Deck 13: Special Contracts: Sale of Goods

Question 1

Aidan gave a $100 watch to Marian as a birthday present.The watch was made of cheap metal that gave Marian a rash.Which of the following statements is TRUE?

A)The Sale of Goods Act applies because a gift is a special type of contract.
B)The Sale of Goods Act applies because Marian expected that the watch would be of merchantable quality.
C)Given the value of the watch,the Sale of Goods Act applies if,but only if,the transaction was evidenced in writing.
D)The Sale of Goods Act does not apply because Marian did not pay a price for the goods but the transaction was a gift.
E)The Sale of Goods Act applies as long as Marian is willing to pay $100 to Aidan.

Answer 1

D

Question 2

Marlene agreed to purchase a specific dress from Julian's shop.Although she paid the total price of $750 immediately,she insisted that Julian raise the hemline one inch before delivering it to her house.He agreed to that arrangement.Julian altered the dress as requested.However,before he could deliver the garment to Marlene,the dress was stolen by a thief.Marlene suffers the loss because the risk passed to her as soon as the hemline was raised.

Answer 2

False

Question 3

On May 1,Sheila entered into a contract with Brian.She promised to pay $500 to him on June 1 and he promised to deliver a television to her on the same day.Since the Sale of Goods Act only applies to sales,the parties' agreement will not be governed by the statute until June 1.

Answer 3

False

Question 4

Helene operates a beauty salon.She cut Bentley's hair in exchange for the payment of $25.She also gave him a small bottle of shampoo as a gift sampler.The parties' transaction regarding the shampoo is governed by the Sale of Goods Act.

Question 5

The Sale of Goods Act may apply if you agree to

A)trade a motorcycle for a car.
B)fix a bicycle for a payment of $100 in cash.
C)receive a bicycle as a gift.
D)rent a bicycle for at least three months.
E)purchase one bicycle from among an inventory of fifty bicycles,even if your bicycle is not identified at the outset.

Question 6

Marianna agreed to rent a generator to Denzel for a six-month period.The Sale of Goods Act will apply to the parties' agreement as long as Denzel actually takes possession of the generator.

Question 7

Although the Sale of Goods Act does not apply to land,it does apply to every form of personal property.

Question 8

Which of the following can be the subject of a "sale of goods"?

A)a cow
B)a house that has already been built
C)a debt
D)a haircut
E)a contract to rent a boat

Question 9

Sunni purchased a stereo system from an electronics store.The total purchase price was $3000.He paid $2000 with a cheque and $1000 with a credit card.That transaction is governed by the Sale of Goods Act.

Question 10

Pavel bought a widget from Anna.The widget was both unmerchantable and unfit for its intended purpose.However,if Anna did not normally deal in widgets,Pavel could succeed in a claim on the basis of the widget's lack of merchantability,but not on the basis of its lack of fitness for its intended purpose.

Question 11

Jana entered into an arrangement with Chauds Refrigerators Inc.It delivered a freezer to her restaurant so that she could determine whether or not it was appropriate for her needs.The parties agreed that she would pay $4000 for the freezer if she kept it.Jana used the freezer for six months,but never bothered to communicate with Chauds.The unit was then stolen.Jana probably suffers the burden of that theft because property and risk had already passed to her.

Question 12

Elin agreed to buy 100 cartons of widgets from Eldrick at a price of $100 000.He actually delivered 110 cartons of widgets.Elin is entitled to keep that entire shipment,as long as she pays the contract price of $100 000.

Question 13

Because the sale of goods is subject to a codified statute,

A)the rules contained in the statute always apply to a sale of goods.
B)the courts cannot rely on cases that occurred before codification.
C)many business transactions can be more easily created.
D)the need for risk management is virtually eliminated.
E)the same statute applies in every common law province and territory.

Question 14

James agreed to sell a widget to Claire for $10 000.She intended to use that item for her personal use.Under the terms of the contract,James agreed to deliver the widget to her on July 1 and Claire promised to pay the full price on the same day.James delivered the widget to Claire,but she did not pay the price as promised.If Claire is insolvent,James is entitled to either exercise a lien over the property or exercise the right of repossession under the Bankruptcy and Insolvency Act.

Question 15

Sigmund ordered and ate a meal at the Big Banana restaurant.Which of the following statements is TRUE?

A)The Sale of Goods Act may apply in order to create a form of consumer protection.
B)The Sale of Goods Act will not apply if Sigmund's primary intention was to receive a meal,rather than to enjoy the exceptional service for which the Big Banana is known.
C)The Sale of Goods Act will not apply if Sigmund paid for his meal with a credit card.
D)The Sale of Goods Act will not apply if Sigmund ate from a self-serve buffet at the Blue Fez.
E)The Sale of Goods Act will apply even if the restaurant provided the meal to Sigmund free of charge,as a way of improving its reputation.

