Deck 21: Performance of Sales Contracts

Question 1

Under the Code, consideration is required to support a modification or rescission of a contract for the sale of goods.

Answer 1

False

Question 2

If the goods delivered by the seller do not conform to the contract, the buyer need not pay for the units accepted at the price per unit provided in the contract.

Answer 2

False

Question 3

If there is a conflict between the express terms of the contract and the past course of dealing between the parties, the:

A) past course of dealing between the parties will prevail.
B) express terms of the contract prevail.
C) contract is voided.
D) seller is excused.

Answer 3

B

Question 4

A party can withdraw repudiation before the other party has canceled the contract or has materially changed position by clearly indicating that the person intends to perform his obligations.

Question 5

In the case of a merchant, _____ means honesty in fact as well as the observance of reasonable commercial standards of fair dealing in the trade.

A) course of dealing
B) usage of trade
C) good faith
D) caveat emptor

Question 6

Anticipatory repudiation is disallowed under the UCC.

Question 7

If the buyer is not a merchant, then her obligation after rejection is limited to returning the goods to the seller.

Question 8

Generally, the UCC uses the test of impossibility to determine if a person can be excused from performing his contractual obligations.

Question 9

Once a buyer has accepted goods, he cannot later reject them unless at the time they were accepted, the buyer had reason to believe that the nonconformity would be cured.

Question 10

If the seller demands cash, the seller must give the buyer a reasonable amount of time to obtain it.

Question 11

The buyer may reject an installment delivery only if the nonconformity substantially affects the value of that delivery and cannot be corrected by the seller in a timely fashion.

Question 12

Which of the following is defined to mean "honesty in fact" in performing the duties assumed in the contract or in carrying out the transaction?

A) Course of dealing
B) Usage of trade
C) Caveat emptor
D) Good faith

Question 13

The Uniform Commercial Code gives the contracting parties very little flexibility in deciding between themselves how they will perform a contract.

Question 14

If the seller does not make a reasonable contract for delivery or notify the buyer and a material delay or loss results, the buyer has the right to reject the shipment.

Question 15

If a buyer accepts a part of a commercial unit of goods, he is considered to have accepted only that part of the unit.

Question 16

If no agreement is made regarding the place of delivery, then the goods are to be delivered at the seller's place of business.

Question 17

Customs and practices of the business that are known by people in the business and that are usually assumed by parties to a contract for goods of that type are known as _____.

A) usage of trade
B) warranties
C) courses of action
D) fair norms

Question 18

If there is a conflict between the express terms of the contract and the past course of dealing between the parties, the express terms of the contract prevail.

Question 19

Johnny LaRue sells men's jackets to men's clothing stores, including Melonville Man. Melonville Man orders a selection of men's jackets from LaRue's catalog, asking that LaRue select an assortment of goods for the buyer. LaRue takes advantage of this opportunity to get rid of the odd-sized jackets and those in pastel colors that are no longer popular. LaRue:

A) has stuck to the express terms of the sales contract.
B) has violated the good faith requirement under sales contracts.
C) has followed the usual trade practice.
D) has properly modified the contract.

Question 20

If the goods required for the performance of a contract are destroyed without fault of either party prior to the time that the risk of loss passed to the buyer, the contract is voided.

Question 21

A buyer makes payment for goods accepted using a check. If the bank refuses to pay the check, the buyer:

A) has still satisfied the duty to pay for the goods.
B) must give the goods back to the seller.
C) has the right to retain the goods.
D) can be excused from the obligation.

Question 22

Is it possible for a party that has waived rights to a portion of the contract not yet performed to retract the waiver? How?

A) Yes. The party will be able to immediately assert the late payments as grounds for later canceling the contract.
B) Yes. The party can give reasonable notice to the other party that strict performance will be required.
C) No. Once a party has waived rights to a portion of the contract, it will not be able to assert this as grounds for later canceling the contract.
D) Yes. The contract is assumed to be made in good faith.

Question 23

Bobby goes to buy a CD player from Sammy's Electronics. In testing one model, Bobby notices that the "scan" function does not allow scanning once a selection from a CD is playing. Bobby purchases the model despite this without mentioning the defect to Sammy. Bobby takes the CD player to his office where he uses it for three months before deciding that he wants to return it. Under these circumstances:

A) Bobby has rejected the CD player.
B) Bobby has accepted the CD player.
C) if Bobby informs Sammy of the defect now, he can reject the CD player.
D) a court will not consider Bobby to have accepted the CD player because it is defective.

Question 24

If all or part of the price of goods is payable in real property, then:

A) only the transfer of goods is covered by the law of sales of goods.
B) both the transfer of goods and the real property is covered by the law of real property.
C) both the transfer of goods and the real property is covered by the law of sales of goods.
D) only the transfer of the real property is covered by the law of real property.

