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1. A buyer has an absolute right to reject goods as long as the rejection is timely.
a.
True
b.
False
False
2. Tender means to physically deliver the goods to the buyer.
a.
True
b.
False
False
3. Under the “perfect tender rule” the buyer may reject the goods if they fail in any respect to conform to the contract.
a.
True
b.
False
True
4. The common law requirement that the seller make a tender of delivery that conforms in all respects to the contract
requirements was retained by drafters of the UCC, although the Code includes sections that limit the rule’s effect.
a.
True
b.
False
True
5. A seller may not make repairs or adjustments after the goods have been tendered, even if that action will bring the
goods into conformity in order to “cure” nonconforming goods.
a.
True
b.
False
False
6. Wimble ordered 1,000 pro-quality luminescent orange tennis balls from Sports Unlimited at a cost of $800. On June 1,
Sports Unlimited shipped standard white tennis balls, but Wimble rejected them. Wimble bought the same number of pro-
quality luminescent orange balls from another supplier the same day for $650. In a suit against Sports Unlimited, Wimble
may recover $800.
a.
True
b.
False
False
7. In some industries it is a routine practice to draft contracts permitting imperfection in the seller’s goods, thereby
limiting the effect of the perfect tender rule by the parties’ agreement.
a.
True
b.
False
True
8. “Course of dealing” refers to prior commercial transactions between the same parties.
a.
True
b.
False
True
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9. A homeowner has a contract with a firewood supplier to bring a rick of hardwood at the beginning of each month from
October through March. If the supplier has brought a mixture of hard and soft woods for the first three deliveries, the
homeowner cannot reject a delivery in January just because it includes some soft wood.
a.
True
b.
False
True
10. A buyer who accepts nonconforming goods may revoke the acceptance under limited circumstances.
a.
True
b.
False
True
11. In the Zion Temple First Pentecostal Church of Cincinnati, Ohio, Inc. v. Brighter Day Bookstore & Gifts case, the
court found that, because of an error in the catalog, there was no right to cure a nonconformity with the sleeves of the
robes.
a.
True
b.
False
False
12. Liquidated damages are not permitted under the UCC.
a.
True
b.
False
False
13. If Chuck buys frozen cheese from Cheese Inc., then fails to inspect the cheese within a reasonable amount of time and
does not reject the shipment, Chuck has accepted the shipment even if there is non-conformity.
a.
True
b.
False
True
14. A buyer’s material breach gives the seller the right to refuse to deliver the goods.
a.
True
b.
False
True
15. Matson agrees to purchase 500 wooden chairs from Woodcarvers, Inc. After Woodcarvers sets the chairs aside in its
warehouse, but before the risk of loss passes to Matson, the chairs are destroyed in a fire, which was not the fault of
Woodcarvers. The contract between Matson and Woodcarvers is void.
a.
True
b.
False
True
16. The duties of the buyer include all of the following except:
a.
acceptance of conforming goods.
b.
payment for conforming goods.
c.
delivery of the documents of sale to the seller as a tender of goods.
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d.
notifying the seller of rejection of non-conforming goods within a reasonable time.
17. Under the UCC, the seller’s right to correct a shipment of non-conforming goods is called:
a.
correction.
b.
cure.
c.
cover.
d.
retender.
b
18. Bryson Hardware accepted delivery of the 50 door handles it ordered. If it later finds the handles do not conform to
the contract specifications, it may return the goods only if:
a.
it shows the handles are nonconforming.
b.
it shows that the defects substantially impair their value.
c.
it can prove it is commercially impracticable for it to keep the goods.
d.
the documents of title are in order.
b
19. If a buyer does not receive goods by the contract deadline, remedies available include:
a.
incidental and consequential damages.
b.
cover.
c.
damages for non-delivery.
d.
All of the above.
d
20. Meister Bros. shipped 250 radiator belts to fill Braybon’s order. Quality control measures had been in place in
Meister’s factory when the belts were manufactured. When Braybon received the order one day before it was due, it
notified Meister that it rejected the belts because of a variation from the contract specifications. Meister, although it
believed the original belts met the contract specifications, notified Braybon that it would supply conforming goods within
one week. When the conforming goods arrive in one week:
a.
Braybon must accept them, but does not have to pay the full price because the contract deadline has passed.
b.
Braybon does not have to accept them because Meister Bros. only has one chance to fill the order correctly.
c.
Braybon should accept them because Meister Bros. has a right to cure even after the contract deadline under
these circumstances.
d.
Braybon does not have to accept them because Meister Bros. failed to meet its UCC requirement to deal in
good faith.
