Deck 23: Performance and Obligations Under Sales and Leases

Question 1

Under the UCC, buyers and lessees are not obligated to accept and pay for conforming goods in accordance with the contract because the lessees still has the right of refusal.

Answer 1

False

Question 2

Courts and the UCC drafters have created exceptions to the perfect tender rule that helps reduce the rule's rigidity.

Answer 2

True

Question 3

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

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

Answer 3

A

Question 4

A seller need not provide an opportunity for inspection before enforcing payment.

Question 5

The substantial-impairment requirement is meant to prevent a party from canceling a contract due to trivial defects.

Question 6

Sometimes language in the parties' agreement limits the rigidity of the perfect tender rule.

Question 7

Once a buyer or lessee has accepted, performance is complete and a buyer or lessee cannot withdraw acceptance.

Question 8

The term "reasonable commercial standards of fair dealing" is often called ________.

A) Commercial standards
B) Commercial reasonableness
C) Transactional reasonableness
D) Good faith standards
E) Good faith reasonableness

Question 9

A buyer who has accepted goods cannot later revoke the acceptance even if the defects substantially impair the value of the goods because he has already accepted them.

Question 10

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

Question 11

Under the UCC, non-delivery is not a breach of contract in circumstances in which performance has been made impracticable because a contingency has occurred that was not contemplated when the parties reached an agreement.

Question 12

The UCC requires reasonable commercial standards of fair dealing in addition to ________ when parties are merchants.

A) honesty in equity
B) honesty in law
C) honesty in fact
D) honesty in equity and also reasonable commercial standards of fair dealing
E) honesty in equity and honesty in law

Question 13

Under the UCC, the buyer does not automatically have the right to reject the goods when the buyer alleges that goods failed to conform to contract specifications.

Question 14

The seller must obtain substitute goods if goods identified to a contract are destroyed through no fault of the parties before the risk of loss passes to the buyer.

Question 15

The concept of good faith and fair dealing governs the inspection process.

Question 16

Another term for course of performance is course of dealing.

Question 17

Under the perfect tender rule, there is no distinction between material and immaterial contractual requirements.

Question 18

Which of the following was the result on appeal in Donovan v. RRL Corporation, the case in the text in which the plaintiff attempted to enforce a price for an automobile contained in an ad, and the defendant car dealership claimed that a mistake was involved?

A) The court ruled in favor of the dealership because ads can never constitute offers.
B) The court ruled in favor of the dealership because an intentional misrepresentation is needed before an ad can be considered an offer, and there was no proof of an intentional misrepresentation on the part of the dealership.
C) The court ruled in favor of the dealership on a combination of mistake and unconscionability.
D) The court ruled in favor of the plaintiff because the ad constituted an enforceable offer.
E) The court ruled in favor of the plaintiff on the basis of unilateral mistake and unconscionability.

Question 19

Which statement is correct regarding similarities between American and European contract law?

A) U.S. law is provided guidance through statutory enactments known as the Restatements of the Law, but European law relies entirely on the CISG.
B) U.S. law is provided guidance through the UCC, a federal statutory enactment, but European law relies entirely on the CISG.
C) U.S. law finds guidance in the Restatements of the Law constituting soft law, not statutory enactments; and Europe has begun crafting its own version of the U.S. Restatement of Contracts.
D) U.S. law finds guidance in the Restatements of the Law constituting soft law, not statutory enactments, but Europe has refused to consider crafting its own version of the U.S. Restatement of Contracts.
E) U.S. law finds guidance in the Restatements of the Law constituting soft law, not statutory enactments; and Europe has disavowed the CISG choosing to follow a code similar to the U.S. Restatements of the Law.

Question 20

The UCC requires that ________ are obligated to accept and pay for conforming goods in accordance with the contract.

A) buyers only
B) lessees only
C) third party vendors
D) buyers and lessees
E) buyers, lessees and third party vendors

Question 21

Which statement is correct regarding the UCC and norms in the industry?

A) The UCC requires that courts consider norms in a particular trade only if consumer goods are involved.
B) The UCC allows courts to consider norms in a particular trade only if the perfect tender rule has been satisfied.
C) The UCC requires that courts consider norms in a particular trade.
D) The UCC does not require that courts consider norms in a particular trade.
E) The UCC requires that courts consider norms in a particular trade only if goods with a unit price of over $500 are involved.

