Deck 4: The Formation and Performance of Contracts for the Sale of Goods

Question 1

"Conflict of Laws" in an international setting refers to which nation has the greater interest in applying its laws in the resolution of contract dispute cases.

Answer 1

True

Question 2

Cultural influences play an insignificant role in the way people approach contract negotiations and contract drafting.

Answer 2

False

Question 3

The term "trade usage" refers to the customs of an industry, past dealings of merchants, and the usages of trade terminology and language.

Answer 3

True

Question 4

When an international seller and buyer negotiate a sales contract, they have the option to "opt out" of CISG.

Question 5

A buyer of goods has no obligation under the CISG to examine goods promptly when received and give notice of an error in shipment.

Question 6

Under common law, a contract is formed when the notice of acceptance has been sent by the mode required by the other party under the mailbox rule.

Question 7

Because the laws are similar in most countries, there are few problems with international sales contracts.

Question 8

The provisions concerning express and implied warranties are similar under the UCC and CISG.

Question 9

The Convention on Contracts for the International Sale of Goods (CISG) was developed to give U.S. business an advantage in international sales contracts.

Question 10

U.S. lawyers generally prefer to draft contracts in exacting, detailed, and technical language while Japanese contracts generally tend to be short and with relatively little detail.

Question 11

Under the CISG, all contracts for the sale of goods must be in writing.

Question 12

Consequential money damages for breach of a sales contract may also include an amount for lost profits arising as a reasonably foreseeable loss due to the breach.

Question 13

International sales contracts concerning consumer goods sold for personal use come under CISG.

Question 14

Under common law, the offeror can withdraw his offer if withdrawal occurs before a transmitted acceptance is received.

Question 15

Historically, multinational corporations were at a disadvantage in contract negotiations with developing countries.

Question 16

Money damages for breach of a sales contract is usually based on the difference between the market price and the contract price.

Question 17

Specific performance is an equitable remedy requiring a party to pay the non-breaching party a specified sum of money for breach of contract.

Question 18

In practice, most force majeure clauses do not excuse a party's performance entirely but only suspend it for a while.

Question 19

In the People's Republic of China, domestic contract law serves largely to enforce commitments made between state agencies.

Question 20

The CISG makes no provision for "trade usages" since everything is defined.

Question 21

The CISG is inflexible as to making sure that goods are delivered on a specified date.

Question 22

A, a New York firm, sends a purchase order to B in Sweden. A standard clause on the purchase order states that "All disputes are to be heard in the courts of New York." B confirms using its standard form, which states that "all disputes are to be resolved in arbitration before the ICC, Sweden." Under the CISG:

A) A contract exists on A's terms because B's terms were a material alteration and do not become a part of the contract.
B) A contract exists on B's terms because the modification is immaterial.
C) No contract exists because B's terms were a counteroffer that was not accepted by A.
D) A contract exists because A did not promptly object to the new terms.

Question 23

Under common law, the "mirror image" rule under contracts, require the acceptance by the offeree is definite and unconditional that matches the offer exactly.

Question 24

The CISG requires that an acceptance materially altering the terms of the offer be approved by the original offering party.

Question 25

In certain cases, a court excuses nonperformance of a contract where an unexpected and unforeseeable event occurs that frustrates the purpose of the contract.

Question 26

A and B have entered into a sales contract. If it becomes apparent to A that B might not perform a substantial part of his bargain as promised, A may:

A) Avoid the contract.
B) Suspend performance.
C) Request that B specifically perform.
D) Seek restitution.

Question 27

To use the concept of impossibility of performance as an excuse for nonperformance of a contract requires that the performance be objectively impossible.

Question 28

Article 16, of the CISG an effective acceptance is effective when it reaches the offeror.

Question 29

Commercial impracticability is an excuse for nonperformance of a contract if it adds more than 20% to the cost of completing performance.

Question 30

Where no price term is fixed under CISG, there is no way to have a valid sales contract.

