Question 1

As the result of a seller's breach, a buyer may ask for incidental damages. Which of the following is not an example of costs that would lead to incidental damages?

Accepted Answer

Incidental damages refer to the additional costs incurred by the buyer due to the seller's breach, such as expenses for storing, inspecting, and finding replacement goods. The difference between the cost of the goods in the contract and the replacement goods is considered consequential or direct damages, not incidental damages.

Question 2

Which of the following is NOT correct with respect to consequential damages under the Code?

Accepted Answer

Consequential damages under the Uniform Commercial Code (UCC) can indeed be recovered by the buyer, but the buyer is generally expected to mitigate damages where reasonably possible, including obtaining cover (substitute goods) if the failure to do so would result in unnecessary additional damages. Therefore, the statement that a buyer's failure to obtain cover does not bar him from recovering consequential damages he could have prevented by cover is not correct.

Question 3

Sabrina contracts to buy 50 porch swings for her retail store.  The swings have been identified to the contract and a down payment of $200 of the $1,250 purchase price has been paid. If the seller becomes insolvent, Sabrina may still pay $1,050 and get the swings.

Accepted Answer

Under the Uniform Commercial Code (UCC), when goods have been identified to a contract and the buyer has made a part payment, the buyer has the right to recover the goods from an insolvent seller upon tendering the remainder of the purchase price.

Question 4

If the buyer received goods on credit while he was insolvent by misrepresenting his solvency in writing within three months prior to deliver of the goods, the seller is able to reclaim the goods only if the seller makes a demand on the buyer within ten days after the buyer has received the goods.

Accepted Answer

The answer of If the buyer received goods on credit...

Question 5

Replevin is an action at law to recover specific goods in the possession of the defendant which are being unlawfully withheld from the plaintiff.

Accepted Answer

Replevin is specifically designed to recover possession of specific goods that are being unlawfully withheld by the defendant.

Question 6

An aggrieved seller who resells wrongfully rejected goods is accountable to the original buyer for any profit made on the resale.

Accepted Answer

Under the Uniform Commercial Code (UCC), an aggrieved seller who resells goods after a buyer's wrongful rejection has the right to recover the difference between the resale price and the original contract price, along with any incidental damages, but is not accountable to the original buyer for any profit made on the resale.

Question 7

The contract between the buyer and the seller can provide for additional remedies more than those allowed in the Code.

Accepted Answer

The Uniform Commercial Code (UCC) allows parties to a contract to agree on additional or alternative remedies as long as these remedies are not expressly prohibited by the UCC or do not operate to deprive either party of their minimum statutory rights under the UCC.

Question 8

Under the CISG, if the buyer fails to perform any obligations, the seller may either require the buyer to pay the price or fix an additional period of time for the buyer to perform.

Accepted Answer

Under the United Nations Convention on Contracts for the International Sale of Goods (CISG), if the buyer fails to perform any of their obligations, the seller has the right to require the buyer to pay the price or fix an additional period of time for performance, as per Articles 62 and 63.

Question 9

If the buyer is insolvent and has not paid for goods it has received, the seller may reclaim the goods.

Accepted Answer

Under the Uniform Commercial Code (UCC) Section 2-702, a seller may reclaim goods shipped to an insolvent buyer if the buyer has not yet paid for them, provided the seller makes a demand within a specified time frame after the buyer receives the goods.

Question 10

Under the UCC, the aggrieved party must choose one remedy to ask for and forfeit the others.

Accepted Answer

Under the Uniform Commercial Code (UCC), the aggrieved party has the option to pursue multiple remedies as long as they are not inconsistent with each other.

Question 11

Since the purpose of remedies under the Code is compensation, punitive damages are generally available.

Accepted Answer

Under the Uniform Commercial Code (UCC), the primary purpose of remedies is to compensate the aggrieved party for losses, not to punish the breaching party, hence punitive damages are generally not available.

Question 12

A buyer's incidental damages include reasonable expenses or commissions in effecting cover.

Accepted Answer

Incidental damages for a buyer include reasonable expenses incurred in inspection, receipt, transportation, and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses, or commissions in connection with effecting cover, and any other reasonable expense incident to the delay or other breach.

Question 13

Where the seller fails to make delivery, the buyer can cancel the contract, but he must give the seller notice of his cancellation.

Accepted Answer

This statement is true. The buyer has the right to cancel the contract if the seller fails to make delivery, but they must provide notice of their cancellation to the seller. This is typically outlined in the terms of the contract or in relevant laws and regulations.

Question 14

Article 2A authorizes liquidated damages payable by either party for default or any other act or omission.

Accepted Answer

Article 2A of the Uniform Commercial Code (UCC) allows for liquidated damages to be specified in a lease agreement, which can be payable by either party in the event of default or other specified acts or omissions.

Question 15

The availability of some buyer's remedies depends on the buyer's actions.

Accepted Answer

In many legal systems, the availability of certain remedies for buyers, such as the right to reject goods or claim damages, can depend on the buyer's actions, such as timely notification of the defect to the seller or the manner in which the buyer treated the goods after discovery of a defect.

Question 16

If the seller has the right to cancel, he may recover damages for breach without having to tender any further performance.

Accepted Answer

If the seller has the right to cancel the contract due to the buyer's breach, the seller can recover damages without having to tender any further performance, as the buyer's breach has relieved the seller of their obligation to perform.

Question 17

Vandehal Company's total liabilities are $520,000 and its total assets are $460,000, and the company is unable to pay debts as they become due. Vandehal's situation falls within the bankruptcy meaning, but not the Code's definition, of insolvency.

Accepted Answer

Vandehal's situation does fall within both the general meaning and the Code's definition of insolvency since its total liabilities exceed its total assets, and it is unable to pay its debts as they become due.

Question 18

A lessor retains title to the goods and has the right to recover possession of them upon default by the lessee.

Accepted Answer

In a lease agreement, the lessor retains ownership (title) of the leased goods and has the right to recover possession if the lessee defaults on the terms of the lease.

Question 19

Quality Appliances sells a flat top range to Ryan for his home. The contract of sale excludes liability for consequential damages. When Ryan turns on the range , it catches fire, burning Ryan severely. Ryan cannot recover for his injuries because of the exclusion of damages clause.

Accepted Answer

The exclusion of consequential damages in a sales contract typically does not absolve a seller from liability for personal injuries caused by a defective product due to strict liability and consumer protection laws.

Question 20

Ronald agrees to sell Mack 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?

Accepted Answer

The buyer's damages for breach of warranty are calculated as the difference between the value of the goods as warranted ($2,600) and the actual value of the goods accepted ($1,500), which equals $1,100.

Quiz 23: Sales Remedies