21. A buyer who accepts goods but notifies the seller the goods are non-conforming:
a.
cannot recover any damages.
b.
can recover the difference between the goods as promised and as delivered, plus incidental and consequential
damages.
c.
cannot recover incidental damages.
d.
cannot recover consequential damages.
b
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22. A baseball team ordered 500 wooden baseball bats from Bats, Inc., for delivery on June 1. On May 15, the ball team
received 500 aluminum bats instead of the wooden ones. As of May 16, Bats, Inc.:
a.
may cure before June 1.
b.
has breached the contract and is liable for damages.
c.
has breached the contract only if the baseball team rejects the goods.
d.
may cure if done within a reasonable time, even if it is after June 1.
23. Family Time Restaurant has a contract with Prime Meats for Prime to deliver 100 pounds of ground sirloin twice a
week for the next three months. If, on one delivery, Prime brings 95 pounds of ground chuck instead of 100 pounds of
ground sirloin:
a.
Family Time may unquestionably reject the non-conforming goods because they vary in both quantity and
quality.
b.
Family Time may reject the non-conforming installment only if it substantially impairs the value of that
installment and cannot be cured.
c.
Prime has no right to cure.
d.
the perfect tender rule applies.
b
24. The UCC “perfect tender” provision provides:
a.
the buyer can reject the entire shipment if any portion of the goods are nonconforming.
b.
the buyer must accept the goods if the defects are minor and correctable.
c.
the buyer may not accept the conforming part of a shipment and reject the nonconforming part.
d.
a buyer must reject nonconforming goods.
25. A buyer who properly rejects goods:
a.
can do so by sending the goods back in any manner.
b.
must notify the seller of the rejection within a reasonable time.
c.
must pay the costs of returning the rejected goods.
d.
None of the above.
b
26. Precision had a contract to supply Higgins, Co. with 500 medical instruments for delivery in three months. Several
weeks later Higgins reads in the Wall Street Journal that Precision has been sued for selling defective instruments.
Higgins could:
a.
require written assurances from Precision.
b.
sue Precision for damages immediately.
c.
“cover.”
d.
declare the contract is breached.
27. A buyer who is unable to obtain cover:
a.
will be limited to the remedy of incidental damages.
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b.
will be limited to the remedy of consequential damages.
c.
will lose the money or goods invested in the breached contract.
d.
may be allowed the remedy of specific performance.
d
28. If a contract does not provide for a time for inspection, the UCC allows inspection:
a.
in a reasonable time.
b.
the same day as delivery.
c.
within 3 days of delivery.
d.
within 10 days of delivery.
29. If a seller cures within a reasonable amount of time, the contract:
a.
has been performed.
b.
is breached.
c.
is void.
d.
is voidable.
30. Neon orders one thousand 25-foot nylon ropes from Hang’em High Co. Upon inspection of the delivery, Neon learns
that Hang’em sent five hundred 25-foot ropes and five hundred 20-foot ropes. Neon may:
a.
demand that Hang’em send 500 additional 25-foot ropes.
b.
accept the 500 conforming ropes and reject the 500 nonconforming ropes.
c.
seek an installment contract.
d.
declare an anticipatory repudiation.
b
31. A buyer may revoke an acceptance of goods if:
a.
the nonconformity does not impair the value of the goods.
b.
the buyer had a legitimate reason for the initial acceptance.
c.
the buyer knew the nonconformity could not be cured.
d.
the buyer thought they could easily cover.
b
32. When a party to a contract notifies the other party that it will not perform the contract as agreed, this conduct is
referred to as:
a.
specific performance.
b.
cover.
c.
repudiation.
d.
assurance.
33. Which of the following statements is not true regarding the buyer’s right to cover?
a.
The buyer must cover.
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b.
The measure of damages in a cover is the difference between the cover price and the contract price.
c.
Cover must be done by reasonably obtaining substitute goods.
d.
Consequential damages can be recovered in addition to the cover damages.
34. Master Glue Hairspray, Inc. contracts to purchase 100 umbrellas with its logo and slogan, “A spray a day keeps the
rain and wind away!” specially printed on the umbrellas and its 1-800 telephone number on the umbrella handle. After the
seller completes the order, Master Glue refuses to accept or pay for the umbrellas. Because of the special logo and
telephone number, the seller has been unable to find a new buyer. If the seller sues Master Glue, what is the proper
measure of the seller’s damages?
a.
Contract price minus market value of the goods at the time of delivery.
b.
Contract price.
c.
Lost profits.
d.
