Deck 4: Sales Contracts and Excuses for Nonperformance

Question 1

Socialist law is less flexible and more mechanical than the common law.

Answer 1

True

Question 2

A buyer of goods has no obligation under the CISG to examine goods promptly when received and give notice of an error in shipment.

Answer 2

False

Question 3

Specific performance is an equitable remedy requiring a party to specifically pay a certain sum of money.

Answer 3

False

Question 4

Because the laws are similar in most countries,there are few problems with international sales contracts.

Question 5

Money damages for breach of a sales contract may also include an amount for lost profits arising as a reasonably foreseeable consequence of the breach.

Question 6

Under common law,the offeror can withdraw his offer if withdrawal occurs before a transmitted acceptance is received.

Question 7

In the People's Republic of China,domestic contract law serves largely to enforce commitments made between state agencies.

Question 8

Historically,multinational corporations were at a disadvantage in contact negotiations with developing countries.

Question 9

Despite the fact that many countries permit foreign currency judgments,the CISG does not authorize them.

Question 10

International sales contracts concerning consumer goods sold for personal use come under CISG.

Question 11

Prevailing U.S.law permits money judgments in foreign currencies.

Question 12

U.S.lawyers generally prefer to draft contracts in exacting,detailed,and technical language while Japanese contracts generally tend to be short and with relatively little detail.

Question 13

The provisions concerning express and implied warranties are similar under the UCC and CISG.

Question 14

Money damages for breach of a sales contract is usually based on the difference between the market price and the contract price.

Question 15

Under common law,a contract is formed when dispatched by the offeree.

Question 16

It is a firmly held principle of international contract law that a seller is always obliged to supply goods in conformity with the provisions of public law applicable in the country of importation.

Question 17

"Conflict of Laws" in an international setting refers to which nation's laws apply to when a court hears a case.

Question 18

The Convention on Contracts for the International Sale of Goods (CISG)was developed to give U.S.business an advantage in international sales contracts.

Question 19

In practice,most force majeure clauses do not excuse a party's performance entirely but only suspend it for a while.

Question 20

Cultural influences play an insignificant role in the way people approach contract negotiations and contract drafting.

Question 21

Contract negotiations in Japan are characterized by all of the following except:

A) The Japanese desire for group harmony and consensus.
B) The importance of not losing face or becoming embarrassed.
C) The presence of lawyers during the negotiations to insure that their clients' legal interests are protected.
D) The desire to develop a long-lasting business relationship.
E) All of the above are characteristic of contract negotiations in Japan.

Question 22

Under the CISG,all contracts for the sale of goods must be in writing.

Question 23

The CISG says that the remedy of specific performance is allowed where the domestic laws of a country allow such a remedy.

Question 24

A and B have entered into a sales contract.If it becomes apparent to A that B might not perform a substantial part of his bargain as promised,A may:

A) Avoid the contract.
B) Suspend performance.
C) Request that B specifically perform.
D) Seek restitution.

Question 25

The CISG requires that an acceptance materially altering the terms of the offer be approved by the original offering party.

Question 26

If the price term is not fixed under CISG,there is no way to have a valid sales contract.

Question 27

When an international seller and buyer negotiate a sales contract,they have the option to "opt out" of CISG.

Question 28

The following sales are excluded from the CISG:

A) The sale of industrial equipment.
B) The sale of consumer goods.
C) The sale of ships and aircraft.
D) All of the above.

Question 29

Commercial impracticability is an excuse for nonperformance of a contract if it adds more than 20% to the cost of completing performance.

Question 30

Price reduction is not available as a buyer's remedy for the seller's breach under the CISG if:

A) The seller has already delivered conforming substitute goods.
B) The buyer has refused to accept the seller's attempt to cure the breach.
C) The buyer has avoided the contract and refused delivery.
D) All of the above.

Question 31

A,a New York firm,sends a purchase order to B in Sweden.A standard clause on the purchase order states that "All disputes are to be heard in the courts of New York." B confirms using its standard form,which states that "all disputes are to be resolved in arbitration before the ICC,Sweden." Under the CISG:

A) A contract exists on A's terms because B's terms were a material alteration and do not become a part of the contract.
B) A contract exists on B's terms because the modification is immaterial.
C) No contract exists because B's terms were a counteroffer that was not accepted by A.
D) A contract exists because A did not promptly object to the new terms.

Question 32

To use the concept of impossibility of performance as an excuse for nonperformance of a contract requires that the performance be objectively impossible.

Question 33

If a seller's employees go on strike,this is a valid legal excuse for not performing under a sales contract.

Question 34

Under a device known as nachfrist notice,the CISG allows either party -- buyer or seller -- to fix an additional period of time,beyond the date called for in the contract,for the other to perform.

Question 35

The Uniform Commercial Code has provisions applicable to international business allowing substituted performance.

Question 36

A force majeure clause serves as a general excuse for nonperformance of a sales contract in all situations.

Question 37

The CISG makes no provision for "trade usages" since everything is defined.

Question 38

In certain cases,a court excuses nonperformance of a contract where an unexpected event occurs that frustrates the purpose of the contract.