Question 22

In reference to the case in the text DeJesus v Cat Auto Tech. Corp., what was the effect of the defendant's payment for goods without inspection on the day of delivery, when the delivery was approximately two weeks after the time called for by the contract?

A) The defendant effectively waived the performance provisions of the contract regarding the time for delivery.
B) The defendant did not lose any rights because under the UCC he had 24 hours after delivery in which to object to late delivery.
C) The defendant did not lose any rights because under the UCC he had 48 hours after delivery in which to object to late delivery.
D) The defendant did not lose any rights because under the UCC he had 7 days after delivery in which to object to late delivery.
E) The defendant did not lose any rights because under the UCC he had 10 days after delivery in which to object to late delivery.

Question 23

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?

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 24

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.

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

Question 25

Which statement is correct regarding any 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 26

Which statement is correct regarding any 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 27

Usage of trade is defined by the UCC ________

A) as any practice that members of an industry expect to be part of their dealings.
B) as any regular course of dealing that the parties choose.
C) as a practice that meets with state customs.
D) as regular trade in business within a particular region of the country.
E) as how the industry values course of performance.

Question 28

The UCC defines course of dealing as ________

A) the trading norm of an industry.
B) the transactions of how industry handles the course of dealing.
C) the course of performance of an industry.
D) previous commercial transactions between the same parties.
E) the course of dealings between industries within a specific region.

Question 29

________, under the UCC, refers to the history of dealings between the parties in the particular contract at issue.

A) Trade norm
B) Course of dealing
C) Anticipated trade dealing
D) Usage of trade
E) Course of performance

Question 30

How does the position of the UCC compare with the common law in regard to the perfect tender rule?

A) The UCC and common law differ with the UCC requiring perfect tender and common law requiring the lesser standard of substantial performance.
B) The UCC and common law differ with the UCC requiring perfect tender and common law requiring the lesser standard of material performance.
C) The UCC and common law differ with the UCC requiring the lesser standard of material performance and common law requiring perfect tender.
D) The UCC and common law differ with the UCC requiring the lesser standard of substantial performance and common law requiring perfect tender.
E) They are the same.

Question 31

Under the UCC, ________ requires that the seller/lessor have and hold conforming goods at the disposal of the buyer/lessee and give the buyer/lessee reasonable notification to enable him or her to take delivery.

A) Tender of delivery
B) Offer of availability
C) Tender of offer
D) Offer of delivery
E) Offer of notification

Question 32

A common law rule known as the ________ requires that the seller deliver goods in conformity with the terms of the contract, down to the last detail.

A) Tender of offer regulation
B) Superior delivery rule
C) Certain tender rule
D) Regulatory rule
E) Perfect tender rule

Question 33

Which of the following are goods that conform to contract specifications?

A) Adequate goods
B) Transforming goods
C) Conforming goods
D) Reasonable goods
E) Superior goods

Question 34

Substantial performance occurs ________

A) when most of the material elements of a contract are satisfied
B) when all the material elements of a contract are satisfied, even if some nonmaterial requirements may not be satisfied
C) when there is complete and perfect performance
D) when the goods are accepted by the buyer/lessee
E) once the seller/lessor starts to perform

Question 35

Sellers and lessors can repair, adjust, or replaced defective or nonconforming goods as long as they give ________.

A) notice within 1 day of delivery
B) notice within 7 days of delivery
C) notice within 21 days of delivery
D) notice prior to the time set for performance
E) prompt notice

Question 36

What was the result on appeal in the case in the text Alaska Pacific Trading Co. v. Eagon Forest Products Inc. in which the defendant rejected a shipment of logs, and the plaintiff/seller claimed that its late shipment was excused because the contract did not specify that time was of the essence?

