Question 1

If a buyer accepts defective goods and wants to hold the seller liable, the buyer must give the seller notice of the defect:

Accepted Answer

A)  only in writing. 
B)  within a reasonable time after detecting the defect. 
C)  within the same financial year of the purchase. 
D)  when the contract is made. 
A)  only in writing. 
B)  within a reasonable time after detecting the defect. 
C)  within the same financial year of the purchase. 
D)  when the contract is made.

Question 2

Unless the seller has agreed to extend credit to the buyer, the buyer must pay for the goods at the time they are delivered.

Accepted Answer

A) True 
 B)False

Question 3

Nominal damages include expenses the buyer incurs in receiving, inspecting, transporting, and storing goods shipped by the seller that do not conform with those called for in the contract.

Accepted Answer

A) True 
 B)False

Question 4

The objective of providing remedies for the breach of a sales contract is to:

Accepted Answer

A)  punish or penalize the party responsible for breaching the contract. 
B)  encourage parties to rely on trade practices rather than express terms. 
C)  put the injured person in the same position as if the contract has been performed. 
D)  encourage parties to rely on oral contracts rather than written contracts. 
A)  punish or penalize the party responsible for breaching the contract. 
B)  encourage parties to rely on trade practices rather than express terms. 
C)  put the injured person in the same position as if the contract has been performed. 
D)  encourage parties to rely on oral contracts rather than written contracts.

Question 5

Sam contracted with Roadies Garage for customized pink seat covers on a new Porsche intended as a gift to his fiancé. Two days before the delivery was due, Sam broke off his engagement and told Roadies Garage that he was no longer interested in getting the seat covers. Which of the following is the most reasonable course of action that Roadies Garage can take?

Accepted Answer

A)  It should coerce Sam into buying the covers. 
B)  It should start a line of pink seat covers so that they have more to sell. 
C)  It should complete manufacture anyway and hope that Sam changes his mind. 
D)  It should sell the uncompleted covers for their scrap or salvage value. 
A)  It should coerce Sam into buying the covers. 
B)  It should start a line of pink seat covers so that they have more to sell. 
C)  It should complete manufacture anyway and hope that Sam changes his mind. 
D)  It should sell the uncompleted covers for their scrap or salvage value.

Question 6

When a seller breaches a contract, the buyer may:

Accepted Answer

A)  buy other goods and recover damages from the seller based on additional expense incurred in obtaining the goods. 
B)  obtain specific performance only if the goods are not unique and can be found elsewhere. 
C)  not recover consequential damages. 
D)  legally sue the seller into performing if the seller repudiated the contract based on the buyer's insolvency. 
A)  buy other goods and recover damages from the seller based on additional expense incurred in obtaining the goods. 
B)  obtain specific performance only if the goods are not unique and can be found elsewhere. 
C)  not recover consequential damages. 
D)  legally sue the seller into performing if the seller repudiated the contract based on the buyer's insolvency.

Question 7

When goods are defective and the buyer provides the seller with notice, which of the following remedies is applicable?

Accepted Answer

A)  The buyer is entitled to only consequential damages. 
B)  The buyer can claim only incidental damages. 
C)  The buyer can recover the difference between the value of the goods received and the value the goods would have had if they had been as warranted. 
D)  The buyer cannot recover damages and can only get the reimbursement amount that the seller thinks is reasonable. 
A)  The buyer is entitled to only consequential damages. 
B)  The buyer can claim only incidental damages. 
C)  The buyer can recover the difference between the value of the goods received and the value the goods would have had if they had been as warranted. 
D)  The buyer cannot recover damages and can only get the reimbursement amount that the seller thinks is reasonable.

Question 8

If the parties agree on the amount of damages that will be paid to the injured party, this amount is known as _____.

Accepted Answer

A)  liquidated damages 
B)  registration expenses 
C)  consequential damages 
D)  remedial agreements 
A)  liquidated damages 
B)  registration expenses 
C)  consequential damages 
D)  remedial agreements

Question 9

An injured buyer can recover consequential damages when a seller breaches a contract if the:

Accepted Answer

A)  expenses incurred during storage of goods do not conform to those called for in the contract. 
B)  buyer purchases goods that have a higher market price than the contract price in the breached contract. 
C)  goods are not consumer products. 
D)  buyer can show that the damage could not have been prevented by obtaining substitute goods. 
A)  expenses incurred during storage of goods do not conform to those called for in the contract. 
B)  buyer purchases goods that have a higher market price than the contract price in the breached contract. 
C)  goods are not consumer products. 
D)  buyer can show that the damage could not have been prevented by obtaining substitute goods.

Question 10

_____ damages for a seller include storage charges and sales commissions.

Accepted Answer

A)  Intentional 
B)  Incidental 
C)  Liquidated 
D)  Unconscionable 
A)  Intentional 
B)  Incidental 
C)  Liquidated 
D)  Unconscionable

Question 11

On May 1, Fred agreed to sell and deliver 1,000 bushels of wheat to a baker for $7 per bushel. After the market price of wheat rose to $8 per bushel, Fred breached the contract by refusing to sell a bushel of wheat at $7. He demanded that the baker pay $8.50 per bushel of wheat. If the baker can get substitute wheat at the current market price, can he get specific performance? If not, what options are available to him if he seeks damages for breach of contract from Fred? What will he recover under each option?

Accepted Answer

The baker cannot get specific performanc

Question 12

When a seller makes a profit from the resale of goods after a buyer breaches a contract, the seller:

Accepted Answer

A)  may keep the profits. 
B)  must share the profit with the buyer who breached the contract. 
C)  must pay incidental damages to the buyer. 
D)  may not recover incidental damages from the profits. 
A)  may keep the profits. 
B)  must share the profit with the buyer who breached the contract. 
C)  must pay incidental damages to the buyer. 
D)  may not recover incidental damages from the profits.