Question 39

The term "trade usage" refers to the customs of an industry,past dealings of merchants,and the usages of trade terminology and language.

Question 40

The CISG is inflexible as to making sure that goods are delivered on a specified date.

Question 41

Under the CISG,a communication between the parties would be considered an offer when:

A) It is in the form of an advertisement.
B) It leaves the quantity or price terms open.
C) It is sufficiently definite and indicates an intention to be bound.
D) Both B and C.

Question 42

All of the following may be raised as reasons for nonperformance of sales contract except:

A) Impossibility.
B) Frustration of Purpose.
C) Commercial Impracticability.
D) Subjective Constraints.

Question 43

All of the following are remedies available under CISG except:

A) Money Damages.
B) Reformation.
C) Avoidance of the Contract.
D) Specific Performance.

Question 44

Both the U.S.and France have ratified the Convention on Contracts for the International Sale of Goods (CISG).A buyer in France and a seller in the U.S.enter into a contract for the sale of widgets.If a dispute arises:

A) The CISG will apply since all the requirements have been met.
B) The CISG will not apply since the requirement of "legal selection" has not been met.
C) The Uniform Commercial Code (UCC) will apply since the seller is a U.S. company.
D) Neither the UCC nor CISG will apply.

Question 45

If a U.S.company wants to limit its implied warranties in connection with a sale of goods to a French company,the CISG provides that:

A) No limitation of implied warranties is allowed.
B) The limitation must be conspicuous and specific.
C) The limitation must be agreed to by the French company.
D) The limitation is valid no matter what the form.

Question 46

International Sales Law:
I) Is not uniform because of vast political, cultural, and historical differences.
II) Is embodied in the Convention on the International Sale of Goods.
Which of the following is correct?

A) Both I and II.
B) Neither I nor II.
C) I only.
D) II only.

Question 47

Under CISG,all of the following are requirements to excuse nonperformance of a contract except:

A) An impediment is beyond a party's control.
B) An impediment was not reasonably foreseeable at the time contract was concluded.
C) Notice of the impediment was given to the other party.
D) The impediment is of such a monetary value as to shock the conscience.

Question 48

A seller in France has a disagreement over a sales contract with a U.S.buyer.The case could be heard in either country.If the French seller starts looking for the best or most favorable court to have his case heard,it is known as:

A) Legal Precedent.
B) Multiple Selection.
C) Unfair Advantage.
D) Forum Shopping.

Question 49

U.S.Wheat Sales,Inc.has a contract with Zambia to supply 1,000,000 bushels of wheat.Before shipment,the U.S.government put an embargo on the sale of wheat to Zambia.U.S.Wheat cannot ship.In a legal action:

A) U.S. Wheat would be liable for breach of contract and have to pay damages.
B) U.S. Wheat will have to get wheat from other sources and specifically perform.
C) U.S. Wheat will be excused from performance because of the doctrine of impossibility of performance.
D) None of the above is correct.

Question 50

Eastern Airlines contracted with Gulf Oil for a supply of jet fuel.An oil embargo resulted in a 400 percent increase in the price of oil.Gulf demanded a price increase from Eastern.Eastern sued to ensure its supply of oil at the contract price.The result in court was:

A) That Eastern won because Gulf should have foreseen this situation.
B) Gulf won due to commercial impracticability.
C) That Eastern lost because a 400 percent increase is too much of a hardship for Gulf.
D) None of the above would be the court's decision in this situation.

Question 51

The name of the clause put into international sales contracts to limit the liability of the parties in the event of an intervening and disruptive force beyond a party's control makes performance more difficult than expected is:

A) Good excuse clause.
B) Out of control clause.
C) Force Majeure clause.
D) Excuse moi clause.

Question 52

Buyers and sellers entered into a contract for the sale of nuts.The usual route used the Suez Canal.Prior to shipment,a war closed the canal.Because the freight charges would be so high by another route,the seller refused to ship.The buyer had to buy at a higher price elsewhere and sued the seller.At trial:

A) The seller will win based on the doctrine of frustration of purpose.
B) The buyer will win since this is just a risk of doing business.
C) The seller will win because of res ipsa loquitur.
D) The buyer will lose because problems with shipment by sea are an excuse for nonperformance.

Question 53

If a question arises over a trade usage,the CISG provides that:

A) No reference to trade usage is allowed by a court.
B) A court can look at those trade usages that the parties knew or ought to have known and are regularly used in the industry.
C) A court can look at those trade usages to which the parties agree to be bound.
D) Both B and C.

Question 54

A U.S.company sends a purchase order to an Italian shoe company.The Italian shoe company sends a letter confirming the purchase order.The CISG provides:

A) The acceptance by the Italian company cannot be withdrawn under any circumstances.
B) The Italian company can withdraw the acceptance if the withdrawal reaches the U.S. before its acceptance.
C) The acceptance by the Italian company was effective when sent.
D) None of the above is correct.

Question 55

The primary body of law in the U.S.dealing with domestic sales contracts is:

A) Uniform Commercial Code (UCC)
B) Convention on the International Sales of Goods (CISG)
C) Uniform Domestic Sales (UDS)
D) Convention on Domestic Contracts (CDC).

