A common law rule known as the _____ required that the seller deliver goods in conformity with the terms of the contract, right down to the
preexisting duty rule
perfect tender rule
parol evidence rule
mirror image rule
Which of the following statements can be inferred from the shipping term free on board (FOB)?
The selling price of the goods excludes transportation costs.
The risk of loss lies with the common carrier till the goods are delivered to the buyer.
The seller passes the title of the goods to the common carrier before the title passes to the buyer.
The seller carries the risk of loss to either the place of shipment or the place of destination.
A _____ occurs when the purchased goods are transferred to a buyer from a seller at either the time of the sale or some time
later by the seller’s delivery.
simple delivery contract
conditional sales contract
common-carrier delivery contract
In obtaining cover for a breach of sales contract by a seller or lessor, the buyer must:
demonstrate that the seller or lessor lacks legal capacity.
demonstrate that the seller or lessor is insolvent.
pay a reasonable amount for the substitute goods.
transfer the title of the substitute goods to the seller or lessor.
When a buyer breaches a sales or lease contract before the seller has delivered the goods, Sections 2-703(a) and 2A-523(1)(c) of the Uniform
do not consider the breach as a violation of contract laws.
revoke the legal capacity of the buyer to enter into contracts.
do not allow the seller to cancel the contract.
allow sellers to withhold delivery of goods.
Which of the following statements is true of liquidated damages?
Liquidated-damage clauses that are deemed to be punitive in nature are not enforceable.
The Uniform Commercial Code considers liquidated damages as the remedy of last resort available to both parties in case of
breach of a sales contract.
The Uniform Commercial Code provides for liquidated damages only if the parties to a sales contract have expressly negotiated
a liquidated-damage clause.
Liquidated damages are identified after the breach of a sales contract occurs.
Under Section 2-608 of the Uniform Commercial Code (UCC), a buyer who has accepted goods may later revoke the acceptance only if the:
buyer can show that the defects substantially impair the value of the goods.
course of dealing between the seller and buyer has been strong.
goods are valued at $50,000 or more in the market.
defects in the goods can be cured by the seller.
Under Section 208(1) of the Uniform Commercial Code (UCC), _____ refers to the history of dealings between the parties in the particular
contract at issue.
course of performance
usage of trade
balance of trade
course of dealing
When HKP Inc. and Univon Inc. were drafting a sales contract, the contract document mentioned that if either of the parties had to breach the
contract, they were liable to pay $30 million dollars to the injured party. This is an example of _____.
Nathalie, the owner of a designer furniture store in New York, orders some goods from a manufacturer based in China. The
manufacturer hires the services of a shipping company to deliver the goods to Nathalie’s warehouse. This is an example of a:
conditional sales contract.
common-carrier delivery contract.
simple delivery contract.
Which of the following situations that can create a voidable title comes from common law?
The buyer deceiving the seller regarding his true identity
The buyer being a minor
The buyer writing a bad check for the goods
The buyer committing criminal fraud in securing the goods
Under Sections 2-613 and 2A-221 of the Uniform Commercial Code (UCC), if the goods are only partially destroyed in a transaction, the buyer
bring a breach of contract claim against the seller even if the seller can fix the problem within reasonable time.
bring a breach of contract claim against the seller on the grounds of transfer of void title.
inspect the goods and accept the damaged goods without any payment.
inspect the goods and ask the seller for a reduction of the contract price and then accept the damaged goods.
Under the Uniform Commercial Code (UCC), which of the following statements is true of the remedies available to buyers and lessees when a
seller or lessor breaches a sales contract?
When buyers or lessees reject nonconforming goods, they only have the rights to cancel the contract and not seek any cure
from the seller.
Buyers and lessees can recover the goods identified in a contract if the seller or lessor becomes insolvent within 30 days after
receiving the first payment due.
In order to obtain cover in a breach of contract by the seller or lessor, buyers or lessees should avoid purchasing goods that are
Buyers or lessees are allowed to accept nonconforming goods and then seek monetary damages to give them the benefit of the
_____ is the preferred remedy for nonbreaching sellers as it provides an easy means to determine damages in breach of sales contract by
Suing to get benefit of the bargain
Revocation of contract
Resale of goods
When the buyer in a sales contract is in breach, sellers are allowed to sell the goods to another buyer or dispose of the goods under the
Uniform Commercial Code (UCC). Which of the following is true of the liability of the buyer under these circumstances?
UCC allows the seller to recover the difference between the resale price and the contract price, plus incidental damages and
minus expenses saved.
UCC allows the seller to claim the difference between the original contract price and the profits made through resale.