Question 13

The amount of liquidated damages is considered reasonable if it is not so large as to be a penalty or so small as to be unconscionable.

Accepted Answer

A) True 
 B)False

Question 14

If the seller fails or refuses to deliver the goods called for in the contract, the buyer can purchase substitute goods; this is known as rescission.

Accepted Answer

A) True 
 B)False

Question 15

What is the statute of limitations period for a lawsuit for breach of a sales contract? Does the Uniform Commercial Code (UCC) allow buyers and sellers to shorten or lengthen the statute of limitations period?

Accepted Answer

The Uniform Commercial Code (UCC) provid

Question 16

An injured buyer is able to recover consequential damages even if he could have prevented the damage by obtaining substitute goods.

Accepted Answer

A) True 
 B)False

Question 17

If the buyer and seller have an agreement for liquidated damages, and the seller justifiably withheld delivery of the goods because of the buyer's breach, the buyer is entitled to recover:

Accepted Answer

A)  any money or goods he has delivered to the seller over and above the agreed amount of liquidated damages. 
B)  an amount in excess of $500 or 20 percent of the value of total performance. 
C)  any money or goods he has delivered to the seller only to the agreed amount of liquidated damages. 
D)  an amount in excess of $1,000 or 20 percent of the value of total performance or whichever amount is higher. 
A)  any money or goods he has delivered to the seller over and above the agreed amount of liquidated damages. 
B)  an amount in excess of $500 or 20 percent of the value of total performance. 
C)  any money or goods he has delivered to the seller only to the agreed amount of liquidated damages. 
D)  an amount in excess of $1,000 or 20 percent of the value of total performance or whichever amount is higher.

Question 18

A buyer whose seller breaks the contract may recover punitive damages based on three times the difference between the contract price and the current market price of the goods.

Accepted Answer

A) True 
 B)False

Question 19

What are liquidated damages?

Accepted Answer

The buyer and seller may provide their o

Question 20

Which of the following statements is true of consequential damages?

Accepted Answer

A)  Liability for consequential damages cannot be excluded by an agreement between the parties. 
B)  A limitation on the liability for consequential damages cannot be enforced if it is unconscionable. 
C)  Consequential damages do not involve the recovery of damages caused by consumer goods. 
D)  Exclusion of or limitation on consequential damages is permitted where the loss is not commercial. 
A)  Liability for consequential damages cannot be excluded by an agreement between the parties. 
B)  A limitation on the liability for consequential damages cannot be enforced if it is unconscionable. 
C)  Consequential damages do not involve the recovery of damages caused by consumer goods. 
D)  Exclusion of or limitation on consequential damages is permitted where the loss is not commercial.

Exam 22: Remedies for Breach of Sales Contracts

If a buyer accepts defective goods and wants to hold the seller liable, the buyer must give the seller notice of the defect:

Unless the seller has agreed to extend credit to the buyer, the buyer must pay for the goods at the time they are delivered.

Nominal damages include expenses the buyer incurs in receiving, inspecting, transporting, and storing goods shipped by the seller that do not conform with those called for in the contract.

The objective of providing remedies for the breach of a sales contract is to:

When a seller breaches a contract, the buyer may:

When goods are defective and the buyer provides the seller with notice, which of the following remedies is applicable?

If the parties agree on the amount of damages that will be paid to the injured party, this amount is known as _____.

An injured buyer can recover consequential damages when a seller breaches a contract if the:

_____ damages for a seller include storage charges and sales commissions.

When a seller makes a profit from the resale of goods after a buyer breaches a contract, the seller:

The amount of liquidated damages is considered reasonable if it is not so large as to be a penalty or so small as to be unconscionable.

If the seller fails or refuses to deliver the goods called for in the contract, the buyer can purchase substitute goods; this is known as rescission.

What is the statute of limitations period for a lawsuit for breach of a sales contract? Does the Uniform Commercial Code (UCC) allow buyers and sellers to shorten or lengthen the statute of limitations period?

An injured buyer is able to recover consequential damages even if he could have prevented the damage by obtaining substitute goods.

If the buyer and seller have an agreement for liquidated damages, and the seller justifiably withheld delivery of the goods because of the buyer's breach, the buyer is entitled to recover:

A buyer whose seller breaks the contract may recover punitive damages based on three times the difference between the contract price and the current market price of the goods.

What are liquidated damages?

Which of the following statements is true of consequential damages?

Law, Legal Reasoning, and the Legal Profession

Dispute Settlement

Business Ethics and Corporate Social Responsibility

Business and the Constitution

Crimes

Intentional Torts

Negligence and Strict Liability

Licensing and Intellectual Property

The Nature and Origins of Contracts

Creating a Contract: Offers

Creating a Contract: Acceptances

Consideration

Capacity to Contract

Voluntary Consent

Illegality

The Form and Meaning of Contracts

Third Parties Contract Rights

Performance and Remedies

Formation and Terms of Sales Contracts

Warranties and Product Liability

Performance of Sales Contracts

The Agency Relationship-Creation, Duties, and Termination

Liability of Principals and Agents to Third Parties

Employment Laws

Which Form of Business Organization

Partnerships

Formation and Termination of Corporations

Management of the Corporate Business

Financing the Corporation and the Role of the Shareholders

Securities Regulation

Legal Liability of Accountants

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Fund Transfers

Introduction to Security

Security Interests in Personal Property

Bankruptcy

The Antitrust Laws

Consumer Protection Laws

Environmental Regulation

Filters