True / False Questions

 

1. The UCC adopts several common law principles. 

True    False

 

 

2. Contract actions are created to enforce the intentions of the parties to the agreement, while tort law is primarily designed to vindicate social policy. 

True    False

 

 

3. The UCC does not allow a seller to cancel a contract if the buyer is in breach. 

True    False

 

 

4. A seller or lessor is allowed to sell goods to another buyer when the original buyer is in breach and the goods have not yet been delivered. 

True    False

 

 

5. Liquidated damages are identified after a contract breach occurs. 

True    False

 

 

6. In transit means that the seller or lessor has delivered the goods to a carrier or bailee, but the carrier or bailee has not yet turned them over to the buyer. 

True    False

 

 

7. The term “cover” refers to buyers or lessees substituting goods for those due under a sales or lease agreement. 

True    False

 

 

 

8. Specific performance usually requires that the seller or lessor cover. 

True    False

 

 

9. The case of Hill v. Gateway, discussed in the text, ruled that in order to be effective, a contract must be verbally read to a consumer who purchases a computer over the telephone. 

True    False

 

 

10. If a buyer accepts nonconforming goods, the buyer may not also seek damages. 

True    False

 

 

 

 

Multiple Choice Questions

 

11. The obligations of sellers/ lessors and buyers/ lessees are determined by which of the following? 

A. Terms the parties outline in agreements

B. Custom

C. Rules outlined by the Uniform Commercial Code

D. All the above

E. Terms the parties outline in agreements and rules outlined by the Uniform Commercial Code, but not custom

 

 

12. What is the basic premise of contract law? 

A. To effectuate the expectations of the parties to an agreement

B. To promote commerce

C. To promote economic growth

D. To promote interstate commerce

E. To encourage a free-market society and greater financial security for the parties

 

 

 

13. What type of remedy does the UCC give buyers and lessees when the other party has breached a contract? 

A. The benefit of the bargain

B. Any amounts of money lost plus 10%

C. Any amounts of money lost plus 15%

D. Any amounts of money lost plus 20%

E. Any amounts of money lost plus 25%

 

 

14. Which of the following is a remedy available to the seller if the buyer fails to pay according to the terms of the agreement? 

A. Sellers may withhold delivery of goods.

B. Sellers may sell undelivered goods to another buyer.

C. Sellers may put a lien on any property of the buyer.

D. Sellers may withhold delivery of goods, sellers may sell the goods to another buyer, and sellers may put a lien on any property of the buyer.

E. Sellers may withhold delivery of goods and sellers may sell the goods to another buyer, but sellers may not put a lien on any property of the buyer.

 

 

15. Which of the following was the result in the case in the text Troy Boiler Works, Inc. v. Sterile Technologies, Inc., when the plaintiff, who was sued to recover amounts due on a sterilizer purchased from the defendant, claimed that a six-year statute of limitations governing actions to collect money on account applied rather than the four-year statute of limitations derived from the UCC? 

A. The court ruled that the six-year statute of limitations applied because a sale of a good was the basis for the dispute.

B. The court ruled that the four-year statute of limitations applied because a sale of a good was the basis for the dispute.

C. The court split the difference and ruled that a five-year statute of limitations applied.

D. The court ruled that the six-year statute of limitations applied because an action on an account receivable was the basis for the dispute.

E. The court ruled that the four-year statute of limitations applied because an action on account receivable was the basis for the dispute.

 

 

 

16. Which of the following damages may a seller receive who sells goods to another buyer when the original buyer is in breach? 

A. The difference between the resale price and the contract price, plus incidental damages and minus expenses saved.

B. The difference between the resale price and the contract price only.

C. The difference between the resale price and the contract price minus expenses without any allowance for incidental damages.

D. The difference between the resale price and the contract price, plus incidental damages, with no deduction for expenses saved.

E. Nominal damages only.

 

 

17. Which of the following is true regarding the right of a lessor to seek incidental damages in the event of a breach by a lessee of goods? 