UCC allows the seller to recover the difference between the resale price and the contract price, minus the profits the seller
makes from the resale.
UCC allows the seller to recover only the incidental damages.
_____ occurs in certain situations where the contract between the original parties would be void but the goods have already
been sold to a third party.
According to the Uniform Commercial Code (UCC), which of the following is the remedy of last resort available to sellers and lessors in the
case of breach of sales contract by the buyer or lessee?
Claiming liquidated damages as per the contract
Withholding delivery of goods
Canceling the contract
Reselling the goods
A person who purchases stolen goods, knowingly or unknowingly, has _____ over the goods.
Under common law, _____ occurs when all the material elements of a contract are satisfied even if some nonmaterial requirements may not be
Sections 2-601 and 2A-509 of the Uniform Commercial Code (UCC) indicate that if goods or tender of delivery fail in any respect to conform to
the contract, the buyer/lessee has the right to:
revoke the contract even if the industry expects such failures to be part of the dealings.
accept part and reject part of the goods.
accept the goods without payment.
claim damages for breach of contract even if the seller offers to cure the problems with the nonconforming goods.
According to the Section 2-725(1) of the Uniform Commercial Code (UCC), the time frame for a plaintiff to file suit once a cause of action
accrues in contracts involving the sale of goods is:
The perfect tender rule:
is usually substituted by the doctrine of substantial performance under the Uniform Commercial Code (UCC).
is interpreted both in light of what is expected in an industry and within the context of past dealings between the parties to
recognizes the distinction between material and immaterial contractual requirements.
requires a lesser standard of contractual performance from sellers in comparison with the doctrine of substantial performance.
Sections 2-502 and 2a-522 under the Uniform Commercial Code (UCC) allows buyers and lessees to recover the goods identified in the
contract if the seller or lessor becomes insolvent:
immediately after a year from receiving the first payment due under the agreement.
15 days before receiving the first payment due under the agreement.
within 30 days after receiving the first payment due under the agreement.
within 10 days after receiving the first payment due under the agreement.
Identify the true statement about the transfer of title, risk of loss, and insurable interest in a simple delivery contract.
Insurable interest is created in the buyer after the goods are delivered to the buyer.
If the seller is a merchant, the risk of loss passes to the buyer under the rule of tender of delivery.
Title transfers to the buyer on the goods being identified to the contract, that is, when the contract is executed.
If the seller is not a merchant, the risk of loss remains with the seller until the goods are actually delivered to the
When a change in government regulation that neither party to a contract of sale contemplated forbids the import or export of a particular item
the parties had agreed would be shipped, nonperformance is excused on the grounds of:
mistake of fact.
Identify the true statement in regard to the remedy that allows a seller or lessor to stop delivery of goods that are in transit.
If the buyer/lessee is solvent, the carrier or bailee can stop delivery only if the quantity shipped is a large shipment.
According to the Uniform Commercial Code (UCC), the title of the goods that are in transit is with the buyer and hence delivery
cannot be stopped by the seller or lessor.
Under the Uniform Commercial Code (UCC), if the buyer or lessee is insolvent, the carrier or bailee can stop delivery only if the
goods are worth $10,000 or more.
If the buyer or lessee is insolvent, the carrier or bailee cannot stop delivery regardless of the quantity shipped.
If a seller allows a buyer to take possession of the goods before deciding whether to complete the contract by making the
purchase, it creates a _____.
simple delivery contract
conditional sales contract
common-carrier delivery contract
Which of the following statements is true of the specific obligations of buyers and lessees?
The right to inspect is seldom waived unless the buyers expressly waive the right.
The sellers or lessors should allow the buyers to inspect the goods only after enforcing payment.
The buyers’ or lessees’ right to partial acceptance is forbidden under any circumstance.
The buyers or lessees may revoke acceptance of conforming goods if it can be proved that they can source the same goods
Which of the following statements is true of a common-carrier delivery contract?
The common carrier in such contracts is an independent contractor and not an agent of the seller.
If the delivery contract is an origin contract, the title remains with the seller till the common carrier delivers the
goods to the buyer.
If the delivery contract is a destination contract, the title passes to the buyer at the time and place of shipment.
The risk of loss transfers from the seller to the buyer even before the title is transferred to the buyer.
Under the Uniform Commercial Code (UCC) Sections 2-508 and 2A-513, sellers and lessors have the right to cure or fix problems with
nonconforming goods as long as:
the goods have not been inspected by the buyer or the lessee.
the buyer or the lessee has previously settled to a level of performance that is less than perfect.
they can prove that they can cure the problem within 90 days.
they give prompt notice of the intent to cure and go ahead and cure within the contract time for performance.
