Deck 19: Performance and Breach

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.

Answer 1

False

Question 2

The right to cure reduces the risk of a breach of contract claim.

Answer 2

True

Question 3

In an installment contract, a buyer or lessee can reject an installment only if the nonconformity substantially impairs the value of the installment and cannot be cured.

Answer 3

True

Question 4

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

Question 5

A shipment contract requires the seller to tender conforming goods at a particular destination.

Question 6

Under the UCC, if a contract does not designate the place of delivery for the goods, and the buyer is expected to pick them up, the place of delivery is the seller's place of business.

Question 7

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

Question 8

Tender of delivery requires that the seller or lessor hold conforming goods at the buyer's or lessee's disposal.

Question 9

Unless otherwise agreed, all goods called for by a contract must be tendered in a single delivery even if they are going to be produced in different production runs or lots.

Question 10

If one party to a contract has "reasonable grounds" to believe that the other party will not perform as contracted, he or she can demand in writing assurance of performance from the other party.

Question 11

Under the perfect tender rule, if tender is not perfect, the seller is in breach even if the attempted tender was early.

Question 12

The basic obligation of commercial reasonableness underlies every contract under the Uniform Commercial Code.

Question 13

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

Question 14

The term cure refers to the seller's or lessor's right to seek the unpaid amount due on a contract from parties other than the buyer or lessee.

Question 15

When a buyer has accepted nonconforming goods in the past, a seller can deliver nonconforming goods on the deadline for delivery but still have time to cure even past the deadline.

Question 16

The perfect tender rule requires that goods conform exactly to a contract's terms or the buyer is in breach.

Question 17

In carrier cases, the seller can fulfill the obligation to deliver the goods only through a shipment contract.

Question 18

Tender can occur at any hour and in any manner.

Question 19

If tender of delivery fails in any respect to conform to the contract, the buyer or lessee must accept or reject the entire shipment.

Question 20

An installment contract is a single contract that requires or authorizes delivery in two or more separate lots to be accepted and paid for separately.

Question 21

Fuel Connector Products, Inc., agrees to sell Go-Flo, Inc., a certain quantity of parts located at Fuel Connector's place of business, but the contract does not specify a place of delivery. Go-Flo is expected to pick up the goods. The place of delivery is

A) Fuel Connector's place of business.
B) Go-Flo's place of business.
C) the current location of the hose couplings and fittings.
D) a warehouse midway between the parties' places of business.

Question 22

Elegant Carpets, Inc., and Fantastic Floors Stores enter into a contract for a sale of carpeting. Under a shipment contract, the seller must

A) allow the buyer to reject the goods for any reason.
B) deliver the goods to a particular destination.
C) inspect the goods before shipping them.
D) place the goods into the hands of a carrier.

Question 23

Paper Company, Inc. agrees to supply Payroll Express with thirty reams of paper each month. Paper Company cannot reasonably ask Payroll Express to pick up the paper at

A) 1:00 P.M.
B) 2:00 P.M.
C) 3:00 P.M.
D) 4:30 A.M.

Question 24

Dairy Goods agrees to sell a certain quantity of ice cream to Event Caterers, but their contract does not specify the address at which the goods are to be delivered. The place of delivery is

A) the seller's place of business.
B) the seller's residence.
C) the buyer's place of business .
D) nonexistent and so the contract is void.

Question 25

When a buyer recovers damages for a seller's breach, the correct calculation is the difference between the contract amount and the market value of the goods at the location of the delivery at the time the buyer learned of the breach.

Question 26

To effectively revoke acceptance, a buyer must return the goods within 30 days of the revocation.

Question 27

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

Question 28

Clear View Company, which is based in Delaware, agrees to sell fifty windows, identified as currently being stored in Florida, to Fair Sight, Inc., which is based in Hawaii. Absent an agreement to the contrary, the place of delivery is in

A) California.
B) Delaware.
C) Florida.
D) Hawaii.

Question 29

Anticipatory repudiation occurs when the parties-at the time the contract was made-had reason to anticipate a certain event.

Question 30

If either the goods or their tender of the goods by the seller or lessor fails to conform to the contract in any respect, the buyer or lessee normally can reject the goods.

Question 31

Buyers and lessees who have rightfully rejected goods or revoked acceptance can protect themselves by exercising the right to cure.

Question 32

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.

Question 33

If some of the goods do not conform to the contract, the buyer must accept or reject all of the goods.

Question 34

If a seller discovers that the buyer has received goods on credit and is insolvent, the seller can demand return of the goods.

Question 35

If a breach occurs when the seller or lessor is still in possession of the goods, the seller or lessor must still deliver the goods.

Question 36

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.

Question 37

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

Question 38

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.

Question 39

Revocation of acceptance is not allowed if a buyer accepted nonconforming goods based on a reasonable assumption that the seller would cure the defect.

Question 40

Payment on a contract can be made by any means agreed on between the parties.

