Deck 16: Performance, Breach, and Warranties of Sales and Lease Contracts

Question 1

A buyer's failure to cover will bar him or her from using any other remedies available under the UCC.​

Answer 1

False

Question 2

Under the UCC, a seller's tender of goods that do not conform in every way to a contract is still a valid tender.​

Answer 2

False

Question 3

The doctrine of commercial impracticability only extends to problems that are unforeseen.​

Answer 3

False

Question 4

The seller's or lessor's major obligation under a sales contract is to tender conforming goods to the buyer or lessee.​

Question 5

Under the perfect tender rule, if tender is not perfect, the seller is obligated to try again.​

Question 6

Statements of fact made during the bargaining process are express warranties.​

Question 7

Under the UCC, parties to a contract can limit or exclude consequential damages.​

Question 8

If a warranty of infringement is breached and the buyer is sued by the claim holder, the buyer need not notify the seller of the lawsuit.​

Question 9

If a buyer breaches a contract, the seller can choose to simply cancel the contract.​

Question 10

In the absence of any specific agreements, the buyer or lessee must make payment after receipt of the goods.​

Question 11

A shipment contract requires a seller to ship goods by a carrier.​

Question 12

In contracts involving a carrier, a seller can complete performance through a shipment contract or a destination contract.​

Question 13

An installment contract is breached if a seller tenders any nonconforming goods.​

Question 14

If goods in every respect conform to a contract, the buyer or lessee does not have a right to reject the goods.​

Question 15

The seller's right to cure does not affect the right of the buyer or lessee to reject goods.​

Question 16

A buyer who rightfully rejects nonconforming goods may obtain cover or cancel the contact, but may not seek damages.​

Question 17

Acceptance of goods precludes the buyer or lessee from exercising the right of rejection.​

Question 18

If a buyer repudiates a contract, the seller can bring an action to recover damages.​

Question 19

The principle of good faith applies to both parties to a sales contract.​

Question 20

A warranty of title cannot be disclaimed.​

Question 21

An action for breach of warranty accrues when the seller or lessor tenders delivery.​

Question 22

A seller is not required to give a written warranty for consumer goods sold.​

Question 23

General descriptions take precedence over inconsistent samples.​

Question 24

A product is unmerchantable if an accident could arise in connection with the goods.​

Question 25

If warranties are inconsistent, implied warranties displace express warranties.​

Question 26

Game Source Stores are open to consumers. The UCC requirement of good faith imposes​

A) ​a higher duty on consumers than Game Source.
B) ​a higher duty on Game Source than on consumers.
C) ​no duty on either Game Source or consumers.
D) ​the same duty on Game Source and consumers.

Question 27

A seller or lessor can disclaim all oral express warranties by including in the contract a written disclaimer.​

Question 28

Pine Mills Inc. and Quality Lumber Company enter into a contract for a sale of plywood to be delivered under a destination contract. This contract requires Pine Mills, the seller, to​

A) ​allow the buyer to reject the goods for any reason.
B) ​deliver the goods to a particular destination.
C) ​inspect the goods before tendering their delivery.
D) ​place the goods into the hands of a carrier.

Question 29

Puffery is an expert's opinion that creates an express warranty.​

Question 30

Fuel Connector Products, Inc., agrees to sell Go-Flo, Inc., a certain quantity of hose couplings and fittings, but the contract does not specify a place of delivery. Go-Flo is expected to pick up the goods. The place of delivery is​

A) ​Fuel Connector's place of business.
B) ​Go-Flo's place of business.
C) ​the current location of the hose couplings and fittings.
D) ​the U.S. Postal Service office nearest to Go-Flo's place of business.

Question 31

Merchants are absolute insurers against all accidents arising in connection with the goods.​

Question 32

Elegant Carpets, Inc., and Fantastic Floors Stores enter into a contract for a sale of carpeting to be delivered under a shipment contract. This contract requires Elegant Carpets, the seller, to​

A) ​allow the buyer to reject the goods for any reason.
B) ​deliver the goods to a particular destination.
C) ​inspect the goods before shipping them.
D) ​place the goods into the hands of a carrier.

Question 33

Implied warranties can arise from a "usage of trade."​

Question 34

To specifically disclaim an implied warranty of merchantability, a seller or lessor must mention the word merchantability.​

Question 35

A statute of limitation may restrict the time within which an action for breach of warranty may be brought.​

Question 36

Generally, the implied warranties of merchantability and fitness for a particular purpose cannot be disclaimed.​

Question 37

Express warranties displace inconsistent implied warranties with no exception.​

Question 38

Statements of opinion and value usually create express warranties.​

Question 39

Natural Eggs, Inc. agrees to supply Omelet Express with five hundred eggs. Natural Eggs can not reasonably ask Omelet Express to pick up the eggs at​

A) ​1:00 P.M.
B) ​2:00 P.M.
C) ​3:00 P.M.
D) ​2:00 A.M.

