Question 1

On May 1,City Auto & Truck Sales agrees to sell a car to Dino.Five days later,Dino refuses delivery and cancels the contract.City is entitled to
A) force Dino to accept the car.
B) recover any damages from Dino but not resell the car.
C) resell the car and recover any damages from Dino.
D) resell the car but not recover any damages from Dino.

Accepted Answer

If Dino cancels the contract and refuses delivery, City Auto & Truck Sales can resell the car and recover any damages from Dino. This is because Dino's refusal to accept the car constitutes a breach of the contract, and therefore City has the right to mitigate their damages by reselling the car. They can then recover any shortfall in the sale price from Dino.

Question 2

Fact Pattern 16-1 (Questions 18-19 apply)
Internet Cafes, Inc., contracts to buy all of its requirements for coffee, at a minimum of 1 million pounds per year, from Java Corporation for six years. After three years, Internet tells Java that it plans to sell its company to Kwik Eateries, Inc. Kwik refuses to assure Java that it will continue Internet's contract.
-Refer to Fact Pattern 16-1.Kwik's refusal constitutes
A) a justified response based on Kwik's relation to the contract.
B) an assignment of Internet's rights under the contract.
C) a reasonable suspension of performance under the contract.
D) a repudiation of the contract.

Accepted Answer

Kwik's refusal to assure Java that it will continue Internet's contract is a repudiation of the contract. A repudiation occurs when one party indicates, by words or conduct, that they will not perform the contract. In this case, Kwik's refusal to continue the contract after Internet sells its company indicates an unwillingness to perform the contract, which constitutes a repudiation.

Question 3

Timber Mills Corporation and Ur-Choice Lumberyards enter into a contract for a sale of plywood.Under a destination contract,the seller must
A) allow the buyer to reject the goods for any reason.
B) deliver the goods to a particular destination.
C) inspect the goods before tendering their delivery.
D) place the goods into the hands of a carrier.

Accepted Answer

Under a destination contract, the seller is responsible for delivering the goods to a particular destination specified by the buyer. This means that the seller must arrange for transportation and bear the risk of loss until the goods are actually delivered to the buyer at the destination.

Question 4

According to the court in Case 16.1,Maple Farms,Inc.v.City School District of Elmira,the defense of commercial impracticability will not excuse the performance of a contractual obligation when there is an increase in the seller's costs while the contract is in force
A) unless the increase in the seller's costs is substantial.
B) under any circumstances.
C) unless the increase in the seller's costs makes it impossible for the seller to perform without losing money.
D) unless the increase in the seller's costs was not foreseeable at the time the contract was formed.

Accepted Answer

The defense of commercial impracticability can excuse performance if the increase in costs was not foreseeable at the time the contract was formed, making it an unforeseen event that significantly alters the nature of the contractual obligations.

Question 5

Relax Chair Company contracts to deliver 100 chairs to Stuffy Furnishings Store on May 1 for which Stuffy agrees to pay.Relax tells Stuffy on April 15 that delivery will be delayed until June 1.Stuffy may
A) await performance, sue Relax, or suspend its own performance.
B) only await Relax's performance for a commercially reasonable time.
C) only sue Relax for breach of contract.
D) only suspend its own performance.

Accepted Answer

Stuffy Furnishings Store has several options when Relax Chair Company informs them of the delay in delivery. Stuffy can await performance, meaning they can wait for Relax to deliver the chairs by the new delivery date of June 1. Alternatively, they can sue Relax for breach of contract for not delivering on the initially agreed upon date of May 1. Finally, Stuffy can also suspend its own performance, meaning they can delay their own payment or take other actions until they receive the chairs. These are all valid options for Stuffy.

Question 6

Vehicle Leasing Agency (VLA)and Wander Trucking Company enter into a contract for a lease of eight cargo vans.VLA delivers eight vans,but they are not cargo-sized.Wander
A) cannot reject the entire shipment.
B) can reject the entire shipment.
C) must accept the entire shipment.
D) must reject the entire shipment.

