Deck 14: Performance and Breach of Sales and Lease Contracts

Question 1

Tender must occur at a reasonable hour and in a reasonable manner.

Answer 1

True

Question 2

An installment contract is a single contract that requires or authorizes delivery in two or more separate lots to be paid for in one payment.

Answer 2

False

Question 3

There are no circumstances under which a contract can be tendered by multiple deliveries of goods.

Answer 3

True

Question 4

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

Question 5

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

Question 6

Under the UCC, if a contract does not designate the place of delivery for the goods, the place of delivery is a location halfway between the seller's place of business and the buyer's place of business.

Question 7

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

Question 8

Unless the parties agree otherwise, the buyer or lessee has an absolute right to inspect the goods before making payment.

Question 9

With an installment contract, a buyer or lessee can reject a single installment on any pretext.

Question 10

Until the time for performance under a contract expires, the seller has a right to cure.

Question 11

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

Question 12

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

Question 13

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

Question 14

The term cure refers to the right of the buyer to reject, adjust, or replace nonconforming goods.

Question 15

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

Question 16

Tender of delivery requires that the seller or lessor hold the goods at the buyer's or lessee's disposal, but not that the goods be conforming.

Question 17

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

Question 18

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

Question 19

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

Question 20

Under the UCC, there are no exceptions to the perfect tender rule.

Question 21

Clear View Company, which is based in Delaware, agrees to sell fifty windows, currently stored in Florida, to Far Sight, Inc., which is based in Hawaii. Absent an agreement to the contrary, the place of delivery is in

A) ​California.
B) ​Delaware.
C) ​Florida.
D) ​Hawaii.

Question 22

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

Question 23

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

Question 24

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 25

If goods identified to a contract are destroyed through no fault of either party, both parties are excused from performance.

Question 26

If a contract specifies a certain carrier, a substitution of a different carrier for any reason breaches the contract.

Question 27

If, before the time for performance, a buyer communicates an intent not to perform, the seller can consider the buyer in breach and pursue a remedy.

Question 28

When a seller refuses to deliver goods that are unique, a buyer can obtain specific performance.

Question 29

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

Question 30

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)m.

A) ​1:00 p.m.
B) ​2:00 p.m.
C) ​3:00 p.m.
D) ​2:00

Question 31

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 32

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

Question 33

Revocation of acceptance is effective on notice to the seller or lessor.

Question 34

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

Question 35

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

Question 36

If either the goods or their tender fails to conform to the contract in any respect, the buyer or lessee must reject all of the goods.

Question 37

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

Question 38

Unless otherwise agreed, inspection of goods can take place at any reasonable place and time and in any reasonable manner.

Question 39

Dairy Goods agrees to sell a certain quantity of ice cream to Event Caterers, but their contract does not specify the address at which the goods are to be delivered. If the parties fail to specify the address before the delivery date

A) ​the seller is excused for any resulting delay.
B) ​the seller is liable for any resulting delay.
C) ​the time for delivery is extended with a price adjustment for the delay.
D) the contract is canceled.

Question 40

If a lessee breaches a contract, the lessor can cancel the contract.

Question 41

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 42

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 43

Fact Pattern 14-1
Daily Bread Bakeries, Inc., contracts to buy all of its ingredient requirements for bread making, at a certain minimum per year, from Enriched Flour & Grain Corporation for six years. After three years, Daily Bread tells Enriched that it plans to sell its assets to Flat Bread Shops, Inc. Flat Bread refuses to assure Enriched that it will continue Daily Bread's contract.
Refer to Fact Pattern 14-1.Flat Bread's refusal is​

A) ​a justified response based on Flat Bread's relation to the contract.
B) ​an assignment of Daily Bread's rights under the contract.
C) ​a reasonable suspension of performance under the contract.
D) ​a repudiation of the contract.

Question 44

Quarry Equipment Corporation and Rock & Gravel Inc. enter into a lease of three bulldozers. Under the perfect tender rule, Quarry must ship or tender goods to Rock & Gravel that, with respect to the contract description, conform

A) ​to the best of the lessor's ability under the circumstances.
B) ​to a reasonable extent.
C) ​in every way.
D) ​to a substantial degree.

Question 45

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 46

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 47

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 48

Fact Pattern 14-1
Daily Bread Bakeries, Inc., contracts to buy all of its ingredient requirements for bread making, at a certain minimum per year, from Enriched Flour & Grain Corporation for six years. After three years, Daily Bread tells Enriched that it plans to sell its assets to Flat Bread Shops, Inc. Flat Bread refuses to assure Enriched that it will continue Daily Bread's contract.
Refer to Fact Pattern 14-1.Enriched can​

A) ​assign its rights under the contract but cannot terminate it.
B) ​terminate the contract and seek damages.
C) ​suspend performance under the contract until Enriched is fully paid.
D) ​do nothing.

Question 49

Beef Burgers, Inc. contracts to buy five hundred head of cattle from Cattle Ranch. Before the seller delivers, an outbreak of disease causes a quarantine of the ranch. In this circumstance, the perfect tender rule

A) ​applies to both parties.
B) ​no longer applies.
C) ​applies only to Beef Burgers.
D) ​applies only to Cattle Ranch.

Question 50

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 51

Precise Parts, Inc., and Quality Auto stores enter into a contract for a sale of auto parts that meet certain specifications. Precise Parts ships goods that do not comply. Quality Auto

A) ​cannot reject the entire shipment.
B) ​can reject the entire shipment.
C) ​must accept the entire shipment.
D) ​must reject the entire shipment.