A. A lessor may seek incidental damages only if the lessee agreed in writing to pay them.

B. A lessor may seek incidental damages only if the lessee agreed orally or in writing to pay them.

C. A lessor may seek incidental damages only if the damages are in an amount over $500.

D. A lessor may seek incidental damages only if the damages are in an amount over $1,000.

E. A lessor may seek incidental damages.

 

 

18. Which of the following are damages identified before the breach occurs? 

A. Nominal damages

B. Compensatory damages

C. Reliance damages

D. Liquidated damages

E. Consequential damages

 

 

19. Which of the following is true regarding a liquidated damages provision? 

A. A provision for liquidated damages is illegal.

B. A provision for liquidated damages is void because of public policy.

C. A provision for liquidated damages is voidable because of public policy.

D. A provision for liquidated damages is enforceable so long as it is not punitive in nature.

E. A provision for liquidated damages will be enforced regardless of whether it is punitive in nature.

 

 

 

20. What does the UCC provide regarding liquidated damages if the parties do not agree to them? 

A. That the nonbreaching seller may claim against a breaching buyer 20 percent of the purchase price or $500, whichever is less, as liquidated damages.

B. That the nonbreaching seller may claim against a breaching buyer 20 percent of the purchase price or $500, whichever is more, as liquidated damages.

C. That the nonbreaching seller may claim against a breaching buyer 30 percent of the purchase price or $1,000, whichever is less, as liquidated damages.

D. That the nonbreaching seller may claim against a breaching buyer 30 percent of the purchase price or $1,000, whichever is more, as liquidated damages.

E. Nothing because liquidated damages are unavailable unless the parties have expressly agreed to them.

 

 

21. What does the UCC provide regarding the availability of punitive damages? 

A. That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 20 percent of the purchase price or $500, whichever is less, as punitive damages.

B. That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 20 percent of the purchase price or $500, whichever is more, as punitive damages.

C. That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 30 percent of the purchase price or $1,000, whichever is less, as punitive damages.

D. That the nonbreaching seller may claim against a breaching buyer who is guilty of malice 30 percent of the purchase price or $1,000, whichever is more, as punitive damages.

E. Nothing

 

 

22. Which of the following was the result in Almetals, Inc. v. Wickeder Westfalenstahl, GMBH, the case in the text involving the sale of clad metal in which the plaintiff sued the defendant for breach of contract seeking specific performance? 

A. That specific performance was unavailable because real estate was not involved.

B. That specific performance was unavailable because a foreign defendant was involved and jurisdiction for specific performance was, therefore, lacking.

C. That specific performance was unavailable because the goods at issue were scarce.

D. That specific performance was unavailable because a requirements contract was involved.

E. That specific performance was the appropriate remedy.

 

 

 

23. Assuming a buyer that is insolvent has breached a contract by not paying for goods that are in transit, which of the following may occur? 

A. The carrier may stop delivery on the entire shipment.

B. The carrier may stop delivery only if the quantity shipped is a large shipment.

C. The carrier may stop delivery only if a signed writing exists by which the buyer agreed to the remedy of stopping shipment.

D. The carrier may stop delivery only if ordered to do so by the bankruptcy judge.

E. The carrier may not stop delivery under any circumstances.

 

 

24. Assuming a buyer that is not insolvent has breached a contract by not paying for goods that are in transit, which of the following may occur? 

A. The carrier may stop delivery on the entire shipment.

B. The carrier may stop delivery only if the quantity shipped is a large shipment.

C. The carrier may stop delivery only if a signed writing exists by which the buyer agreed to the remedy of stopping shipment.

D. The carrier may stop delivery only if ordered to do so by the bankruptcy judge.

E. The carrier may not stop delivery under any circumstances.

 

 

25. Under UCC 2-702(2), under which of the following circumstances may a seller reclaim goods when a buyer is in possession of goods and is in breach? 

A. When the seller discovers the buyer is insolvent

B. When the buyer is at least five days late on a payment

C. When the buyer has received at least 10 days prior notification of reclamation

D. All of the above

E. When the seller discovers the buyer is insolvent and when the buyer has received at least 10 days prior notification of reclamation, but not when the buyer is five days late on a payment.

 

 

 

26. Under UCC 2A-525(2) when may a lessor reclaim goods when a lessese in possession of the goods is in breach? 

A. When the lessor discovers the lessee is insolvent

B. When the lessee fails to make payments according to the lease terms

C. When the lessee has received at least 10 days prior notification of reclamation

D. All of the above

E. When the lessor discovers that the lessee is insolvent and when the lessee has received at least 10 days prior notification of reclamation, but not when the lessee has failed to make payments according to the lease terms

 

 

27. Which of the following is the right of a buyer and lessee to substitute goods for those due under a sales or lease agreement? 

