Sales and Lease Contracts

Performance and Breach of Sales and Lease Contracts

• The obligation of commercial reasonableness underlies every sale and lease contract is false.
• Under the UCC, good faith can never be disclaimed is true.
• If a contract for the sale of six freezers does not designate delivery location, the place of delivery is the buyer's place of business is false under the UCC.
• Tender can occur at any hour and in any manner, even by a phone call allowing buyer fifteen minutes to pick up goods, is false.
• If a contract for the sale of six freezers does not designate delivery location, the place of delivery is the buyer's place of business is false under the UCC.
• Under a shipment contract for the sale of solar panels, the seller must deliver conforming goods at a particular destination is false.
• In a destination contract, the seller agrees to deliver conforming goods to the buyer at a particular destination is true.
• Under the perfect tender rule, a buyer/lessee can insist on goods conforming to their contract in every detail is true.
• If contracting parties agree that defective goods will not be rejected if the seller/lessor can repair/replace them in a reasonable time, the perfect tender rule does not apply is true.
• When time for performance under a contract expires, the right to cure expires is true.
• Unless the contract states otherwise, an installment contract is breached only when nonconforming installments substantially impair the value of the whole contract is true.
• Commercial impracticability arises only when the parties—at the time the contract was made—had reason to foresee a certain event that could make performance “impracticable" is false.
• If a party has reasonable grounds to believe another party will not perform, he/she can demand written assurance of performance is true.
• Destruction of goods identified in a contract can excuse both parties from performance is true.
• A buyer is deemed to have accepted delivered goods if, after a reasonable opportunity to inspect, the buyer does not reject them is true.
• Any use of delivered goods by the buyer—even for limited testing—constitutes acceptance is true.
• If, before the time for contract performance, one party communicates intent not to perform, the other party can only wait to see if the repudiating party decides to perform is false.
• If a buyer wrongfully refuses to accept goods, the seller can bring an action for damages equal to the difference between contract and market prices, at the time and place of tender is true.
• If a seller fails to deliver conforming goods, the measure of recovery in the buyer's suit for damages is the difference between the contract price and the market price when the buyer learns of the breach is true.
• If breach occurs when the seller still possesses the identified goods, the seller must nevertheless deliver the goods to pursue a remedy is false.
• If a buyer wrongfully refuses to pay for goods, the seller can reclaim/resell them, without crediting the sale proceeds to the buyer is true.
• If a buyer rightfully rejects nonconforming goods, he/she can resell them/retain proceeds, without crediting the amount to the seller is true.
• If a seller fails to deliver goods, the buyer can purchase substitute goods but cannot sue for consequential damages is false.
• A buyer is required to cover, and failure to do so bars the buyer from using any other UCC remedies is false.
• A buyer can revoke acceptance if it was predicated on a reasonable assumption that the goods' nonconformity would be cured, and it was not is true.
• A buyer can revoke acceptance if, despite assurances by the seller that the goods would conform, the buyer was aware of their nonconformity before acceptance is false.
• When delivered goods are not as promised, the measure of recovery in the buyer's suit for damages is the difference between the value of goods as accepted, and the value if they had been delivered as warranted is true.
• If a contract states that repair/replacement is the exclusive remedy, then it is, even if repair/replacement is not possible is false.
• Parties to a sales contract can limit/exclude consequential damages for any commercial loss is true.
• The statute of limitations to file actions under the UCC is three years after the cause of action accrues, or the breach occurs is false.
• Warranties of title arise automatically in most sales contracts, and a thief breaches the warranty by selling stolen goods is true.
• If a creditor repossesses goods from a buyer who bought them knowing they were subject to a prior claim, the buyer can recover from the seller for breach of warranty is true.
• A warranty against infringement guarantees there are no encumbrances or liens on the product is false.
• An express warranty arises when a seller (or lessor) indicates that the goods are the "best" of the kind of goods sold is false.
• To create an express warranty, a reasonable buyer must regard a seller's representation of fact as part of the basis of the bargain is true.