Question 40

Every sale or lease by a merchant who deals in goods of the kind sold or leased automatically gives rise to an implied warranty of merchantability.​

Question 41

Pavers Inc. contracts to buy some heavy equipment from Earthmovers, Inc. Before either party performs, Earthmovers sells its assets to Excavation Corporation. On learning of the sale, Pavers is concerned about its contract with Earthmovers. Pavers should​

A) ​demand assurances of performance from the seller.
B) ​consider the contract repudiated and sue the seller for breach.
C) ​buy the equipment from a different firm and bill the seller for the price.
D) ​buy the equipment from a different firm and bill Excavation for the price.

Question 42

Quade is an expert in twentieth-century art. Rachel visits Quade's gallery, seeking to buy artwork as an investment. Quade shows her a painting that in his opinion is by Picasso. Quade's statement is​

A) ​an express warranty.
B) ​an implied warranty.
C) ​a warranty of title.
D) ​puffery.

Question 43

MotorCo Inc. makes and sells auto parts to retail repair services, vehicle sales outlets, and consumer parts stores. On one MotorCo box is a label that reads "Contains one gross (144) sparkplugs, assorted sizes." This statement is​

A) ​an implied warranty of fitness for a particular purpose.
B) ​an implied warranty of merchantability.
C) ​an express warranty.
D) ​none of the choices.

Question 44

Minerals Ltd. contracts to provide several manufacturers with tin. When a cartel of tin-producing countries suddenly embargoes future shipments of tin to Minerals so that it cannot fulfill its contracts, the distributor​

A) ​can substitute some other material for the tin.
B) ​is excused from the performance of its contracts.
C) ​is liable for breach of contract.
D) ​must still supply the tin needs of its customers.

Question 45

Refined Mills orders "Grade A" oats from Sweet Valley Farm to grind and sell to Town Co-op Grocery. Sweet Valley ships "Grade B" grain, which Refined Mills accepts. To recover damages for the nonconformity, Refined Mills must give notice of the breach within a reasonable time to​

A) ​Sweet Valley.
B) ​Town Co-op.
C) ​no one.
D) ​the appropriate state government agency.

Question 46

Eliza buys a new motorcycle from Fab Cycles, Inc. The most important factor in determining whether an express warranty is created is whether​

A) ​Eliza expresses to Fab Cycles what she wants warranted.
B) ​Eliza's desire for the cycle becomes part of her motivation to deal.
C) ​Fab Cycles expresses to Eliza what it expects of its customers.
D) ​Fab Cycles's promise becomes part of the basis of the bargain.

Question 47

Soft Chair Company contracts to deliver 100 chairs to Stuffy Furnishings Store on May 1 for which Stuffy agrees to pay. Soft tells Stuffy on April 15 that delivery will be delayed until June 1. Stuffy may​

A) await performance, sue Soft, or suspend its own performance.​
B) ​only await Soft's performance for a commercially reasonable time.
C) ​only sue Soft for breach of contract.
D) ​only suspend its own performance.

Question 48

Field Farms and Gourmet Restaurant enter into a contract for a sale of produce. After Field Farms ships the lettuce but before the restaurant receives it, the buyer declares bankruptcy. The seller can stop delivery of the goods in transit​

A) ​only if the quantity is at least 50 percent of the contract amount.
B) ​only if the quantity is in a single "unit."
C) ​only if the quantity is at least a truckload.
D) ​regardless of the quantity.

Question 49

ABC Toy Store orders one hundred board games from Big Board Games Inc. When the games are delivered, they are all missing pieces. ABC rejects the shipment. To cure, Big Board Games must​

A) ​promptly notify ABC of the intent to cure.
B) ​pay a cure fee.
C) ​pick up the nonconforming games before the end of the business day.
D) ​enter into a new contract with Axel's.

Question 50

Greg, a salesperson for Home Improvement Center, tells Irena, "This is the best floor sander I've ever seen." This statement is​

A) ​an express warranty.
B) ​an implied warranty.
C) ​a warranty of title.
D) ​puffery.

