Deck 21: Performance of Sales Contracts

Question 1

The fact that a buyer may have to pay for goods before inspecting them does not deprive the buyer of remedies against the seller if the goods do not conform to the contract.

Answer 1

True

Question 2

Once a party has waived rights to a portion of a contract that has not yet been performed, that party may retract the waiver:

A) if there is a material change of position by the other party.
B) unconditionally.
C) by giving reasonable notice that strict performance will be required.
D) only if the other party does not object to it.

Answer 2

C
Explanation: A party who has waived rights to a portion of the contract not yet performed may retract the waiver by giving reasonable notice to the other party that strict performance will be required. The retraction of the waiver is effective unless it would be unjust because of a material change of position by the other party in reliance on the waiver.

Question 3

_____ means honesty in fact in performing the duties assumed in the contract or in carrying out the transaction.

A) Social responsibility
B) Good faith
C) "Arms-length" bargaining
D) Conciliation

Answer 3

B
Explanation: The buyer and seller must act in good faith in the performance of a sales contract. Good faith means honesty in fact in performing the duties assumed in the contract or in carrying out the transaction.

Question 4

The buyer and seller must act in good faith in the performance of a sales contract.

Question 5

The buyer and seller may agree on the place where the goods will be delivered. If no such agreement is made, then the goods are to be delivered at the seller's place of business.

Question 6

Once a party to a contract repudiates the contract, it is rendered void with no way to withdraw the repudiation.

Question 7

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

Question 8

If a buyer treats the goods as if he owns them, the buyer is considered to have rejected the goods.

Question 9

The Uniform Commercial Code (UCC) gives the parties great flexibility in deciding between themselves how a contract will be performed.

Question 10

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

Question 11

The basic duty of the buyer is to accept and pay for the goods if they conform to the contract.

Question 12

To reject goods, the buyer must notify the seller of the rejection and specify the defect or nonconformity.

Question 13

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

Question 14

If the shipping terms are cash on delivery, the buyer must pay for the goods after inspecting them.

Question 15

In a contract where there is no agreement between two parties for delivery in installments, all the goods _____.

A) must be delivered at the seller's discretion
B) must be delivered to the buyer in a single delivery
C) must be delivered in the installments at the seller's discretion
D) must be delivered in reasonably spaced intervals

Question 16

Normally, the buyer does not have the right to inspect the goods before she accepts or pays for them.

Question 17

If a buyer accepts any part of a commercial unit of goods, she is considered to have accepted the whole unit.

Question 18

A contract calls for a farmer to send apples growing at his farm to the fruit market every Monday, and he promptly sends fresh stock of apples every Monday as per the contract. If the fruit market does not pay cash but rather sends a check the following week, then _____.

A) the farmer can object, but the contract can be cancelled only after six months of the contract period
B) the farmer cannot object under any circumstances
C) the farmer must object if he may want to rely on the late payment as grounds for later canceling the contract
D) the farmer can object only if he has not been paid by any means for the apples he delivered

Question 19

Skyline Builders and Pine Lumber had a contract, calling for Pine Lumber to deliver a certain quantity of bricks to Skyline's place of business on the first of every month for one year. Pine delivered the bricks one week late for the first six months, but Skyline did not object. When Pine delivered the bricks one week late, as usual, in the seventh month, Skyline attempted to cancel the contract because of the late delivery. Which of the following is true about this scenario?

A) Pine will have to return the delivery fee of the first six months because it broke the contract.
B) Skyline does not have the legal right to modify the contract.
C) Pine is not in breach because the delivery was made at the intended place of business.
D) Skyline has waived its right to cancel the contract.

Question 20

Under the Uniform Commercial Code, only the buyer can demand assurance from the other party that the contract will be performed.

Question 21

_____ of goods occurs when a buyer, after having reasonable opportunity to inspect the goods, either indicates that he will take them or fails to reject them.

A) Assurance of performance
B) Notification of shipment
C) Acceptance
D) Improper delivery

Question 22

The "right to cure" refers to the:

A) seller's right to reship conforming goods within a reasonable time.
B) seller's right to obtain payment from the buyer despite delivering nonconforming goods.
C) exclusive right, granted by state permit, for certain businesses to reship certain types of items.
D) buyer's right to persuade a seller to replace nonconforming goods.

Question 23

Which of the following is a correct statement regarding payment in a contract for the sale of goods transaction?

A) The buyer and seller may not agree in their contract that the price of the goods is to be paid in services.
B) If there is no agreement for extending credit to the buyer, the buyer must pay for them on delivery.
C) The buyer and seller may not agree in their contract that the price of the goods is to be paid in other goods.
D) As a general rule, the buyer cannot inspect the goods before payment.

