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Exam 22: Performance and Breachapter of Sales and Lease Contracts

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Question 21

Multiple Choice

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Durable Goods Inc., a U.S. firm, and Économique S.A., a French company, contract for an international sale of goods with the use of a letter of credit issued by Finance Corporation. In this transaction, the letter protects

A) primarily the issuer.
B) both the buyer and the seller.
C) only any third parties, such as advising and paying banks.
D) chiefly the account party.

E) A) and B)
F) A) and C)

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Question 22

True/False

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

A) True
B) False

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Question 23

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Signal Sets Company contracts to deliver one hundred television sets to a new retail customer, Tuner Electronics Warehouse, on May 1, with payment to be made on delivery. Signal tenders delivery in its own truck. Tuner's manager notices that some of the cartons have scrape marks. Tuner's owner phones Signal's office and asks whether the sets might have been damaged as they were being loaded. Signal assures Tuner that the sets are in perfect condition. Tuner tenders Signal a check, which Signal refuses, claiming that the first delivery to new customers is always for cash. Tuner promises to pay the cash within two days. Signal leaves the sets with Tuner, which stores them in its facility pending its "Grand Opening Sale" on May 15. Two days later, Tuner's stocker opens some of the cartons and discovers that a number of the sets are damaged beyond ordinary repair. Signal claims Tuner has accepted the sets and is in breach by not paying on delivery. Will Signal succeed on these claims? Explain.

In a letter-of-credit transaction, Unum Inc., a U.S. firm, delivers a bill of lading to Verity Bank to prove that a contracted-for shipment was made to Wallaby Ltd., an Australian company. Verity must pay Unum

ABC Hardware Store orders one hundred power hand-drills from Drilling Tools Inc. When the hand-drills are delivered, they are all missing pieces. ABC rejects the shipment. To exercise a right to cure, Drilling must

If a buyer wrongfully refuses to pay for goods, the seller can reclaim them and resell them, without crediting the sale proceeds to the buyer.

Speedy Auto Parts orders two gross of tires from Tough Tread Inc. Ten of the tires are delivered in a damaged condition. Speedy

RV Company agrees to buy a certain quantity of vintage campers from Sales Inc. Their contract limits consequential damages for lost profits resulting from the use of the goods. This limit is not necessarily unconscionable because

Under the United Nations Convention for the International Sale of Goods, the measure of damages for a breach of an international sales contract normally is the difference between

On July 10, Best Pet Supply Store orders fifty small dog collars from Collars Inc. to be delivered by July 15. On July 13, Collars delivers fifty large dog collars. Best rejects the shipment. Collars has

Fresh Grow Farm enters into a contract with Gourmand's Restaurant for a sale of a certain quantity of specified vegetables. After Fresh ships the produce but before Gourmand's receives it, the buyer declares bankruptcy. Fresh can stop delivery of the goods in transit

A buyer will be deemed to have accepted delivered goods if, after a reasonable opportunity to inspect the goods, the buyer does not reject them.

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

H2O Company contracts to sell pumps, tanks, and water storage systems to In-Flo Irrigation, Inc. Before the goods are delivered, In-Flo indicates that it will not be able to pay. H2O can

Alpha Packaging Company agrees to buy goods from Boxes Inc. Their contract limits Alpha's remedies to repair or replacement of defective parts. Alpha can pursue other remedies

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.

Any use of delivered goods by the buyer-even for the limited purpose of testing them-constitutes acceptance.

Rancho Stables orders ten saddles from Saddles Inc. The sales contract states that if the tack is defective, Rancho will allow Saddles to repair or replace it instead of rejecting the shipment. When the gear arrives, it is defective. In this case, the perfect tender rule

Refined Mills orders "Grade A" oats from Sweet Farms to grind and sell to Town Grocery. Sweet ships "Grade B" grain, which Refined accepts. To recover damages for the nonconformity, Refined must give notice of the breach within a reasonable time to

Steel Buildings Inc. agrees to sell four portable garages to Truck Service Center. Five days later, Truck refuses delivery and cancels the contract. Steel is entitled to