Deck 18: Remedies for Breach of Sales and Lease Contracts

Question 1

Exosoft Software contracts with Rensys Semiconductors to purchase electronic security sensors in bulk.Both companies draft a carrier contract which specifies that the shipment must be transferred in a single transaction to a specific port city where Exosoft's headquarters is located.The carrier contract in this scenario is an example of a(n)________.

A) destination contract
B) shipment contract
C) installment contract
D) implied contract

Answer 1

A

Question 2

In a destination contract,delivery is completed when the shipment ________.

A) reaches the destination specified in the contract
B) passes inspection by transport customs and is allowed to be transported
C) is handed over to the carrier by the seller before the transportation
D) is in transit to the destination specified in the contract

Answer 2

A

Question 3

Which of the following is true for a lease contract wherein the goods involved are totally destroyed without the fault of either the lessor or the lessee?

A) The lessor is legally required to reimburse the lessee for any damages.
B) The lessee is legally obliged to reimburse the lessor for any damages.
C) Both parties are excused from performing the contract.
D) Both parties share the damages that arise from the total destruction of the goods.

Answer 3

C

Question 4

A(n)________ contract is defined as a sales contract that requires the seller to deliver goods to the buyer's place of business or another specified location.

A) noncarrier
B) option
C) shipment
D) destination

Question 5

A seller's opportunity to repair or replace defective or nonconforming goods is termed as ________.

A) right to cure
B) right to inspect
C) right to cover
D) right to cancel a contract

Question 6

Failure of a party to perform an obligation in a sales or lease contract is known as ________.

A) revocation
B) breach
C) capture
D) replevin

Question 7

A sales contract that requires the seller to send the goods to the buyer but not to a specifically named destination is defined as a(n)________ contract.

A) shipment
B) destination
C) option
D) noncarrier

Question 8

The obligation of a seller to transfer and deliver goods to the buyer or lessee in accordance with a sales or lease contract is defined as ________.

A) the right of capture
B) breach
C) anticipatory repudiation
D) tender of delivery

Question 9

The perfect tender rule delivery allows for buyers to ________.

A) reject goods that conform to all aspects of a contract
B) seek remedies against the seller for accepting the deliverance of conforming goods
C) reject or accept a part or whole of a shipment of nonconforming goods
D) seek remedies against other buyers who accept nonconforming goods from the same seller

Question 10

An installment contract is a type of contract that requires ________.

A) the seller to deliver the goods to the buyer's place of business destination
B) goods to be delivered and accepted in separate lots
C) the seller to send the goods to the buyer but not to a specifically named destination
D) goods to be delivered and accepted in one single transaction

Question 11

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

A) Cost of inspection is shared by the seller and buyer if goods are conforming.
B) The buyer pays for the inspection if the goods conform to the contact.
C) Inspected goods, even if found to be nonconforming, should be paid for by the buyer.
D) Inspection has to be performed after the goods in the contract have been paid for.

Question 12

With regard to place of delivery,a person buying goods from the place where the goods are manufactured would be an example of a ________.

A) noncarrier case
B) carrier case
C) shipment contract
D) destination contract

Question 13

Which of the following constitutes an acceptance of goods by a buyer?

A) The buyer asks for inspection of goods upon its arrival.
B) The buyer resorts to an immediate revocation of the goods due to their nonconformity.
C) The buyer rejects the goods within a reasonable time after delivery.
D) The buyer resells the goods delivered by the seller.

Question 14

Which of the following is a similarity between destination contracts and shipment contracts?

A) Both are applicable for carrier cases of transactions between buyers and sellers.
B) Both hold that delivery occurs when the seller puts the goods in the carrier's possession.
C) Both hold that delivery occurs when the goods reach the buyer.
D) Both are applicable for noncarrier cases of transactions between buyers and sellers.

Question 15

Which of the following is true of a shipment contract?

A) It requires the seller to deliver goods to the buyer's place of business or another specified destination.
B) Its delivery is said to have occurred when the goods reach a specific destination.
C) It requires the seller to contract for proper transportation of goods and promptly notify the buyer.
D) It is applicable to noncarrier cases of transactions between buyers and sellers.