Question 31

A seller's employees go on strike, is this a commercial impossibility a valid legal excuse for not performing under a sales contract.

Question 32

The uniform Commercial Code has been approved by all fifty states without any changes.

Question 33

The Uniform Commercial Code has provisions applicable to international business allowing substituted performance.

Question 34

Under the UCC, between merchants, an offer may not be revoked if it is made in a signed writing that gives assurance that it will remain open for a stated period of time.

Question 35

A force majeure clause serves as a general excuse for nonperformance of a sales contract in all situations.

Question 36

Under a device known as nachfrist notice, the CISG allows either party -- buyer or seller -- to fix an additional period of time, beyond the date called for in the contract, for the other to perform.

Question 37

Price reduction is not available as a buyer's remedy for the seller's breach under the CISG if:

A) the seller has already delivered conforming substitute goods.
B) the buyer has refused to accept the seller's attempt to cure the breach.
C) the buyer has avoided the contract and refused delivery.
D) all of the above.

Question 38

The following sales are excluded from the CISG:

A) the sale of industrial equipment.
B) the sale of consumer goods.
C) the sale of ships and aircraft.
D) all of the above.

Question 39

Contract law in all countries require that there be mutual assent in the establishment of a contract between the parties.

Question 40

The CISG says that the remedy of specific performance is allowed where the domestic laws of a country allow such a remedy.

Question 41

The following are all problems faced by developing countries in their business contract relationships with wealthier nations except :

A) lack of trained professionals to assist their governments in contract negotiations.
B) lack of natural resources to use as collateral for credit.
C) lack of economic bargaining power in dealing with more powerful multinationals.
D) lack of sophisticated legal mechanisms for dealing with contract disputes.

Question 42

The following elements are all considered to be key elements materially altering the terms of an offer when included with an acceptance under the CISG except :

A) price.
B) place and time of delivery.
C) specification of the ship to be used for carriage.
D) settlement of disputes.

Question 43

Buyers and sellers entered into a contract for the sale of nuts. The usual route used the Suez Canal. Prior to shipment, a war closed the canal. Because the freight charges would be so high by another route, the seller refused to ship. The buyer had to buy at a higher price elsewhere and sued the seller. At trial:

A) the seller will win based on the doctrine of frustration of purpose.
B) the buyer will win since this is just a risk of doing business.
C) the seller will win because of res ipsa loquitur .
D) the buyer will lose because problems with shipment by sea are an excuse for nonperformance.

Question 44

A U.S. company sends a purchase order to an Italian shoe company. The Italian shoe company sends a letter confirming the purchase order. The CISG provides:

A) the acceptance by the Italian company cannot be withdrawn under any circumstances.
B) the Italian company can withdraw the acceptance if the withdrawal reaches the U.S. before its acceptance.
C) the acceptance by the Italian company was effective when sent.
D) none of the above is correct.

Question 45

All of the following may be raised as reasons for nonperformance of sales contract except :

A) Impossibility.
B) Frustration of Purpose.
C) Commercial Impracticability.
D) Subjective Constraints.

Question 46

All of the following are remedies available under CISG except :

A) money Damages.
B) reformation.
C) avoidance of the Contract.
D) specific Performance.

Question 47

The name of the clause put into international sales contracts to limit the liability of the parties in the event of an intervening and disruptive force beyond a party's control makes performance more difficult than expected is:

A) Good excuse clause.
B) Out of control clause.
C) Force Majeure clause.
D) Excuse moi clause.

Question 48

If a U.S. company wants to limit its implied warranties in connection with a sale of goods to a French company, the CISG provides that:

A) no limitation of implied warranties is allowed.
B) the limitation must be conspicuous and specific.
C) the limitation must be agreed to by the French company.
D) the limitation is valid no matter what the form.

