Chp. 21 Performance and Breach of Sales Agreements
1. Raw Resources, Inc., sells unprocessed minerals to commercial processors in Texas. With regard to the UCC’s good faith requirement, Raw can
a. avoid it only by a conspicuous written disclaimer.
b. avoid it only by oral disclaimer.
c. avoid it with or without a disclaimer.
d. not disclaim it.
2. Gleaming Gem Corporation agrees to sell Jewelry Outlets, Inc. (JOI), fifty new diamonds, but the contract does not specify a place of delivery. JOI is expected to pick up the goods. The place of delivery is
a. Gleaming’s place of business.
b. JOI’s place of business.
c. the Annual Gems and Jewels Convention.
d. the U.S. Postal Service office nearest to JOI’s place of business.
3. Natural Seed Company and Mill Valley Farmers Cooperative enter into a contract for a sale of hybrid seeds. Under the perfect tender rule, Natural must ship or tender seeds that
a. approximately conform to the contract description.
b. entirely conform to the contract description in most ways.
c. conform to the contract description in every way.
d. substantially conform to the contract description.
4. 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.
5. Vehicle Leasing Agency (VLA) and West Coast Trucking Company enter into a contract for a lease of eight cargo vans. VLA delivers eight vans, but they are not cargo-sized. West Coast
a. cannot reject the entire shipment.
b. can reject the entire shipment.
c. must accept the entire shipment.
d. must reject the entire shipment.
6. Timber Products Corporation and 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.
7. Coverall Paints agrees to sell Grade A-1 latex outdoor paint to Dropcloth Painters to be delivered May 8. On May 7, Coverall tenders Grade B-2 paint, which Dropcloth. rejects. Two days later, Coverall tenders Grade C-3 paint with an offer of a price allowance. Coverall 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.
8. Relax-o Chair Company contracts to deliver 100 chairs to Stuffy Furnishings Store on May 1 for which Stuffy agrees to pay. Relax-o tells Stuffy on April 15 that delivery will be delayed until June 1. Stuffy may
a. await performance, sue Relax-o, or suspend its own performance.
b. only await Relax-o’s performance for a commercially reasonable time.
c. only sue Relax-o for breach of contract.
d. only suspend its own performance.
9. 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.
10. Design Architects, Inc., and Office Supply Company contract for a sale of office furniture. Design Architects, which is insolvent, breaches the contract. Office Supply can stop delivery of the goods in transit
a. only if the quantity is at least a carload.
b. only if the quantity is at least a planeload.
c. only if the quantity is at least a truckload.
d. regardless of the quantity.
11. Text Publishers, Inc., contracts for a sale of textbooks to University Bookstores, Inc. Viable Shipping Corporation, the carrier, transports the books to Warehouse Storage Company. Text’s right to stop delivery is lost when University’s rights to the goods are acknowledged by
a. the appropriate government agency.
b. the students who opt to buy the books.
c. University Bookstores.
d. Warehouse Storage.
12. Hi-Tech Company contracts to sell fiber optic cable to Internet Services, Inc. Hi-Tech may bring an action to recover the purchase price and incidental damages if Internet
a. accepts the cable and pays for it.
b. accepts the cable but does not pay for it.
c. rejects the cable.
d. revokes acceptance of the cable.
13. Nu-Tec Company contracts to sell fiber optic cable to Online Services, Inc. Nu-Tec ships the cable, which Online accepts but does not pay for. Nu-Tec can
a. sue to recover the purchase price plus incidental damages.
b. sue to recover the purchase price minus incidental damages.
c. resell the cable to any buyer willing to reclaim it from Online.
d. require Online to revoke its acceptance of the cable.
14. Rugged Boats, Inc., and Whitewater Rafting enter into a contract for a sale of six custom-made rubber rafts. Whitewater pays for the goods, but Rugged does not deliver. Whitewater can use replevin as a remedy if
a. Rugged is lawfully withholding the goods.
b. Whitewater cannot effectively cure the defect.
c. Whitewater is unable to cover for the goods.
d. the goods have not been identified to the contract.
15. Leather & Suede Stores, Inc., rejects a shipment of goods that does not conform to its contract with Genuine Cowhide Corporation, but is unable to obtain instructions from the seller. Leather & Suede can
a. destroy the goods.
b. cure the goods to make them conform to the contract.
c. retain the goods without paying for them.
d. reship or store the goods for the seller.
16. Gunmakers Pride Corporation contracts for the sale of twelve hunting rifles to Hunters Supply store. Gunmakers delivers nonconforming goods. Acceptance will be presumed unless Hunters Supply rejects the goods
a. within a reasonable time after delivery.
b. within a reasonable time after ordering the goods.
c. within any time, since hunting rifles are not perishable.
d. before the last day of the current hunting season.
17. BBQ, Inc., makes and sells grills to Grill Mart, a retailer, which sells one of the grills to Hope, a consumer. Their contracts limit consequential damages for personal injuries arising from a breach of warranty. This is prima facie unconscionable with respect to
a. BBQ.
b. Grill Mart.
c. Hope.
d. none of these parties.
Fact Pattern 21-B1 (Questions B18–B20 apply)
First State Bank issues a letter of credit in favor of Oboe Company, an American firm, to facilitate an international sales contract to buy resources from Lapland Mining, Ltd., a Finnish company.
18. Refer to Fact Pattern 21-B1. Lapland is entitled to payment when it
a. enters into the contract with Oboe.
b. verifies that Oboe has the money to pay for the purchase.
c. complies with the terms and conditions of the letter of credit.
d. asks to be paid.
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19. Refer to Fact Pattern 21-B1. First State Bank is bound to
a. make sure that the parties perform the contract.
b. verify with Oboe that the transaction has been completed.
c. make payment when Lapland presents the proper documents.
d. pay Lapland whenever it asks to be paid.
B20. Refer to Fact Pattern 21-B1. In this letter of credit, the beneficiary is
a. Lapland.
b. Oboe.
c. First State Bank.
d. Finland.
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