Chapter 25. Sales Remedies
1. The Code’s remedies are cumulative; therefore, a seller may both withhold delivery of the goods and identify goods
to the contract.
a. True
b. False
2. A company may be considered insolvent under the Code if it is unable to pay its debts as they come due.
a. True
b. False
3. If the buyer is insolvent and has not paid for goods received, the seller may reclaim the goods.
a. True
b. False
4. Under the Code, damages have to be “calculable with mathematical precision.”
a. True
b. False
5. The Code defines cancellation as one party’s ending a contract by that party’s breach.
a. True
b. False
6. Robert paid William $1,000 for a rare first edition of an Edgar Allen Poe novel. The sales contract states that the
book is to be delivered within ten days. William, however, refused to deliver the book as promised. In order to sue
for the UCC remedy of specific performance, Robert must prove that money damages will not be adequate
compensation for his loss.
a. True
b. False
7. Dual purposes of remedies for breach of a contract for the sale of goods under the Code are compensation and
deterrence of wrongdoing; therefore, compensatory and punitive damages are common remedies.
a. True
b. False
8. Under Article 2A a lessor may recover compensation for loss to his residual interest in the goods caused by the
lessee’s default.
a. True
b. False
9. Under the CISG, the aggrieved party in a breach of contract has no duty to mitigate the loss.
a. True
b. False
10. A buyer who has rightfully rejected or justifiably revoked acceptance of goods that remain in her possession or
control has a security interest in these goods to the extent any payment of the price has been made.
a. True
b. False
11. A buyer may not recover consequential damages that could have been prevented by cover.
a. True
b. False
12. One hundred crystal flower vases have been identified to the contract and a down payment of $1,000 of the $10,000
purchase price has been paid. If the seller becomes insolvent, the buyer may still pay $9,000 and get the goods.
a. True
b. False
13. Al agrees to sell goods to Betty for a contract price of $3,000 due on delivery. Betty wrongfully rejects the goods
and refuses to pay anything. Al resells the goods in strict compliance with the Code for $2,000. He incurs incidental
damages for sales commissions of $200 but saves $150 in expenses because of the resale. Al is entitled to recover
$1,050 from Betty.
a. True
b. False
14. A contract between the seller and buyer may not provide for remedies in addition to or instead of those provided in
the Code.
a. True
b. False
15. Contract remedies provided as exclusive will not preclude Code remedies if circumstances cause the remedy to fail
in its essential purpose.
a. True
b. False
16. Under the CISG, if the seller fails to perform any of his obligations under the contract or the CISG, the buyer may
require the seller to perform or may fix an additional reasonable period of time for the seller to perform.
a. True
b. False
17. Breach of one installment of an installment contract is never considered to impair the value of the whole contract.
a. True
b. False
18. Upon the seller’s breach, the buyer must protect himself by obtaining “cover” or he is barred from any other remedy
under the Code.
a. True
b. False
19. Under the CISG, if the contract is avoided and the seller has resold the goods in a reasonable manner, he may
recover the difference between the contract and resale prices.
a. True
b. False
20. Replevin is an action at law to recover specific goods in the possession of the defendant which are being unlawfully
withheld from the plaintiff.
a. True
b. False
21. Upon rightful rejection or justifiable revocation of acceptance, the buyer loses all property interest in the goods.
a. True
b. False
22. Specific performance is a remedy at law which seeks to compel the party in breach to perform the contract
according to its terms.
a. True
b. False
23. A seller may default in three different ways and the Code provides remedies, each of which is available for any type
of default.
a. True
b. False
24. The contract between the buyer and the seller may expressly limit or exclude consequential damages so long as the
contract is not unconscionable.
a. True
b. False
25. Exclusion of consequential damages for personal injuries resulting from breach of warranty in the sale of consumer
goods is prima facie unconscionable.
a. True
b. False
26. The right of the buyer to recover from an insolvent seller the goods in which he has a special property interest
existed at common law before being included in the Code.
a. True
b. False
27. Incidental damages do not include expenses in connection with effecting cover.
a. True
b. False
28. According to the UCC, if the buyer of defective goods recovers incidental damages, he will be unable to recover
compensatory damages.
a. True
b. False
29. Where the seller fails to make delivery, the buyer can cancel the contract, but he must give the seller notice of his
cancellation.
a. True
b. False
30. The bankruptcy and the equity definitions of insolvency are the same.
a. True
b. False
31. Upon the lessor’s breach, the lessee may protect himself by leasing substitute goods.
a. True
b. False
32. If a seller withholds delivery of goods to the buyer because of the buyer‘s failure to make timely payment, the seller
may resell the goods and is accountable to the original buyer for any profit made on the resale.
a. True
b. False
33. Under Article 2A, a lessor retains title to the goods and therefore has the right to recover possession of them upon
default by the lessee.
a. True
b. False
34. The statute of limitations provided by Article 2 is five years, which can be reduced or extended by the parties’
contract.
a. True
b. False
35. For purposes of the statute of limitations contained in Article 2, a cause of action generally accrues when a breach
occurs, without regard to whether the injured party knows of the breach at that time.
a. True
b. False
36. The right of the seller to stop delivery of the goods ceases when:
a. a negotiable document of title covering the goods is negotiated to the buyer.
b. the buyer receives the goods.
c. Either of these events occurs.
d. It never ceases.
37. The seller may recover the full contract price when:
a. there is no ready market available for the resale of the goods identified to the contract.
b. the buyer has accepted the goods.
c. conforming goods have been lost or damaged after the risk of loss passed to the buyer.
d. Any of these situations occurs.
38. Which of the following is not a remedy of the buyer?
a. The buyer has the right of cover and to receive damages.
b. The buyer may have the right to obtain specific performance.
c. The buyer may have the right to recover incidental and consequential damages.
d. All of these may be remedies of the buyer.
39. The seller may resell the goods identified to a contract:
a. only at a public sale.
b. only at a private sale.
c. at a public or private sale.
d. at a public sale only if notice is given to the buyer.
40. Which of the following would not be a remedy available to the seller on account of buyer‘s breach?
a. Stop delivery of the goods by the carrier
b. Require the financially sound buyer to return the goods
c. Recover the price
d. Cancel the contract
41. Taylor agrees to sell Pedro goods for $2,000. The value of the goods accepted is $1,500. If the goods had been as
warranted, their value would have been $2,600. What are the buyer’s damages for breach of warranty?
a. $500
b. $600
c. $1,100
d. Damages cannot be determined in this case because they are not calculable with mathematical precision.