A) That by not shipping the logs in a timely manner according to the contract, the seller failed to satisfy the perfect tender rule thereby releasing the defendant buyer from its duty to accept the logs.
B) That the seller satisfied the perfect tender rule although the logs were late and that the defendant buyer breached the contract by refusing to accept the logs.
C) That the seller was entitled to rely on the common law doctrine of material breach but that the seller did not substantially perform thereby releasing the buyer from contractual duties.
D) That the seller was entitled to rely on the common law doctrine of material breach, that the seller substantially performed, and that the buyer was in breach.
E) That the seller was entitled to rely on the perfect tender rule and that the buyer materially breached the contract by refusing to accept the logs.

Question 37

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

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 38

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?

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 39

Which of the following is false regarding the perfect tender rule?

A) In relation to the perfect tender rule, sometimes norms for a particular trade do not permit a buyer to reject goods with minor flaws.
B) In relation to the perfect tender rule, the UCC requires that courts consider course of dealing.
C) In relation to the perfect tender rule, the UCC requires that courts consider course of performance.
D) Parties may by contractual language limit the rigidity of the perfect tender rule.
E) The perfect tender rule is satisfied when material elements of a contract are satisfied even if some nonmaterial elements may not be satisfied.

Question 40

Which of the following states that when a contract for sale involves repeated occasions for performance by either party with the other's knowledge of the nature of the performance and opportunity for objection to it, any course of performance accepted or acquiesced to without objection is relevant to determine what the parties' agreement means?

A) Trade norm
B) Course of dealing
C) Anticipated trade dealing
D) Usage of trade
E) Course of performance

Question 41

[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?

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 42

LaTisha contracted with Marco, who operates a farm in Guatemala, for the importation of some great coffee beans for her coffee shop. The contract provided that Marco would be sure the coffee arrived by September 1st, in time for an open house LaTisha had planned. LaTisha was not worried because Marco had always delivered on a timely basis in the past. Marco was busy and was late getting the beans in transit. The beans did not arrive until September 2nd. LaTisha shipped them back and refused to pay. Marco sued. What is LaTisha 's best defense?

A) That Marco failed to substantially perform.
B) That Marco failed to materially perform.
C) That Marco violated the perfect tender rule.
D) That Marco beans were not that good and that she decided to go with another brand.
E) She has no defense because he was only one day late, and she should pay.

Question 43

[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.
By claiming that he had the right to fix the problem, Tyler was alluding to which of the following, under the UCC?

A) The right to cure
B) The right to review
C) The right to perform
D) The right to claim
E) The right to reclaim

Question 44

Under an installment contract, when does the UCC provide that a buyer/lessee may reject an installment of a particular item?

A) If the defects substantially impair the value of the goods regardless of whether cure is possible.
B) If the defects cannot be cured even if defects are minor.
C) If the defects devalue the property by more than 10% and if the defects cannot be cured.
D) If the defects devalue the property by more than 20% and if the defects cannot be cured.
E) If the defects substantially impair the value of the goods and if the defects cannot be cured.

Question 45

Ming-Na orders a certain type of rose from a florist for her event. A disease sweeps through that type of rose, and the florist could only obtain the roses at great cost, if at all. Is there any defense that the florist can use?

A) Commercial unreasonableness
B) Commercial impracticability
C) Performance hardship
D) Unforeseen circumstances
E) Undue influence

Question 46

[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?

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 47

A buyer who has accepted goods may later ________ if the buyer can show that the defects substantially impaired the value of the goods.

A) reduce the payment by 25%
B) refuse and return the goods at the seller's expense
C) revoke the acceptance
D) Reduce the payment by 50%
E) sue in court for breach of contract without violating the UCC rules

Question 48

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

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 49

Under the UCC, a delay in delivery or nondelivery, in whole or in part, is not a breach in circumstances in which performance has been made impracticable ________.

A) because the buyer refuses to perform.
B) because the parties contemplated an out due to the nature of the goods.
C) Because the performance is now economically unsound
D) because a contingency has occurred that was not contemplated when the parties reached the agreement
E) because the seller refuses to receive the goods.

Question 50

[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.
Is Tyler correct that he has a right to remedy and fix the problem?

A) No, the UCC does not provide a party with the right to fix any problem.
B) No, while the UCC provides a party with the right to fix some problems, the problems with the T-shirts were too serious to afford Tyler that right.
C) Yes, but only if he can provide correctly worded T-shirts by the next day, the last day set for performance.
D) Yes, Tyler has up to 10 days under the UCC to fix any problem.
E) Yes, Tyler has up to 20 days under the UCC to fix any problem.

