Deck 14: Sales Contracts Rights, Duties, Breach, and Warranties

Question 1

If a seller offers to cure an improper delivery of goods, he or she must always do so before the contractual time for performance expires.

Answer 1

False
Explanation: If the time for performance has expired, the seller is allowed to have an additional amount of time to substitute a conforming tender assuming the seller has reasonable grounds to believe that the goods that were delivered were acceptable.

Question 2

The statute of limitations for breach of a sales contract is two years.

Answer 2

False
Explanation: In general, an action for breach of a sales contract must be brought within four years after the date of the breach.

Question 3

Garcia purchases a used shotgun from Andy, who had purchased it from Jane, who purchased it from Maria, who had stolen it from Songhee. Only Maria has broken the warranty of title.

Answer 3

True
Explanation: When anyone buys goods that turn out to be stolen, the rightful owner will be entitled to the return of those goods. The innocent purchaser may sue the seller for breach of warranty of title.

Question 4

To be in a position to bring suit on a sales contract, the seller of goods must make tender of delivery.

Question 5

The implied warranty of merchantability provides that whenever a merchant sells goods, the merchant warrants that the goods are merchantable-that is, that they are reasonably fit for the purpose for which they are sold.

Question 6

Legal tender cannot be refused by a seller.

Question 7

Proper tender means the seller must put and hold conforming goods at the buyer's disposition prior to 2:00 P.M. local time.

Question 8

Generally, the words "as is" on an item for sale exclude implied warranties.

Question 9

Sue contracts to purchase Sanyo's auto. Only Sue needs to make a tender of performance.

Question 10

A commercial unit is a single whole for the purpose of sale, the division of which impairs its character or value on the market.

Question 11

The Garden Club orders 40 T-shirts from Shirt City, Inc. to be printed with the club name and motto for a total price of $400. The Garden Club breaches the contract, and Shirt City discovers that the resale value of the shirts is $1 each. Shirt City may sue the Garden Club for the order price of the T-shirts.

Question 12

A seller cannot sue a buyer of goods for breach of contract if the seller is able to resell the goods.

Question 13

Sonia's warehouse is holding Joe's goods. Joe is selling the goods to Monique. If Sonia tells Monique that she may pick up the goods, tender by the seller has occurred.

Question 14

A buyer may revoke an acceptance if the acceptance was made on the assumption that the nonconformity of the goods would be corrected by the seller and the seller does not do so.

Question 15

Tender of payment requires the buyer of goods to offer legal tender only.

Question 16

In August 2014, Zano orders 10 guitars from Music Retailers for his class which is scheduled to start in January, 2015. After two months, Music Retailers notifies him that it cannot fill his order by the start of his class. This notification is an anticipatory breach of contract.

Question 17

To be legally enforceable, an express warranty must be in writing.

Question 18

In a c.o.d. shipment, the buyer has paid for what turns out to be defective goods. It means the buyer has made a binding acceptance of the goods.

Question 19

An implied warranty is created by statements of the seller and not imposed by law.

Question 20

Conway Retailers contracts to buy office furniture from Blue Ridge Furniture to install in a newly constructed office building. About half of the delivered furniture is defective and Conway rejects it. Conway may recover the cost of inspecting the defective furniture from Blue Ridge.

Question 21

Rajid, an immigrant who speaks little English, enters into a contract to pay $300 per month for ten years to purchase an auto from Travel Motor Co. The appraised retail value of the car is $5000. What legal remedy would release Rajid from his contract?

A) Unconscionability
B) Specific performance
C) Punitive damages
D) Implied understanding

Question 22

In a tender of payment, the:

A) buyer offers to turn the money over to the seller.
B) buyer shows a seller his or her legal tender.
C) seller puts conforming goods at the buyer's disposition.
D) seller provides storage facilities for goods to the buyer.

Question 23

Gino, a used car salesman, tells BillyBob while test driving a restored '64 Mustang, "BillyBob, this car is a chick magnet!" So BillyBob buys the Mustang, but later is not satisfied because no girls want to go riding with BillyBob. BillyBob threatens to sue Gino. What result?