Question 51

Business Rental Corporation (BRC) and Cartage Trucking Company enter into a contract for a lease of ten hydraulic lifts. Under the perfect tender rule, BRC must ship or tender goods to the lessee that​

A) ​approximately conform to the contract description.
B) ​entirely conform to the contract description except in one or two details.
C) ​conform to the contract description in every way.
D) ​substantially conform to the contract description in most details.

Question 52

Tarts & Pies Bakery contracts with Sweet Fruits for strawberries to be delivered by Refrigerated Trucking Company. On the day of delivery, the refrigeration on the trucks is not working. Sweet Fruits​

A) ​may ship the strawberries to the buyer using a different carrier.
B) ​must cancel the contract.
C) ​must wait to ship the strawberries until the carrier fixes its trucks.
D) ​must ship the goods through a different carrier and pay damages.

Question 53

Steel Buildings, Inc., agrees to sell four portable garages to Truck Service Center. Five days later, the buyer refuses delivery and cancels the contract. The seller is entitled to​

A) ​force the buyer to accept the garages.
B) ​recover any damages from the buyer but not resell the garages.
C) ​resell the garages and recover any damages from the buyer.
D) ​resell the garages but not recover any damages from the buyer.

Question 54

Vehicle Wholesale Company and Walt's Retail Motors enter into a contract for a sale of used cars. Vehicle Wholesale assures Walt's that it has valid title to the vehicles. Under the UCC, warranties of title arise​

A) ​automatically in most sales contracts.
B) ​only if the buyer asks for such a warranty.
C) ​only if the seller expresses such a warranty.
D) ​only in conjunction with lease contracts, not sales contracts.

Question 55

Okay Markets, Inc., rejects a shipment of turkey that does not conform to its contract with Poultry Processing Corporation, but is unable to obtain instructions from the seller. Okay Markets can​

A) ​destroy the goods.
B) ​cure the goods to make them conform to the contract.
C) ​retain the goods without paying for them.
D) ​reship or store the goods for the seller.

Question 56

Medical Supply Company and Health Care, Inc., enter into a contract for a sale of medical equipment and supplies. Under either a shipment contract or a destination contract, the seller must​

A) ​allow the buyer to reject the goods for any reason.
B) ​deliver the goods to a particular destination.
C) ​place the goods into the hands of a carrier.
D) ​give the buyer any necessary documents of title.

Question 57

On July 10, Pet Supply Store orders fifty small dog collars from Quality Collars, Inc. to be delivered by July 15. On July 13, Quality Collars tenders fifty large dog collars. Pet Supply rejects the shipment. Quality Collars has​

A) ​no right to cure.
B) ​until July 15 to cure.
C) ​until the end of the business day on July 13 to cure.
D) ​unlimited time to cure.

Question 58

Arnold buys a backhoe from Big Dig Equipment Inc. Arnold is unaware that Credit Collection Company holds a lien against the backhoe when he buys it. If Credit Collection repossesses the backhoe, Arnold can​

A) ​recover from Big Dig for breach of warranty.
B) ​do nothing.
C) ​file criminal charges against Big Dig and Credit Collection.
D) ​recover damages from Credit Collection for breach of warranty.

Question 59

Phoenix, a salesperson for Quality Fruit, Inc., shows Robert, a buyer for Sweet Home Fruit Company, samples of peaches, stating that any shipment will match the samples. This statement is​

A) ​an express warranty.
B) ​an implied warranty.
C) ​a warranty of title.
D) ​puffery.

Question 60

Global Talk Corporation sells phones and other mobile devices. Under most circumstances, Global Talk will be presumed to have warranted that its title to the goods is​

A) ​the same as each brand's name.
B) ​none of the choices-a warranty of title is not presumed.
C) ​good and valid.
D) ​the best that money can buy.

Question 61

Band Instruments, Inc., sells seventy-six trombones to Community & School Band Source, Inc. To avoid liability for most implied warranties, Band Instruments should state in writing that the trombones are sold​

A) ​as is.
B) ​by a merchant.
C) ​in perfect condition.
D) ​with no known defects.

Question 62

Water Pipe Company includes in its contracts a provision that reads, in large red letters, "There are no warranties that extend beyond the description on the face hereof." This disclaimer negates​

A) ​the implied warranty of fitness for a particular purpose.
B) ​the implied warranty of merchantability.
C) ​the implied warranty of title.
D) ​none of the choices.

Question 63

Ken goes to a Lawn & Yard store to tune up his mower. Mort, the service technician, learns that Ken's lawn is overgrown and rocky, and advises the use of a certain type of oil, plug, filter, and blade. Later, the mower breaks down due to the use of the recommended items. Ken may recover from Lawn & Garden for breach of​

A) ​an express warranty.
B) ​an implied warranty of fitness for a particular purpose.
C) ​an implied warranty of merchantability.
D) ​none of the choices.

