Question 1

The seller's or lessor's major obligation under a sales contract is to furnish facilities reasonably suited for receipt of the goods.

Accepted Answer

A) True 
 B)False

Question 2

If a buyer or lessee wrongfully refuses to accept the goods, the seller or lessor can only demand return of the goods and is not able to bring an action for damages.

Accepted Answer

A) True 
 B)False

Question 3

Incidental damages are calculated as the difference between the contract price and the price the seller was able to recover by selling the goods to a third party.

Accepted Answer

A) True 
 B)False

Question 4

Speedy's Auto Parts orders twenty tires from Tough Tires, Inc. Ten of the tires are destroyed during delivery in an accident. Speedy's

Accepted Answer

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 5

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

Accepted Answer

A)  must reject the nonconforming goods and accept the conforming goods . 
B)  may reject the entire shipment. 
C)  must accept or reject the entire shipment as a unit. 
D)  may require specific performance of the contract.

Question 6

If a merchant buyer or lessee rightfully rejects nonconforming goods, he or she may resell the goods and retain the proceeds, without liability to the seller.

Accepted Answer

A) True 
 B)False

Question 7

The buyer or lessee has a right to inspect the goods before making payment and this right cannot be waived.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

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 9

Commercial impracticability arises only when the parties-at the time the contract was made-had reason to foresee a certain event.

Accepted Answer

A) True 
 B)False

Question 10

If an agreed-on manner of delivery becomes impracticable or unavailable, a commercially reasonable substitute is sufficient.

Accepted Answer

A) True 
 B)False

Question 11

Loading Ramps Plus Inc. contracts to sell sixteen aluminum loading ramps to Moving Services, Inc. Loading Ramps ships the ramps, which Moving Services accepts but does not pay for. Loading Ramps can

Accepted Answer

A)  sue to recover the purchase price plus inci-dental damages. 
B)  sue to recover the purchase price minus inci-dental damages . 
C)  resell the ramps to any buyer willing to reclaim them from Moving Services. 
D)  require Moving Services to revoke its acceptance of the ramps.

Question 12

If a seller or lessor fails to deliver the goods, the buyer or lessee can sue for damages.

Accepted Answer

A) True 
 B)False

Question 13

If goods fail in any respect to conform to the contract, the buyer or lessee cannot accept the goods.

Accepted Answer

A) True 
 B)False

Question 14

Pine Mills Inc. and Quality Lumber Company enter into a contract for a sale of plywood to be delivered under a destination contract. Pine Mills, the seller, must

Accepted Answer

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 15

Kim's Pony Rides orders ten saddles from Little Horse Saddles, Inc. The sales contract states that if the saddles are defective, Kim's will allow Little Horse Saddles to repair or replace them instead of rejecting the shipment. When the saddles arrive, they are defective. In this case,

Accepted Answer

A)  there is an exception to the perfect tender rule . 
B)  the perfect tender rule applies to both parties. 
C)  the perfect tender rule applies only to Little Horse Saddles. 
D)  Kim's Pony Rides may immediately reject the saddles.

Question 16

Colby contracts in writing (by e-mail) to sell his Dodge-brand pick-up truck to Efrem for $10,500. Colby agrees to deliver the truck on Monday morning, and Efrem promises to pay the $10,500 on Monday. On Thursday, Efrem e-mails Colby that he changed his mind and will not buy the truck. Colby does not respond. Over the weekend, Efrem changes his mind again and tenders $10,500 to Colby on Monday. Colby has not sold the truck to another party but refuses the tender and refuses to deliver. Efrem claims that Colby has breached their contract. Colby contends that Efrem's repudiation released him from his duty to perform under the contract. Who is correct, and why?

Accepted Answer

The answer of Colby contracts in writing (by e-mail) to...

Question 17

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

Accepted Answer

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 at the time the buyer learned of the breach. 
D)  the current prices in the parties' locations at the date and time of the due date for delivery.

Question 18

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

Accepted Answer

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

Question 19

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

Accepted Answer

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 20

Minerals Ltd. contracts to provide tin to several manufacturers. When a group of tin-producing countries suddenly bans sales of tin to Minerals so that it cannot fulfill its contracts, Minerals

Accepted Answer

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.

Exam 19: Performance and Breach

The seller's or lessor's major obligation under a sales contract is to furnish facilities reasonably suited for receipt of the goods.

If a buyer or lessee wrongfully refuses to accept the goods, the seller or lessor can only demand return of the goods and is not able to bring an action for damages.

Incidental damages are calculated as the difference between the contract price and the price the seller was able to recover by selling the goods to a third party.

Speedy's Auto Parts orders twenty tires from Tough Tires, Inc. Ten of the tires are destroyed during delivery in an accident. Speedy's

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

If a merchant buyer or lessee rightfully rejects nonconforming goods, he or she may resell the goods and retain the proceeds, without liability to the seller.

The buyer or lessee has a right to inspect the goods before making payment and this right cannot be waived.

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

Commercial impracticability arises only when the parties-at the time the contract was made-had reason to foresee a certain event.

If an agreed-on manner of delivery becomes impracticable or unavailable, a commercially reasonable substitute is sufficient.

Loading Ramps Plus Inc. contracts to sell sixteen aluminum loading ramps to Moving Services, Inc. Loading Ramps ships the ramps, which Moving Services accepts but does not pay for. Loading Ramps can

If a seller or lessor fails to deliver the goods, the buyer or lessee can sue for damages.

If goods fail in any respect to conform to the contract, the buyer or lessee cannot accept the goods.

Pine Mills Inc. and Quality Lumber Company enter into a contract for a sale of plywood to be delivered under a destination contract. Pine Mills, the seller, must

Kim's Pony Rides orders ten saddles from Little Horse Saddles, Inc. The sales contract states that if the saddles are defective, Kim's will allow Little Horse Saddles to repair or replace them instead of rejecting the shipment. When the saddles arrive, they are defective. In this case,

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

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

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

Minerals Ltd. contracts to provide tin to several manufacturers. When a group of tin-producing countries suddenly bans sales of tin to Minerals so that it cannot fulfill its contracts, Minerals