A. Swap

B. Rearrange

C. Cover

D. Shift

E. Reallocate

 

 

28. Which of the following must a buyer do in obtaining cover? 

A. Demonstrate good faith in obtaining the substitute goods

B. Pay a reasonable amount for the substitute goods

C. Act without unreasonable delay in purchasing the substitute goods

D. All the above

E. Pay a reasonable amount for the substitute goods and act without unreasonable delay in purchasing the substitute goods, but there is no good faith requirement.

 

 

29. Assuming proper proof, which of the following represents damages a buyer or lessee may recover in the event of a breach? 

A. Incidental damages

B. Consequential damages

C. Remedial damages

D. All the above

E. Incidental and consequential damages, but not remedial damages

 

 

 

30. Which of the following includes lost profits so long as those damages are not too speculative? 

A. Punitive damages

B. Consequential damages

C. Remedial damages

D. Nominal damages

E. Control damages

 

 

31. Under the UCC buyers and lessees may recover goods identified in the contract if the seller or lessor becomes insolvent within ______ after receiving the first payment due under the agreement. 

A. 5 days

B. 10 days

C. 15 days

D. 30 days

E. 60 days

 

 

32. Which of the following usually requires that the seller or lessor deliver the particular goods identified in the contract? 

A. Absolute order

B. Absolute performance

C. Specific performance

D. Specific order

E. None of the above

 

 

33. When does the UCC allow buyers and lessees to seek the remedy of specific performance? 

A. When goods are unique

B. When a remedy at law is inadequate

C. When goods are worth more than $500

D. When goods are unique, when a remedy at law is inadequate, or when goods are worth more than $500

E. When goods are unique or when a remedy at law is inadequate, but not because the goods are worth more than $500

 

 

 

34. Which of the following was the result in U.S.A. Coil & Air, Inc. v. Hodess Building Co., the case in the text in which the seller of cooling coils sued for the contract price and the defendant counterclaimed for breach of contract? 

A. That the seller was liable to the buyer for replacement costs.

B. That the buyer did not have to pay the seller contract costs but that the buyer was not liable for replacement costs.

C. That neither party owed the other anything.

D. That the buyer was liable to the seller for the contract price.

E. That the buyer was liable to the seller for the contract price plus attorney’s fees.

 

 

35. Which of the following may a buyer/lessee do when the seller/lessor delivers nonconforming goods? 

A. Reject the goods only

B. Obtain cover only

C. Cancel the contract only

D. Reject the goods, and then obtain cover or cancel the contract

E. Reject the goods and obtain cover, but the buyer may not cancel the contract

 

 

36. Which of the following is true regarding revocation of accepted nonconforming goods? 

A. A buyer may revoke acceptance of nonconforming goods under some circumstances, but a lessee may not.

B. A lessee may revoke acceptance of nonconforming goods under some circumstances, but a buyer may not.

C. Neither a buyer nor a lessee may revoke acceptance of nonconforming goods.

D. Neither a buyer nor a lessee may revoke acceptance of nonconforming goods after the goods have remained accepted for a period of 24 hours.

E. A buyer or lessee may revoke acceptance of nonconforming goods if, for example, the buyer/lessee made a reasonable assumption that the nonconformity would be cured, but then the nonconformity was not cured within a reasonable time.

 

 

 

37. What was the result in the case in the text Dunleavy v. Paris Ceramics USA, Inc., the case in which French limestone was found to be defective and the buyer sued the seller for a refund? 

A. The buyer was not allowed to recover because the buyer refused the defendant the right to cure.

B. The buyer was allowed to recover compensatory damages because the seller’s efforts to cure were unsuccessful, and in addition the buyer was allowed to recover punitive damages based on misrepresentations.

C. The buyer was allowed to recover because the seller did not offer to cure.

D. The buyer was allowed to recover because the buyer had accepted the goods and resold them to another party, and no right to cure existed.