Question 25

If no agreement is made on the place where the goods will be delivered, then the goods are to be delivered at:

A) a neutral location.
B) the buyer's place of business.
C) the buyer's warehouse.
D) the seller's place of business.

Question 26

Under a(n) _____, the seller's bank agrees to assume liability on the letter of credit.

A) confirmed letter of credit
B) advised letter of credit
C) negotiable bill of lading
D) revocable letter of credit

Question 27

Which of the following observations is true under the UCC?

A) Consideration is not required to support a modification of a contract for the sale of goods.
B) If there is a conflict between the express terms of the contract and trade usage, the trade usage will prevail.
C) The buyer or the seller cannot delegate their duties to someone else under any circumstance.
D) The UCC does not alter the basic contract law when applied to performance of contracts.

Question 28

Bob contracts to sell Ben 20 bales of hay. A bale is the accepted commercial unit in hay transactions. Ben accepts only 9 1/5 of the 20 bales. Under the UCC, Ben is considered to have accepted:

A) all 20 bales.
B) 10 bales.
C) 9 bales.
D) nothing.

Question 29

Which instrument enables the seller's bank to just act as an agent for collection of the due amount from the buyer?

A) Confirmed letter of credit
B) Advised letter of credit
C) Negotiable bill of lading
D) Draft

Question 30

If there is a conflict between the express terms of the contract and trade usage, the:

A) past course of dealing between the parties will prevail.
B) seller is excused.
C) contract is voided.
D) express terms of the contract prevail.

Question 31

If the shipping terms are cash on delivery (COD), then the buyer:

A) need not pay for the goods if inspection is not allowed.
B) must pay for the goods if it is obvious without inspection that the goods do not conform to the contract.
C) must pay the expenses of inspection if the goods do not conform to the contract.
D) must pay for the goods before inspecting them unless they are marked "Inspection Allowed."

Question 32

What does tender of delivery mean?

A) The seller must make the goods available to the buyer.
B) The buyer must accept and pay for the goods if they conform to the contract.
C) Where delivery is to be made in lots, the seller can demand the price of each lot upon delivery.
D) The goods are to be delivered at the buyer's place of business.

Question 33

Which of the following occurs when a buyer, after having a reasonable opportunity to inspect them, either indicates that he will take them or fails to reject them?

A) Rejection of goods
B) Assignment of goods
C) Revocation of rights
D) Acceptance of goods

Question 34

In which of the following situations can a buyer revoke acceptance of nonconforming goods?

A) The buyer accepted them with the knowledge of the nonconformity, because they were the only option available in the market.
B) The buyer accepted the nonconforming goods because the seller couldn't cure the defect.
C) The price of the goods fell in the general market.
D) The nonconformity substantially impaired the value of the goods.

Question 35

Pete contracts to sell Jill 100 widgets. The 100 widgets are located at Pete's business. The contract does not state a place of delivery. The place of delivery is:

A) Jill's place of business.
B) Jill's home.
C) Pete's place of business.
D) Pete's home, if this is different from his place of business.

Question 36

If the goods are covered by a negotiable warehouse receipt, then the:

A) seller must notify the bailee about the buyer.
B) seller must endorse the receipt and give it to the buyer.
C) seller must obtain bailee's consent before selling his goods.
D) seller must release the goods to the buyer.

Question 37

Pam enters into a contract with Jack to sell him 300 bales of hay. The bushels are kept in her warehouse, which is about 100 miles away from her place of business. The contract makes no express mention of the place of delivery. The place of delivery in such cases is:

A) Pam's place of business.
B) Pam's house.
C) Pam's warehouse.
D) Jack's house.

Question 38

Bob contracts to sell Ben 20 bales of hay at $10 per bale. A bale is the accepted commercial unit in hay transactions. Ben accepts only 9 1/5 of the 20 bales. Ben will have to pay _____.

A) $100
B) $95
C) $150
D) $15

Question 39

Sam agrees to make partial deliveries of goods over three months to Winston. The first delivery was late by two weeks. Why should Winston object to this late delivery?

A) Winston may be required to pay in advance for future deliveries.
B) Winston may waive his rights to cancel the contract if other deliveries are late.
C) Sam may cancel the contract.
D) Sam may be excused from performing all his contractual obligations.

Question 40

The buyer usually can inspect goods before payment except:

A) where payment is made by check.
B) when the goods are perishable.
C) where the goods are shipped COD.
D) when the buyer pays in a foreign currency.

Question 41

Wanda contracted to sell Mike 100 boxes of ball bearings. The contract did not specify a place of delivery. The ball bearings now reside at Wanda's place of business. Wanda refuses to ship the 100 boxes to Mike, and Mike refuses to come to Wanda's place of business to pick them up. Who is right? Why?