Question 51

What did the court rule in the case of Hubbard v. UTZ Quality Foods, Inc., in which the buyer refused on the basis of color to accept potatoes that were the subject of an installment contract?

A) That the failure to meet the proper color standard was not a substantial impairment.
B) That the failure to meet the proper color standard was a substantial impairment but that it did not impair the contract.
C) That the failure to meet the proper color standard amounted to a substantial impairment of the installments, substantially impairing the whole contract.
D) That the refusal to accept the potatoes was made in bad faith.
E) That the tendering of the potatoes was made in bad faith.

Question 52

If Dominique ordered lobsters from Maine for a catered affair and a hurricane hits the Maine coast line, what rule may allow the seller a defense to a breach of contract claim?

A) Commercial impracticability.
B) Course of dealing.
C) Course of performance.
D) Performance inability.
E) Buyer beware.

Question 53

According to the case of Hubbard v. UTZ Quality Foods, Inc., whether goods conform to contract terms is a ________.

A) question only a jury can decide
B) question of mixed law and fact
C) question of law
D) question of fact
E) question of fact unless an installment contract is involved in which case it is a question of law

Question 54

[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.
Which statement is true regarding the claim of Solid Wood that Kristin failed to properly reject the goods?

A) Solid Wood is incorrect because under the UCC Kristin had 30 days in which to reject the goods.
B) Solid Wood is incorrect only if Kristin can establish that Let Us Help You miscalculated the amount of interest she owed.
C) Solid Wood is incorrect only if Kristin can show that the goods were overpriced.
D) Solid Wood is correct only if Solid Wood can show that the goods were priced at reasonable market value.
E) Solid Wood is correct.

Question 55

Which of the following was the result in the "Case Opener" in which Vitol sued Koch Petroleum for delivering oil one day late causing Vitol to sustain a loss based on its sale to another entity?

A) The court ruled that Koch Petroleum had substantially performed and that Vitol could not recover.
B) The court ruled that Koch Petroleum had materially performed and that Vitol could not recover.
C) The court ruled that Koch Petroleum had committed fraud in that the delay was intentional and that Vitol could recover.
D) The court ruled that Koch Petroleum had violated the perfect tender rule and that Vitol could recover.
E) The court ruled that both parties were in the wrong and that damages would be split between the two.

Question 56

[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.
Which of these is the most likely result if Troy claims he had reasonable grounds to believe the trophies were acceptable?

A) He would be correct because Eduardo's payment by check for the goods upon their delivery provided Troy with a measure of reliance that they would be acceptable.
B) He would be incorrect because Eduardo did not confirm in writing that the trophies were acceptable.
C) He would be incorrect because Eduardo did not confirm orally or in writing that the trophies were acceptable.
D) He would be correct because of the special UCC exception for sports-related items.
E) He would be correct because of the special UCC exception for school-related items.

Question 57

When may a buyer revoke acceptance if a nonconformity substantially impairs the value of goods?

A) For any reason within 24 hours of acceptance.
B) For any reason within 48 hours of acceptance.
C) For any reason within 7 days of acceptance.
D) For any reason within 30 days of acceptance.
E) Only if the buyer had a legitimate reason for the initial acceptance.

Question 58

Under the UCC, which of the following is true if goods are identified at the time the parties entered into a contract and these goods are partially destroyed through no fault of the parties before risk passes to the buyer or lessee?

A) The contract is void.
B) The buyer may inspect the goods and decide whether to (1) treat the contract as void or (2) ask the seller for a reduction of the contract price and then accept the damaged goods.
C) The seller may inspect the goods and decide whether to (1) treat the contract as void or (2) offer the buyer a reduction of the contract price for the damaged goods.
D) Unless the parties can agree on a price, the matter must be submitted to arbitration for a determination as to an appropriate price.
E) Unless the parties can agree on a price, the contract is voidable at the option of the seller.

Question 59

[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.
Only considering the issue involving the time set for delivery, what is the likely effect of Troy delivering the trophies after the agreed upon time?