Question 16

Chuck agreed to sell a widget to Tawny.Under the terms of that contract,she was required to pay $50 000 on May 1 and he was required to deliver the widget to her by June 1.The contract also stated that,regardless of possession,property in the widget would not pass to Tawny until she paid the full price.Tawny failed to pay $50 000 on May 1.However,on May 2,she introduced Chuck to Brandi,who was willing to buy the same widget for $45 000.Chuck insists that Tawny is still required to pay $50 000.Tawny,in contrast,argues that she only has to pay $5000 and that Chuck is required to act reasonably by selling the widget to Brandi for $45 000.Chuck's argument is correct and Tawny's argument is incorrect.

Question 17

There is a common element to the seller's right to exercise a lien,a stoppage in transit,or a repossession.In each case,the remedy is available only if the buyer is insolvent or bankrupt.

Question 18

Dawn wanted to buy 10 cricket bats to use to teach the game of cricket to her students.She visited Bradman's Cricket Manufacturing's factory and was shown several types of bats.She selected one of the models and asked Bradman's to send ten copies of that model to her house.The company's representative asked her if she wanted to test that model,but she said,"No,I'm in too much of a hurry." When the bats arrived at Dawn's house,however,she immediately noticed that the handles were manufactured in a way that made them impossibly painful to use.The model that she chose at Bradman's factory suffered from the same defect.Dawn would have noticed that defect if she had tested it.She nevertheless is entitled to reject the bats.

Question 19

Because of the need for commercial certainty,it generally is not possible for the parties to a sale of goods contract to exclude the terms implied by the Sale of Goods Act.

Question 20

Merckx Cycle displayed five identical bicycles in its front window.Eddie looked at the five bikes and said,"I'll take one for $750.Pick one and set it aside for me.I'll collect it from you next week." He then paid the entire purchase price and left.The owner of the shop picked one of the five bikes and moved it to a backroom.Two days later,the bike was stolen.Eddie certainly suffers the burden of that theft because property and risk has passed to him.

Question 21

Nigel was interested in a stereo system that he saw at Nikita's garage sale.She asked if he wanted to take it inside to her basement to test it out,but he said "no" because he felt uncomfortable with the idea of listening to music in a stranger's house.He nevertheless bought it for $100.When he got it home,however,he noticed three problems.First,there are several small scratches in the stereo's exterior finish.Second,he was disappointed to discover that the stereo does not have a radio.Nikita had not said anything about a radio,but he assumed that one was included in the unit.And third,Nigel is very upset that the CD player skips badly.Which of the following statements is TRUE with respect to the implied term of merchantable quality?

A)Nigel cannot sue Nikita because he would have noticed all of the defects if he had reasonably inspected the stereo unit before buying it.
B)Each of the problems that Nigel noticed prevents the stereo from satisfying the implied term of merchantable quality.
C)Nigel cannot sue Nikita because the implied term of merchantable quality does not apply to used goods.
D)Nigel cannot sue Nikita unless she normally is in the business of selling stereos.
E)Nigel cannot sue Nikita unless he relied upon her advice when he decided to buy the stereo.

Question 22

Which of the following statements is TRUE with respect to the implied condition of merchantability?

A)Although the buyer is not required to inspect the goods before purchase,the implied condition of merchantability is entirely inapplicable if an inspection does occur.
B)Although the buyer is required to inspect the goods before purchase,the implied condition of merchantability is applicable to defects that a reasonable person would not have noticed during such an inspection.
C)Goods may be considered to be of merchantable quality even if they are defective in some other way not affecting their merchantability.
D)The implied condition of merchantability applies only if the buyer purchased the goods for personal use.
E)The implied condition of merchantability applies only if the buyer ordinarily deals in the sorts of goods that it purchased from the seller.

Question 23

Which of the following statements is entirely TRUE with respect to the implied term for a sale by sample and the implied term for description?

A)If the seller has breached one of those implied terms,it has always breached the other as well.
B)The implied term regarding a sale by sample is only concerned with fitness for purpose,and the implied term regarding description is only concerned with the identity of the goods.
C)Both types of implied terms are concerned only with the identity of goods.
D)Neither type of term applies unless the seller ordinarily is in the business of selling the type of goods that the buyer purchased.
E)The implied term for a sale by sample may be ineffective if the buyer failed to reasonably inspect the goods at the time of delivery,but the same is not true of the implied term for description.