A) BillyBob will win because Gino's statement is an express warranty.
B) BillyBob will lose because Gino's statement is sales puffery.
C) BillyBob will win because Gino's statement is an implied warranty of fitness for a particular purpose.
D) BillyBob will lose because there are no express or implied warranties under the Magnuson-Moss warranty act.

Question 24

Tyler has always had a "180 day full warranty" from Business Sales Company when purchasing office equipment over the past five years. On this occasion, Tyler purchased a big screen LED TV from Business Sales that broke thirty days after Tyler purchased it. Business Sales asserts that it did not provide a 180 day full warranty on the TV and has no legal liability. Which of the following is true of this situation?

A) Tyler cannot assert a warranty since Business Sales has not provided a full warranty on the product.
B) Tyler may assert a warranty based upon past dealings with Business Sales.
C) Business Sales can escape liability by asserting that the defect was caused by the manufacturer.
D) Tyler can bring a suit against Business Sales and claim punitive damages.

Question 25

____________ damages are reasonable expenses that indirectly result from the breach, such as expenses incurred in stopping delivery of goods, transporting goods, and caring for goods after the buyer's breach.

A) Compensatory
B) Resale
C) Punitive
D) Incidental

Question 26

When a buyer has a right to inspect the goods, the right usually must be exercised:

A) before the goods are shipped.
B) after the goods are shipped, but before delivery.
C) before accepting the goods.
D) within ten days of accepting the goods.

Question 27

Samantha purchased a used computer system from Office Rental, Inc. who was updating its computers. Later, Big Bank asserted the right to repossess the used computer system from Samantha since it had a lien on all of Office Rental's business equipment to secure an unpaid loan. Samantha was unaware of this lien. What are Samantha's legal rights?

A) She can sue Office Rental for breach of warranty of title.
B) She can claim that she was unaware of Office Rental's debt, and hence, Big Bank cannot assert its lien.
C) She can continue to possess the computer system, since she paid Office Rental for it.
D) She can claim a refund from Office Rental, but cannot bring a lawsuit against Office Rental or Big Bank.

Question 28

Lori went into an electronics store that had a sign posted on the wall declaring "All sales final!" She told the salesperson that she was looking for an iPod with Pandora, so that she could listen to streaming music while working out in her wifi-enabled health club. The salesperson selected a wifi-capable iPod and told Lori that she could receive Pandora as long as the fitness center had wifi. The next day, when Lori tried to use the iPod at the fitness center with wifi, she found that she could only hear static. Which of the following is true of this situation?

A) Lori will be unable to return the iPod because the store's policy said "All sales final!" at the time of the purchase.
B) Lori may not be able to claim a refund, since the iPod will be declared as merchantable.
C) Lori can claim a refund of the iPod on the basis of an implied warranty of fitness for a particular purpose created by the salesperson.
D) Lori can claim a refund from the store based on a limited warranty that is practiced in the electronics industry.

Question 29

Brenner entered into a written contract with the Inkblot Corporation for $1,000 worth of office supplies. Inkblot subsequently sent Brenner some supplies that were not requested in the contract. Brenner noticed that the order did not match the contract, but he accepted the nonconforming goods. Which of the following is true of this situation?

A) The Inkblot Corporation must cure the improper tender.
B) Inkblot is not required to cure the improper delivery since it has been accepted.
C) Brenner can reject the goods without informing Inkblot of the defect in the supply.
D) Brenner can accept the goods and through the court, obligate the Inkblot Corporation to cure the improper delivery.

Question 30

Harvey orders high-end stoves and ranges from Bosch to sell in his appliance store, Harvey's Appliances. When the stoves arrive, Harvey discovers that the stoves are not what he ordered. Bosch can:

A) revoke the acceptance.
B) cure the delivery.
C) cover the tender.
D) seasonably revoke the tender.