E. The buyer was not allowed to recover because the seller properly cured the problem.

 

 

38. Which of the following is true regarding buyers or lessees who want to accept nonconforming goods and then seek monetary damages? 

A. Buyers and lessees are allowed to do so in order to receive the benefit of the bargain, but they must give the seller/lessor reasonable notice of the defect.

B. Buyers and lessees are allowed to do so in order to receive the benefit of the bargain, and there is no requirement that they give the seller/lessor prior notice of the defect.

C. Buyers may do so in order to receive the benefit of the bargain so long as reasonable notice of the defect is given, but lessors may not.

D. Lessors may do so in order to receive the benefit of the bargain so long as reasonable notice of the defect is given, but buyers may not.

E. Buyers and lessors may do so only if the seller/lessee agrees to the retention of the nonconforming goods and does not request their return.

 

 

39. Which of the following provide remedies to buyers of defective cars? 

A. Apple laws

B. Lemon laws

C. Clunker laws

D. Roadside laws

E. Peach laws

 

 

 

40. Regarding the “Case Opener,” what did the court rule regarding the liability of Abbott Industries following its supply of 1.2 million tubes of bad eye medication to Altana, a customer, for resale? 

A. That Abbott industries was liable for the cost of the recall and destruction of the defective medication, for the costs of employee overtime, and for lost future sales because Altana was unable to meet its contractual obligations.

B. That Abbott industries was liable for the cost of the recall and destruction of the defective medication, for the costs of employee overtime, and for lost future sales even though Altana was able to meet its contractual obligations.

C. That Abbott industries was liable for the cost of the recall and destruction of the defective medication and for the costs of employee overtime, but not for lost future sales because Altana was able to meet its contractual obligations.

D. That Altana was only entitled to receive cover, meaning substitution for the defective medication.

E. That Altana was unable to recover anything because business people take a risk that some shipments will be bad.

 

 

41. Which of the following is true of lemon laws in Canada? 

A. They are generally the same as lemon laws in the U.S.

B. They allow for replacement of defective parts but not a new car unless the plaintiff agrees to pay the difference between the amount received for the used car when sold and the amount charged for the new car.

C. They guarantee a buyer of a lemon a new car.

D. They guarantee the buyer of a lemon a return of all consideration.

E. Canada does not have a lemon law such as is known in the U.S. Instead, an arbitration program is run through which a buyer may lodge complaints.

 

 

 

42. Sam contracted with Sharon, his cousin, to build a building to house Sam’s new restaurant. Sam wanted the building completed by October 15th so that he could advertise and get holiday business. Sam and Sharon entered into an agreement by which Sharon would pay Sam $300 per day for every day she was late. Which of the following is true regarding their agreement? 

A. It is known as a liquidated damages provision which will be enforced by a court so long as it is not so far out of reasonable range as to be punitive in nature.

B. It is known as a penalty provision which will be enforced by a court so long as the plaintiff can establish proof of compensatory damages in at least the amount of recovery requested.

C. It is known as a punitive damages provision which will be enforced by a court only if wrongdoing or fraud on the part of the defendant can be established.

D. It is known as a consequential damages provision which will be enforced by a court only if incidental damages can be established.

E. It is known as an invalid provision which will not be enforced.

 

 

43. Under which of the following circumstances will a court refuse to uphold modifications or limitations to remedies agreed upon by the parties? 

A. When they seem unfair.

B. When one party is a corporation.

C. When neither party is a corporation.

D. When one side was not represented by an attorney.

E. When the remedies fail in their essential purpose.

 

 

44. What does the UCC provide regarding a limitation on consequential damages allowing for repair, replace, or refund in the event of equipment malfunction? 

A. That consequential damages may be limited or excluded unless the limitation or exclusion benefits one party over the other.

B. That consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable.

C. That consequential damages may be limited but not excluded entirely.

D. That consequential damages may be limited but not excluded entirely, and the limit must not benefit one party over the other.

E. That consequential damages may be limited but not excluded entirely, and the limit must not be unconscionable.

 

 

 

45. What does the UCC say regarding a limitation of consequential damages for injury to the person in the case of consumer goods? 

A. A limitation of consequential damages for injury to the person is acceptable so long as both parties are represented by an attorney.

B. A limitation of consequential damages for injury to the person is acceptable so long as any consumer was represented by an attorney.