Question 24

Cordelia visited Gord's paint store and explained that she wanted to paint the exterior of her house a certain shade of blue.She gave him a piece of material to demonstrate the colour that she had in mind.She also explained that she had never before painted anything,and she asked Gord whether or not he thought that she was capable of doing the job.He said,"No problem.I have 30 years of experience in this business.Just leave the details to me and you'll be fine." Cordelia then bought six buckets of paint that Gord had mixed for her in his back room.The next day,she asked her nephew to paint her house while she was at work.When she returned home at the end of the day,she was disappointed to discover that the colour was considerably different than the colour that she had given to Gord.She also learned that the paint was intended for interior use only.Cordelia can sue Gord for breach of

A)the implied term regarding description and the implied term regarding fitness for purpose.
B)the implied term regarding description only.
C)the implied term regarding fitness for purpose only.
D)the implied term regarding description,the implied term regarding fitness for purpose,and the implied term regarding merchantable quality.
E)the implied term of merchantable quality only if she relied on his advice in selecting the paint.

Question 25

Meena offered to sell a widget to Thor for use in his factory.He hesitated to accept that offer because he was not sure that the widget would be compatible with the rest of his equipment.The parties therefore agreed that Thor would take possession of the widget for the purpose of testing it at his factory.Which of the following statements is TRUE?

A)Risk will pass to Thor if he keeps the widget for an unreasonably long time,even if he does not intend to purchase it.
B)Since property follows possession,the risk passed to Thor as soon Meena gave the widget to him.
C)Risk will not pass to Thor unless he notifies Meena that he intends to keep the widget.
D)This transaction falls under Rule 5.
E)In this type of case,the issue of risk is irrelevant.

Question 26

Alison bought a computer from Hugh.The parties never actually met.Alison saw a selection of computers on Hugh's web site and ordered one by telephone.Alison will be able to bring an action against Hugh on the basis of an implied condition that the goods match their description

A)if the computer is delivered two weeks later than Hugh had promised.
B)only if she has already paid the purchase price.
C)if the computer is not of the same quality as she expected.
D)only if she intended to use the computer for personal,rather than business,purposes.
E)if her complaint deals with the identity of the goods,but not if her complaint deals with the quality of the goods.

Question 27

Which of the following transactions would not be decided under the Sale of Goods Act?

A)Marco sold a bicycle to Tara.Although she received the bike immediately,she did not pay any money.She promised to pay $400 in cash within six months.
B)Marco sold a bicycle to Tara.Although she received the bike immediately,she did not pay any money.She gave a cheque to Marco for $400.
C)Marco sold a bicycle to Tara.Although she received the bike immediately,she did not pay any money.She allowed Marco to charge $400 to her credit card.
D)Marco sold a bicycle to Tara.Although she received the bike immediately,she did not pay any money.She gave her old bike to Marco and promised that she would pay $100 within six months.
E)Marco promised to make a gift of a bike to Tara,but he changed his mind and did not give the bike to Tara.

Question 28

Lucy sells bulk foods to restaurants.Jean-Paul visited her warehouse and indicated that he wanted to buy a barrel of peanuts for use at his diner,the Healthy Nut.Lucy went into a back room and returned with a small bag of unsalted peanuts.Jean-Paul agreed to buy a barrel of the same.Lucy went to a back room again and returned with a sealed barrel of peanuts.She asked Jean-Paul if he wanted to inspect the goods,but he said,"No,I'm in too much of a hurry.Just have them delivered to my restaurant this afternoon." The barrel was delivered,but when Jean-Paul opened it,he discovered that the peanuts were salted.He therefore insists that he is entitled to reject them.Which of the following statements is TRUE?

A)Jean-Paul cannot reject the barrel because property passed to him when the contract was created.
B)Jean-Paul cannot reject the barrel because he failed to use a reasonable opportunity to inspect the goods.
C)Jean-Paul is entitled to reject the barrel because the goods are unmerchantable.
D)Jean-Paul is entitled to reject the barrel because the goods do not correspond to the sample.
E)Jean-Paul can reject the barrel unless he is capable of mitigating his loss by reselling the goods to a third party.

Question 29

Fenna bought a specific widget from Maurice.The total price was $1000.She paid $400 immediately and promised to pay the remainder within one month.Since the widget was a floor model,Maurice agreed to clean and lubricate it for Fenna within one week.Under the terms of the contract,once he had done so,he would leave the widget behind his store and call her to pick it up.The widget was stolen before Fenna acquired possession of it.Which of the following statements is TRUE?