A) Eduardo has the right to rely on the failure of Troy to deliver the trophies in a timely manner and will likely prevail.
B) Eduardo's payment for the trophies without inspection and after the time called for by the contract likely waived the performance provisions of the contract regarding the time for delivery.
C) Eduardo did not waive the performance provisions of the contract regarding the time for delivery because he paid by check.
D) Eduardo did not waive the performance provisions of the contract regarding the time for delivery only because he canceled the check before it was cashed by Troy.
E) Eduardo cannot rely upon the performance provisions of the contract regarding the time for delivery because he did not object within 24 hours of the delivery of the trophies and, therefore, did not meet the UCC 24-hour rule.

Question 60

Typically, buyers and lessees ordinarily inspects goods ________ paying, unless the parties agree otherwise.

A) before
B) immediately after
C) within 24 hours after
D) within 48 hours after
E) within 7 days after

Question 61

[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.
Must Kai accept the cupcakes?

A) Yes, if they are still sellable, he must perform under the terms of the contract.
B) No, since the goods are partially destroyed, Kai may treat the contract as void.
C) No, but he must provide Lui with time to cure.
D) Yes, unless the contract specifically states otherwise.
E) No, since the goods are partially destroyed, Lui may treat the contract as void.

Question 62

[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.
Lui tells Kai the cupcakes can still be sold. Must Kai accept the cupcakes?

A) Yes, because they are still sellable and he must pay the price under the contract.
B) Yes, his only option is to accept the cupcakes and ask for a price reduction.
C) No, but Kai must provide Lui with time to cure.
D) No, Kai can treat the contract as void or Kai can ask Lui for a price reduction and then accept the damaged goods.
E) No, Kai's only option is to treat the contract as void.

Question 63

[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?

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 64

[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?

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 65

Felipe who is a commercial buyer decides to reject goods he was purchasing from Saul. What kind of notice must be provided to Saul by Felipe?

A) written notice sent within 10 days.
B) written notice sent within 5 days.
C) reasonable notice.
D) oral or written notice as long as notice is given in 7 days.
E) perfect notice prepared on a UCC form.

Question 66

[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.
Arturo, an exotic animal dealer contracts with Benita, an importer of exotic animals, to purchase several rare lizards. After the contract is executed, the U.S. government issues a ban on the importation of lizards. When Benita fails to deliver the lizards as per the contract, Arturo tells her she is in breach of their contract. What is Benita's best defense?

A) Commercial impracticability
B) Commercial illegality
C) Perfect tender rule
D) She has the right to cure by providing lizards that are not imported.
E) She cannot provide conforming goods under the contract.

Question 67

[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, can Zelda simply cancel the contract?

A) No, a buyer has no right to cancel a contract without giving the seller a chance to cure.
B) No, although a buyer has a right to cancel a contract, Zelda must provide the seller a chance to cure.
C) Yes, when goods are nonconforming, a buyer may reject goods and cancel the contract if a condition such as time being of the essence is present.
D) No, even though the goods are nonconforming, Zelda may not cancel the contract.
E) Yes, a buyer has the right to cancel the contract.

Question 68

[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?

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 69

[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.
On December 6, RoboCo delivers a shipment of 100 of the RoboMan electronic toy. Unfortunately, on inspection, each unit has a faulty battery pack. The performance time under the contract ends on the 8th. Under which circumstances would RoboCo property exercise its right to cure?

A) The following day, RoboCo delivers a shipment of 100 of the ElectroMan electronic toy.
B) RoboCo's president e-mails the buyer stating they intend to cure and send 100 of the ElectroMan toy the following day.
C) RoboCo's president calls the Buyer and asks when the RoboCo toys are needed. After a response that they are needed for a sale on the 15th, RoboCo sends a new shipment of RoboMan, which arrives on the 10th.
D) RoboCo's president emails the Buyer that 100 of the RoboMan electronic toy will be sent within two weeks.
E) RoboCo immediately sends a shipment of functional battery packs for RoboMan which arrives the next day.

Question 70

[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?

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 71

[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.
Which statement is correct regarding Solid Wood's contention that the duty of good faith is imposed on all parties equally?