Question 31

Jess buys a microwave oven with a manufacturer's full one-year written warranty. If Jess discovers that the microwave oven does not work properly during this time, the manufacturer is obligated to:

A) charge Jess only for the cost of the parts replaced, not for the labor involved.
B) repair the microwave at a nominal cost to Jess.
C) provide a pro-rata credit for the defective part of the microwave.
D) fix or replace the microwave for free.

Question 32

Tom orders $24,000 worth of premium bicycles from Budnitz, a premium bicycle manufacturer, to sell in his Tom's Bike store. After the bicycles are loaded into the freight truck and are on their way to Tom, Budnitz discovers that Tom is insolvent and unlikely to be able to pay for them. Budnitz has the right to:

A) stop the delivery and sue for any damages.
B) cure the delivery and sue for any damages.
C) cover the tender and sue for any damages.
D) seasonably reject the tender.

Question 33

Gerald orders 1,000 cupcakes from Haddock Bakers for a Christmas Eve party. However, Haddock fails to deliver the cupcakes as per the schedule mentioned in the contract, and does not send any notification to Gerald. Gerald orders the cupcakes from Marlene's Cakes that evening. Gerald's order from Marlene's Cakes is called a ____________.

A) writ of replevin
B) specific performance
C) cover of a sales contract
D) cure of nonconforming product

Question 34

Which of the following is true of a shipment contract?

A) The seller must put the goods in the possession of the carrier.
B) The seller must tender the delivery of goods to the buyer.
C) The seller offers to turn the goods to the buyer, and the buyer offers to pay for them.
D) The seller tenders the delivery of goods to the carrier, along with the document title.

Question 35

In a written contract, Hogan agrees to sell Jason kitchen cabinets and to deliver them before December 21. On October 21, two months before the delivery is expected, Hogan tells Jason that he will not sell him the cabinets. Which of the following can Jason do in this situation?

A) He can sue Hogan for breach of contract, but must wait until December 21 to do so.
B) He can sue Hogan for breach of contract immediately.
C) He can sue Hogan for breach of contract if he is unable to find another vendor by December 21.
D) He cannot sue Hogan for breach of contract, since Hogan served an advanced notice to Jason.

Question 36

Bridget contracts with Hunter to purchase $30,000 worth of goods for her store. Hunter wants a clause in the contract stating that neither party will sue the other after one year from the date of breach of contract. Which of the following is true of this situation?

A) Parties are not allowed to provide time limits in their sales agreements, since the UCC sets this time.
B) Competent and informed parties can agree to set any time limit to sue for breach of contract.
C) The courts must review the time limits the parties have determined in the sales agreement as reasonable.
D) The UCC allows parties to shorten the time limit to bring a suit to a minimum of one year.

Question 37

Auto Rebuilders, Inc. orders original 1995 model parts for a Ford Mustang Cobra from Car Wreckers, Inc. Car Wreckers boxes the parts for shipment, but finds another purchaser who is willing to pay more and refuses to ship the parts to Auto. Auto is unable to find the parts for sale elsewhere, but is uncertain about what legal remedy to pursue. What remedy is best suited for this situation?

A) Cover and sue for compensatory damages
B) Sue for specific performance
C) Writ of replevin
D) Cure and sue for incidental damages

Question 38

Which of the following is true of an exclusion of the implied warranty of fitness for a particular purpose?

A) The exclusion can be an oral or written statement, promise or other representation about the quality of a product.
B) The exclusion can occur by excusing buyers from examining the goods, the sample, or model.
C) The exclusion must be in writing, bold type, and be conspicuous.
D) Using expressions such as "as is", "with all faults", or some similar language would not exclude the implied warranty of fitness for a particular purpose.

Question 39

Which of the following is true of rejection of goods by the buyer?

A) A rejection by the buyer can be done even after the buyer has expressed acceptance of the goods.
B) A buyer can claim ownership of the goods even after rejection.
C) A rejection by the buyer can occur even before the goods are tendered and inspected.
D) A rejection must be done within a reasonable time after delivery or tender to the buyer.

Question 40

A(n) ____________ is any written warranty that does not meet all of the requirements for a full warranty.