A)Property did not pass to Fenna unless she paid the remainder of the price to Maurice before the theft occurred.
B)Fenna will bear the burden of the loss if the theft occurred after Maurice had cleaned and lubricated the widget,and after he called her to collect the widget.
C)If the risk passed to Fenna,she will not be entitled to recover her $400 payment,but she also will not be required to pay the remainder of the price.
D)If property passed to Fenna,Maurice should use the remedy of repossession to demand payment of the remainder of the price.
E)Even if property passed to Fenna,the risk of loss must have remained with Maurice until Fenna actually took possession of the widget.

Question 30

On March 1,Giselle saw Harlan demonstrating a new type of widget at a trade show.On April 1,she ordered one from him.Under the terms of that contract,Harlan was required to deliver the widget on May 1 and Giselle was required to pay the entire purchase price of $10 000 on June 1.Harlan did not deliver the widget until May 15.Although Giselle accepted the item and agrees that it is in good working order,she is unhappy.The late delivery caused her to lose $5000 in profits.She should sue Harlan on the basis of his breach of an implied term

A)concerning description.
B)dealing with samples.
C)of merchantable quality.
D)that requires fitness for purpose.
E)that is classified as a condition,rather than a warranty,under the Sale of Goods Act.

Question 31

Kasper bought a truckload of gravel from Gita.The parties agreed that the price would be at least $500.Kasper therefore paid that amount later the same day.He promised to pay the remainder (which the parties estimated to be $200)after Gita weighed the gravel in order to determine its exact price.Gita returned with the truckload of gravel to her supply yard,weighed the gravel,and determined that the total contract price should be $675.Unfortunately,the gravel was stolen before Kasper actually took possession of it.Which of the following statements is TRUE?

A)Risk passed to Kasper because he paid part of the price.
B)Although property passed to Kasper when he paid part of the price,the risk remained with Gita until she weighed the gravel.
C)Kasper will bear the burden of the theft if Gita notified him of the total price after the theft occurred.
D)Property passed to Kasper as soon as the contract was created because the agreement was concerned with specific goods that were already in a deliverable condition.
E)The Sale of Goods Act applies to the facts even though the subject matter of the contract is gravel,which is a substance that must be taken from land.

Question 32

In March,Nena entered into several transactions with Hakeem.She borrowed a boat from him and promised that she would fix its engine before she gave it back.She purchased a piece of land from him for $100 000,even though it was really only worth $75 000.She received two bicycles from him as gifts and secretly intended to give him $500 on his next birthday.She paid $250 for his advice regarding her investments.She promised to pay $1000 in June and he promised to deliver a widget to her in July.It is now April.The Sale of Goods Act may apply to the transactions regarding

A)the widget and the boat,but not the others.
B)the land and the investment advice,but not the others.
C)the bicycles and the widget,but not the others.
D)the boat and the bicycles,but not the others.
E)the widget,but not the others.

Question 33

Yossuf is a carpenter who manufactures furniture.Among other things,he specializes in carving chairs out of a single block of wood.He then personalizes each chair by carving the owner's name into the backrest.Yossuf's store contains a number of such chairs.Krystelle saw the chairs,was impressed,and agreed to buy one for $1500.Unfortunately,Yossuf's entire stock of chairs was destroyed in a fire before Krystelle could take possession of her chair.Which of the following statements is TRUE?

A)Krystelle will be required to pay the price as long as Yossuf intended to carve her name into a particular chair before the fire occurred.
B)Because the parties agreed on the price at the outset,the risk passed to Krystelle as soon as the contract was created.
C)The facts demonstrate that the parties' contract contained a "retention of title clause."
D)This case will be decided under Rule 4.
E)Krystelle is entitled to recover any money that she paid to Yossuf as part of the price.

Question 34

Which of the following statements is TRUE as a general rule?

A)Property passes under an unconditional contract for the sale of specific goods in a deliverable state only once the buyer pays the price.
B)Property passes under a contract that requires the seller to modify the goods in order to put them into a deliverable state only when the goods are delivered to the buyer.
C)Property passes under a contract that requires the seller to do something to ascertain the price of the goods as soon as the price is determined.
D)Property passes under a contract "on sale or return" only if the buyer pays the price.
E)Property passes under a contract that requires the seller to test the goods as soon as the seller does so and notifies the buyer.

Question 35

If goods are sold by both description and sample,the goods must

A)match the description and the sample.
B)match the description,but not the sample.
C)match the sample,but not the description.
D)always be fit for their intended purpose.
E)always be of merchantable quality.

Question 36

The general rule in sales is caveat emptor.Which of the following statements about that concept is TRUE?