Question 52

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 53

H2O Company contracts to sell pumps, tanks, and water storage systems to In-Flo Irrigation, Inc. Before the goods are delivered, In-Flo indicates that it will not be able to pay. H2O can

A) ​force the buyer to accept and pay for the goods.
B) ​require the buyer to find a buyer for the goods.
C) ​resell the goods and recover any damages from the buyer.
D) ​do nothing.

Question 54

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 55

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 56

Speedy's Auto Parts orders twenty tires from Tough Tires, Inc. Ten of the tires are delivered in a damaged condition. Speedy's

A) ​cannot reject the entire shipment.
B) ​must pay for all of the tires at the contract price.
C) ​may accept the shipment with a reduction in price.
D) ​must reject the entire shipment.

Question 57

Fruit of the Plant, Inc., agrees to sell a certain quantity of a high-quality grain seed to Grange Co-op. Fruit of the Plant can obtain only half of the quantity ordered, so the seller also ships a lesser quality seed in twice the amount of the remainder of the order for the same price. Grange Co-op rejects the lesser quality seed. With time for performance not yet expired, Fruit of the Plant can

A) attempt to cure the defect.
B) ​cancel the contract.
C) ​recover the amount of its expected profit plus incidental damages.
D) ​resell or dispose of the seed and hold Grange Co-op liable for any loss.

Question 58

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 59

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 60

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 61

TackMaker, Inc., and Silver Stallion Stables enter into a contract for a sale of bridles, saddlery, and other equine equipment. TackMaker delivers, but Silver Stallion does not pay. TackMaker can normally recover as damages

A) ​any profit lost minus any loss avoided.
B) ​whatever amount the seller wishes to claim.
C) ​the purchase price plus incidental damages.
D) ​the market price at the place at which the seller delivered the goods.

Question 62

EconBank issues a letter of credit in favor of Facile Deals Inc., a U.S. firm, to facilitate an international sales contract to buy certain products from Global Goods, Ltd., a British company. Global is entitled to payment when it

A) ​enters into the contract with the buyer.
B) ​verifies that the buyer has the money to pay for the purchase.
C) ​complies with the terms and conditions of the letter of credit.
D) ​asks to be paid.

Question 63

River Gear Company and Scenic Trips, Inc., enter into a contract on August 1 for the sale of fifty inflatable river rafts. Scenic cancels the contract ten days later. River Gear is unable to sell the rafts to another buyer. River Gear can

A) ​force the buyer to accept the rafts and pay for them.
B) ​recover the contract price but must hold the rafts for the buyer.
C) ​recover the contract price and keep the rafts.
D) ​recover the contract price but must destroy the rafts.

Question 64

Owen and Pablo enter into a contract for a sale of irrigation equipment. Pablo pays, but Owen does not deliver. Pablo can normally recover as damages the difference between

A) ​any loss avoided and any profit gained.
B) ​the actual price and the hoped-for price.
C) ​the contract price and the market price.
D) ​the current prices in the parties' locations.

Question 65

Bayou Boats, Inc., contracts for the sale of seven swamp boats to Eventide Fishing Tours. Bayou repudiates the contract. Eventide's recovery is measured at the time

A) ​Bayou advertised the goods.
B) ​Eventide ordered the goods.
C) ​Eventide learned of the breach.
D) ​Bayou knew that it would repudiate the contract.

Question 66

Asian Noodle Company contracts to sell 1,000 cases of rice noodles to Bob's Bistros, Inc., but refuses to deliver. Due to a rice shortage, Bob's Bistros cannot obtain the noodles elsewhere. The buyer's right to recover the goods from the seller is the right of

A) ​cover.
B) ​cure.
C) ​tender.
D) ​specific performance.

Question 67

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 68

Precious Stones, Inc., and Sparkling Jewelry stores enter into a contract for a sale of gemstones. Precious Stones does not deliver. The buyer can normally recover as damages the difference between

A) ​any loss avoided and any profit gained.
B) ​the actual price and the hoped-for price.
C) ​the contract price and the market price.
D) ​the current prices in the parties' locations.

Question 69

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 70

Banquets & Parties (B&P) contracts to buy 1,000 uninflated balloons from Gas Bags, Inc., for $1 per item. When the market price decreases to 50 cents per balloon, B&P refuses to go through with the deal. Gas Bags can recover

A) ​$1,500.
B) ​$1,000.
C) ​$500.
D) ​$0.

Question 71

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 72

VuPlay Company contracts to deliver one hundred 60-inch 3D HD television sets to a new retail customer, Watchbox Store, on May 1, with payment to be made on delivery. VuPlay tenders delivery in its own truck. Watchbox's manager notices that some of the cartons have scrape marks. Watchbox's owner phones VuPlay's office and asks whether the sets might have been damaged as they were being loaded. VuPlay assures Watchbox that the sets are in perfect condition. Watchbox tenders VuPlay a check, which VuPlay refuses, claiming that the first delivery to new customers is always for cash. Watchbox promises to pay the cash within two days. VuPlay leaves the sets with Watchbox, which stores them in its warehouse pending its "Grand Opening Sale" on May 15. Two days later, Watchbox's stocker opens some of the cartons and discovers that a number of the sets are damaged beyond ordinary repair. VuPlay claims Watchbox has accepted the sets and is in breach by not paying on delivery. Will VuPlay succeed on these claims? Explain.