A) Solid Wood is incorrect because the UCC imposes no duty of good faith.
B) Solid Wood is incorrect because the UCC mandated duty of good faith requires honesty in fact in regard to all transactions regardless of the parties involved.
C) Solid Wood is incorrect because the UCC mandated duty of good faith imposes a higher duty than honesty of fact in regard to sellers, that of reasonable negotiation considering the position of buyers.
D) Solid Wood is incorrect because the UCC mandated duty of good faith imposes a higher duty than honesty of fact in transactions involving amounts in excess of $500, that of reasonable conduct considering all circumstances.
E) Solid Wood is incorrect because the UCC mandated duty of good faith imposes a higher duty than honesty in fact on merchants, that of reasonable commercial standards of fair dealing.

Question 72

[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.
Which statement is true regarding both the UCC and common law with regard to conforming and nonconforming goods?

A) Under the UCC and common law, if goods fail in any respect to conform to the contract, the buyer has the right to accept the goods, reject the entire shipment, or accept part and reject part.
B) The perfect tender rule recognizes the distinction between material and immaterial contractual requirements.
C) Both the UCC and common law recognize the distinction between material and immaterial contractual requirements.
D) Common law usually substitutes perfect tender with the doctrine of substantial performance.
E) Under common law, if goods fail in any respect to conform to the contract, the buyer has the right to accept the goods, reject the entire shipment, or accept part and reject part.

Question 73

Margot, a jewelry dealer, sent a shipment of diamond bracelets to Halden's Jewelry Store according to their contract. If Halden's does not reject the goods within a reasonable period, what are Margot's obligations under the contract?

A) Margot must confirm the goods were received.
B) Margot must follow up to ensure inspection is complete.
C) Margot has the obligation to demand if the contract is accepted.
D) Margot can presume Halden's accepted the goods.
E) Margot must provide prompt notice of her intent to cure.

Question 74

How often is the right to inspection waived?

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.

Question 75

[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?

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 76

[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.
Can Zelda reject the shipment because of the size?

A) Yes, because of the perfect tender rule and no exception applies.
B) No, because failure to meet the proper size standard would never constitute a substantial impairment.
C) Yes, because failure to meet the proper size standard may constitute a substantial impairment, especially in light of the contract provision about berry size.
D) No, because she cancel a contract for trivial defects.
E) No, a buyer has no right to reject a shipment based on subjective factors, such as inappropriate size.

Question 77

[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.
Which statement is true regarding Kristin's claim that the UCC imposes no obligation of good faith conduct?

A) Kristin is correct in this instance because while the UCC generally imposes a duty of good faith, that duty is inapplicable during the initial 30 days after a purchase when a buyer has the right to revoke acceptance for a good or a bad reason.
B) Kristin is correct in this instance because while the UCC generally imposes a duty of good faith, that duty is inapplicable in relation to third-party financing.
C) Kristin is correct only if she can establish that the goods were overpriced resulting in the right to disregard any obligation of Solid Wood.
D) Kristin is correct only if she can establish that Solid Wood Furniture itself failed to act in good faith.
E) Kristin is incorrect.

Question 78

[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 with minor facial flaws?

A) No, as long as they substantially conform to the contract specifications
B) Yes, because they do not conform to the contract specifications
C) No, if it is the norm in the doll industry not to permit a buyer to reject dolls with minor flaws
D) Yes, because they are not perfect, under the perfect tender rule
E) Yes, because a buyer does not have to accept goods with flaws

Question 79

[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 the difference between the terms course of dealing and course of performance?

A) Course of dealing references previous commercial dealings within the particular industry, while course of performance refers to the history of dealings between the parties in the particular contract at issue.
B) Course of dealing is an exception to the perfect tender rule, while course of performance is not an exception to the perfect tender rule.
C) Course of dealing and course of performance are treated the same with regard to conforming and nonconforming goods.
D) Course of performance references previous commercial transactions between the parties, while course of dealing refers to the history of dealings between the parties in the particular contract at issue.
E) Course of dealing references previous commercial transactions between the parties, while course of performance refers to the history of dealings between the parties in the particular contract at issue.

Question 80

[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?

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