Question 24

If a contract does not require a seller to deliver the goods to a buyer's place of business but merely to ship the goods to the buyer, the seller:

A) is required to put the goods into the possession of a carrier such as a trucking company or a railroad.
B) is not required to notify the buyer of the shipment as it is the duty of the carrier to bear for any material delay or loss in the process.
C) is required to deliver the goods personally to the buyer's place of business.
D) is not required to make a contract with the carrier as the seller's duty ends after he delivers the goods safely to the carrier.

Question 25

The buyer can usually inspect the goods before payment except when they are shipped _____.

A) FAS
B) COD
C) FOB shipment
D) FOB destination

Question 26

Which of the following is true of the buyer's right of inspection?

A) If the terms of the purchase are cash on delivery, the buyer must pay for the goods before inspection unless they are marked "Inspection Allowed."
B) If the terms of the purchase are cash on delivery, the buyer always has the right to inspect the goods before he pays for it.
C) The buyer has a right to inspect goods only if the transaction involves the purchase of perishable commodities or electronic equipment.
D) The buyer can reject the goods immediately after inspection but only after paying for the goods.

Question 27

Which of the following holds true of revocation of acceptance by the buyer?

A) A buyer can revoke acceptance of nonconforming goods when the nonconformity substantially impairs the value of the goods.
B) A buyer cannot revoke acceptance of nonconforming goods if the buyer accepted the goods because of assurances by the seller.
C) A buyer can revoke acceptance of nonconforming goods even after accepting goods with the knowledge of the nonconformity.
D) The right to revoke acceptance can be exercised any time after the buyer discovers the nonconformity.

Question 28

In a sales contract, in order to reject goods, the buyer must:

A) notify the seller of the rejection and specify the defect.
B) specify the nonconformity to the seller after treating the goods as his own.
C) use the goods for at least a month and then inform the seller in writing.
D) make a replacement purchase of similar price goods from the seller.

Question 29

Which of the following terms implies that the seller must make the goods available to the buyer during reasonable hours and for a reasonable period of time so that the buyer can take possession of the goods?

A) Tender of payment
B) Notification
C) Acceptance
D) Tender of delivery

Question 30

Which of the following is true about the seller's duty of delivery?

A) The contract of sale requires the seller to deliver the goods to the buyer's place of business.
B) If the goods are covered by a negotiable warehouse receipt, the buyer must indorse the receipt.
C) The buyer is required to officially notify the seller once he receives the goods.
D) The seller's basic obligation is to tender delivery of goods that conform to the contract with the buyer.

Question 31

If the goods delivered by the seller do not conform to the contract, _____.

A) the buyer can pay for the units accepted at a price lower than the price per unit provided in the contract
B) the buyer can accept only part of a commercial unit and reject the rest
C) the buyer cannot reject an installment delivery even if the nonconformity substantially affects the value of that delivery
D) the buyer can accept any commercial units and reject the rest

Question 32

Jamal purchased a motorcycle from Getaway Automobiles, and the motorcycle's electric starter began malfunctioning after a week of the motorcycle's purchase. Jamal returned the motorcycle to the store, and the manager assured him that it was only a minor problem that could be fixed easily. In the next two months, Jamal visited the store five times for rectification of the same issue. Finally, he gave up and demanded that he get a cashback for the faulty motorcycle. Under these circumstances, which of the following is most likely to be true?

A) Jamal is not entitled to revoke acceptance of the goods because he has used it.
B) Jamal is entitled to revoke acceptance because he took back the motorcycle after the seller's assurance that the nonconformity would be cured.
C) Jamal cannot revoke his acceptance because the value of the motorcycle is impaired by its use for over two months.
D) Jamal can revoke his acceptance but is not entitled to damages for breach of warranty.

Question 33

Jayden, the owner of a cosmetic store, orders 20 bottles of body lotion and 30 bottles of face cleansing lotion. After the order is delivered, he discovers that he has received only 10 bottles of body lotion and 10 bottles of face cleansing lotion. In this scenario, Jayden:

A) can accept all the goods and avoid payment for the face cleansing lotion.
B) cannot accept the nonconforming goods.
C) can reject or accept the entire order.
D) can avoid payment for the body lotion which he had not ordered but has accepted.

Question 34

Acceptance of goods occurs when a:

A) buyer indicates that he or she will take the goods.
B) buyer inspects the goods.
C) seller ships the goods to a buyer.
D) buyer makes a payment by cash or check for the goods.

Question 35

When the buyer rejects goods that are not perishable, and the seller does not give the buyer instructions concerning the disposal of the goods, the buyer:

A) can resell the goods but cannot keep a commission on the sale.
B) cannot reship the goods to the seller as it would break the contract.
C) cannot resell the goods.
D) can give the seller a reasonable time to remove the goods.

Question 36

Ryan owns a department store called One Stop. He made an order of eggs from his usual wholesaler. The eggs arrived, but they were too old to be sold at the store. He rejected the goods and promptly notified the wholesaler. What are Ryan's responsibilities regarding the rejection of the spoiled goods?