A)Caveat emptor is a Latin phrase that means that a person cannot sell more than he or she actually owns.
B)Caveat emptor is a Latin phrase that means "let the seller beware."
C)Because of the concept of caveat emptor,the buyer normally must pay for goods as soon as they are delivered.
D)The implied term regarding merchantability is an exception to the general rule of caveat emptor.
E)Caveat emptor is a Latin phrase that means that,after the codification of the Sale of Goods Act,judges should resolve disputes on the basis of the statute and not on the basis of old cases.

Question 37

Which of the following statements is TRUE?

A)The passing of property is important for the purposes of insurance because risk usually passes with property.
B)The Sale of Goods Act does not apply until property has passed from the seller to the buyer.
C)Property in goods is always held by the person who has possession of the goods.
D)Although the passing of property is important for some reasons,it does not affect the remedies that may be available to a seller.
E)Property never passes under a sale of goods until the buyer has paid the price.

Question 38

The Sale of Goods Act implies a term that goods will match their description.Which of the following statements is TRUE with respect to that term?

A)That term is a warranty.
B)That term applies only if the seller is normally in the business of selling the type of goods that the buyer has purchased.
C)That term does not apply if the buyer personally selected an item from a shelf.
D)That term is a codification of the phrase caveat emptor.
E)That term applies to the identity of goods,but not to the quality of goods.

Question 39

Juan bought a lawn mower at Raija's garage sale.He gave her a cheque for $100 and explained that he would collect the lawn mower later the same afternoon when he had use of his friend's pickup truck.Juan then asked Raija to leave the lawn mower near her garage.When Juan came to collect the lawn mower two hours later,he discovered that it had been stolen from the place where he had told Raija to leave it.Which of the following statements is TRUE?

A)Juan is entitled to a refund of $100 because he is not required to pay for a stolen lawn mower.
B)Property and risk did not pass to Juan because he had not taken possession of the lawn mower.
C)Property and risk did not pass to Juan unless Raija cashed his cheque before the theft occurred.
D)Even if the transaction occurred in a jurisdiction that considers some oral contracts to be unenforceable,the agreement between Juan and Raija did not have to be evidenced in writing because the price had already been paid.
E)Since the transaction dealt with used goods,the Sale of Goods Act does not apply and it is therefore unnecessary to determine if property passed.

Question 40

Which of the following statements is TRUE?

A)The basic distinction between conditions and warranties is the same under both the Sale of Goods Act and the general law of contracts.
B)Although the parties are generally free to accept or reject parts of the Sale of Goods Act,they cannot decide to treat a statutory condition as if it was a warranty.
C)If there is a breach of contract under the Sale of Goods Act,the plaintiff must use the statutory remedies rather than the remedies that are generally available for a breach of contract.
D)The Sale of Goods Act always imposes an implied condition that the goods are suitable for the buyer's purpose.
E)The Sale of Goods Act now classifies a number of implied obligations as innominate terms.

Question 41

Which of the following remedies can only ever be used if the buyer is insolvent?

A)stoppage in transit and repossession
B)an action for the price and a lien
C)an action for the price,stoppage in transit,and repossession
D)damages,a lien,and repossession
E)a lien,stoppage in transit,and repossession

Question 42

The Sale of Goods Act applies only to the sale of goods.Goods include things like cars,cats,and cabbages.Identify and briefly explain three types of property to which the Act does not apply.

Question 43

Naima ordered 100 rolls of film from Coltrane Photographic Supplies.The total contract price was $200 ($20 per roll).Which of the following statements is TRUE?

A)If Coltrane delivers 110 rolls of film,Naima must accept at least 100 rolls.
B)If Coltrane delivers 90 rolls,Naima must accept them,but she only has to pay $180.
C)If Coltrane delivers 110 rolls,Naima can keep them all and is only required to pay the contract price of $200.
D)If Coltrane delivers 90 rolls,Naima can reject them all,even if Coltrane is willing to reduce the contract price to $180.
E)If Coltrane delivers 110 rolls of film,but charges for only 100 rolls,then Naima must accept delivery and pay the price.

Question 44

The Sale of Goods Act implies a

A)warranty that the seller has title to sell.
B)warranty that delivery will occur on time.
C)warranty that goods will be of merchantable quality.
D)warranty that payment will occur on time.
E)condition that the buyer will receive clear title.

Question 45

The implied term regarding fitness for intended purpose

A)applies any time that the buyer relied upon the seller's skill or judgment.
B)applies only if the buyer relied upon the seller's skill or judgment and the seller knew of that reliance.
C)applies only if the buyer purchased the goods for a business purpose.
D)never applies if the buyer mentions the trade name for a particular type of goods.
E)cannot be reduced or eliminated by a limitation clause or an exclusion clause.