Accepted Answer

Wander Trucking Company has the right to reject the entire shipment as the delivered vans were not the specified cargo-sized vans. This constitutes a breach of contract by VLA, and Wander has the option to reject the entire shipment.

Question 7

Double D Ranch and Esau enter into a contract on August 1 for the sale of 200 cattle.Esau cancels the contract ten days later.Double D is unable to sell the cattle to another buyer.Double D is entitled to
A) force Esau to accept the cattle and recover the contract price.
B) keep the cattle and recover the contract price from Esau.
C) keep the cattle only.
D) recover the contract price from Esau but must destroy the cattle.

Accepted Answer

Since Esau cancelled the contract, Double D Ranch is entitled to keep the cattle and recover the contract price from Esau. There is no indication that Double D Ranch must destroy the cattle.

Question 8

Fact Pattern 16-1 (Questions 18-19 apply)
Internet Cafes, Inc., contracts to buy all of its requirements for coffee, at a minimum of 1 million pounds per year, from Java Corporation for six years. After three years, Internet tells Java that it plans to sell its company to Kwik Eateries, Inc. Kwik refuses to assure Java that it will continue Internet's contract.
-Refer to Fact Pattern 16-1.Java can
A) assign its rights under the contract but cannot terminate it.
B) do nothing.
C) suspend performance under the contract until Java is fully paid.
D) terminate the contract and seek damages.

Accepted Answer

Since Internet has plans to sell its company to Kwik Eateries, and Kwik has refused to assure Java that it will continue the contract, Java can terminate the contract and seek damages.

Question 9

Pep Paints agrees to sell to Quality Painters Grade A-1 latex outdoor paint to be delivered May 8.On May 7,Pep tenders Grade B-2 paint.Quality rejects the Grade B-2 paint.Two days later,Pep tenders Grade C-3 paint with an offer of a price allowance.Pep has
A) additional, unlimited time to cure.
B) a reasonable, additional time to cure.
C) one more day to cure.
D) no more time to cure.

Accepted Answer

Pep Paints breached the contract by tendering Grade B-2 paint and Quality Painters rejected it. Pep then offered Grade C-3 paint with a price allowance, which does not fulfill the original contract terms. As a result, Pep has no more time to cure and cannot force Quality to accept the subpar Grade C-3 paint.

Question 10

Citrus Groves contracts with four food companies to sell its entire crop of oranges.When half of the crop is lost to an unexpected insect infestation,Citrus must
A) apportion its surviving crop fairly among its customers.
B) breach some of its contracts.
C) buy elsewhere as many oranges as needed to satisfy its contracts.
D) substitute other fruit for the oranges.

Accepted Answer

The answer of Citrus Groves contracts with four food companies...

Question 11

Sid and Tony enter a contract for a sale of Sid's collection of electric guitars.Before the time for performance,Sid tells Tony that he does not want to deliver the guitars.Anticipatory repudiation is
A) a breach of contract.
B) a compromise between two parties who are unable to perform.
C) a remedy available only to a breaching party.
D) a remedy available only to a nonbreaching party.

Accepted Answer

Anticipatory repudiation is a breach of contract in which one party declares their intention not to perform their obligations under the contract before the time for performance has arrived. Therefore, the correct choice is A.

Question 12

Mineral Resource Company contracts to provide several manufacturers with tin.When a cartel of tin-producing countries suddenly embargoes future shipments of tin to Mineral Resource so that it cannot fulfill its contracts,the distributor
A) can substitute some other material for the tin.
B) is excused from the performance of its contracts.
C) is liable for breach of contract.
D) must still supply the tin needs of its customers.

Accepted Answer

The sudden embargo by the cartel of tin-producing countries is an unforeseeable event that makes Mineral Resource's performance under its contracts impossible. This is known as the doctrine of frustration in contract law. Therefore, Mineral Resource is excused from fulfilling its contracts without liability for breach of contract.

Question 13

Ramblin' Country Stables contracts to buy 1,000 horseshoes from Blacksmith,Inc.,for $1 per shoe.When the market price decreases to 50 cents per shoe,Ramblin' refuses to go through with the deal.Blacksmith can recover
A) $1,500.
B) $1,000.
C) $500.
D) $0.