Cover price minus contract price.
35. Under the doctrine of commercial impracticability, which situation would not excuse the seller’s performance?
a.
The seller forgot to include the cost of freight in a C&F contract.
b.
The seller’s source of supply is no longer available because of a governmental embargo prohibiting an export
from another country.
c.
The seller cannot deliver because severe flooding wiped out three-fourths of the state’s produce.
d.
The seller’s workforce is out on an unexpected strike.
36. Assume that Sherrie’s Cherries contracts with Dessert World to sell and ship 600 pounds of cherries in three equal
installments of 200 pounds each. If the first installment arrives with 5 pounds of spoilage, then Dessert World may:
a.
reject the installment shipment because of the perfect tender rule.
b.
not reject the installment if those in the food industry expect a small percentage of spoilage with fresh fruits or
vegetables.
c.
reject the entire contract.
d.
declare a breach and “cover.”
37. Reba orders a pair of custom-made cowboy boots, C.O.D. from Home on the Range Western Wear. When the boots
arrive, Reba pays the carrier for the boots, then opens the package, only to discover that the boots are the wrong snake
skin color and three sizes too big. At this point:
a.
she is entitled to inspect the goods after payment (due to the C.O.D. terms) and she can reject the boots
because they are nonconforming.
b.
Reba cannot revoke the acceptance, because the wrong color and size of the boots are not substantial
impairments.
c.
Home on the Range can allege that Reba did not conduct a proper inspection; therefore, though Home on the
Range must cure, Reba is obligated to pay for the return of the incorrect boots and the shipment of
replacement boots.
d.
None of the above.
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38. The Code’s requirement of good faith in the performance and enforcement of every contract imposes:
a.
a greater duty on merchants than consumers.
b.
a greater duty on consumers than merchants.
c.
the same duty on both consumers and merchants.
d.
a greater duty on parties to a sales contract with the purchase price over $500.
39. Buyer Bob breaches his contract for the sale of goods with Seller Suzie. Suzie still has possession of the goods at the
time of the breach. Suzie can refuse to deliver the goods and:
a.
resell the goods and sue Bob for the total contract price.
b.
either resell the goods or sue, but not both.
c.
resell the goods and sue for any loss on the sale plus incidental damages less expenses saved.
d.
resell the goods and sue only for incidental damages.
40. Turtle World orders 200 small sea turtles from Reptile World. After the sea turtles had been identified to the contract
but before the risk of loss had passed to Turtle World, the turtles were released into the ocean by a militant animal rights
group who broke into Reptile World to set the animals free. Under this scenario:
a.
Turtle World cannot successfully sue because the contract is void.
b.
Turtle World can cover, then win a judgment against Reptile World for the difference between the contract
price and the cover price, plus incidental and consequential damages, minus expenses saved.
c.
Turtle World can successfully sue for specific performance because sea turtles are everywhere.
d.
Turtle World is entitled to a judgment for compensatory damages, but not consequential damages.
41. Discuss the UCC rules on the limitation of damages in a contract.
limitations will not be enforced if they leave a party with no remedy or are an unconscionable exclusion of
consequential damages.
42. Leonna orders five table settings of china from Elite China. Each set includes a dinner plate, cup & saucer, bowl, and
dessert plate. The china is sold only in sets. When the delivery arrives, Leonna discovers that Elite China sent the wrong
pattern. Leonna immediately calls Elite China and is instructed to send the shipment back. While repacking the shipment,
Leonna changes her mind and decides to keep the cups and saucers. She returns everything else. Can she do this?
dishes are not sold separately, she must send the entire set back. She may be able to buy one set and return the
other four sets, as this would probably be a commercial unit.
43. Define these terms: usage of trade; course of dealing; and course of performance.
perfect according to industry standards, or prior contracts between the same parties, or based on a history of
dealings between the parties in the same contract.
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44. Tiny Tim Toy Company (TTT) entered into a contract with the manufacturing firm of Charles, Dickens, and Scrooge
(C,D&S) to purchase Christmas toys. The shipment was due to arrive on September 1, in time for the Christmas sales. By
August 15, after hearing from other toy companies that C,D&S were falling far behind on meeting delivery dates, TTT
wrote a letter demanding assurances that the goods would arrive as scheduled. The only response received was a letter on
C,D&S letterhead that said, “Bah Humbug! You’ll get the shipment by November 1.” Discuss TTT’s possible remedies at
this point.
45. Identify six possible remedies for a seller when the buyer breaches a contract.
46. Identify seven possible remedies for a buyer when the seller breaches a contract.