• Only expressions of fact can make up an express warranty is true.
• In an action based on breach of implied warranty, a buyer must show the warranty existed, and its breach proximately caused the damage sustained is true.
• A merchant in the business of selling certain goods makes an implied warranty of merchantability every time she sells any type of merchandise is false.
• A bar of soap is unmerchantable if stepping on it would cause the user to slip and fall is false.
• For an implied warranty to be created, the buyer (or lessee) must have relied on the skill (or judgment) of the seller (or lessor) in selecting or furnishing suitable goods is true.
• An implied warranty can arise as a result of a well-recognized trade custom that a court could infer the parties intended to apply to their contract is true.
• Express and implied warranties do not displace each other because more than one warranty can cover the same goods in the same transaction is true.

Multiple choice questions

• Nature's Eggs, Inc. agrees to supply Omelet Express with five hundred eggs, Nature's Eggs can reasonably ask Omelet Express to pick up the eggs at any reasonable hour.
• Fuel Connector Products, Inc., agrees to sell Go-Flo, Inc., a certain quantity of hose couplings and fittings, but the contract does not specify a place of delivery; Go-Flo is expected to pick up the goods, the place of delivery is Fuel Connector's place of business.
• Elegant Carpets, Inc., agrees to sell a certain quantity of carpeting to Fantastic Floors stores under a shipment contract; Elegant Carpets must place the carpeting into the hands of Great States Trucking, a carrier.
• Pine Mills Inc. agrees to sell a certain quantity of plywood to Quality Lumber Company under a destination contract; Pine Mills must deliver the plywood to a particular destination.
• 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 in every way.
• Precise Parts, Inc., and Quality Auto stores enter into a contract for a sale of auto parts that meet certain specifications; Precise Parts ships goods that do not comply, Quality Auto can reject the entire shipment.
• 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 does not apply.
• On July 10, Bob's Pet Supply Store orders fifty small dog collars from Canine Collars, Inc. to be delivered by July 15; On July 13, Canine Collars tenders fifty large dog collars; Bob's rejects the shipment; Canine Collars has until July 15 to cure.
• ABC Hardware Store orders one hundred power hand-drills from Best Tools Inc; When the hand-drills are delivered, they are all missing pieces; ABC rejects the shipment; To exercise a right to cure, Best Tools must promptly notify ABC of the intent to cure and make the cure within the contract time for performance.
• Minerals Ltd. contracts to provide several manufacturers with tin; When a cartel of tin-producing countries suddenly embargoes future shipments of tin to Minerals so that it cannot fulfill its contracts, the distributor is excused from the performance of its contracts.
• Beef Burgers, Inc. contracts to buy five hundred head of cattle from Cattle Ranch; Before the seller delivers, an outbreak of disease causes a quarantine of the ranch; In this circumstance, the perfect tender rule no longer applies.
• Speedy Auto Parts orders two gross of tires from Tough Tread, Inc; Ten tires are delivered in a damaged condition; Speedy may accept the shipment with a reduction in price.
• Pavers Inc. contracts to buy some heavy equipment from Earthmovers, Inc; Before either party performs, Earthmovers sells its assets to Excavation Corporation; On learning of the sale, Pavers is concerned about its contract with Earthmovers, Pavers should demand assurances of performance from the seller.
• Chair Company contracts to deliver a dozen suites of dining room tables and chairs to Furniture Store on May 1; On April 15, Chair tells Furniture that delivery will be delayed until June 1; Furniture may await performance, sue Chair, or suspend its own performance.
• Steel Buildings, Inc., agrees to sell four portable garages to Truck Service Center; Five days later, Truck Service refuses delivery and cancels the contract; Steel is entitled to recover any damages from Truck Service but not resell the garages and resell the garages and recover any damages from Truck Service.
• Field Farm enters into a contract with Gourmet Restaurant for a sale of a certain quantity of specified vegetables; After Field ships the produce but before Gourmet receives it, the buyer declares bankruptcy; Field can stop delivery of the goods in transit regardless of the quantity.