C. A limitation of consequential damages for injury to the person is prima facie unconscionable.

D. A limitation of consequential damages for injury to the person is analyzed in the same way as a limitation of consequential damages where the loss is commercial.

E. A limitation of consequential damages for injury to the person is acceptable so long as the injuries are not life threatening.

 

 

46. What does the UCC say regarding a limitation of consequential damages for commercial losses? 

A. A limitation of consequential damages for commercial losses is acceptable so long as both parties are represented by an attorney.

B. A limitation of consequential damages for commercial losses is acceptable so long as any consumer was represented by an attorney.

C. A limitation of consequential damages for commercial losses is prima facie unconscionable.

D. A limitation of consequential damages for commercial losses is analyzed in the same way as a limitation of consequential damages for personal injury.

E. A limitation of consequential damages for commercial losses is not prima facie unconscionable.

 

 

47. What are the rights of the parties under the UCC to provide for remedies in addition to those provided by the UCC? 

A. Parties to a commercial sales agreement may provide for remedies in addition to those provided by the UCC.

B. Parties to a commercial sales agreement may not provide for remedies in addition to those provided by the UCC.

C. Parties to a commercial sales agreement may provide for remedies in addition to those provided by the UCC only if both sides are represented by an attorney.

D. Parties to a commercial sales agreement may provide for remedies in addition to those provided by the UCC only if both parties are merchants.

E. Parties to a commercial sales agreement may provide for remedies in addition to those provided by the UCC only in transactions involving over $10,000 in value.

 

 

 

48. Which of the following is true regarding whether usage of trade may impose a remedy in the event of a breach? 

A. Usage of trade may not impose a remedy in the event of a breach.

B. Usage of trade may impose a remedy in the event of a breach but it may not impose an exclusive remedy.

C. Usage of trade may impose an exclusive remedy in the event of a breach.

D. Usage of trade may impose an exclusive remedy in the event of a breach only if both sides are represented by an attorney.

E. Usage of trade may impose an exclusive remedy in the event of a breach only if a contract signed by both parties specifically provides as such.

 

 

49. What was the result in the case of Figgie International, Inc. v. Destileria Serralles, Inc., the case in the book involving a dispute over bottle-labeling equipment? 

A. The court ruled that the remedy of repair, replacement, or a refund failed of its essential purpose.

B. The court ruled that the remedy of repair, replacement, or a refund did not fail of its essential purpose, and the remedy was enforced.

C. The remedy of repair, replacement, or a refund was found unconscionable and not enforced.

D. The remedy of repair, replacement, or a refund was found unconscionable but enforced anyway.

E. The remedy of repair, replacement, or a refund was not enforced because the buyer had not agreed to that remedy in writing.

 

 

 

50. Reference: “Missed Payments.” Robin purchased a hot tub on an installment plan and was to pay the seller monthly. Her last payment was made on January 2, 2002. The seller brought a lawsuit against her for sums remaining on the account on January 3, 2007. Robin defended on the basis that the statute of limitations had run. The seller claimed, however, that appropriate time remained because a state law six-year statute of limitations to collect money on account applied. Robin also arranged to purchase a personal watercraft but failed to pay the deposit to the seller, and the seller refused to deliver the watercraft. Robin claimed that the seller was required to deliver the watercraft and allow her the opportunity to cover. Under the UCC, how long does a plaintiff have to bring an action for breach of contract for the sale of goods once the cause of action accrues? 

A. One year

B. Two years

C. Three years

D. Four years

E. Five years

 

 

51. Reference: “Missed Payments.” Robin purchased a hot tub on an installment plan and was to pay the seller monthly. Her last payment was made on January 2, 2002. The seller brought a lawsuit against her for sums remaining on the account on January 3, 2007. Robin defended on the basis that the statute of limitations had run. The seller claimed, however, that appropriate time remained because a state law six-year statute of limitations to collect money on account applied. Robin also arranged to purchase a personal watercraft but failed to pay the deposit to the seller, and the seller refused to deliver the watercraft. Robin claimed that the seller was required to deliver the watercraft and allow her the opportunity to cover. Assuming that the state in which Robin lived had adopted the UCC statute of limitations for the sale of goods, which of the following is true regarding whether the court would likely apply the UCC statute, the six-year statute applicable to accounts, or reach another result? 