A) express warranty
B) limited warranty
C) implied warranty
D) warranty of merchantability

Question 41

Cassandra purchased a truck at a Middleburg police auction of abandoned property. The truck, in fact, had been stolen and the original owner, Ariel, subsequently asserted a claim to it. Discuss if Cassandra has any claims against Middleburg or Ariel.

Question 42

When Zachary purchased an Arctic Refrigerator from Best Bargain Store, the refrigerator came with a 36-month written full warranty. When the refrigerator malfunctioned, Zachary discovered that he was expected to ship the refrigerator at his expense to the Arctic factory in China where it was manufactured. There would be a four-month delay until he received his repaired refrigerator back from the factory. Discuss if these requirements to exercise the full warranty are lawful.

Question 43

Rebecca sells Qadir goods that are located in the Matrix Warehouse and gives Qadir a warehouse receipt at 5 P.M. Matrix closes at 5 P.M. That night, the goods are destroyed by a fire at the Matrix Warehouse. Have the goods been tendered to Qadir by Rebecca?

Question 44

Jan, a nonmerchant buyer, receives nonconforming goods from Zoe, a merchant seller. Jan is so upset that she places the goods outside next to the trash collection bin and tells Zoe to come get her "trash." Rain damages some of the goods before Zoe picks them up the next day. Discuss Jan's duties and Zoe's rights.

Question 45

Jarvis Enterprises ordered 50 boxes of blueberries from Agricultural Wholesalers, Inc. Agriculture delivered 50 boxes of blackberries. Jarvis rejected the blackberries and attempted to contact Agriculture. After many unsuccessful attempts, Jarvis decided to sell the blackberries to Cold Ice Cream Co. for $500. Jarvis was ready to forward the money after deducting its expenses and a commission to Agriculture, but when Agriculture learned the sale price, it objected. Agriculture feels that the blackberries had a fair market value of $1,200, and that Jarvis sold the blackberries too cheaply. Discuss the legal rights and duties of Jarvis in this situation.

Question 46

Nicholas entered into a written contract with Mondo Choco, Inc., agreeing to pay Mondo Choco $700 for several hundred assortments of holiday chocolates for the employees of his corporation. Mondo Choco failed to deliver the chocolates by the date set in the contract. Nicholas then told Mondo Choco that he would cover the sale. Discuss.

Question 47

Bigger Grocery Stores orders 100 cases of tomatoes from Produce Wholesale Co., but receives 100 cases of bananas. Bigger asks Produce for instructions concerning the wrong delivery, but receives no instructions. Bigger resells the bananas, considering they are perishable goods. However, when Produce Wholesale learns this, it sues Bigger Grocery Stores on grounds that it did not await instructions from Produce. Discuss the case.

Question 48

Westdress, Inc. entered into a contract with Salvo, Inc. to supply them with specified goods by June 15^th. Salvo, Inc. shipped the goods, which were delivered to Westdress, Inc. on May 30^th. Westdress inspected the goods, found 50% of the goods to be nonconforming to their order, but kept them without notifying the seller of the discrepancy. In the meantime, Salvo, Inc. realized its error and contacted Westdress to replace the goods, but Westdress refused the offer. Discuss the case.

Question 49

Toy Distributors, Inc. had a swing set constructed for customers to examine. It was anchored to the ground with 20-inch steel pins. Gina purchased one for installation in her backyard by Toy, but Toy anchored it with 6-inch steel pins that pulled out of the ground, causing the swing set to tip over and injure Gina's child who was playing on the swing. Discuss if any warranties have been violated by Toy.

Question 50

Tang went into a bicycle shop to purchase a bike rack. He asked the salesperson for help in picking out a rack that would fit his bike. While the salesperson was helping another customer, Tang went ahead and chose one he wanted. The salesperson then told Tang that the rack was a good one. After Tang put the rack on his bike, it did not fit properly and damaged his gear shift. Explain whether Tang can rightfully claim that the salesperson committed a breach of warranty of fitness for a particular purpose.