Question 16

The destination contract differs from the shipment contract in that the destination contract ________.

A) defines delivery to occur when the seller puts the goods in a carrier's possession
B) is excluded from the purview of the perfect tender rule as legislated under the UCC Statutes
C) applies to noncarrier cases of transactions between buyers and sellers
D) is said to be delivered when goods reach a specific destination

Question 17

________ is an action a party to a sales or lease contract is required by law to carry out.

A) Obligation
B) Breach
C) Misappropriation
D) Anticipatory repudiation

Question 18

Fractaline Analytics contracts with Lushwing Interiors to purchase office furniture.Both companies draft a carrier contract which specifies that the shipment must be transferred in a single transaction to Fractaline Analytics.While not mentioning the exact place of delivery,the contract requires Lushwing Interiors to put the goods in a carrier's possession and ensure their proper and safe transportation.The carrier contract in this scenario is most likely to be an example of a(n)________.

A) installment contract
B) shipment contract
C) destination contract
D) implied contract

Question 19

Which of the following is a legal recourse for sellers,under the UCC,in case of shipment of nonconforming or defective goods?

A) tender of delivery
B) right to cure
C) perfect tender rule
D) replevin

Question 20

In the case of a shipment contract,delivery occurs when ________.

A) the buyer receives the shipment
B) the seller puts the goods in the carrier's possession
C) the shipment reaches the destination that the buyer specified
D) the shipment is allowed to be transported by transport customs

Question 21

________ is the right of a seller to demand the return of goods from the buyer under specified situations.

A) Right to dispose of goods
B) Right to recover damages
C) Right to recover purchase price
D) Right to reclaim goods

Question 22

The ________ provides that an action for breach of any written or oral sales or lease contract must commence within four years after the cause of action accrues.

A) perfect tender rule
B) decree of specific performance
C) Lanham act
D) UCC statute of limitations

Question 23

Which of the following is true of a buyer's revocation of acceptance?

A) It is effective even before the seller or lessor is notified of the revocation.
B) It always arises due to the conforming nature of the goods delivered.
C) It must occur after substantial change in the condition of the goods delivered.
D) It is a reversal of acceptance of a lot or commercial unit.

Question 24

Klint Microsystems,a microprocessor manufacturer,was contracted by Zeitar Studios to manufacture specially designed microchips.Zeitar was to pay Klint $300,000 as per the contract.While the finished microchips were being shipped via a carrier,Klint was informed of Zeitar's insolvency.Klint cancelled the shipment before it was delivered.Klint then resold the chips to another studio.What right to remedy did Klint exercise when selling the microchips to another studio?

A) right to claim lost profits
B) right to cover
C) right to dispose of goods
D) right to recover damages

Question 25

Which of the following is a right to remedy that a seller can claim while the goods are in possession of the buyer?

A) right to dispose of goods
B) right to withhold delivery of goods
C) right to stop delivery of goods in transit
D) right to reclaim goods

Question 26

Pollard entered into a sales contract to purchase a specific Picasso painting from Jenson for $15 million.When Pollard tenders payment,Jenson refuses to sell the painting to the buyer.Which of the following legal rights to remedy can Pollard exercise to retrieve the Picasso painting from Jenson?

A) right to cover
B) right to cure
C) right to obtain specific performance
D) right to withhold delivery

Question 27

The right of a seller to refuse to send goods to a buyer upon breach of a sales contract by the buyer or the insolvency of the buyer is known as the ________.

A) right to recover purchase rent
B) right to reclaim goods
C) right to withhold delivery
D) right to dispose of goods

Question 28

The ________ is the right of a seller to demand the return of merchandises from the buyer under specified situations.

A) right to recover the purchase price or rent
B) right to withhold delivery
C) right to reclaim goods
D) right to cure

Question 29

Which of the following is a seller's remedy?

