Question 1

Which of the following are damages for lost profits a buyer may recover in the event of a breach of contract?

Accepted Answer

Consequential damages include damages for lost profits,as long as such damages are not too speculative.

Question 2

The obligations of sellers and buyers are determined by which of the following?

Accepted Answer

The obligations of sellers and buyers are determined by: a)terms the parties outline in agreements; b)custom; and c)rules outlined by the Uniform Commercial Code.

Question 3

Which of the following are damages identified before the breach occurs?

Accepted Answer

Liquidated damages are damages identified before the breach occurs.Buyers and sellers are free to negotiate,as part of the contract,a liquidated-damage clause in which the parties agree in advance what the damages will be for each party if a breach occurs.

Question 4

Under the Uniform Commercial Code,a seller must bring a lawsuit on a breached contract within ________ of when the breach occurred or when the seller became aware of it.

Accepted Answer

According to the Uniform Commercial Code,a seller must bring a lawsuit on a breached contract within four years of when the breach occurred or when the seller became aware of it.

Question 5

Which of the following is true under the Magnuson-Moss Act if a written warranty is silent as to whether or not it is a full warranty?

Accepted Answer

Under the Magnuson-Moss Act,if a written warranty is silent,it is presumed to be a full warranty.

Question 6

When was the Magnuson-Moss Act enacted?

Accepted Answer

The Magnuson-Moss Act was enacted in 1975.

Question 7

Which of the following is true regarding whether the buyer and seller may negotiate contractually for a shorter time period to sue for breach of contract than the statute of limitations period ordinarily recognized by the Uniform Commercial Code?

Accepted Answer

According to the Uniform Commercial Code,the buyer and seller are free to negotiate contractually a shorter time period to sue for breach of contract than the four-year statute of limitations ordinarily recognized by the Uniform Commercial Code,so long as the contractually-agreed-upon time period is not for less than one year.They are not free to negotiate a longer time period than four years.

Question 8

Under the Uniform Commercial Code,a buyer must bring a lawsuit on a breached contract within ________ of when the breach occurred or when the buyer became aware of it.

Accepted Answer

According to the Uniform Commercial Code,a buyer must bring a lawsuit on a breached contract within four years of when the breach occurred or when the buyer became aware of it.

Question 9

Which of the following must a buyer do in obtaining cover?

Accepted Answer

When seeking to cover,the buyer must: a)demonstrate good faith in obtaining the substitute goods; b)pay a reasonable amount for the substitute goods; c)act without unreasonable delay in purchasing the substitute goods; and d)purchase goods that are reasonable substitutes.

Question 10

Which of the following damages may a seller receive if the seller resells goods to another buyer when the original buyer is in breach of contract?

Accepted Answer

Sellers are allowed to resell or dispose of the goods when the buyer is in breach and the goods have not yet been delivered.The seller then holds the buyer liable for any loss.Uniform Commercial Code Section 2-706 allows the seller to recover the difference between the resale price and contract price,plus incidental damages and minus expenses saved.

Question 11

Which of the following means that the seller has delivered the goods to a carrier,but the carrier has not yet turned them over to the buyer?

Accepted Answer

In transit means that the seller has delivered the goods to a carrier,but the carrier has not yet turned them over to the buyer.

Question 12

Which of the following is required by the Magnuson-Moss Act when the seller issues a written warranty for a consumer good?

Accepted Answer

The 1975 federal law known as the Magnuson-Moss Act requires that with regard to a seller's warranty,the seller must indicate whether the warranty is a full warranty or a limited warranty.

Question 13

Under the Magnuson-Moss Act,what is the effect of a full warranty?

Accepted Answer

A full warranty under the Magnuson-Moss Act means that if the good fails or is defective,the good or its defective part will be replaced.If replacement cannot be timely effected,the buyer has the right to a refund or a full replacement.

Question 14

Which of the following is true regarding whether a seller must provide a warranty under the Magnuson-Moss Act?

Accepted Answer

The 1975 federal law known as the Magnuson-Moss Act requires that if a seller decides to issue a written warranty for a consumer good (the seller is not required to do so),the seller must indicate whether that warranty is a full warranty or a limited warranty.

Question 15

Which of the following is the right of a buyer to substitute goods for those due under a sales agreement?

Accepted Answer

Under Uniform Commercial Code Sections 2-712 and 2A-518,buyers and lessees are allowed to cover,or substitute,goods for those due under the sales agreement.

Question 16

Which of the following is generally true regarding a liquidated-damage clause?

Accepted Answer

Liquidated-damage are damages identified before the breach occurs.Buyers and sellers are free to negotiate,as part of the contract,a liquidated-damage clause in which the parties agree in advance what the damages will be for each party if a breach occurs.Generally speaking,a court will enforce a liquidated-damage clause as long as it is not so far out of reasonable range as to be punitive in nature.Liquidated-damage clauses that are deemed punitive in nature are not enforceable.

Question 17

Assuming a buyer that is insolvent has breached a contract by not paying for goods that are in transit,which of the following may occur?

Accepted Answer

If the buyer is insolvent,the carrier can stop delivery regardless of the quantity shipped.

Question 18

Which of the following usually requires that the seller deliver the particular goods identified in the contract?

Accepted Answer

Specific performance usually requires that the seller or lessor deliver the particular goods identified in the contract.

Question 19

Under the Uniform Commercial Code,buyers may recover goods identified in the contract if the seller becomes insolvent within ________ days after receiving the first payment due under the agreement.

Accepted Answer

Uniform Commercial Code Sections 2-502 and 2A-522 allow buyers or lessees to recover the goods identified in the contract if the seller or lessor becomes insolvent within ten days after receiving the first payment due under the agreement.Buyers and lessees are obligated to pay the remaining balance according to the terms of the agreement.

Question 20

What does the Uniform Commercial Code provide for liquidated damages if the parties do not otherwise agree to them?

Accepted Answer

The Uniform Commercial Code (UCC)provides for liquidated damages if the parties have not expressly negotiated a liquidated-damage clause.Uniform Commercial Code Section 2-718 pertains to liquidated damages and allows the nonbreaching seller to claim against a breaching buyer 20 percent of the purchase price or $500,whichever is less,as liquidated damages.

Quiz 16: Sales and Lease Contracts: Performance, Warranties, and Remedies