Question 49

In the event that a buyer receives a shipment of seriously defective goods, under the CISG:

A) the buyer may accept the goods and reduce the amount paid to the seller accordingly.
B) the buyer must notify the seller of the defects within a reasonable time.
C) the seller may cure the defect up until the time for performance has expired.
D) the seller may request additional time to perform even though he will be late in so doing.
E) all of the above.

Question 50

If a U.S. buyer wants to avoid a sales contract with an Italian seller, the CISG states that the U.S. buyer:

A) can avoid the contract only if there has been a fundamental breach by the Italian seller.
B) cannot avoid the sales contract under any circumstances.
C) can avoid the contract even for minor breaches by the Italian seller.
D) can avoid if done anytime within 30 days after the goods arrive.

Question 51

International Sales Law:
I. Is not uniform because of vast political, cultural, and historical differences.
II. Is embodied in the Convention on the International Sale of Goods.
Which of the following is correct?

A) Both I and II.
B) Neither I nor II.
C) I only.
D) II only.

Question 52

The primary body of law in the U.S. dealing with domestic sales contracts is:

A) Uniform Commercial Code (UCC)
B) Convention on the International Sales of Goods (CISG)
C) Uniform Domestic Sales (UDS)
D) Convention on Domestic Contracts (CDC).

Question 53

In the U.S., the remedy of specific performance is limited to those instances where:

A) money damages would be sufficient, but the injured party does not want them.
B) the goods are unique.
C) the buyer does not want the goods for which he contracted.
D) the seller wants to force the buyer to take the goods.

Question 54

Under CISG, all of the following are requirements to excuse nonperformance of a contract except :

A) an impediment is beyond a party's control.
B) an impediment was not reasonably foreseeable at the time contract was concluded.
C) notice of the impediment was given to the other party.
D) the impediment is of such a monetary value as to shock the conscience.

Question 55

Eastern Airlines contracted with Gulf Oil for a supply of jet fuel. An oil embargo resulted in a 400 percent increase in the price of oil. Gulf demanded a price increase from Eastern. Eastern sued to ensure its supply of oil at the contract price. The result in court was:

A) that Eastern won because Gulf should have foreseen this situation.
B) Gulf won due to commercial impracticability.
C) that Eastern lost because a 400 percent increase is too much of a hardship for Gulf.
D) none of the above would be the court's decision in this situation.

Question 56

Contract negotiations in Japan are characterized by all of the following except :

A) the Japanese desire for group harmony and consensus.
B) the importance of not losing face or becoming embarrassed.
C) the presence of lawyers during the negotiations to insure that their clients' legal interests are protected.
D) the desire to develop a long-lasting business relationship.
E) all of the above are characteristic of contract negotiations in Japan.

Question 57

If a question arises over a trade usage, the CISG provides that:

A) no reference to trade usage is allowed by a court.
B) a court can look at those trade usages that the parties knew or ought to have known and are regularly used in the industry.
C) a court can look at those trade usages to which the parties agree to be bound.
D) both B and C.

Question 58

U.S. Wheat Sales Inc. has a contract with Zambia to supply 1,000,000 bushels of wheat. Before shipment, the U.S. government put an embargo on the sale of wheat to Zambia. U.S. Wheat cannot ship. In a legal action:

A) U.S. Wheat would be liable for breach of contract and have to pay damages.
B) U.S. Wheat will have to get wheat from other sources and specifically perform.
C) U.S. Wheat will be excused from performance because of the doctrine of impossibility of performance.
D) none of the above is correct.

Question 59

Under the CISG, a communication between the parties would be considered an offer when:

A) it is in the form of an advertisement.
B) it leaves the quantity or price terms open.
C) it is sufficiently definite and indicates an intention to be bound.
D) both B and C.

Question 60

Both the U.S. and France have ratified the Convention on Contracts for the International Sale of Goods (CISG). A buyer in France and a seller in the U.S. enter into a contract for the sale of widgets. If a dispute arises:

A) the CISG will apply since all the requirements have been met.
B) the CISG will not apply since the requirement of "legal selection" has not been met.
C) the Uniform Commercial Code (UCC) will apply since the seller is a U.S. company.
D) neither the UCC nor CISG will apply.