A. The court would likely apply the six-year statute applicable to accounts.

B. The court would likely apply the UCC statute of limitations for the sale of goods.

C. The court would likely apply the six-year statute applicable to accounts but only because Robin is not a merchant.

D. The court would likely apply the UCC statute of limitations for the sale of goods but only because Robin is not a merchant.

E. The court would likely disregard any statute of limitation on equitable grounds because consumers should pay their debts.

 

 

 

52. Reference: “Missed Payments.” Robin purchased a hot tub on an installment plan and was to pay the seller monthly. Her last payment was made on January 2, 2002. The seller brought a lawsuit against her for sums remaining on the account on January 3, 2007. Robin defended on the basis that the statute of limitations had run. The seller claimed, however, that appropriate time remained because a state law six-year statute of limitations to collect money on account applied. Robin also arranged to purchase a personal watercraft but failed to pay the deposit to the seller, and the seller refused to deliver the watercraft. Robin claimed that the seller was required to deliver the watercraft and allow her the opportunity to cover. Which of the following is true regarding Robin’s claim that the watercraft should have been delivered to her because she had a right to cover? 

A. She had no right to cover and the seller should have delivered the personal watercraft to her.

B. She had a right to cover only because she was a consumer, not a merchant.

C. She had a right to cover but she was required to cover before the personal watercraft had to be delivered.

D. She had no right to cover only because she was not a merchant.

E. She had no right to cover, and the merchant was not required to deliver the personal watercraft.

 

 

53. Reference: “Refused Furniture.” Selina arranges to sell furniture from her furniture store to Roland for $3,000. Roland was supposed to give Selina a $500 deposit on February 1 and pay the remainder in monthly installments. Selina was to deliver the furniture by February 7. Roland did not pay Selina as promised on February 1. He asked her to wait until March 1, but she refused. She told him that the contract was cancelled, and she refused to deliver the furniture. Selina was able to sell the furniture for only $2,500 because of a downturn in the economy. Roland told Selina that she had no right to withhold or sell his furniture and that he was suing. Selina also incurred $100 in additional amounts in advertising costs to advertise the furniture that Roland initially purchased. Selina saved $40 in delivery costs because she did not have to deliver the furniture to Roland. The subsequent purchaser picked up her own furniture. Which of the following is true regarding Roland’s claim that Selina had no right to withhold his furniture? 

A. Roland is correct. Selina was required to deliver the furniture, but she retained the right to sue him for any deficiency.

B. Roland is correct but only because of the special UCC exception for consumer goods.

C. Roland is incorrect. Selina had a right to withhold the furniture.

D. Roland is incorrect but only if Selina can prove that she had no reason to believe that he was a credit risk prior to signing the contract of sale.

E. Roland is correct because of federal consumer protection laws.

 

 

 

54. Reference: “Refused Furniture.” Selina arranges to sell furniture from her furniture store to Roland for $3,000. Roland was supposed to give Selina a $500 deposit on February 1 and pay the remainder in monthly installments. Selina was to deliver the furniture by February 7. Roland did not pay Selina as promised on February 1. He asked her to wait until March 1, but she refused. She told him that the contract was cancelled, and she refused to deliver the furniture. Selina was able to sell the furniture for only $2,500 because of a downturn in the economy. Roland told Selina that she had no right to withhold or sell his furniture and that he was suing. Selina also incurred $100 in additional amounts in advertising costs to advertise the furniture that Roland initially purchased. Selina saved $40 in delivery costs because she did not have to deliver the furniture to Roland. The subsequent purchaser picked up her own furniture. Which of the following is true regarding Roland’s claim that Selina had no right to sell the furniture he initially purchased? 

A. Roland is correct. Selina had no right to sell the furniture, but she retained the right to sue him for any deficiency.

B. Roland is correct but only because of the special UCC exception for consumer goods.

C. Roland is incorrect. Selina had a right to resell the furniture.

D. Roland is incorrect but only if Selina can prove that she had no reason to believe that he was a credit risk prior to signing the contract of sale.