Question 64

HandiTools, Inc., sells power tools, power tool parts, and related supplies under "full" warranties. Under the Magnuson-Moss Warranty Act, this means that HandiTools must provide​

A) ​free repair or replacement of any defective part.
B) ​a toll-free number for a HandiTools-approved service company.
C) ​a complete catalog of products and parts available for sale.
D) ​repair or replacement of any defective part at a reduced charge.

Question 65

Drive-Away Autos, Inc., sells cars to consumers. To avoid liability for oral express warranties, each Drive-Away sales agreement should note that a car is sold​

A) ​as is.
B) ​in perfect condition.
C) ​subject to warranties included in the written contract only.
D) ​with no known defects.

Question 66

Trucks & Trailers, Inc. (T&T), and United Express Service enter into a contract for a lease of vehicles. T&T is a merchant who deals in goods of the kind leased. Under the UCC, an implied warranty of merchantability arises​

A) ​automatically in most contracts for a lease of goods.
B) ​only if the lessee asks for it.
C) ​only if the lessor expresses such a warranty.
D) ​only in conjunction with sales, not lease, contracts.

Question 67

Erin contracts in writing to sell her Ford-brand pick-up truck to Garth for $10,500. Erin agrees to deliver the truck on Friday, and Garth promises to pay the $10,500 on the following Monday. On Thursday, Garth tells Erin that he changed his mind and will not buy the truck. Over the weekend, Garth changes his mind again and tenders $10,500 to Erin on Monday. Erin has not sold the truck to another party but refuses the tender and refuses to deliver. Garth claims that Erin has breached their contract. Erin contends that Garth's repudiation released her from her duty to perform under the contract. Who is correct, and why?​

Question 68

Pat's Pet Houses, Inc. sells shelters for animals under "limited" warranties. Under the Magnuson-Moss Warranty Act, this means that the warranties on the shelters from Pat's​

A) ​limit the buyers' recourse in some fashion.
B) ​are only good for some buyers.
C) ​cover only some of the shelters.
D) ​are oral instead of written.

Question 69

Grande Floors, Inc., and Home Decor Stores enter into a contract for a sale of carpeting. Grande Floors, a merchant who deals in goods of the kind sold, makes express warranties in connection with the sale. Under the UCC, at the time a contract is formed, an express warranty can be disclaimed or modified​

A) ​by clear, conspicuous language called to the buyer's attention.
B) ​by implied affirmations of fact relating to the goods.
C) ​in any way that the seller sees fit for the ordinary purpose.
D) ​in no way.

Question 70

Home Remodelers, Inc., and Imogen enter into a contract for a sale of cabinets and countertops. Home Remodelers, a merchant who deals in goods of the kind sold, notes that its goods come with an implied warranty of merchantability. Under the UCC, this means that the goods are reasonably​

A) ​fit for the buyer's particular purpose.
B) ​fit for the ordinary purpose for which such goods are used.
C) ​suitable for resale at an acceptable price.
D) ​the best quality that money can buy.

Question 71

Clark purchases a new car from Dicey's Deals. The retail installment contract states immediately above the buyer's signature in large, bold type: "There are no warranties that extend beyond the description on the face hereof" and "There are no express warranties that accompany this sale unless expressly written in this contract." Before purchasing the car, Clark specifically informed Dicey's salesperson that he wanted a car that could be driven in a dusty area without needing mechanical repairs. Dicey's salesperson said to Clark, "Nothing will go wrong with this car, but if it does, return it to us, and we will repair it without cost to you." Neither this statement nor any similar statement appears in the retail sales contract. Clark drives the car into a dust storm. The air filter gets plugged up, and the car engine overheats, causing motor damage. Dicey's refuses to repair the engine under any warranty. Clark claims that Dicey's is liable for breach of the implied warranty of fitness for a particular purpose, that the Magnuson-Moss Warranty Act prohibits disclaiming this implied warranty, and that the salesperson's express warranty has also been breached. What are the problems with Clark's claims?​

Question 72

Marcos buys a pneumatic drill from NuTools Inc. Owen leases a table saw from Piecework Tools Sales & Lease Company. Later, Marcos and Owen become aware of defects in the goods that indicate breaches of warranty. An action for breach of warranty accrues when​

A) ​the seller or lessor tenders delivery.
B) ​the buyer or lessee becomes aware of the breach.
C) ​the nonbreaching party notifies the breaching party of the breach.
D) ​four years have passed since the breach occurred.