Question 61

In what ways is the coverage of the CISG and the UCC similar? Different?

Question 62

Contract laws in socialist countries tend to be:
I. Detailed, mechanical, and cumbersome.
II. Enforced by private companies operating on behalf of the state.
Which of the following is correct?

A) Both I and II.
B) Neither I nor II.
C) I only.
D) II only.

Question 63

Write that same contract using CISG law.

Question 64

As a seller who fails to deliver goods on time, consider whether U.S. law or the CISG favors your interests.

Question 65

Paul has a contract to sell i-watches to a Jo Ann in Vietnam, and enter into a contract to purchase the i-watches from Gregory in Silicon Valley.  The Vietnam Government banned i-watches imported into the country. Consequently, Paul cancels the contract with Gregory.  Is "frustration of purpose" recognized in the United States?

A) Breach of contract
B) Recognized in the United States
C) Generally not recognized in the United States
D) Anticipatory repudiation

Question 66

When one party clearly sees that the other contracting party will either not perform a substantial part of the contract, this is a:

A) Breach of contract.
B) Anticipatory Breach.
C) Impossibility of performance.
D) Force Majeure.

Question 67

Write a contract (between a U.S. buyer and a German seller) that includes some provision of German law.

Question 68

Compare and contrast the remedies for breach under the CISG and U.S. law.

Question 69

Negotiations style in Japan can be characterized as:

A) aggressive.
B) win-win.
C) passive.
D) harmony, personal dignity, consensus.

Question 70

In what ways do both U.S. law and the CISG contemplate circumstances beyond a party's control? How are these similar and different from each other?

Question 71

Consider the benefits and detriments of a U.S. buyer and a German seller using U.S. law for a sale contract.

Question 72

A states to B, "Within the next month, I will be placing an order for 100 Model A computers, so please give me your best price." B replies, "I will sell you this model computer for $500 each." A enters into a contract to sell the computers to C for a profit. Three weeks later, B refuses to sell the computers to A. Under the CISG:

A) B will win because the contract was not in writing.
B) B will win because of the mirror image rule.
C) A will win because B's reply was a firm offer.
D) A will win because B had accepted unconditionally.

Question 73

As an offeror, would you favor the offer/acceptance/revocation rules of the CISG or U.S. law?

Question 74

Compare and contrast the mailbox rule with the receipt theory. What implications might these different rules have?

Question 75

Consider the benefits and detriments of a U.S. buyer and a German seller using CISG law for a sales contract.

Question 76

Identify at least 10 similarities between the CISG and the UCC and/or U.S. common law.

Question 77

Identify at least 10 dissimilarities between the CISG and the UCC and/or U.S. common law.

Question 78

If a merchant receives goods unsolicited with a note, "If I don't hear from you, I assume you will keep them and pay for them", failure to respond to the sender is an acceptance

A) unless a rejection is sent within three (3) days upon receipt
B) silence is an acceptance
C) no acceptance
D) must return the goods within three (3) days.

Question 79

Compare and contrast the remedies for breach under both U.S. law and the CISG.

Question 80

A German plaintiff had sold equipment to an American firm on open account. On the date the amounts were due, the American firm owed the plaintiff 60,000 marks. At that time, the dollar was worth 2.5 marks. Three years later, the plaintiff took a judgment against the American firm in the courts of New York. At the time of judgment, the dollar was worth only 1.5 marks. The New York court may do which of the following:

A) award judgment to the plaintiff in $24,000 of U.S. currency.
B) award judgment to the plaintiff in $40,000 of U.S. currency.
C) award judgment to the plaintiff in 60,000 D.M., German currency.
D) dismiss the case. U.S. courts cannot hear cases involving foreign currencies.