Question 41

Steel Buildings, Inc., agrees to sell four air compressors to Truck Service Center. Five days later, the buyer refuses delivery and cancels the contract. The seller is entitled to

A) force the buyer to accept the air compressors .
B) recover any damages from the buyer but not resell the air compressors .
C) resell the air compressors and recover any damages from the buyer.
D) resell the air compressors but not recover any damages from the buyer.

Question 42

Pavers Inc. contracts to sell some heavy equipment to Earthmovers, Inc. Before either party performs, Pavers, Inc. sees an article in a local paper about a possible Earthmovers bankruptcy. On learning this, Pavers is concerned about its contract with Earthmovers. Pavers should

A) demand assurances of performance from Earthmovers, Inc.
B) consider the contract repudiated and sue Earthmovers for breach.
C) sell the equipment to a different firm but bill Earthmovers for any lost profit.
D) sell the equipment to a different firm and notify Earthmovers that the contract is canceled.

Question 43

Fact Pattern 19-1 Daily Bread Bakeries, Inc., contracts to buy all of its ingredient requirements for bread making, at a certain minimum per year, from Enriched Flour & Grain Corporation for six years. After three years, Daily Bread tells Enriched that it plans to sell its assets to Flat Bread Shops, Inc. Flat Bread refuses to assure Enriched that it will continue Daily Bread's contract.
Refer to Fact Pattern 19-1. Enriched Flour can  pursue the following relief

A) assign its rights under the contract but cannot terminate it.
B) terminate the contract and seek damages.
C) suspend performance under the contract until Enriched is fully paid.
D) None of these answers is correct.

Question 44

Field Farms and Gourmet Restaurant enter into a contract for a sale of lettuce. After Field Farms ships the lettuce but before the restaurant receives it, Gourmet goes out of business and sends notice to Field that it won't be paying for the lettuce. Field

A) can stop the shipment.
B) cannot stop the shipment but can sue Gourmet for damages.
C) can stop the shipment only if Gourmet pays for half of the shipping price.
D) cannot stop the shipment or sue Gourmet for damages until the lettuce is proven to be in good condition on arrival.

Question 45

ABC Toy Store ordered one hundred board games from Big Board Games Inc. The games were delivered two weeks prior to the deadline, but they were all missing pieces. ABC rejected the shipment. To cure, Big Board Games must

A) promptly notify ABC of the intent to cure.
B) pay a cure fee.
C) pick up the nonconforming games before the end of the business day.
D) enter into a new contract with ABC.

Question 46

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,

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 47

Tarts & Pies Bakery contracts with Sweet Fruits for strawberries to be delivered by Refrigerated Trucking Company. On the day of delivery, the refrigeration on the trucks is not working. Sweet Fruits

A) may ship the strawberries to the buyer using a different carrier.
B) must cancel the contract.
C) must wait to ship the strawberries until the carrier fixes its trucks.
D) must ship the goods through a different carrier and pay damages.

Question 48

Beef Burgers, Inc. contracts to buy five hundred head of cattle from Cattle Ranch. Before the seller can begin any delivery, an outbreak of disease causes a quarantine of the ranch. In this circumstance, the perfect tender rule

A) applies and Cattle Ranch must deliver the goods .
B) does not apply due to commercial impracticability.
C) does not apply due to the nature of the installment contract.
D) does not apply because the outbreak was foreseeable.

Question 49

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

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.

Question 50

Fruit of the Plant, Inc., agrees to sell a certain quantity of a high-quality grain seed to Grange Co-op. Fruit of the Plant can obtain only half of the quantity ordered, so the seller also ships a lesser quality seed in twice the amount of the remainder of the order for the same price. Grange Co-op rejects the lesser quality seed. With time for performance not yet expired, Fruit of the Plant can

A) attempt to cure the defect.
B) cancel the contract.
C) recover the purchase price plus incidental damages.
D) resell or dispose of the goods and hold Grange Co-op liable for any loss.

Question 51

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

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 52

Fact Pattern 19-1 Daily Bread Bakeries, Inc., contracts to buy all of its ingredient requirements for bread making, at a certain minimum per year, from Enriched Flour & Grain Corporation for six years. After three years, Daily Bread tells Enriched that it plans to sell its assets to Flat Bread Shops, Inc. Flat Bread refuses to assure Enriched that it will continue Daily Bread's contract.
Refer to Fact Pattern 19-1. Flat Bread's refusal is

A) a breach of the original contract between Enriched Flour and Daily Bread.
B) an assignment of Daily Bread's rights under the contract.
C) a reasonable suspension of performance under the contract.
D) a repudiation of the contract.

Question 53

Soft Chair Company contracts to deliver one hundred chairs to Stuffy Furnishings Store on May 1. Soft tells Stuffy on April 15 that delivery will be delayed until June 1. Stuffy

A) may await performance, sue Soft, or suspend its own performance.
B) must await Soft's performance for a commercially reasonable time.
C) must immediately sue Soft for breach of contract.
D) must give Soft thirty days to change its mind and correct the problem.

