Chapter 18 - Performance and Breach of Sales and Lease Contracts Flashcards Preview

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Flashcards in Chapter 18 - Performance and Breach of Sales and Lease Contracts Deck (30):
1

anticipatory repudiation

- an assertion or action by a party indicating that he or she will not perform an obligation that the party is contractually obligated to perform at a future time

2

conforming goods

- goods that conform to contract specifications

3

cover

- a buyer or lessee's purchase on the open market of goods to substitute for those promised but not delivered by the seller
- under the Uniform Commercial Code, if the cost of cover exceeds the cost of the contract goods, the buyer or lessee can recover the difference, plus incidental and consequential damages

4

cure

- under the Uniform Commercial Code, the right of a party who tenders nonconforming performance to correct his or her performance within the contract period

5

installment contract

- under the Uniform Commercial Code, a contract that requires or authorizes delivery in two or more separate lots to be accepted and paid for separately

6

letter of credit

- a written instrument, usually issued by a bank on behalf of a customer or other person, in which the issuer promises to honor drafts or other demands for payment by third persons in accordance with the terms of the instrument

7

perfect tender rule

- a common law rule under which a seller was required to deliver to the buyer goods that conformed perfectly to the requirements stipulated in the sales contract
- a tender of nonconforming goods would automatically constitute a breach of contrac
- under the Uniform Commercial Code, the rule has been greatly modified

8

replevin

- an action to recover specific goods in the hands of a party who is wrongfully withholding them from the other party

9

tender of delivery

- under the Uniform Commercial Code, a seller's or lessor's act of placing conforming goods at the disposal of the buyer or lessee and giving the buyer or lessee whatever notification is reasonably necessary to enable the buyer or lessee to take delivery

10

SAMPLE TEST QUESTIONS
1. Sun Power, Inc., sells solar power cells and panels to commercial dealers in the Southwest. With regard to the UCC's good faith requirement, Sun Power can :
a. avoid it only by a conspicuous written disclaimer
b. avoid it only by oral disclaimer
c. avoid it with or without a disclaimer
d. not disclaim it

ANSWER :
(A)
CORRECT :
(D)

11

SAMPLE TEST QUESTIONS
2. Fuel Connector Products, Inc., agrees to sell Go-Flo, Inc., a certain quantity of house couplings and fittings, 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. the U.S. Postal Service office nearest to Go-Flo's place of business

ANSWER :
(A)
CORRECT :
(A)

12

SAMPLE TEST QUESTIONS
3. GR8 Daze Products, Inc., and Hot Springs Spas Stores enter into a contract for a sale of hot tubs. 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

ANSWER :
(D)
CORRECT :
(D)

13

SAMPLE TEST QUESTIONS
4. Energy Products Corporation and First Response Preparedness.com enter into a contract for a sale of portable generators. Under a destination 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 tendering their delivery
d. place the goods into the hands of a carrier

ANSWER :
(B)
CORRECT :
(B)

14

SAMPLE TEST QUESTIONS
5. 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 the goods to the lessee that :
a. approximately conform to the contract destination
b. entirely conform to the contract destination except in one or two details
c. conform to the contract description in every way
d. substantially conform to the contract description in most details

ANSWER :
(C)
CORRECT :
(C)

15

SAMPLE TEST QUESTIONS
6. Lock & Key Storage Pods and Maxi Discount Stores enter into a contract for a lease of ten storage pods of a certain size. Lock & Key delivers ten pods, but they are not the right size. Maxi Discount :
a. cannot reject the entire shipment
b. can reject the entire shipment
c. must accept the entire shipment
d. must reject the entire shipment

ANSWER :
(B)
CORRECT :
(B)

16

SAMPLE TEST QUESTIONS
7. Sweet Fruits contracts with Fruits to You, Inc., for a delivery of two hundred pounds of strawberries to be delivered by Keep Kool Trucking, a trucking company with refrigerated trucks. On the day of the delivery, the refrigeration units on Keep Kool's trucks are not working. Fruits to You :
a. may ship the goods to Sweet Fruits using another trucking company with refrigerated trucks
b. must refund Sweet Fruits' money and cancel the contract
c. must wait to ship the strawberries until Keep Kool has fixed its trucks
d. must ship the goods through a different carrier an pay Sweet Fruits incidental damages

ANSWER :
(A)
CORRECT :
(A)

17

SAMPLE TEST QUESTIONS
8. 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 Collar 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

ANSWER :
(A)
CORRECT :
(B)

18

SAMPLE TEST QUESTIONS
9. Beef Burgers, Inc. contracts to buy five hundred steers from Fattening Feedlots. Before Fattening Feedlots can deliver the steers, there is an outbreak of disease in the feedlot, and all of the cattle are quarantined. In this case the perfect tender rule :
a. applies to both parties
b. does not apply
c. applies only to Beef Burgers
d. applies only to Fattening Feedlots