When nonbreaching buyers or lessees obtain specific performance under the Uniform Commercial Code (UCC), the sellers or lessors:
are free from their contractual obligations.
lose their legal capacity to enter into contracts in the future.
have to deliver the particular goods identified in the contract.
are required to pay for the substitute goods.
In a sale-on-approval contract, the:
seller allows the buyer to take possession of the goods only after making the purchase.
title of the goods passes to the buyer even before the buyer notifies the seller about the approval of the contract.
risk of loss remains with the seller until the buyer notifies the seller about the approval of the contract.
seller cannot transfer physical possession of the goods, unless the buyer has a document of title indicating
ownership of the goods.
With the savings from his income, Salim purchases a wristwatch from a store at a local mall. In this scenario, Salim has _____
over the wristwatch.
Emily sells her car to David, and he pays her with a bad check. Before Emily can reclaim the car, David sells the car to a
third-party good-faith purchaser for value. Under these circumstances, _____.
the third-party good-faith purchaser gets a void title
Emily can reclaim the car from the third-party purchaser
the third-party good-faith purchaser gets a good title
David transfers his voidable title to the third-party good-faith purchaser
Under the Uniform Commercial Code (UCC) Sections 2-613 and 2A-221, when goods are identified at the time the parties entered into a
contract and these goods are destroyed through no fault of the parties before risk passes to the buyer or lessee, the:
parties are excused from performance.
buyer gets a void title to the damaged goods.
seller is bound to replace the destroyed goods.
contract is discharged on the grounds of material breach.
Goods-in-bailment contracts occur when the:
seller allows the buyer to take possession of the goods before deciding whether to complete the contract by
making the purchase.
purchased goods are in some kind of storage under the control of a third party.
purchased goods are transferred to the buyer from the seller at either the time of the sale or some time later by the
goods are delivered to the buyer via a common carrier, such as a trucking line.
Which of the following statements is true of the transfer of interests in a goods-in-bailment contract?
If the document of title is nonnegotiable, the risk of loss passes to the buyer simultaneously with the document of
If the document of title is negotiable, the risk passes to the buyer on notification and acknowledgment by the
custodian of the goods.
Title of goods passes from the seller to the buyer when a document of title is actually endorsed or signed over to
Only the buyer can buy insurance on the goods because the seller cannot transfer physical possession of the
Which of the following requires that a seller/lessor have and hold conforming goods at the disposal of a buyer/lessee and give the buyer/lessee
reasonable notification to enable him or her to take delivery?
Proof of delivery
Deed of conformity
Tender of delivery
As per Section 1-205(1), which of the following is defined by the Uniform Commerical Code (UCC) as previous commercial transactions
between the same parties to a contract?
Usage of trade
Course of dealing
Course of performance
Balance of trade
Uniform Commercial Code (UCC) Section 1-205(2) defines usage of trade as:
previous commercial transactions between the same parties.
the history of dealings between the parties in the particular contract at issue.
any practice that members of an industry expect to be part of their dealings.
the common procedures potential parties to a contract must follow before trading with each other.
Section 2-718 under the Uniform Commercial Code (UCC) allows a nonbreaching seller to claim against a breaching buyer _____, whichever is
less, as liquidated damages.
the lost profits or 30 percent of the purchase price
50 percent of the purchase price or $2,000
20 percent of the purchase price or $500
the resale costs or $1,000
Sections 2-716(1) and 2A-521(1) under the Uniform Commercial Code (UCC) allow nonbreaching buyers and lessees to seek the remedy of
specific performance when:
a breach of contract occurs due to commercial impracticality.
a remedy at law is inadequate.
the goods purchased are commodity goods.
the seller is proven to be insolvent.
Which of the following is the basic performance obligation of sellers and lessors under the Uniform Commercial Code (UCC)?
They are obligated to transfer and deliver conforming goods.
They are obliged to fulfill the terms of a contract to the last detail even if it is commercially impractical.
They are merely required to maintain substantial performance.
They are required to bear the risk of loss even if the goods are destroyed through no fault of theirs.
A(n) _____ is best described as the right to insure the goods against any risk exposure such as damage or destruction.
right of subrogation
When a seller sues a buyer for the breach of a sales contract to get the benefit of the bargain, and nothing more, courts typically:
grant damages to recover the purchase price.
mandate the buyer to pay the opportunity cost incurred by the seller.
ask the buyer to resell the goods on behalf of the seller.
revoke the legal capacity of the buyer to enter into contracts in the future.
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