Question 54

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

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 55

Gold Medical Supply Company and Home & Hospice Care, Inc., enter into a contract for a sale of health care equipment and supplies. Under either a shipment contract or a destination contract, the seller must

A) use a carrier that is pre-approved by the buyer and has offices in the buyer's state.
B) deliver the goods to a particular destination.
C) place the goods into the hands of a carrier.
D) give the buyer reasonable notice to enable the buyer to take delivery.

Question 56

Business Rental Corporation (BRC) and Cartage Trucking Company enter into a contract for a lease of ten hydraulic lifts. Under the perfect tender rule, BRC must ship or tender goods to the lessee that

A) approximately conform to all of the details of the contract.
B) entirely conform to the contract except in one or two details.
C) exactly conform to the contract in every detail.
D) substantially conform to the contract in most details.

Question 57

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

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 58

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

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 59

H2O Company contracts to sell water storage systems to In-Flo Irrigation, Inc. Before the goods are delivered, In-Flo indicates that it will not be able to pay. H2O can

A) force the buyer to accept and pay for the goods.
B) require the buyer to find another buyer for the goods.
C) resell the goods and recover any damages from the buyer.
D) reclaim the goods.

Question 60

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

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 61

River Gear Company and Scenic Trips, Inc., enter into a contract on August 1 for the sale of fifty inflatable river rafts. Scenic cancels the contract ten days later. River Gear is unable to sell the rafts to another buyer. River Gear can

A) force the buyer to accept the rafts and pay for them.
B) recover the full contract price but must hold the rafts for the buyer.
C) recover the full contract price and resell the rafts to a new buyer.
D) recover the contract price but must destroy the rafts.

Question 62

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?

Question 63

Tack Inc. and Stallion Stables enter into a contract for a sale of stable equipment. Tack delivers, but Stallion does not pay. Tack can normally recover as damages

A) any profit lost minus any loss avoided.
B) whatever amount the seller wishes to claim.
C) the purchase price plus incidental damages.
D) the market price at the place at which the seller delivered the goods.

Question 64

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

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 65

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

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 66

Refined Mills orders "Grade A" oats from Sweet Valley Farms to grind and sell to Town Co-op Grocery. Sweet Valley ships "Grade B" oats, which Refined Mills accepts after a reasonable inspection believing it to be Grade A. Once Refined Mills discovers that the oats are Grade B, it

A) can revoke its acceptance .
B) can use all the grain but sue Sweet Valley for the full purchase price.
C) can cancel the contract and keep the nonconforming goods.
D) can give Sweet Valley up to sixty days to cure the defect.

Question 67

Banquets & Parties (B&P) contracts to buy 1,000 balloons from Gas Bags, Inc., for $1 per item. When the market price decreases to 50 cents per balloon, B&P refuses to go through with the deal. Gas Bags can recover as contract damages

A) $1,500.
B) $1,000.
C) $500.
D) $0.

Question 68

Owen and Pablo enter into a contract for a sale of fifty Western saddles. Owen delivers, but Pablo does not pay. Owen can normally recover as damages the difference between

A) any loss avoided and any profit gained.
B) the actual price and the hoped-for price based on the location of last signature to the contract .
C) the contract price and the market price at the time and place of tender .
D) the current prices in the parties' locations as of the date of the breach.

Question 69

Asian Noodle Company contracts to sell 1,000 cases of rice noodles to Bob's Bistros, Inc., but refuses to deliver. Bob's right to obtain substitute goods for those that were due under the contract is the right to obtain

A) cover.
B) cure.
C) tender.
D) specific performance.

Question 70

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

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 71

Open-Air Markets, Inc., rejects a shipment of turkey that does not conform to its contract with Poultry Processing Corporation, but is unable to obtain instructions from the seller. Open-Air Markets can

A) destroy the goods.
B) cure the goods to make them conform to the contract.
C) retain the goods without paying for them.
D) reship or store the goods for the seller.

Question 72

Signal Sets Company contracts to deliver one hundred television sets to a new retail customer, Tuner TV Store, on May 1, with payment to be made on delivery. Signal tenders delivery in its own truck. Tuner's manager notices that some of the cartons have scrape marks. Tuner's owner phones Signal's office and asks whether the sets might have been damaged as they were being loaded. Signal assures Tuner that the sets are in perfect condition. Tuner tenders Signal a check, which Signal refuses, claiming that the first delivery to new customers is always for cash. Tuner promises to pay the cash within two days. Signal leaves the sets with Tuner, which stores them in its warehouse pending its " Grand Opening Sale " on May 15. Two days later, Tuner's stocker opens some of the cartons and discovers that a number of the sets are damaged beyond ordinary repair. Signal claims Tuner has accepted the sets and is in breach by not paying on delivery. Will Signal succeed on these claims? Explain.