Accepted Answer

Ramblin' breached the contract by refusing to go through with the deal. Blacksmith could sue Ramblin' for the difference between the contract price ($1 per shoe) and the market price ($0.50 per shoe) for 1,000 shoes, which would be $500. Therefore, the correct answer is C.

Question 14

Food Packaging,Inc.,agrees to sell 50,000 6-ounce yogurt containers to Golden Dairy Company.Food can obtain only 20,000 of the 6-ounce containers,but also ships 30,000 more expensive 8-ounce containers for the same price.Under these circumstances,Golden
A) cannot reject delivery, and Food cannot later replace the containers.
B) cannot reject delivery, but Food can later replace the containers.
C) may reject delivery, and notice to Golden of Food's intent to cure will give Food a reasonable time to replace the containers.
D) may reject delivery, but Food cannot later replace the containers.

Accepted Answer

Golden Dairy Company may reject delivery of the containers due to Food Packaging, Inc. not meeting the quantity requirements specified in their agreement. However, if Food Packaging, Inc. provides notice of their intent to cure the nonconformity and is given a reasonable amount of time to replace the containers, they may still be able to fulfill the contract and avoid breaching it. Therefore, option C is the best choice.

Question 15

Genuine Seed Company and Hillside Farmers Cooperative enter into a contract for a sale of hybrid seeds.Under the perfect tender rule,Genuine Seed must ship or tender seeds to Hillside that
A) approximately conform to all of the details of the contract.
B) entirely conform to the contract except in one or two details.
C) exactly conform to the contract in every detail.
D) substantially conform to the contract in most details.

Accepted Answer

Under the perfect tender rule, the seller must deliver goods that exactly conform to the contract in every detail. Any deviation from the contract can be considered a breach of the contract and the buyer can reject the goods.

Question 16

Loni and Myra enter into a contract for a sale of clarinets and other wind instruments.Loni delivers,but Myra does not pay.Loni can normally recover as damages the difference between
A) any loss avoided and any profit gained.
B) the actual price and the hoped-for price.
C) the contract price and the market price.
D) the current prices in the parties' locations.

Accepted Answer

Loni's usual measure of damages for the buyer's breach of contract would be the difference between the contract price and the market price at the time and place of tender. This is because Loni can sell the goods on the open market and recover the difference between what Myra promised to pay and what he can get from another buyer.

Question 17

Craft Engineering,Inc.,contracts for a sale of technical instruments to Detail Design Company.Before the date on which performance is due,Craft notifies Detail that it will not perform.This is
A) anticipatory repudiation.
B) perfect tender.
C) rejection of performance.
D) revocation of acceptance.

Accepted Answer

This is anticipatory repudiation, which occurs when one party to a contract informs the other party that it will not perform its obligations under the contract before the performance is due.

Question 18

Summit Supply Company contracts for a sale of medical equipment to Valley Immediate Care Corporation.Summit can enforce its right to payment
A) only after Valley has actually inspected the goods.
B) only after Valley has had an opportunity to inspect the goods.
C) only before Valley has inspected the goods.
D) whether or not Valley has had the chance to inspect the goods.

Accepted Answer

The answer of Summit Supply Company contracts for a sale...

Question 19

Regal Manufacturing Company contracts to sell sweaters to Superb Styles Store.Before the sweaters are delivered,Superb indicates that it will not be able to pay.Regal can resell the goods
A) either after finishing the job (and identifying the goods), or after stopping the job.
B) only after finishing the job and identifying the goods.
C) only if Regal immediately stops the job.
D) under no circumstances.

Accepted Answer

Regal can resell the goods either after finishing the job (and identifying the goods) or after stopping the job. This is because the contract between Regal and Superb has become impossible to perform due to the latter's inability to pay. As a result, Regal can treat the contract as terminated and resell the goods to mitigate their loss. The option to resell is not contingent on stopping the job or identifying the goods.