A) right to recover damages for nondelivery
B) right to dispose of goods
C) right to replevy goods
D) right to obtain specific performance

Question 30

Mansfield Dairies entered into a contract with Aratez,Inc.,a dairy product food processing company,to provide dairy products for a period of four years.The contract included a provision for a one-year limitation period in case of breach.But with less than a year left on the contract,Mansfield Dairies stopped shipment of milk products to Aratez,Inc.Under the UCC statute of limitations,which of the following would be true with reference to Aratez,Inc.'s right to bring a lawsuit against Mansfield Dairies?

A) The lawsuit can be filed any time within one year from the breach.
B) The lawsuit can be filed only after the expiration of the contract.
C) The lawsuit cannot be filed as there was less than a year left to complete the contract.
D) The lawsuit can be filed any time within four years from the breach.

Question 31

Arnault Automobiles contracts with Glennworth Machines to purchase car engines for their new line of sports cars.After the engines are delivered by Glennworth,Arnault pays its contractual partner with a check that bounces.Which of the following rights can Glennworth Machines exercise in order to recover its engines?

A) right to replevy goods
B) right to reclaim goods
C) right to obtain specific performance
D) right to capture

Question 32

Blue Rorschach,Inc.has an immediate requirement for laptops with bionic sensor features.It contracts with Zenzo Computers and entrusts it with the delivery of such laptops.However,the delivered laptops lacked the bionic sensors that Blue Rorschach desired.Blue Rorschach immediately returns these laptops to Zenzo Computers.Which of the following rights to remedy has Blue Rorschach,Inc.exercised in this scenario?

A) right to replevy goods
B) right to cure
C) right to reject nonconforming goods
D) right to obtain specific performance

Question 33

Klint Microsystems,a microprocessor manufacturer,was contracted by Zeitar Studios to manufacture specially designed microchips.Zeitar was to pay Klint $300,000 as per the contract.While the finished microchips were being shipped via a carrier,Klint was informed of Zeitar's insolvency.Klint cancelled the shipment before it was delivered.Klint then resold the chips to another studio.What right to remedy did Klint exercise when they stopped shipment to Zeitar?

A) right to dispose of goods
B) right to stop delivery of goods in transit
C) right to obtain specific performance
D) right to recover purchase rent

Question 34

A(n)________ can be obtained in writing from the other party if there is an indication that a contract will be breached by that party.

A) adequate assurance of performance
B) installment contract
C) codicil
D) deed agreement

Question 35

A seller has the right to stop delivery of goods in transit regardless of the size of the shipment when ________.

A) the buyer repudiates the contract
B) the buyer has payments due
C) the seller learns of the buyer's insolvency
D) the seller has been ordered for specific performance

Question 36

The term ________ refers to an action by a buyer to recover scarce goods wrongfully withheld by a seller.

A) revocation
B) replevin
C) cancellation
D) capture

Question 37

Which of the following is a similarity between the seller's right to withhold delivery and the right to stop delivery of goods in transit?

A) Both prevent the good involved from reaching the buyer.
B) Both require a decree of specific performance to be enforced on the buyer.
C) Both allow the seller to exercise his or her right to replevy goods from the buyer.
D) Both restrict the seller from exercising his or her right to replevy goods from the buyer.

Question 38

Minewell Publishers contracts with Inkhome Paper to purchase large quantities of bond paper.Minewell accepts the shipment supplied by Inkhome but fails to pay for it when the payment is due.Which of the following rights can be exercised by Inkhome Paper to reclaim their payment?

A) right to recover the purchase price
B) right to replevy goods
C) right to obtain specific performance
D) right to cure

Question 39

Which of the following is true of a buyer's acceptance of a delivery?

A) Buyers may only accept delivery of a commercial unit.
B) Acceptance of a part of a commercial unit does not constitute acceptance of the entire unit.
C) An effective rejection of goods within a reasonable time after their delivery leads to acceptance on the part of the buyer.
D) Once a delivery is accepted, its revocation is forbidden by the law.

Question 40

Minewell Publishers contracts with Inkhome Paper to purchase large quantities of bond paper.Due to multiple defaults on payments by Minewell,Inkhome stops supplying the contracted monthly quota of paper to Minewell.Which of the following seller's right has Inkhome Paper exercised in the above scenario?