Question 46

Myla became violently ill after eating a hamburger at a fast food restaurant.Assuming that the fast food restaurant operated in the usual manner,the Sale of Goods Act will be irrelevant to the legal relationship that exists between those two parties

A)because the restaurant did not provide Myla with a paper receipt for her purchase.
B)because the parties' contract was focused on the provision of services,rather than the transfer of goods.
C)if the hamburger that Myla ate was purchased for her by a friend.
D)if Myla purchased the hamburger by using a debit card.
E)unless it was evidenced in writing.

Question 47

Honoria agreed to sell a shipment of widgets to Klaus on credit.Following the terms of the contract,Honoria delivered the widgets to an independent carrier and instructed the carrier to deliver the shipment to Klaus's warehouse.Which of the following statements is TRUE?

A)Honoria still has the authority and the ability to exercise a lien in order to retain possession of the shipment until Klaus pays the full purchase price.
B)Honoria can exercise the right of repossession against the independent carrier if she hears a rumor that the carrier may be insolvent.
C)If Klaus becomes bankrupt,Honoria should rely entirely on an action for the price.
D)If Honoria becomes insolvent while the goods are being shipped by the carrier,Klaus should exercise a lien over the widgets.
E)If Klaus becomes insolvent while the carrier still has possession of the shipment,Honoria should exercise the right of stoppage in transit.

Question 48

Good-Nite Inns,a chain of mid-quality hotels,entered into a contract with Hospitality Supply Company (HSC)for the purchase of soaps.Those soaps were intended to be provided to customers of the hotel.Shortly after receiving the first delivery,however,Good-Nite Inns discovered that the soaps caused a dry,itchy rash on even the most thick-skinned customers.The hotel chain therefore wants to sue HSC under the Sale of Goods Act.Which of the following statements is TRUE?

A)There is no implied term of fitness for purpose because,given the nature of its business,Good-Nite Inns should know enough about its customers to select the correct soaps.
B)There is no implied term of fitness for purpose if Good-Nite Inns relied upon the soaps' brand name when it placed its order.
C)Good-Nite Inns may be able to rely upon an implied term of merchantability even if it placed its order after selecting the soaps from among a variety of samples.
D)If Good-Nite Inns selected the soaps from among a variety of samples,HSC may be held liable even if the hotel chain would have discovered the defect in the soaps if it had reasonably inspected the soaps before creating the contract.
E)The Sale of Goods Act does not apply because the contract was created between two companies.

Question 49

Noriko saw a painting in Kurosawa's Fine Art shop.The total price was $7000.Noriko explained to the salesperson that she loved the painting,but she also said that she was not sure if she could afford it.The salesperson said that he could not simply set it aside for her because several other customers had shown an interest in the painting.Noriko therefore agreed to provide a $500 deposit and promised that she would return within a week to pay the remainder and take possession of the painting.Two weeks later,she telephoned the salesperson and said that she simply could not afford to buy the painting.Which of the following statements is TRUE?

A)Noriko can recover her $500 payment because the Sale of Goods Act does not apply to the parties' contract.
B)Kurosawa is probably entitled to keep the $500 because Noriko's payment was probably a penalty.
C)Noriko can exercise a lien in order to recover $500 from Kurosawa.
D)The facts demonstrate the use of a contractual clause for liquidated damages and why parties should sometimes insert such clauses in their contracts.
E)Noriko would be entitled to recover her $500 payment if the contract was not governed by the Sale of Goods Act.

Question 50

Shasta contractually agreed to purchase a crystal vase from Status Home Furnishings.However,before she was able to take possession of it,and while it was still in the store,the crystal vase fell to the ground and shattered beyond repair as a result of a small earthquake.Which of the following statements is TRUE?

A)Shasta bears the cost of the accident because risk always passes to the buyer as soon as a valid sale contract is created.
B)Shasta cannot possibly bear the cost of the accident if property had not yet passed to her.
C)Assuming that risk passed to Shasta before the accident occurred,it could not possibly be relevant that the store had acted carelessly.
D)As a general rule,if risk passed to Shasta before the accident occurred,the store was required to purchase insurance for her protection as long as the store retained possession.
E)If the store was contractually required to polish the vase,then it may still bear the loss even if it had completed the task before the earthquake occurred.

Question 51

The passing of property under the Sale of Goods Act is important for a variety of reasons.Identify and explain the most important of those reasons.

Question 52

Manuela purchased a network server from Compu-Sell.After installing the server and trying to use it for several days,however,she discovered that it does not perform in the way that she expected and requires.Which of the following statements is TRUE with respect to terms under the Sale of Goods Act?