Question 20

Elegant Carpets,Inc.,and Fantastic Floors Stores enter into a contract for a sale of carpeting.Under a shipment contract,the seller must
A) allow the buyer to reject the goods for any reason.
B) deliver the goods to a particular destination.
C) inspect the goods before shipping them.
D) place the goods into the hands of a carrier.

Accepted Answer

Under a shipment contract, the seller's responsibility is to place the goods into the hands of a carrier. The carrier then assumes responsibility for delivery of the goods to the buyer. The buyer does not have the right to reject the goods for any reason, and the seller is not required to deliver the goods to a particular destination or inspect the goods before shipping them.

Quiz 16: Performance Breach of Sales Lease Contracts

On May 1,City Auto & Truck Sales agrees to sell a car to Dino.Five days later,Dino refuses delivery and cancels the contract.City is entitled to

Timber Mills Corporation and Ur-Choice Lumberyards enter into a contract for a sale of plywood.Under a destination contract,the seller must

According to the court in Case 16.1,Maple Farms,Inc.v.City School District of Elmira,the defense of commercial impracticability will not excuse the performance of a contractual obligation when there is an increase in the seller's costs while the contract is in force

Relax Chair Company contracts to deliver 100 chairs to Stuffy Furnishings Store on May 1 for which Stuffy agrees to pay.Relax tells Stuffy on April 15 that delivery will be delayed until June 1.Stuffy may

Vehicle Leasing Agency (VLA) and Wander Trucking Company enter into a contract for a lease of eight cargo vans.VLA delivers eight vans,but they are not cargo-sized.Wander

Double D Ranch and Esau enter into a contract on August 1 for the sale of 200 cattle.Esau cancels the contract ten days later.Double D is unable to sell the cattle to another buyer.Double D is entitled to

Pep Paints agrees to sell to Quality Painters Grade A-1 latex outdoor paint to be delivered May 8.On May 7,Pep tenders Grade B-2 paint.Quality rejects the Grade B-2 paint.Two days later,Pep tenders Grade C-3 paint with an offer of a price allowance.Pep has

Citrus Groves contracts with four food companies to sell its entire crop of oranges.When half of the crop is lost to an unexpected insect infestation,Citrus must

Sid and Tony enter a contract for a sale of Sid's collection of electric guitars.Before the time for performance,Sid tells Tony that he does not want to deliver the guitars.Anticipatory repudiation is

Mineral Resource Company contracts to provide several manufacturers with tin.When a cartel of tin-producing countries suddenly embargoes future shipments of tin to Mineral Resource so that it cannot fulfill its contracts,the distributor

Ramblin' Country Stables contracts to buy 1,000 horseshoes from Blacksmith,Inc.,for $1 per shoe.When the market price decreases to 50 cents per shoe,Ramblin' refuses to go through with the deal.Blacksmith can recover

Food Packaging,Inc.,agrees to sell 50,000 6-ounce yogurt containers to Golden Dairy Company.Food can obtain only 20,000 of the 6-ounce containers,but also ships 30,000 more expensive 8-ounce containers for the same price.Under these circumstances,Golden

Genuine Seed Company and Hillside Farmers Cooperative enter into a contract for a sale of hybrid seeds.Under the perfect tender rule,Genuine Seed must ship or tender seeds to Hillside that

Loni and Myra enter into a contract for a sale of clarinets and other wind instruments.Loni delivers,but Myra does not pay.Loni can normally recover as damages the difference between

Craft Engineering,Inc.,contracts for a sale of technical instruments to Detail Design Company.Before the date on which performance is due,Craft notifies Detail that it will not perform.This is

Summit Supply Company contracts for a sale of medical equipment to Valley Immediate Care Corporation.Summit can enforce its right to payment

Regal Manufacturing Company contracts to sell sweaters to Superb Styles Store.Before the sweaters are delivered,Superb indicates that it will not be able to pay.Regal can resell the goods

Elegant Carpets,Inc.,and Fantastic Floors Stores enter into a contract for a sale of carpeting.Under a shipment contract,the seller must