A) right to dispose of goods
B) right to withhold delivery
C) right to obtain specific performance
D) right to cure

Question 41

Which of the following is true of the decree of specific performance?

A) It is used by buyers to obtain possession of unique and rare goods.
B) It is used by sellers to cancel a contract.
C) It is used by buyers to stop delivery of their good in transit.
D) It is used by sellers to employ replevin actions on buyers.

Question 42

The ________ is the right of a lessee to lease substitute goods if a lessor fails to make delivery of the goods or repudiates the contract.

A) right to dispose goods
B) right to cure
C) right to cover
D) right to stop delivery of goods in transit

Question 43

Greenmart Retailers contracts Wilson's Foodstuff to purchase biscuit packets in bulk.Greenmart Retailers fulfills its side of the contract by making a complete payment to Wilson's Foodstuff before the delivery.A week after the payment,Wilson's Foodstuff becomes insolvent.Which of the following rights can Greenmart Retailers exercise to recover its goods from Wilson's Foodstuff?

A) right to capture
B) right to cure
C) right to withhold delivery
D) right to dispose of goods

Question 44

Damages that will be paid upon a breach of contract,but that are established in advance are defined as ________ damages.

A) punitive
B) actual
C) incidental
D) liquidated

Question 45

A lessor,in his exercise of the right to stop goods in transit,is legally authorized to stop a shipment of any size if ________.

A) the lessor is insolvent and the lessee is solvent
B) both the lessor and the lessee are solvent
C) the lessor is solvent and the lessee is insolvent
D) both the lessor and the lessee are creditworthy

Question 46

Ashenwaft Sandalwood is contracted by Sphinxia Perfumes to supply fresh sandalwood on a monthly basis.When the goods are delivered,Sphinxia inspects them and finds the sandalwood to be below the quality standards fixed by the contract.Sphinxia accepts the substandard sandalwood shipment and sues Ashenwaft for reasonable damages.Which of the following rights has Sphinxia exercised in this regard?

A) right to recover damages for accepted nonconforming goods
B) right to recover damages for nondelivery of contracted goods
C) right to obtain specific performance
D) right to stop delivery of goods in transit

Question 47

Andrew contracts Goldflour Breads to purchase 10 pounds of flour at $4 per pound.The contract states that delivery is to occur on July 1.On this date,the market price of flour is $6 per pound.Goldflour Breads is unable to make the delivery on July 1.Apart from incidental and consequential damages,less expenses saved,the damages Andrew can recover from Goldflour Breads is ________.

A) $20
B) $10
C) $4
D) $40

Question 48

Calibrato Instruments contracts Stronghold Metals to purchase stainless steel in bulk to manufacture tachometers.Stronghold Metals fails to transport the goods to Calibrato Instruments on the delivery date.Which of the following rights can Calibrato Instruments exercise in order to gain legal recourse?

A) right to recover purchase price
B) right to recover damages for nondelivery
C) right to recover any lost profits
D) right to reclaim goods

Question 49

A lessor has the ________ if the lessee breaches the contract by repudiating all or any part of the contract.

A) right to replevy
B) right to cancel a contract
C) right to cure
D) right to obtain specific performance

Question 50

If the lessor's tender of delivery fails to conform to a lease contract in any way,the lessee has the right to ________.

A) reject improperly tendered goods
B) recover the purchase price
C) withhold tendered goods
D) stop delivery of goods in transit

Question 51

Which of the following applies to the right to dispose of goods?

A) It mandates any profit made by the lessor on the resale of the goods to be shared with the original lessee.
B) It allows lessees to recover incidental damages incurred in the disposition of the goods.
C) It permits lessees to dispose of goods in a commercially reasonable manner if the lessor's right to cure has expired.
D) It can be exercised by a lessee who has reacquired the goods after stopping them in transit.

Question 52

The lessor can exercise the ________ to claim damages that would have resulted from the full performance of a breached contract plus an allowance for reasonable overhead and incidental damages.