A)If the server is not of merchantable quality,Manuela will not be able to sue if she did not inspect the server at the time of purchase,and if the defect would have been discovered on the basis of a reasonable inspection.
B)Because of the maxim caveat emptor,the parties' contract will not contain an implied term of merchantability unless the parties actually intended to include that term.
C)Manuela will not be able to sue for a lack of merchantability unless it was reasonably clear to Compu-Sell that Manuela was relying on its expertise.
D)The server may be of merchantable quality if Manuela purchased it as used,even if it would not be considered merchantable quality if Manuela purchased it new.
E)The implied term of merchantability applies to the server itself,but not to its labeling and packaging.

Question 53

The phrase nemo dat quod non habet means

A)things that are attached to land are part of the home.
B)sales of things at sea are different than sales of things on land.
C)no one can give what they do not have.
D)risk of loss follows property.
E)a person cannot own what they do not possess.

Question 54

Pepe wants to buy something from Lorna.Pepe also wants to make sure that the contract is governed by the Sale of Goods Act.Which of the following statements is TRUE?

A)Even if the parties' transaction would not normally fall within the scope of the Sale of Goods Act,the statute will apply if the parties intend for it to do so.
B)Because the Sale of Goods Act defines a sale of goods as a transfer of goods in exchange for "money consideration," the statute will apply only if Pepe pays with cash
C)The statute will apply if the parties create either a sale or an agreement to sell.
D)Although the parties' contract may be valid,it cannot possibly be governed by the Sale of Goods Act unless it is evidenced in writing.
E)The statute may apply if the parties' contract deals with manufactured goods (like cars and computers),but not if it deals with natural products (like milk and timber).

Question 55

Which of the following are special remedies available under the Sale of Goods Act as discussed in Chapter 13?

A)stoppage in transit
B)liquidation
C)insolvency
D)mortgage
E)injunction to perform personal services

Question 56

Which of the following transactions falls OUTSIDE the scope of the Sale of Goods Act?

A)the exchange of a painting for a cheque
B)a trade of a boat for a car
C)the exchange of a diamond ring for a series of monthly cash payments
D)the exchange of a new truck for $10 000 cash and an old car
E)a cash purchase of crops that will be harvested

Question 57

The Sale of Goods Act applies only to sales contracts.A sale includes both a sale in which the buyer immediately acquires the property,and an agreement for sale in which property passes some time after the contract is created.Identify and briefly explain three types of transactions that are not governed by the statute.

Question 58

Sound Experience Inc sold a carton of personal CD players to Noriel.The contract requires Noriel to pay the total price of $10 000 upon delivery.The contract required Sound Experience to deliver no later than March 15.Sound Experience therefore gave the carton to an independent carrier on March 7,along with instructions for delivery to Noriel.On March 12,however,Sound Experience learned that Noriel had become insolvent and almost certainly would not be able to pay for the CD units.Which remedy should Sound Experience use?

A)sue for damages
B)stoppage in transit
C)repossession
D)lien
E)action for the price

Question 59

Hamish entered into a contract with Shania.Under the terms of that agreement,she was required to deliver a widget to his factory within one week.As payment for that widget,Hamish immediately gave Shania a cheque for $5000 and a used widget that he no longer required.Shania intended to re-calibrate that widget and sell it to another customer for $1000.A dispute has arisen between the parties.Hamish argues that the agreement is governed by the Sale of Goods Act.Shania disagrees and in support of her position,she points to a section in the statute that says that the buyer must provide "a money consideration,called the price." And,as she reminds Hamish,he did not give any cash to her.Is the parties' contract governed by the Sale of Goods Act? Explain your answer.

Question 60

"The Sale of Goods Act was intended to make commerce easier by generally implying a number of terms into contracts for the sale of goods.However,the implication of such terms also creates the need for careful risk management." Explain the meaning of that statement and describe how the relevant risks can be managed.

Question 61

Hiram is about to agree to sell a specific antique book to Natasha for $30 000.Hiram is willing to let Natasha have possession of the goods immediately.Furthermore,he is willing to sell the book on credit and to allow her to pay in ten monthly instalments.However,he is also concerned that she might become insolvent before paying the full price.If that occurred,he would want to be able to recover the book itself,rather than simply sue Natasha.After all,if she becomes bankrupt,she will not have enough money to fully satisfy all of the claims against her.Is Hiram's position truly at risk? If so,is there anything that he can do when creating his contract with Natasha to protect himself? Explain your answer.