• Builders Inc. and Concrete Supply Company enter into a contract for a sale of cement; Concrete delivers, but Builders does not pay; Concrete can recover as damages any profit lost minus any loss avoided.
• 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 resell the goods and recover any damages from In-Flo.
• When the goods are unfinished at the time the buyer breaches the contract, the seller can cease manufacturing the goods and resell them for scrap, complete the manufacturing process, resell, or dispose of the goods and hold the buyer liable for any difference between the contract price and sales price.
• Loading Ramps Inc. contracts to sell sixteen loading ramps to Moving Service Inc; Loading Ramps ships the ramps, which Moving Service accepts but does not pay for, Loading Ramps can sue to recover the purchase price plus incidental damages.
• Real Stones, Inc., and Sparkling Jewelry Stores enter into a contract for a sale of gemstones; Real Stones does not deliver; Sparkling can recover as damages the difference between the contract price and the market price.
• Fiesta LLC contracts to buy 1,000 balloons from Gas Bags Inc. for $1 per item; When the market price decreases to 50 cents per balloon, Fiesta refuses to go through with the deal; Gas Bags can recover $500.
• 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 Sweet.
• Bayou Boats, Inc., contracts for the sale of seven swamp boats to Eventide Fishing Tours; Bayou repudiates the contract; Eventide's recovery is measured at the time Eventide learned of the breach.
• Parties to a contract can change the statute of limitations as long as it falls between these guidelines no less than one year and no longer than 4 years
• Text & Talk Corporation sells phones; Under most circumstances, Text & Talk will be presumed to have warranted that its title to the goods is good and valid.
• Coal Mine Company buys an excavator from Dig Equipment Inc; Coal Mine is unaware that Equity Credit Company holds a lien against the excavator; If Equity repossesses the goods, Coal Mine can recover for breach of warranty from Equity.
• Blake, a salesperson for Custom Commercial Kitchens Inc., shows Dylan, a buyer for Eatery Inc., display items in Custom's showroom, stating that any purchased equipment will match the display is an express warranty.
• Eliza buys a new motorcycle from Fast Bikes, Inc; The most important factor in determining whether an express warranty is created is whether Fast Bikes' promise becomes part of the basis of the bargain.
• A statement by a salesperson that “this bike will never break—it is the best bike ever made,” will not lead to an express warranty because it is so clearly improbable and no reasonable person would rely on that.
• Home Redo, Inc., and Ivy enter into a contract for a sale of cabinets and countertops; Home Redo, a merchant who deals in goods of the kind sold, notes that its goods come with an implied warranty of merchantability; Under the UCC, this means that the goods are reasonably fit for the ordinary purpose for which such goods are used.
• Trucks & Trailers, Inc. (T&T), and United Express Service enter into a contract for a lease of trucks; T&T is a merchant who deals in goods of the kind leased; Under the UCC, an implied warranty of merchantability arises automatically.
• Ski Shop sells a pair of skis to Tami; When Tami uses the skis, they snap in two; The cause is something that Ski Shop did not know about and could not have discovered; This is a breach of the implied warranty of merchantability.
• Riverside Mill and Standard Contractors enter into a contract for a sale of lumber; The mill knows the purpose for which the buyer will use the goods; Under the UCC, an implied warranty of fitness of a particular purpose arises if the buyer is relying on the seller to select suitable goods.
• Cruisin' Autos, Inc., sells cars to consumers; To avoid liability for oral express warranties, each sales agreement should note that a car is sold subject to warranties included in the written contract only.
• Pipe Company includes in its contracts a provision that reads, in large red letters, “There are no warranties that extend beyond the description on the face hereof;” This disclaimer negates the implied warranty of merchantability.
• Brass Instruments, Inc., sells seventy-six trombones to Community Band; To avoid liability for most implied warranties, Brass should state in writing that the trombones are sold as is.