Question 1

Since the purpose of remedies under the Code is compensation, punitive damages are generally available.

Accepted Answer

A) True 
 B)False

Question 2

A buyer who does not cover is precluded from consequential damages that could have been prevented if the buyer did obtain cover.

Accepted Answer

A) True 
 B)False

Question 3

The buyer's incidental damages resulting from the seller's breach include all of the following except:

Accepted Answer

A)  expenses reasonably incurred in inspection of rightfully rejected goods. 
B)  any commercially reasonable charges or commissions in connection with obtaining cover. 
C)  any reasonable expenses connected to the delay. 
D)  loss of sales revenue from the unsellable goods. 
A)  expenses reasonably incurred in inspection of rightfully rejected goods. 
B)  any commercially reasonable charges or commissions in connection with obtaining cover. 
C)  any reasonable expenses connected to the delay. 
D)  loss of sales revenue from the unsellable goods.

Question 4

If the seller has the right to cancel, he may recover damages for breach without having to tender any further performance.

Accepted Answer

A) True 
 B)False

Question 5

Under the CISG, if the buyer fails to perform any obligations, the seller may either require the buyer to pay the price or fix an additional period of time for the buyer to perform.

Accepted Answer

A) True 
 B)False

Question 6

The right of the buyer to recover from an insolvent seller the goods in which he has a special property interest and for which he has paid, existed at common law before being included in the Code.

Accepted Answer

A) True 
 B)False

Question 7

The Code permits the seller to recover the price plus incidental damages in which of the following situation(s)?

Accepted Answer

A)  Where the buyer has accepted the goods. 
B)  Where conforming goods have been lost or damaged before risk of loss has passed to the buyer. 
C)  Where the goods have not been identified to the contract. 
D)  When the goods are fungible. 
A)  Where the buyer has accepted the goods. 
B)  Where conforming goods have been lost or damaged before risk of loss has passed to the buyer. 
C)  Where the goods have not been identified to the contract. 
D)  When the goods are fungible.

Question 8

The fair market value of a 10-foot fishing boat is $1,000. In a special promotion, J's Marina purchases a 10-foot fishing boat for $900. The boat is badly scratched when it arrives. J's Marina, however, accepts the shipment and notifies the seller of the defect. The boat as delivered has a value of $800. If the damaged boat is a breach of warranty by the seller, the buyer may recover from the seller:

Accepted Answer

A)  $100. 
B)  $100 plus incidental and consequential damages. 
C)  $200. 
D)  $200 plus incidental and consequential damages. 
A)  $100. 
B)  $100 plus incidental and consequential damages. 
C)  $200. 
D)  $200 plus incidental and consequential damages.

Question 9

The recovery for a lessee's wrongful repudiation of a lease is the difference between the present values of the old rent due under the original lease and the market rent.

Accepted Answer

A) True 
 B)False

Question 10

Tom breached a sales contract to purchase goods from Jim. In addition to other remedies available, Jim may be able to recover commercially reasonable expenses incurred as a result of the breach. These expenses are:

Accepted Answer

A)  incidental damages. 
B)  punitive damages. 
C)  liquidated damages. 
D)  extraordinary damages. 
A)  incidental damages. 
B)  punitive damages. 
C)  liquidated damages. 
D)  extraordinary damages.

Question 11

Vandehal Company's total liabilities are $520,000 and its total assets are $460,000, and the company is unable to pay debts as they become due. Vandehal's situation falls within the bankruptcy meaning, but not the Code's definition, of insolvency.

Accepted Answer

A) True 
 B)False

Question 12

MoVu Co. contracted to buy 400 round plastic bowls from Continental Industries, then anticipatorily breached the contract when their plans changed. Continental may proceed to identify to the contract conforming goods in its possession so that it can exercise the remedy of resale of the goods.

Accepted Answer

A) True 
 B)False

Question 13

On the seller's breach, if the buyer makes substitute purchases in good faith and without unreasonable delay, she may recover, as damages, the difference between the cost of cover and the contract price, plus incidental damages but minus any expenses she saved because of the seller's breach.

Accepted Answer

A) True 
 B)False

Question 14

A seller has breached his contract by providing unfit seed for the planting of beans. Damages would include all of the following except:

Accepted Answer

A)  the lost profits from a contract to sell the bean crop. 
B)  the cost of keeping the defective seed in a storeroom. 
C)  the cost of replacement seed. 
D)  the cost of the farm land not being used for growing beans. 
A)  the lost profits from a contract to sell the bean crop. 
B)  the cost of keeping the defective seed in a storeroom. 
C)  the cost of replacement seed. 
D)  the cost of the farm land not being used for growing beans.

Question 15

When existing goods are identified to the contract of sale, the buyer acquires a special property interest in the goods.

