consequential damages.

Question 48

Under what circumstances may the buyer seek the remedy of replevin?

A) Where the buyer has been able to effect cover
B) Where the goods have been shipped under reservation of a security interest and the buyer has satisfied that interest
C) Where the goods are specially manufactured but can be purchased from another source
D) All of these are correct.

Question 49

As the result of a seller's breach, a buyer may ask for incidental damages. Incidental damages include costs incurred in:

A) storing goods in a warehouse.
B) making calls to obtain replacement goods.
C) inspecting the goods.
D) All of these.

Question 50

Perry is building his house and orders a hot water heater from Jones Co. to be installed by them. The hot water heater they sent has a 45-gallon capacity when Perry ordered a 60-gallon capacity. Jones cannot provide a 60-gallon heater for two months, so Perry cancels the contract and gets a heater from Stosill's. Jones Co. says it must be allowed to install the heater purchased from Stosill's. What result?

A) Jones wins; Perry can only cancel the contract as regards the goods.
B) Jones wins; Perry can only cancel if installation is also delayed two months.
C) Perry wins since the contract breach goes to the whole contract.
D) Perry can cancel the whole contract, but he is then limited in his recovery of damages.

Question 51

Under the CISG, if the buyer fails to perform any obligations, the seller may:

A) set an additional period of time of reasonable length for performance.
B) require the buyer to pay the price.
C) receive damages.
D) All of these.

Question 52

Tom breached a contract he had with Jim. In addition to other remedies available, Jim may be able to recover commercially reasonable expenses incurred as a result of the breach. These expenses are:

A) incidental damages.
B) punitive damages.
C) liquidated damages.
D) extraordinary damages.

Question 53

A buyer's right to purchase, in good faith and without unreasonable delay, substituted goods from Seller B when Seller A breaches a sales contract is:

A) cover.
B) specific performance.
C) replevin.
D) reclamation.

Question 54

Taylor agrees to sell Pedro goods for $2,000. The value of the goods accepted is $1,500. If the goods had been as warranted, their value would have been $2,600. What are the buyer's damages for breach of warranty?

A) $500
B) $600
C) $1,100
D) Damages cannot be determined in this case because they are not calculable with mathematical precision.

Question 55

Which of the following remedies are available to either a buyer or seller following a breach by the other party?

A) Canceling the contract and recovering incidental damages
B) Covering and suing for incidental damages
C) Obtaining specific performance and stopping delivery of the goods
D) Canceling the contract and suing to recover the price

Question 56

Damages a buyer may recover for loss resulting from requirements, the needs of which the seller had reason to know at the time of contracting and which could not reasonably be prevented by cover, are:

A) incidental.
B) consequential.
C) punitive.
D) liquidated.

Question 57

In which of the following situations would the seller's right to stop delivery continue?

A) Where the buyer receives the goods
B) When a negotiable document of title for the goods is negotiated to the buyer
C) When a bailee of the goods has not yet acknowledged to the buyer that he holds the goods for the buyer
D) When the carrier acknowledges to the buyer that he holds the goods for the buyer as a warehouser

Question 58

William rents a backhoe for six months from Hunter Leasing but fails to make timely payment of the rent. Hunter Leasing may recover:

A) only the backhoe itself.
B) the difference between the present values of the rent due under the original lease and the market rent for the remainder of the term of the original lease.
C) only the contract amount of rent.
D) the market rent for the period of time covered by William's nonpayment.

Question 59

On January 3, Cara wrote to SunTime Mfg. asking for shipment of 100 swimsuits on 90-day credit. In the letter, she gave references that indicated that her store was financially sound. Actually she had bills that she could not pay and hoped to turn the business around with the summer swimsuit sales. SunTime ships the suits on March 1; they are received March 15. Cara immediately puts them on display and seven are sold by March 20 when SunTime discovers that Cara has lied. SunTime may:

A) recover 93 suits plus incidental damages.
B) recover 100 suits provided that SunTime acts in ten days from the delivery date.
C) recover no suits since it has been ten days since the suits were shipped.
D) recover 93 suits.

Question 60

Seth and Maricela enter into a contract for a sale of goods for a contract price of $1,200 and Maricela has made a down payment of $200. Seth delivers nonconforming goods to Maricela who rightfully rejects them. The best remedy available to Maricela is to:

A) cancel the contract and recover her $200 plus whatever other damages she can prove.
B) reclaim the goods and cover.
C) resell the goods and recover damages.
D) stop delivery of the nonconforming goods and recover payments made.

Question 61

Under the Code, what rights do the parties have to affect the possible remedies available in the case of breach?

Question 62

If Andrews Manufacturing Company has repudiated its contract to sell 500 computers to a retailer, the retailer:

A) must await the seller's performance.
B) can recover punitive damages.
C) can seek specific performance.
D) can "cover" by procuring goods elsewhere and then sue Andrews for incidental and consequential damages.

Question 63

Which of the following remedies are mutually exclusive and could not be obtained simultaneously?

A) Cover, incidental and consequential damages
B) Identification of the goods and withholding delivery
C) Withholding delivery and suit to recover incidental and consequential damages
D) None of these. The Code's remedies are cumulative, unless under the facts of an individual case one remedy bars another.

Question 64

Which of the following remedies is available to the seller or manufacturer of goods upon a breach by buyer by repudiation of the contract?

A) The manufacturer may resell any unfinished goods.
B) The manufacturer may identify goods to the contract.
C) The seller may sell the unfinished goods for scrap.
D) The seller may do all of these.

Question 65

Which of the following would be considered consequential damages?

A) Commissions paid to effect cover
B) Expenses reasonably incurred for inspection of the goods
C) Damages to personal property and personal injury resulting from the malfunction of a machine warranted by the seller to be suitable for the buyer's purpose.
D) Storage charges for rejected nonconforming goods

Question 66

Compare the remedies of withholding delivery of the goods and stopping delivery of the goods. How are they alike?
How are they different?

Question 67

Smith's of Dallas placed a $10,000 order for dresses, F.O.B. Dallas from Magnifique Manufacturing Co. in New York, for their October 1 Fall Showing. The dresses were to be shipped at a cost of $300 to the seller. In New York, Magnifique dresses were the rage, but the boom had not yet reached Dallas. By September 15, Smith's realized that the shop could not afford all of these dresses and called Magnifique to cancel the contract. On September 15, the market price for the dresses in New York was $9,000 and in Dallas, $5,000. On October 1, the market price had
risen to $9,500 in New York and to $7,000 in Dallas. What may Magnifique do? What are the alternatives for damages from Smith's?

Question 68

In what ways may a seller default, and what remedies are available to the buyer in such a case?

Question 69

Under the CISG, what are the damages for breach of contract by one party? Does the aggrieved party have any responsibility after the breach occurs?

Question 70

How are remedies of the seller for breach of contract by the buyer categorized by their orientation? What remedies are within each of the categories?

Question 71

A seller has breached his contract by providing unfit seed, which breach was undetectable until the bean crop was to be harvested. Remedies would include:

A) damages for the lost profits from a contract to sell the bean crop.
B) liquidated damages set by the court to cover such a situation.
C) specific performance of the contract.
D) All of these.