E. Roland is correct because of federal consumer protection laws.

 

 

55. Reference: “Refused Furniture.” Selina arranges to sell furniture from her furniture store to Roland for $3,000. Roland was supposed to give Selina a $500 deposit on February 1 and pay the remainder in monthly installments. Selina was to deliver the furniture by February 7. Roland did not pay Selina as promised on February 1. He asked her to wait until March 1, but she refused. She told him that the contract was cancelled, and she refused to deliver the furniture. Selina was able to sell the furniture for only $2,500 because of a downturn in the economy. Roland told Selina that she had no right to withhold or sell his furniture and that he was suing. Selina also incurred $100 in additional amounts in advertising costs to advertise the furniture that Roland initially purchased. Selina saved $40 in delivery costs because she did not have to deliver the furniture to Roland. The subsequent purchaser picked up her own furniture. Which of the following is true regarding whether Selina had a right to cancel the contract? 

A. Roland was in breach giving Selina the right to cancel the contract.

B. Roland was only in partial breach, and Selina had not right to cancel the contract.

C. Roland was in breach, but Selina had no right to cancel the contract because Roland had the right to cover.

D. Roland was in breach, but Selina had no right to cancel the contract because a consumer transaction was involved.

E. Roland was in breach, but Selina had no right to cancel the contract because Roland was available for service of process.

 

 

 

56. Reference: “Refused Furniture.” Selina arranges to sell furniture from her furniture store to Roland for $3,000. Roland was supposed to give Selina a $500 deposit on February 1 and pay the remainder in monthly installments. Selina was to deliver the furniture by February 7. Roland did not pay Selina as promised on February 1. He asked her to wait until March 1, but she refused. She told him that the contract was cancelled, and she refused to deliver the furniture. Selina was able to sell the furniture for only $2,500 because of a downturn in the economy. Roland told Selina that she had no right to withhold or sell his furniture and that he was suing. Selina also incurred $100 in additional amounts in advertising costs to advertise the furniture that Roland initially purchased. Selina saved $40 in delivery costs because she did not have to deliver the furniture to Roland. The subsequent purchaser picked up her own furniture. Which of the following is true regarding any right of Selina to recover the additional advertising fees she incurred from Roland? 

A. She is entitled to recover the damages only if she can show that Roland agreed to pay such damages in his contract with her.

B. She is entitled to recover the damages only if she can show that Roland orally agreed to pay such damages.

C. She is entitled to recover the damages only if she can show that Roland has a history of breaching contracts of sale.

D. She cannot recover the damages because consumer goods are involved.

E. Selina will be able to recover the damages so long as they were reasonably incurred because of Roland’s breach.

 

 

 

57. Reference: “Refused Furniture.” Selina arranges to sell furniture from her furniture store to Roland for $3,000. Roland was supposed to give Selina a $500 deposit on February 1 and pay the remainder in monthly installments. Selina was to deliver the furniture by February 7. Roland did not pay Selina as promised on February 1. He asked her to wait until March 1, but she refused. She told him that the contract was cancelled, and she refused to deliver the furniture. Selina was able to sell the furniture for only $2,500 because of a downturn in the economy. Roland told Selina that she had no right to withhold or sell his furniture and that he was suing. Selina also incurred $100 in additional amounts in advertising costs to advertise the furniture that Roland initially purchased. Selina saved $40 in delivery costs because she did not have to deliver the furniture to Roland. The subsequent purchaser picked up her own furniture. Which of the following is true regarding any deduction in damages to which Roland is entitled? 

A. Roland is not entitled to any deduction because he was the breaching party.

B. Roland is entitled to a deduction for the delivery expenses only if he can show that Selina agreed in writing to deduct those in the event of a breach.

C. Roland is entitled to a deduction for the delivery expenses only if he can show that Selina agreed orally or in writing to deduct those in the event of a breach.

D. Roland is entitled to a deduction for the delivery expenses because that was a savings to Selina.

E. Roland is entitled to a deduction for the delivery expenses because Selina breached the contract by not delivering the furniture to him and then pursuing an action for damages.