Question 42

Ace Appliances, an appliance store, orders 100 toasters from Consolidated Electric (CE). The toasters CE ships to Ace, however, are not the ones Ace ordered. Hence, Ace rejects them. CE then insists that Ace return them, at the expense of Ace. Can CE make Ace return the toasters? If so, who pays the cost of returning the toasters?

Question 43

In most situations, the UCC uses the test of _____ for determining when a person is excused from performing contractual obligations.

A) commercial impracticability
B) superior knowledge
C) frustration of purpose
D) impossibility

Question 44

If the party who repudiated the contract changes his mind, the repudiation can be withdrawn:

A) before the other party has canceled the contract.
B) after the other party has materially changed position.
C) at any point in time.
D) even if the contract has been cancelled.

Question 45

Jody, a consumer, ordered a computer from Dwindex Technologies. After Jody validly rejected the computer due to its nonconformity to the contract, Dwindex insisted that Jody return it. Jody refused, and instead just held the computer for Dwindex to retrieve it. Is Jodie obligated to return the computer?

Question 46

Which of the following can a buyer do if the goods delivered by the seller do not conform to the contract?

A) Accept only part of a commercial unit and reject the rest
B) Accept all of them but not make the payment
C) Accept a commercial unit and withhold payment for the accepted portion
D) Accept any commercial units and reject the rest

Question 47

If unforeseen conditions cause a partial inability to make delivery of the goods and thus make performance impracticable, the seller is excused from making delivery.

A) the seller is readily excused from making delivery.
B) the seller can unilaterally annul the contract.
C) the seller must allocate production in any fair and reasonable manner among his customers.
D) the buyer is required to fully take the risk of loss.

Question 48

In which of the following situations can a buyer revoke acceptance of nonconforming goods?

A) The buyer accepted them without knowledge of the nonconformity because of the difficulty of discovering the nonconformity.
B) The buyer accepted them with the knowledge of the nonconformity, because they were the only option available in the market.
C) The price of the goods fell in the general market.
D) The buyer accepted the nonconforming goods because the seller couldn't cure the defect.

Question 49

If a buyer has a basis for rejecting a delivery of goods, the buyer:

A) should not ask the seller to reship conforming goods.
B) will still be liable to the seller for breach of the sales contract.
C) need not give the seller notice of the rejection.
D) must act within a reasonable time after delivery.

Question 50

Where the goods are to be delivered in installments, an installment delivery may be rejected only if the nonconformity substantially affects the value of that delivery and:

A) if payment is to be made as per the contract price.
B) if the nonconformity cannot be corrected by the seller.
C) if the buyer accepted the goods with full knowledge of the nonconformity.
D) if payment has already been made.

Question 51

After entering into a contract, a buyer becomes concerned that the other party may not be able to perform his contract obligations. The buyer demands assurance from the other party that the contract will be performed. What is the maximum time period that the buyer would have to wait before considering the other party has repudiated the contract?

A) 90 days
B) 10 days
C) 30 days
D) 365 days

Question 52

A buyer who is not a merchant rejects nonconforming goods that are not perishable. He:

A) may destroy the goods.
B) must sell the goods for the seller.
C) must hold the goods till the seller is willing to take them back.
D) need not return the goods to the seller.

Question 53

General contract law uses the test of _____ for determining when a person is excused from performing contractual obligations.

A) commercial impracticability
B) superior knowledge
C) frustration of purpose
D) impossibility

Question 54

The goods required for the performance of a contract are destroyed without fault of either party prior to the time that the risk of loss passed to the buyer. In this case,

A) the contract cannot be cancelled.
B) the contract is voided.
C) the seller will not be excused.
D) the seller has to make good for the loss.

Question 55

Explain the term usage of trade. What happens if there is a conflict between the express terms of the contract and trade usage?

Question 56

Which of the following is not an option for the buyer if the goods delivered by the seller do not conform to the contract?

A) Reject all of the goods
B) Accept all of them
C) Accept only part of a commercial unit and reject the rest
D) Accept any commercial units and reject the rest

Question 57

In which of the following situations can a buyer revoke acceptance of nonconforming goods?

A) The buyer accepted them with the knowledge of the nonconformity, because they were the only option available in the market.
B) The buyer accepted the goods because of the seller's assurances that it would cure the defect.
C) The price of the goods fell in the general market.
D) The buyer accepted the nonconforming goods because the seller couldn't cure the defect.

Question 58

A buyer who is not a merchant rejects nonconforming goods. He:

A) must return the goods to the seller.
B) must sell the goods for the seller.
C) must hold the goods for the seller for a reasonable time.
D) may destroy the goods.

Question 59

List a few scenarios under which sellers may be excused from performing contractual obligations.

Question 60

Which of the following should a buyer who is a merchant do if the rejected goods are perishable?

A) The buyer must make a reasonable effort to sell the goods.
B) The buyer should store the goods for the seller.
C) The buyer should reship them to the seller.
D) The buyer should immediately make the payment.