Question 56

If a U.S.buyer wants to avoid a sales contract with an Italian seller,the CISG states that the U.S.buyer:

A) Can avoid the contract only if there has been a fundamental breach by the Italian seller.
B) Cannot avoid the sales contract under any circumstances.
C) Can avoid the contract even for minor breaches by the Italian seller.
D) Can avoid if done anytime within 30 days after the goods arrive.

Question 57

In the event that a buyer receives a shipment of seriously defective goods,under the CISG:

A) The buyer may accept the goods and reduce the amount paid to the seller accordingly.
B) The buyer must notify the seller of the defects within a reasonable time.
C) The seller may cure the defect up until the time for performance has expired.
D) The seller may request additional time to perform even though he will be late in so doing.
E) All of the above.

Question 58

In the U.S.,the remedy of specific performance is limited to those instances where:

A) Money damages would be sufficient, but the injured party does not want them.
B) The goods are unique.
C) The buyer does not want the goods for which he contracted.
D) The seller wants to force the buyer to take the goods.

Question 59

The following elements are all considered to be key elements materially altering the terms of an offer when included with an acceptance under the CISG except:

A) Price.
B) Place and time of delivery.
C) Specification of the ship to be used for carriage.
D) Settlement of disputes.

Question 60

The following are all problems faced by developing countries in their business contract relationships with wealthier nations except:

A) Lack of trained professionals to assist their governments in contract negotiations.
B) Lack of natural resources to use as collateral for credit.
C) Lack of economic bargaining power in dealing with more powerful multinationals.
D) Lack of sophisticated legal mechanisms for dealing with contract disputes.

Question 61

Scenario
A claim of formation of a contract based upon a purported acceptance of an offer mailed by a Chinese offeree but never received by the American offeror.

Question 62

Compare and contrast the mailbox rule with the receipt theory.What implications might these different rules have?

Question 63

Consider the benefits and detriments of a U.S.buyer and a German seller using CISG law for a sales contract.

Question 64

Identify at least 10 dissimilarities between the CISG and the UCC and/or U.S.common law.

Question 65

A states to B,"Within the next month,I will be placing an order for 100 Model A computers,so please give me your best price." B replies,"I will sell you this model computer for $500 each." A enters into a contract to sell the computers to C for a profit.Three weeks later,B refuses to sell the computers to A.Under the CISG:

A) B will win because the contract was not in writing.
B) B will win because of the mirror image rule.
C) A will win because B's reply was a firm offer.
D) A will win because B had accepted unconditionally.

Question 66

Scenario
A claim by a German buyer against an American seller alleging the seller's failure to perform an oral agreement relating to a sale of goods valued at U.S.$10,000.

Question 67

Consider the benefits and detriments of a U.S.buyer and a German seller using U.S.law for a sale contract.

Question 68

Compare and contrast the remedies for breach under both U.S.law and the CISG.

Question 69

Identify at least 10 similarities between the CISG and the UCC and/or U.S.common law.

Question 70

As a seller who fails to deliver goods on time,consider whether U.S.law or the CISG favors your interests.

Question 71

As an offeror,would you favor the offer/acceptance/revocation rules of the CISG or U.S.law?

Question 72

Scenario
An attempt by an American buyer to introduce evidence of preliminary negotiations in order to interpret a written contract in a breach of contract case against an Italian seller.

Question 73

In what ways is the coverage of the CISG and the UCC similar? Different?

Question 74

How are the concerns of CISG Article 77 reflected in U.S.law? How does U.S.law diverge from Article 77?

Question 75

In what ways do both U.S.law and the CISG contemplate circumstances beyond a party's control? How are these similar and different from each other?

Question 76

A German plaintiff had sold equipment to an American firm on open account.On the date the amounts were due,the American firm owed the plaintiff 60,000 marks.At that time,the dollar was worth 2.5 marks.Three years later,the plaintiff took a judgment against the American firm in the courts of New York.At the time of judgment,the dollar was worth only 1.5 marks.The New York court may do which of the following:

A) Award judgment to the plaintiff in $24,000 of U.S. currency.
B) Award judgment to the plaintiff in $40,000 of U.S. currency.
C) Award judgment to the plaintiff in 60,000 D.M., German currency.
D) Dismiss the case. U.S. courts cannot hear cases involving foreign currencies.

Question 77

Compare and contrast the remedies for breach under the CISG and U.S.law.

Question 78

Contract laws in socialist countries tend to be:
I) Detailed, mechanical, and cumbersome.
II) Enforced by private companies operating on behalf of the state.
Which of the following is correct?

A) Both I and II.
B) Neither I nor II.
C) I only.
D) II only.

Question 79

Scenario
An attempt by an American buyer to avoid payment for goods received from a French seller based upon a letter providing that the goods were "deficient in quality."

Question 80

Scenario
An attempt by an American buyer to avoid paying a French seller for goods after ignoring the French seller's request for additional time to perform the contract,which goods were delivered six days after the date provided in the contract.