A) Ryan must follow the seller's instructions that concern the disposition of the eggs.
B) Ryan must sell the eggs on the wholesaler's behalf but cannot retain profits or take a commission.
C) Ryan need not state any reasons to the wholesaler for rejecting the eggs.
D) Ryan must give sufficient notice to the seller who must personally come and collect the eggs.

Question 37

A buyer is considered to have accepted a whole commercial unit of goods if the:

A) buyer pays for the goods before inspecting them.
B) buyer accepts any part of the commercial unit.
C) seller delivers even part of the commercial unit.
D) seller delivers all the goods in the commercial unit.

Question 38

If the buyer and seller do not have an agreement for where the goods are to be delivered, the goods should be delivered at the _____.

A) seller's place of business
B) seller's house, even if the seller has a place of business
C) buyer's house
D) buyer's place of work

Question 39

In sales contracts, the seller can exercise the right to cure even when the original time for delivery has expired, if the:

A) buyer purchases products regularly from the seller.
B) seller agreed to cash on delivery (COD) selling terms.
C) buyer accepted the commercial units in the original shipment and rejected the rest.
D) seller had some reason to believe the buyer would accept nonconforming goods.

Question 40

Normally, a buyer has the right to inspect the goods _____.

A) after the guarantee period of the product
B) only after paying for the goods
C) before accepting the goods or paying for them
D) only after accepting the goods

Question 41

If a buyer becomes concerned that the seller may not be able to perform required contract obligations, the buyer:

A) can legally cancel the contract without telling the seller.
B) can demand assurance from the seller that the contract will be performed.
C) will be excused from fair trade under the test of commercial impracticability.
D) will be excused from performance under the test of impossibility.

Question 42

The Uniform Commercial Code (UCC) uses the test of _____ to determine when a seller is excused from performing contractual obligations.

A) wrongful rejection
B) commercial impracticability
C) proximate causes
D) concurrent causes

Question 43

How does "usage of trade" affect the rights and obligations of buyers and sellers in contracts for the sale of goods transactions?

Question 44

_____ refers to a party's decision to suspend its performance under a contract when the other party indicates that it does not wish to fulfill its obligations under the contract.

A) Anticipatory repudiation
B) Tender of delivery
C) Buyer's waiver
D) Contract breach

Question 45

PC Corp. entered into a contract with KPL University (KPLU) to supply 500 PCs for use in KPLU's new computer facility. A week before the PCs were to be delivered, KPLU indicated that it would not go through with the purchase. PC Corp. immediately stopped assembling the computers for KPLU and sold the already assembled computers to another buyer. Three days later, KPLU decided to go through with the purchase and asked PC Corp. to deliver the 500 PCs on the delivery date as agreed in the contract. Is PC Corp. obligated to deliver the PCs as required by the contract? Why or why not?

Question 46

With regard to the seller's delivery of nonconforming goods to the buyer, what is meant by the seller's right to "cure?"

Question 47

Liu orders a music player from Spark Appliances and intends on using it during her upcoming vacation. She notices a button missing from its console but accepts the order because she is leaving town the next day. Liu returns from her vacation a week later, takes the music player to Spark and rejects the purchase because of the missing button. Does Liu have a right to reject the purchase? Explain what is most likely to happen in this scenario.

Question 48

Kanbar Novelties is a wholesaler of costumes and costume accessories in the U.S. Gwen's Barrow is retail store in Iowa that sells Halloween costumes. Gwen's Barrow placed an order for 75 ninja swords, made of glass, from Kanbar Novelties. Kanbar placed the swords in cardboard boxes and shipped them by railroad, without wrapping them in protective material. Moreover, Kanbar failed to indicate that the box contained fragile goods. As a result, there was no care taken to ensure that the box was handled safely. The box was placed under other heavier goods which crushed the glass swords in the box. Kanbar claimed that its obligations ended with the delivery to the carrier and that the risk of loss was on Gwen's Barrow. What argument would you make in favor of Gwen's Barrow?

Question 49

Campus Bus Service entered into a contract with Smith Bus Company to purchase 10 buses. One week before Campus Bus was scheduled to receive the buses, a fire destroyed Smith's warehouse and the buses inside. As a result, Campus Bus had to purchase its buses at a slightly higher cost from another manufacturer. Campus Bus sues Smith Bus for damages for breach of contract under these circumstances. Assume Campus Bus did not bear the risk of loss of the goods under the contract. In this scenario, _____.

A) Smith Bus should be excused from performance under the clause for the rights on improper delivery
B) Smith Bus should not be excused from performance because it did not act in good faith
C) Smith Bus should be excused from performance under the test of commercial impracticability
D) Smith Bus can exercise its right of anticipatory repudiation