Accepted Answer

A) True 
 B)False

Question 16

Where the seller fails to make delivery, the buyer can cancel the contract, but he must give the seller notice of his cancellation.

Accepted Answer

A) True 
 B)False

Question 17

The contract between the buyer and the seller may expressly limit or exclude consequential damages so long as the contract is not unconscionable.

Accepted Answer

A) True 
 B)False

Question 18

Quality Appliances sells a flat top range to Ryan for his home. The contract of sale excludes liability for consequential damages. When Ryan turns on the range , it catches fire, burning Ryan severely. Ryan cannot recover for his injuries because of the exclusion of damages clause.

Accepted Answer

A) True 
 B)False

Question 19

Watts contracts to sell 1,000 transformers to Babbage and issues a negotiable document of title for the specified goods. The transformers are stored in the Reedy Creek Warehouse. When Watts discovers that Babbage is insolvent, she may effectively stop delivery of the goods by notifying Reedy Creek not to deliver the goods to Babbage .

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is NOT correct with respect to consequential damages under the Code?

Accepted Answer

A)  Consequential damages include damages for destruction of a warehouse caused by the explosion of nonconforming goods. 
B)  Consequential damages include damages for lost profits from a contract to resell goods which the seller never delivers. 
C)  Particular needs of the buyer need to be made known to the seller before the seller can be held responsible for consequential damages relating to those needs. 
D)  The buyer is not required to obtain cover, so his failure to do so does not bar him from recovering consequential damages that he could have prevented by cover. 
A)  Consequential damages include damages for destruction of a warehouse caused by the explosion of nonconforming goods. 
B)  Consequential damages include damages for lost profits from a contract to resell goods which the seller never delivers. 
C)  Particular needs of the buyer need to be made known to the seller before the seller can be held responsible for consequential damages relating to those needs. 
D)  The buyer is not required to obtain cover, so his failure to do so does not bar him from recovering consequential damages that he could have prevented by cover.

Exam 23: Sales Remedies

Since the purpose of remedies under the Code is compensation, punitive damages are generally available.

A buyer who does not cover is precluded from consequential damages that could have been prevented if the buyer did obtain cover.

The buyer's incidental damages resulting from the seller's breach include all of the following except:

If the seller has the right to cancel, he may recover damages for breach without having to tender any further performance.

Under the CISG, if the buyer fails to perform any obligations, the seller may either require the buyer to pay the price or fix an additional period of time for the buyer to perform.

The right of the buyer to recover from an insolvent seller the goods in which he has a special property interest and for which he has paid, existed at common law before being included in the Code.

The Code permits the seller to recover the price plus incidental damages in which of the following situation(s)?

The recovery for a lessee's wrongful repudiation of a lease is the difference between the present values of the old rent due under the original lease and the market rent.

Tom breached a sales contract to purchase goods from Jim. In addition to other remedies available, Jim may be able to recover commercially reasonable expenses incurred as a result of the breach. These expenses are:

Vandehal Company's total liabilities are $520,000 and its total assets are $460,000, and the company is unable to pay debts as they become due. Vandehal's situation falls within the bankruptcy meaning, but not the Code's definition, of insolvency.

MoVu Co. contracted to buy 400 round plastic bowls from Continental Industries, then anticipatorily breached the contract when their plans changed. Continental may proceed to identify to the contract conforming goods in its possession so that it can exercise the remedy of resale of the goods.

On the seller's breach, if the buyer makes substitute purchases in good faith and without unreasonable delay, she may recover, as damages, the difference between the cost of cover and the contract price, plus incidental damages but minus any expenses she saved because of the seller's breach.

A seller has breached his contract by providing unfit seed for the planting of beans. Damages would include all of the following except:

When existing goods are identified to the contract of sale, the buyer acquires a special property interest in the goods.

Where the seller fails to make delivery, the buyer can cancel the contract, but he must give the seller notice of his cancellation.

The contract between the buyer and the seller may expressly limit or exclude consequential damages so long as the contract is not unconscionable.

Quality Appliances sells a flat top range to Ryan for his home. The contract of sale excludes liability for consequential damages. When Ryan turns on the range , it catches fire, burning Ryan severely. Ryan cannot recover for his injuries because of the exclusion of damages clause.

Which of the following is NOT correct with respect to consequential damages under the Code?

Introduction to Law

Business Ethics

Civil Dispute Resolution

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Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

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Third Parties to Contracts

Performance Breach and Discharge

Contract Remedies

Introduction to Sales and Leases

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Product Liability Warranties and Strict Liability

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits Collections and Funds Transfers

Relationship of Principal and Agent

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Formation and Internal Relations of General Partnerships

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Nature and Formation of Corporations

Financial Structure of Corporations

Management Structure of Corporations

Fundamental Changes of Corporations

Secured Transactions and Suretyship

Bankruptcy

Securities Regulation

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