 

 

58. Reference: “Fixture Mishap.” Trudy owns a hardware shop that also sells expensive bathroom fixtures. Danny, a home contractor in residential real estate, purchased for $500 some expensive powder room fixtures from her for a custom home he was building for Theresa. Danny installed the fixtures and sold the home to Theresa. A month later, Theresa called Danny and told him that the fixtures were corroding and looked terrible. Danny offered to fix the problem, but Theresa told him that she did not want him setting foot in her home. She told him that she had already had the fixtures replaced and that he could pick up the corroded fixtures at her front door. Danny picked up the fixtures. They were obviously defective, but he was able to sell them for $100. Danny told Trudy about the problem and requested a refund. Trudy told him that she would provide replacement fixtures that would not corrode but that she would not provide a refund. Which of the following is a UCC term referring to Theresa’s action in obtaining replacement fixtures? 

A. Breach of contract

B. Cover

C. Exchange

D. Settlement

E. Trade modification

 

 

 

59. Reference: “Fixture Mishap.” Trudy owns a hardware shop that also sells expensive bathroom fixtures. Danny, a home contractor in residential real estate, purchased for $500 some expensive powder room fixtures from her for a custom home he was building for Theresa. Danny installed the fixtures and sold the home to Theresa. A month later, Theresa called Danny and told him that the fixtures were corroding and looked terrible. Danny offered to fix the problem, but Theresa told him that she did not want him setting foot in her home. She told him that she had already had the fixtures replaced and that he could pick up the corroded fixtures at her front door. Danny picked up the fixtures. They were obviously defective, but he was able to sell them for $100. Danny told Trudy about the problem and requested a refund. Trudy told him that she would provide replacement fixtures that would not corrode but that she would not provide a refund. Is Trudy correct in that her only obligation under the circumstances is to provide replacement fixtures? 

A. Yes, Trudy is correct but only because Danny was a contractor in residential real estate.

B. Yes, but only because the fixtures were incorporated into real property.

C. Yes, because that is the only remedy she must provide under any circumstances.

D. Yes, because she is entitled to an attempt to recover. A refund or damages are only available if she cannot provide appropriate replacement fixtures.

E. No, she is not entitled to that remedy because the fixtures had been accepted and resold.

 

 

60. Reference: “Fixture Mishap.” Trudy owns a hardware shop that also sells expensive bathroom fixtures. Danny, a home contractor in residential real estate, purchased for $500 some expensive powder room fixtures from her for a custom home he was building for Theresa. Danny installed the fixtures and sold the home to Theresa. A month later, Theresa called Danny and told him that the fixtures were corroding and looked terrible. Danny offered to fix the problem, but Theresa told him that she did not want him setting foot in her home. She told him that she had already had the fixtures replaced and that he could pick up the corroded fixtures at her front door. Danny picked up the fixtures. They were obviously defective, but he was able to sell them for $100. Danny told Trudy about the problem and requested a refund. Trudy told him that she would provide replacement fixtures that would not corrode but that she would not provide a refund. What is the effect of Danny reselling the defective fixtures for $100? 

A. That is the only remedy Danny will receive.

B. The $100 will be deducted from the $500 he is entitled to receive from Trudy.

C. He will be allowed to keep the $100 and is still entitled to receive $500 from Trudy.

D. He will be required to deduct half of the $100 from any recovery he receives from Trudy.

E. He will be required to return the $100 to Theresa but will be able to receive $500 from Trudy.

 

 

 

 

 

Essay Questions

 

61. Discuss the damages a seller and lessor may recover when a buyer or lessee is in breach, and the goods have not yet been delivered. 

 

 

 

 

 

 

 

 

62. Define punitive damages, set forth how the UCC handles the issue of punitive damages, and discuss whether you believe they should be available in breach of contract actions. 

 

 

 

 

 

 

 

 

63. Discuss when specific performance is available as a remedy against a seller or lessor when the sale of goods is involved, and what is involved if specific performance is decreed. 

 

 

 

 

 

 

 

 

 

64. Bernice purchased a new trampoline from ABC Trampolines. The purchase agreement signed provided that she released ABC Trampolines from any consequential damages for personal injury. Unfortunately, the trampoline ripped while she was using it causing Bernice to fall and break her leg. She asked ABC for damages but the manager refused. The manager referenced her agreement whereby she signed away her rights to consequential damages for personal injury. Is the manager right, and why or why not? 

 

 

 

 

 

 

 

 

65. List the various options discussed in the text that may be available to a buyer/lessee when the seller/lessor is in breach.