A) right to replevy goods
B) right to cover
C) right to cure
D) right to recover any lost profits

Question 53

Which of the following is a lessor's remedy when the goods involved are in the possession of the lessee?

A) right to reclaim goods
B) right to withhold delivery of goods
C) right to stop goods in transit
D) right to obtain specific performance

Question 54

Goods are considered to be in transit when they are in possession of ________.

A) sellers
B) buyers
C) lessors
D) carriers

Question 55

The ________ is the right of a lessor to resell or release goods in a good faith and commercially reasonable manner.

A) right to dispose of goods
B) right to withhold delivery
C) right to cure
D) right to replevy

Question 56

Which of the following is a lessee's remedy?

A) right to withhold delivery
B) right to reclaim goods
C) right to obtain specific performance
D) right to stop delivery of goods in transit

Question 57

If the lessee repudiates the contract while the goods are in the process of being transported to the lessor,the lessor has the ________.

A) right to stop delivery of goods in transit
B) right to replevy goods
C) right to obtain specific performance
D) right to cure

Question 58

If a lessee makes full payment for goods before they are received and the lessor becomes insolvent within 10 days after receiving the first payment,the lessee has ________.

A) the right to capture
B) the right to cure
C) the right to withhold delivery
D) the right to reclaim goods

Question 59

What is the similarity between the lessee's rights of capture and replevy?

A) Both are invoked to obtain a decree of specific performance.
B) Both are invoked when a lessee wants to cancel a contract.
C) Both help the lessee in stopping shipments in transit.
D) Both help the lessee recover goods from the seller.

Question 60

Antarez Jewelers contracts RTR Mining to purchase rare polished diamonds.RTR fails to deliver the goods on the scheduled date.Antarez attempts to procure the diamonds from other sources but is unsuccessful in its pursuit due to the scarcity of polished diamonds.Which of the following rights can Antarez exercise in order to recover its goods from RTR?

A) right to stop delivery of goods in transit
B) right to withhold delivery
C) right to replevy goods
D) right to cure

Question 61

The seller's or lessor's general obligation is to accept and pay for the goods.

Question 62

A sales contract that requires the seller to send the goods to the buyer but not to a specifically named destination is termed as a shipment contract.

Question 63

When goods are in the possession of the buyer,the right to stop goods in transit is a viable remedy for the seller.

Question 64

The right of a lessee to demand the return of goods from the lessor in the occurrence of the defaulting of the contract is the right to reclaim goods.

Question 65

Noncarrier cases are covered by the Uniform Commercial Code (UCC)under two different types of contracts: shipment contract and destination contract.

Question 66

The right to replevy is available to the seller if the buyer wrongfully rejects or revokes acceptance of the goods,fails to make a payment when due,or repudiates the contract.

Question 67

Goods are considered to be in transit while they are in possession of carriers or bailees.

Question 68

Reasonable expenses incurred in disposition of goods like stopping delivery,transportation charges,storage charges,and sales commission are called incidental charges.

Question 69

A sales contract that requires the seller to deliver the goods to the buyer's place of business or another specified location is defined as a destination contract.

Question 70

Replevin actions can only be claimed on goods that are unique.

Question 71

The reversal of a buyer's acceptance is defined as revocation.

Question 72

The obligation of a seller to transfer and deliver goods to the buyer in accordance with a sales contract is called tender of delivery.

Question 73

Specific performance is usually used to obtain possession of common everyday items.

Question 74

Nonconforming goods must be rejected within a reasonable time after their delivery for a successful exercise of the right to reject nonconforming goods.

Question 75

If the goods are delivered in a credit sale and the seller then discovers that the buyer was insolvent,the seller has 10 days to demand that the goods be returned.

Question 76

A seller who learns of the buyer's insolvency while the goods are in transit has a right to stop delivery of the goods in transit,regardless of the size of the shipment.

Question 77

The right to recover the goods from the insolvent seller is often referred to as capture.

Question 78

Failure of a party to perform a duty in a sales or lease contract is defined as obligation.

Question 79

The buyer's right to repair defective or nonconforming goods is termed right to cure.

Question 80

The right to capture allows a buyer to stop goods while in transit.