Deck 23: Sales Remedies

Question 1

When the buyer breaches a sales contract, if the difference between the contract price and the market price will not place the seller in as good a position as performance would have, then the seller may recover the lost profit.

Answer 1

True

Question 2

If the breach by the seller concerns the whole contract, the buyer may cancel the entire contract.

Answer 2

True

Question 3

A contractual remedy is optional unless the parties expressly agree that it is to be exclusive.

Answer 3

True

Question 4

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

Question 5

Frances paid Abbey $1,200 for a rare first edition of a Charles Dickens novel. The sales contract states that the book is to be delivered within ten days. Abbey , however, became sentimental about the book and refused to deliver it as promised. In order to sue for specific performance under the UCC, Frances must prove that money damages will not be adequate compensation for his loss.

Question 6

A buyer who does not cover is precluded from consequential damages that could have been prevented if the buyer did obtain cover.

Question 7

The recovery for a lessee's wrongful repudiation of a lease is the difference between the present values of the old rent due under the original lease and the market rent.

Question 8

Overby, Inc. sells some woodworking equipment to American Furniture, warranting its suitability for American Furniture 's purpose. The equipment, which is not suitable for American Furniture 's purpose, causes $8,000 in damage to American Furniture 's property and $12,000 in personal injuries. American Furniture can recover only $8,000 in consequential damages.

Question 9

When existing goods are identified to the contract of sale, the buyer acquires a special property interest in the goods.

Question 10

Specific performance is an equitable remedy which seeks to compel the party in breach to perform the contract according to its terms.

Question 11

On the seller's breach, if the buyer makes substitute purchases in good faith and without unreasonable delay, she may recover, as damages, the difference between the cost of cover and the contract price, plus incidental damages but minus any expenses she saved because of the seller's breach.

Question 12

MoVu Co. contracted to buy 400 round plastic bowls from Continental Industries, then anticipatorily breached the contract when their plans changed. Continental may proceed to identify to the contract conforming goods in its possession so that it can exercise the remedy of resale of the goods.

Question 13

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

Question 14

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

Question 15

If the buyer makes a wrongful rejection, the seller may resell the goods in good faith and in a commercially reasonable manner and the seller may recover from the buyer the difference between the contract price and the resale price, plus any incidental damages, minus expenses saved.

Question 16

Breach of one installment of an installment contract may give rise to breach under the whole contract.

Question 17

Under the CISG, avoidance of a contract cancels any provision for settlement of disputes.

Question 18

If the seller has failed to comply with Code requirements in making a resale of goods that were wrongfully rejected, a good faith purchaser at the resale takes the goods subject to rights of the original buyer.

Question 19

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

Question 20

Watts contracts to sell 1,000 transformers to Babbage and issues a negotiable document of title for the specified goods. The transformers are stored in the Reedy Creek Warehouse. When Watts discovers that Babbage is insolvent, she may effectively stop delivery of the goods by notifying Reedy Creek not to deliver the goods to Babbage .

Question 21

As the result of a seller's breach, a buyer may ask for incidental damages. Which of the following is not an example of costs that would lead to incidental damages?

A) storing goods in a warehouse
B) making calls to obtain replacement goods
C) inspecting the goods
D) the difference between the cost of the goods in the contract and the replacement goods.

Question 22

Which of the following is NOT 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) The buyer is not required to obtain cover, so his failure to do so does not bar him from recovering consequential damages that he could have prevented by cover.

Question 23

Sabrina contracts to buy 50 porch swings for her retail store.  The swings have been identified to the contract and a down payment of $200 of the $1,250 purchase price has been paid. If the seller becomes insolvent, Sabrina may still pay $1,050 and get the swings.

Question 24

If the buyer received goods on credit while he was insolvent by misrepresenting his solvency in writing within three months prior to deliver of the goods, the seller is able to reclaim the goods only if the seller makes a demand on the buyer within ten days after the buyer has received the goods.

Question 25

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 26

An aggrieved seller who resells wrongfully rejected goods is accountable to the original buyer for any profit made on the resale.

Question 27

The contract between the buyer and the seller can provide for additional remedies more than those allowed in the Code.