Question 62

Humbert visited Dolores's premises and saw a sample of widgets that she was offering for sale.On the basis of that sample,he agreed to buy her entire stock of ten widgets.Dolores was delighted with that sale because she had not previously dealt in widgets and she did not intend to do so again in the future.Humbert paid the price in full and Dolores delivered the widgets to his workshop the next day.Because he was busy,Humbert did not inspect the widgets when they arrived.He simply signed a receipt and placed the widgets in a storeroom.Some time later,however,he discovered that the widgets were defective.He therefore demanded a partial refund.Dolores refused that request on the basis that the defect was fairly obvious.Is Humbert entitled to complain about the defect? Explain your answer.

Question 63

Lalene agreed to purchase a specific vehicle from Ritooria Motors.Under the terms of that contract,Lalene immediately provided a cheque for $10 000 and promised to pay another $15 000 within one year.Ritooria promised to prepare the car for delivery within one week (by installing a CD player and adding new tires)and to call Lalene when the work was done.Ritooria cashed the cheque the next day and prepared the car as promised within one week.Before it contacted Lalene,however,the car was struck by lightning and completely destroyed.Unfortunately,neither party had insurance on the car.Ritooria insists that it is still entitled to receive another $15 000 from Lalene.She,in contrast,insists that she is entitled to a refund of the $10 000 that she previously paid.Which party is probably correct? Explain your answer.

Question 64

Zounds Sounds,a music store,ordered 20 cases of blank cassette tapes from Polymuse Inc.Each case costs $100,so that the total contract price was $2000.In fact,Polymuse delivered 23 cases of tapes to Zounds.Is Zounds required to accept some or all of those cases? If so,what price will it be required to pay?

Question 65

Sareena has owned and operated her own interior decorating business for several years.She was recently hired to redecorate the ballroom of the Palliser Hotel.The ballroom was located across from the hotel's swimming pool and sauna area.Sareena visited Fridman's Home Supply,explained the situation to the sales person,and said that she needed a large amount of wallpaper.The sales person took Sareena to the appropriate section of the store and asked if she required any further assistance.Sareena said,"Not really.I'm an old pro at this sort of thing.I just need something that will remain stuck to the walls even if there is high humidity." She then pointed to a particular brand of wallpaper and said,"Please just load fifty rolls of this stuff into my truck that is sitting out front." She then paid for the purchase and,over the next few days,hung the wallpaper in the hotel's ballroom.Almost immediately,however,it became apparent that the humidity from the pool and sauna was causing the wallpaper to peel.Is Sareena entitled to bring an action against Fridman's Home Supply on the basis that the wallpaper is not fit for its intended purpose? Explain your answer.

Question 66

Beverley purchased a widget from Laskin Manufacturing Inc.She wanted the widget for personal use in her home.Like most large businesses,Laskin Manufacturing uses standard form documents for all of its transactions.The document that it used for the sale to Beverley said "The seller shall not be held liable on the basis of any implied warranties." Shortly after she brought the widget home,Beverley discovered that it was fundamentally defective.She has complained to Laskin Manufacturing,but the company says that it cannot be held liable because of the exclusion clause in the sales contract.Is the company's argument correct? Explain your answer.

Question 67

Explain the basic differences between: (i)a claim for damages following the buyer's breach of contract,and (ii)an action for the price by the seller.

Question 68

Discuss the significance of a buyer's reasonable opportunity to inspect goods before accepting them.Can a buyer ever be held responsible for failing to use a reasonable opportunity to inspect goods? Can a buyer ever be held responsible for failing to detect a defect while inspecting goods? Explain your answers.

Question 69

Crystal purchased a specific,fully functioning widget from Husker Du Inc.She promised to pay the price of $10 000 within one month.As part of a promotional campaign,Husker Du agreed to deliver the widget to her factory for free.Husker Du Inc.delays shipping the widget to Crystal's place as it forgets about the order.During that delay Husker Du's employee carelessly left its truck unlocked on the street during his lunch break.The widget was stolen from the truck and has never been recovered.Husker Du nevertheless insists that Crystal had already acquired property in the widget by the time of the theft and that she therefore was required to honour her promise to pay $10 000.Is that argument correct? Did property pass to Crystal? Is she required to pay the price? Explain your answer.

Question 70

On May 1,Suneel entered into a contract with Mathilde.She promised to deliver a widget to him on June 1 and he promised to pay the total purchase price of $10 000 on July 1.As June 1 approached,however,Suneel began to worry about giving possession of the widget to Mathilde without getting paid at the same time.He therefore wants to exercise a lien.Is he entitled to do so? Would your answer be different if Mathilde became insolvent before June 1? Explain your answers.