ANSWER :
(A)
CORRECT :
(B)

19

SAMPLE TEST QUESTIONS
10. Shane's Auto Parts order twenty tires from Tough Tires, Inc. The truck delivering the tires to Shane's is in an accident and ten of the tires are damaged. Shane's Auto Parts :
a. cannot reject the entire shipment
b. must still pay for all twenty tires at the original contract price
c. may inspect the tires and accept the shipment with a reduction in price
d. must reject the entire shipment

ANSWER :
(C)
CORRECT :
(C)

20

SAMPLE TEST QUESTIONS
11. Repair Tools Company contracts to deliver fifty heavy-duty floor jacks to Serv-UR-Self on April 15 that delivery will be delayed until June 1. Serve-UR-Self may do all of the following except :
a. force Repair Tools to deliver substitute goods befor the time for the contract's performance
b. await Repair Tools' performance for a commercially reasonable time
c. sue Repair Tools for breach of contract
d. suspend its own performance

ANSWER :
(D)
CORRECT :
(A)

21

SAMPLE TEST QUESTIONS
12. On May 1, Garage Prefabricators, Inc., agrees to sell four portable garages to Hiway Truck Service Center. Five days later, Hiway refuses delivery and cancels the contract. Garage Prefabricators is entitled to :
a. force Hiway to accept the garage
b. recover any damages from Hiway but not resell the garage
c. resell the garage and recover any damages from Hiway
d. resell the garage but not recover any damages from Hiway

ANSWER :
(C)
CORRECT :
(C)

22

SAMPLE TEST QUESTIONS
13. Garden Field Farms and Haute Gourmet Restaurant, Inc., enter into a contract for a sale of lettuce. After Garden Field ships the lettuce but before Haute Gourmet receives it, the buyer declares bankruptcy. Garden Field can stop delivery of the goods in transit :
a. only if the quantity is deficient
b. only if the quantity exceeds the contract amount
c. only if the quantity is at least a truckload
d. regardless of the quantity

ANSWER :
(C)
CORRECT :
(D)

23

SAMPLE TEST QUESTIONS
14. 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 incidental damages
b. sue to recover the purchase price minus incidental 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

ANSWER :
(A)
CORRECT :
(A)

24

SAMPLE TEST QUESTIONS
15. Oh! Wow! 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. Oh! Wow! 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

ANSWER :
(B)
CORRECT :
(D)

25

SAMPLE TEST QUESTIONS
16. Almond Farms contracts for the sale of a certain quantity of nuts to Bulk Natural Foods Stores. Almond Farms delivers nonconforming goods. Acceptance will be presumed unless Bulk Natural Foods rejects the goods :
a. within a reasonable time after delivery
b. within a reasonable time after ordering the goods
c. within any time, since hunting rifles are not perishable
d. before the last day of the current hunting season

ANSWER :
(A)
CORRECT :
(A)

26

SAMPLE TEST QUESTIONS
17. BBQ, Inc., makes and sells grills to Cook's Choice and Grill Market, retailers of kitchen appliances, outdoor cooking equipment, and related utensils. Their contracts limit consequential damages when the loss is commercial in nature. This is prima facie unconscionable with respect to :
a. BBQ
b. Grill Mart
c. Cook's Choice
d. none of these choices

ANSWER :
(D)
CORRECT :
(D)

27

FACT PATTERN 18-B1
Economy Bank issues a letter of credit in favor of Finish & Refining Comoany, a U.S. firm, to facilitate an international sales contract to buy resources from Global Mining, Ltd., a British company

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28

FACT PATTERN 18-B1
18. Refer to Fact Pattern 18-B1. Global Mining is entitled to payments when it :
a. enters into the contract with Finish & Refining
b. verifies that Finish & Refining has the money to pay for the purchase
c. complies with the terms and conditions of the letter of credit
d. asks to be paid

ANSWER :
(C)
CORRECT :
(C)

29

FACT PATTERN 18-B1
19. Refer to Fact Pattern 18-B1. Economy Bank is bound to :
a. make sure that the parties perform the contract
b. verify with Finish & Refining that the transaction has been completed
c. make payment when Global Mining presents the proper documents
d. pay Global Mining whenever it asks to be paid

ANSWER :
(C)
CORRECT :
(C)

30

FACT PATTERN 18-B1
20. Refer to Fact Pattern 18-B1. In this letter of credit, the account party is :
a. Global Mining
b. Finish & Refining
c. Economy Bank
d. Great Britain

ANSWER :
(B)
CORRECT :
(B)