Question 28

Under the CISG, if the buyer fails to perform any obligations, the seller may either require the buyer to pay the price or fix an additional period of time for the buyer to perform.

Question 29

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

Question 30

Under the UCC, the aggrieved party must choose one remedy to ask for and forfeit the others.

Question 31

Since the purpose of remedies under the Code is compensation, punitive damages are generally available.

Question 32

A buyer's incidental damages include reasonable expenses or commissions in effecting cover.

Question 33

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

Question 34

Article 2A authorizes liquidated damages payable by either party for default or any other act or omission.

Question 35

The availability of some buyer's remedies depends on the buyer's actions.

Question 36

If the seller has the right to cancel, he may recover damages for breach without having to tender any further performance.

Question 37

Vandehal Company's total liabilities are $520,000 and its total assets are $460,000, and the company is unable to pay debts as they become due. Vandehal's situation falls within the bankruptcy meaning, but not the Code's definition, of insolvency.

Question 38

A lessor retains title to the goods and has the right to recover possession of them upon default by the lessee.

Question 39

Quality Appliances sells a flat top range to Ryan for his home. The contract of sale excludes liability for consequential damages. When Ryan turns on the range , it catches fire, burning Ryan severely. Ryan cannot recover for his injuries because of the exclusion of damages clause.

Question 40

Ronald agrees to sell Mack 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) $1,000.
D) $1,100.

Question 41

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

A) Where the buyer has been unable to obtain cover.
B) Where the goods have been shipped under reservation of a security interest in the seller and that interest has been satisfied.
C) Where the goods are specially manufactured but can be purchased from another source.
D) Both if the buyer has been unable to obtain cover  and where  the goods have been shipped under reservation of a security interest in the seller and that interest has been satisfied.

Question 42

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, but Perry had 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 another company. Jones Co. says it must be allowed to install the replacement heater. What result?

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

Question 43

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 44

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

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

Question 45

On July 30 Christina, in Knoxville, agrees to sell machine-stitched quilts to Deanna, in Los Angeles for $2,500 C.O.D., with delivery by October 1. When Christina fails to deliver the quilts, Deanna suffers incidental damages of $400 and consequential damages of $300. Deanna may recover:

A) damages equal to the difference between the market price on July 30 in Knoxville and $2,500 in addition to the remedy of cover.
B) the difference between the market price on October 1 in Knoxville and $2,500, plus $400 and $300, less expenses saved because of Christina's breach.
C) the difference between the market price on July 30 and October 1 in Los Angeles, plus $400 and $300, less expenses saved because of Christina's breach.
D) only through the equitable remedy of specific performance.

Question 46

On February 21, Cara wrote to Pandora 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. Pandora shipped the suits on April 2; they were received April 15. Cara immediately put them on display and 27 were sold by April 30 when Pandora discovered that Cara had lied. Pandora could:

A) recover 73 suits plus incidental damages.
B) recover 10 suits provided that Pandora acted within 10 days of discovering the misrepresentation.
C) recover no suits since it had been more than 10 days since delivery.
D) recover 73 suits.

Question 47

A seller's incidental damages for a buyer's breach would include all but which one of the following?

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

Question 48

A buyer's commercially reasonable charges for the care and custody of goods that a buyer has rightfully rejected are known as:

A) incidental damages.
B) liquidated damages.
C) consequential damages.
D) cover charges.

Question 49

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 50

The seller may resell the goods identified to a contract:

A) only at a public sale.
B) only if the goods are sold as a unit.
C) at a public or private sale.
D) only if the goods are perishable.

Question 51

Tom breached a sales contract to purchase goods from 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 52

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 53

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 54

After a breach by the seller, buyer may replevy the goods after identification if:

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

Question 55

Which type of contractual provision affects remedies?

A) Cover.
B) Liquidation or limitation of damages.
C) Modification or limitation of remedy.
D) Both limitation of damages  and limitation of remedy are correct.

Question 56

The amount of liquidated damages included in a contract that would be upheld by a court:

A) must be reasonable in light of the inconveniences or lack of feasibility of obtaining an adequate remedy.
B) may be so high as to be punitive to the breaching party.
C) may be regarded as a penalty.
D) must be exactly the amount lost in the breach.

