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Exam 18: Remedies for Breach of Sales and Lease Contracts

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Question 51

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If the buyer or lessee chooses to reject goods,he or she must identify defects that are ascertainable by reasonable inspection.

A) True
B) False

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Question 52

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Grinning Pig Restaurant contracts to purchase 100 specially-manufactured tablecloths with its logo of a smiling pig on them.After the seller completes them,Grinning Pig wrongfully refuses to accept or pay for the tablecloths.The tablecloths cannot be sold in the open market.If the seller sues Grinning Pig,what is the proper measure of damages?

A) the contract price less the resale price
B) fair market value less the contract price
C) the contract price
D) the cover price less the contract price
E) lost profits

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

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Question 53

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A buyer or lessee who rightfully cancels a contract is discharged from any further obligations on the contract.

Tender of delivery includes the requirement that the seller or lessor put and hold conforming goods at the buyer's or lessee's disposition.

The UCC permits parties to a sales or lease contract to establish in advance in their contract the damages that will be paid upon breach of contract.Such pre-established damages,called ________ damages,substitute for actual damages.

If the seller or lessor has no place of business,the place of delivery is the seller's or lessor's residence.

A sales contract that requires the seller to deliver goods to the buyer's place of business is a ________ contract.

If a buyer or lessee wrongfully refuses to make payments when due and this occurs before delivery,the seller or lessor may withhold delivery of the goods.

If the buyer or lessee makes partial or full payment for goods before they are received,and the seller or lessor becomes insolvent within 10 days after receiving the first payment,the buyer or lessee may recover the goods from the seller or lessor.

________ damages include reasonable expenses incurred in stopping delivery,transportation charges,storage charges,sales commission,and the like incurred in the exercise of the seller's or lessor's right to dispose of goods.

What is the significance of a seller being determined to be a lost volume seller?

Buyer has ordered 100 cases of scotch.If the seller delivers 99 cases of scotch and one case of bourbon,the buyer may reject the entire shipment and send it all back.

A sales contract that requires the seller to deliver the goods to the buyer's place of business or another specified destination is a destination contract.

A seller may refuse to deliver goods to a buyer discovered to be insolvent.

The seller or lessor may use self-help to reclaim goods if it is discovered after delivery that the buyer or lessor is insolvent.

Under the UCC,the parties are free to set reduce the statute of limitations applicable to a contract but may not extend it.

Under Article 2 of the UCC,what are the obligations of the parties with respect to good faith?

Acceptance occurs when the buyer or lessee fails to effectively reject the goods within a reasonable time after their delivery or tender by the seller or lessor.

Dr.Vet,a veterinarian,started a new endeavor cooking and selling weight reduction food and supplements for animal movie and television stars.Dr.Vet's products were very popular and in short supply because he prepared all the products himself.One of his clients was Mighty Pup,who was going to be the star in the upcoming action movie,"Pups Stop Alien Invaders IV." In the first three invader movies,that were wildly successful,Mighty Pup and been trim and agile.Mighty Pup's owner was concerned that Mighty Pup had eaten a few too many treats and was anxious to get some weight reduction underway before the movie's producer found out about Pup's overindulgence.The movie was set to begin filming October 31,2010.Dr.Vet met with Mighty Pup and owner on June 1,2010,reviewed Pup's situation,and sold Mighty Pup's owner $2,000 in weight reduction food and supplements.Dr.Vet promised that the products would be delivered by June 30,2010,so that Mighty Pup could get busy with weight loss.On June 10,Dr.Vet got a call from the owner of another canine star,Bugle Beagle,a competitor of Mighty Dog.Beagle's owner wanted some immediate assistance and offered to pay triple the regular price.Dr.Vet only had a limited amount of weight reduction food and supplements available.Dr.Vet wrote to Mighty Pup's owner saying that he would not be able to provide the products as promised on June 15.Pup's owner was very concerned and decided to go ahead and consult with the movie producer about Mighty Pup.He did not call Dr.Vet and make any response.Instead,Mighty Pup's owner,who lived in Tennessee,spent a considerable amount of funds flying to California with Mighty Pup to see the producer.The producer said that overindulgence is the American way,and that the public would love a heftier Mighty Pup.Both Mighty Pup and Mighty Pup's owner were very happy.Meanwhile,Dr.Vet decided that he was risking his reputation by canceling Mighty Pup's order.He called up the owner of Bugle Beagle and said that Bugle Beagle would have to wait.Dr.Vet called Mighty Pup's owner on June 28 and said that he would be able to provide the products as promised.Mighty Pup's owner said to forget it.Dr.Vet wants damages for breach of contract.Discuss the legal concepts involved and who should win.

In general,a seller's right to cure lasts for a reasonable time beyond the buyer's discovery of a nonconformity.