Question 1

In a sales contract, an agreed-on remedy is in addition to those provided in the UCC even if the parties expressly otherwise.

Accepted Answer

Under the Uniform Commercial Code (UCC), an agreed-on remedy in a sales contract can limit or modify the remedies otherwise available under the UCC, depending on the specific terms of the agreement between the parties.

Question 2

Lumber Company agrees to sell a certain quantity of plywood to Metro Builders Inc. under a destination contract. Lumber must

Accepted Answer

In a destination contract, the seller is obligated to deliver goods to a specific destination. The responsibility of the seller includes ensuring that the goods reach the agreed-upon location as specified in the contract.

Question 3

To bring an action based on breach of warranty, a buyer or lessee has a certain limited period of time from the date of delivery to file suit.

Accepted Answer

Under the Uniform Commercial Code (UCC), a buyer or lessee must commence an action for breach of warranty within a certain period of time after delivery, typically four years, unless the warranty explicitly extends for a longer period. This limitation period is designed to provide certainty and finality in commercial transactions.

Question 4

A letter of credit is independent of the underlying contract between a buyer and seller, requiring the issuer to ascertain whether the contractual conditions have been met.

Accepted Answer

A letter of credit is indeed independent of the underlying contract between the buyer and seller in terms of its operation, meaning the bank deals with documents and not the actual performance under the contract. However, it does not require the issuer to ascertain whether the contractual conditions have been met; it only requires that the documents presented comply with the terms of the letter of credit.

Question 5

Nature's Eggs Inc. agrees to supply Omelet Express with five hundred eggs. Nature's Eggs can reasonably ask Omelet Express to pick up the eggs at

Accepted Answer

Nature's Eggs Inc. can ask Omelet Express to pick up the eggs at any reasonable hour, as this would be considered a fair and practical expectation for both parties involved in the transaction.

Question 6

If Basic Pipe LLC and City Construction Inc. state in their contract that repair or replacement is the exclusive remedy, then it is-even if Basic is unable to repair a defect or replace a defective part.

Accepted Answer

The statement of repair or replacement as the exclusive remedy in a contract does not necessarily hold if the party responsible for the repair or replacement (in this case, Basic Pipe LLC) is unable to fulfill that obligation. In such scenarios, alternative remedies may be sought under the law, depending on the jurisdiction and specific terms of the contract.

Question 7

When the goods delivered are not as promised, the measure of recovery in the buyer's suit for damages is the difference between the values of the goods as accepted and if they had been delivered as warranted.

Accepted Answer

This measure of recovery is based on the principle that the buyer should be placed in the position they would have been in if the goods had been delivered as promised. It compensates the buyer for the loss in value of what was received compared to what was contracted for.

Question 8

The parties to a sales contract can vary their rights and obligations by agreement, but they cannot change the measure of damages.

Accepted Answer

Parties to a sales contract can agree to modify both their rights and obligations as well as the measure of damages, as long as such modifications are within legal limits and do not violate any statutory provisions or public policy.

Question 9

Under the United Nations Convention on Contracts for the International Sale of Goods, a buyer can avoid obligations under a contract only if the seller fails to deliver the goods.

Accepted Answer

The United Nations Convention on Contracts for the International Sale of Goods (CISG) allows a buyer to avoid obligations under a contract for reasons beyond the failure of the seller to deliver the goods, such as substantial non-conformity of the goods delivered.

Question 10

Under the United Nations Convention on Contracts for the International Sale of Goods, the measure of damages on a contract's breach normally includes foreseeable consequential damages.

Accepted Answer

Under the United Nations Convention on Contracts for the International Sale of Goods (CISG), Article 74 allows for the recovery of damages including lost profits that are foreseeable at the time of the contract's conclusion, which encompasses consequential damages.

Question 11

A buyer can revoke his or her acceptance if, despite assurances by the seller that the goods would conform, the buyer was aware of their nonconformity before acceptance.

Accepted Answer

Under the Uniform Commercial Code (UCC), a buyer's right to revoke acceptance of goods is generally limited to situations where the nonconformity substantially impairs the value of the goods and was difficult to discover at the time of acceptance or if the seller has provided assurances that the nonconformity would be cured and it was not. If the buyer was aware of the nonconformity before acceptance, they typically cannot later revoke acceptance based on that known nonconformity.

Question 12

The parties to a sales contract can limit or exclude consequential damages for any commercial loss-such as a business's lost profits or property damage.

Accepted Answer

Under the Uniform Commercial Code (UCC), parties to a sales contract can agree to limit or exclude consequential damages, provided that the limitation or exclusion is not unconscionable.

Question 13

A buyer can revoke his or her acceptance if it was predicated on a reasonable assumption that the goods' nonconformity would be cured, and the nonconformity was not cured.

Accepted Answer

Under the Uniform Commercial Code (UCC), a buyer may revoke their acceptance of goods if they initially accepted them on the reasonable assumption that their nonconformity would be cured and it was not, significantly impairing the value of the goods.

Question 14

Fuel Connectors Inc. agrees to sell Go-Flo, Inc., a certain quantity of hose 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

Accepted Answer

The place of delivery, by default, is the seller's place of business if no specific location is mentioned in the contract and the buyer is expected to pick up the goods.

Question 15

Under the United Nations Convention on Contracts for the International Sale of Goods, a seller can avoid obligations under a contract only if the buyer fails to accept delivery of the goods.

Accepted Answer

Under the United Nations Convention on Contracts for the International Sale of Goods (CISG), a seller can avoid obligations under a contract for reasons beyond the buyer's failure to accept delivery, such as force majeure or fundamental breach of contract by the buyer.

Question 16

Business Rents LLC and Cartage Trucking Inc. enter into a contract for a lease of ten hydraulic lifts. Under the perfect tender rule, Business Rents must ship or tender lifts to Cartage that, with regard to the contract specifications, conform

Accepted Answer

The perfect tender rule requires that goods delivered under a contract must match the contract specifications exactly, without any deviation.

Question 17

A buyer is required to cover-a failure to do so will bar the buyer from using any other remedies available under the UCC.

Accepted Answer

Under the Uniform Commercial Code (UCC), a buyer's failure to cover does not bar them from pursuing other remedies available for breach of contract, such as damages. Covering is just one of several options available to a buyer when a seller fails to deliver goods as promised.

Question 18

Elegant Carpet Inc. agrees to sell a certain quantity of carpeting to Fabulous Floor stores under a shipment contract. Elegant must

Accepted Answer

In a shipment contract, the seller's obligation is to deliver the goods to a carrier for transportation to the buyer. The seller does not need to deliver the goods to a specific destination (that would be a destination contract), inspect the goods before shipping, or allow the buyer to reject the goods for any reason.

Question 19

When a buyer or lessee is a consumer, any limitation of damages is per se unconscionable.

Accepted Answer

Limitations of damages in consumer contracts are not automatically considered unconscionable. The determination of unconscionability depends on the specific circumstances of each case, including the fairness of the contract terms and the bargaining power of the parties involved.

Question 20

An action for breach of contract under the UCC must be commenced within a certain period of time before the cause of action accrues.

Accepted Answer

Under the UCC, an action for breach of contract must be commenced within a certain period of time after the cause of action has accrued, not before.

Quiz 22: Performance and Breachapter of Sales and Lease Contracts