Question 57

Under the CISG, if the contract is avoided and the seller has resold the goods in a reasonable manner and within a reasonable time after avoidance, the seller may recover:

A) the difference between the contract price and the resale price.
B) incidental damages only.
C) consequential damages.
D) Both the difference between the contract price and the resale price  and consequential damages.

Question 58

The Code permits the seller to recover the price plus incidental damages in which of the following situation(s)?

A) Where the buyer has accepted the goods.
B) Where conforming goods have been lost or damaged before risk of loss has passed to the buyer.
C) Where the goods have not been identified to the contract.
D) When the goods are fungible.

Question 59

In the Bigelow-Sanford, Inc. v. Gunny Corp. case, the court found:

A) the buyer did not purchase substitute goods in good faith and without unreasonable delay.
B) the Code permits a buyer to cover by buying substitute goods if the buyer acts in good faith and without unreasonable delay.
C) since the buyer did not specifically allocate the spot market replacements to the individual sellers' accounts, the cost of cover could not be determined in this case.
D) the buyer was required to obtain cover and its failure to do so bars other Code remedies.

Question 60

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 has the right to stop delivery of the goods.
C) The buyer may have the right to obtain specific performance.
D) The buyer may have the right to recover incidental and consequential damages.

Question 61

A seller's remedies upon the buyer's default:

A) may be goods oriented, money oriented, or obligation oriented.
B) are subject to the doctrine of election of remedies.
C) are, under the UCC, the same as a buyer's remedies for the seller's breach.
D) are the same under the UCC and CISG.

Question 62

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

Question 63

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 64

In what three situations will a seller recover the price of goods plus incidental damages?

Question 65

Under the CISG, if the buyer fails to perform contractual obligations, the seller may require the buyer to do all of the following except:

A) pay the price.
B) take immediate delivery.
C) perform the contractual obligations within a reasonable time.
D) pay damages.

Question 66

Amy agrees to buy goods from Van for a contract price of $2,000 payable on delivery. Amy repudiates the contract and refuses to pay anything. Van resells the goods in compliance with the Code for $1,700, incurring $200 in sales commissions but saving $250 in shipping costs. Van would recover from Amy:

A) the contract price of $2,000.
B) $500.
C) $350.
D) $250.

Question 67

A seller has breached his contract by providing unfit seed for the planting of beans. Damages would include all of the following except:

A) the lost profits from a contract to sell the bean crop.
B) the cost of keeping the defective seed in a storeroom.
C) the cost of replacement seed.
D) the cost of the farm land not being used for growing beans.

Question 68

a. Under the Code, when can an injured party seek the remedy of specific performance?
b. How does this rule differ from the common law?
c. Compare the remedies of replevin and specific performance. How are they alike? How are they different?

Question 69

Smith's of Dallas agreed to buy $10,000 worth of dresses F.O.B. Dallas from Magnifique Manufacturing Co. in New York for their October 1 Fall Showing. The cost of shipping the dresses is $300. 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 before the goods were shipped. 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 damages may be sought from Smith's?

Question 70

What is the purpose of the Code's remedies for breach of sales contracts?
How is this purpose accomplished?

Question 71

Angus has rightfully rejected nonconforming goods that were delivered to him. Explain his interest in those goods in his possession and his rights and duties regarding the goods.

Question 72

The buyer's incidental damages resulting from the seller's breach include all of the following except:

A) expenses reasonably incurred in inspection of rightfully rejected goods.
B) any commercially reasonable charges or commissions in connection with obtaining cover.
C) any reasonable expenses connected to the delay.
D) loss of sales revenue from the unsellable goods.

Question 73

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

Question 74

Andrews Manufacturing Company has repudiated its contract to sell 500 computers to a computer store. What recourse does the retailer have under the circumstances?

A) It must await the seller's performance.
B) It can recover punitive damages.
C) It can seek specific performance.
D) It can "cover" by procuring goods elsewhere and then sue for any difference between the cost of cover and the contract price, plus incidental and consequential damages less expenses saved by the breach.