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Exam 14: Performance and Breach of Sales and Lease Contracts

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Question 21

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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

A) ​can substitute some other material for the tin.
B) ​is excused from the performance of its contracts.
C) ​is liable for breach of contract.
D) ​must still supply the tin needs of its customers.

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

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Question 22

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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

A) ​demand assurances of performance from the seller.
B) ​consider the contract repudiated and sue the seller for breach.
C) ​buy the equipment from a different firm and bill the seller for the price.
D) ​buy the equipment from a different firm and bill Excavation for the price.

E) A) and C)
F) C) and D)

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Question 23

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If, before the time for performance, a buyer communicates an intent not to perform, the seller can consider the buyer in breach and pursue a remedy.

The principle of good faith applies to both parties to a sales contract.

Fact Pattern 14-1 Daily Bread Bakeries, Inc., contracts to buy all of its ingredient requirements for bread making, at a certain minimum per year, from Enriched Flour & Grain Corporation for six years. After three years, Daily Bread tells Enriched that it plans to sell its assets to Flat Bread Shops, Inc. Flat Bread refuses to assure Enriched that it will continue Daily Bread's contract. -Refer to Fact Pattern 14-1.Flat Bread's refusal is​

In contracts involving a carrier, a seller can complete performance through a shipment contract or a destination contract.

If either the goods or their tender fails to conform to the contract in any respect, the buyer or lessee must reject all of the goods.

The term cure refers to the right of the buyer to reject, adjust, or replace nonconforming goods.

Pine Mills Inc. and Quality Lumber Company enter into a contract for a sale of plywood to be delivered under a destination contract. This contract requires Pine Mills, the seller, to

If goods identified to a contract are destroyed through no fault of either party, both parties are excused from performance.

Soft Chair Company contracts to deliver 100 chairs to Stuffy Furnishings Store on May 1 for which Stuffy agrees to pay. Soft tells Stuffy on April 15 that delivery will be delayed until June 1. Stuffy may

Game Source Stores are open to consumers. The UCC requirement of good faith imposes

VuPlay Company contracts to deliver one hundred 60-inch 3D HD television sets to a new retail customer, Watchbox Store, on May 1, with payment to be made on delivery. VuPlay tenders delivery in its own truck. Watchbox's manager notices that some of the cartons have scrape marks. Watchbox's owner phones VuPlay's office and asks whether the sets might have been damaged as they were being loaded. VuPlay assures Watchbox that the sets are in perfect condition. Watchbox tenders VuPlay a check, which VuPlay refuses, claiming that the first delivery to new customers is always for cash. Watchbox promises to pay the cash within two days. VuPlay leaves the sets with Watchbox, which stores them in its warehouse pending its "Grand Opening Sale" on May 15. Two days later, Watchbox's stocker opens some of the cartons and discovers that a number of the sets are damaged beyond ordinary repair. VuPlay claims Watchbox has accepted the sets and is in breach by not paying on delivery. Will VuPlay succeed on these claims? Explain.

Precious Stones, Inc., and Sparkling Jewelry stores enter into a contract for a sale of gemstones. Precious Stones does not deliver. The buyer can normally recover as damages the difference between

Under the perfect tender rule, if tender is not perfect, the seller is obligated to try again.

Fruit of the Plant, Inc., agrees to sell a certain quantity of a high-quality grain seed to Grange Co-op. Fruit of the Plant can obtain only half of the quantity ordered, so the seller also ships a lesser quality seed in twice the amount of the remainder of the order for the same price. Grange Co-op rejects the lesser quality seed. With time for performance not yet expired, Fruit of the Plant can

Clear View Company, which is based in Delaware, agrees to sell fifty windows, currently stored in Florida, to Far Sight, Inc., which is based in Hawaii. Absent an agreement to the contrary, the place of delivery is in

The seller's or lessor's major obligation under a sales contract is to tender conforming goods to the buyer or lessee.

Field Farms and Gourmet Restaurant enter into a contract for a sale of produce. After Field Farms ships the lettuce but before the restaurant receives it, the buyer declares bankruptcy. The seller can stop delivery of the goods in transit

Revocation of acceptance is effective on notice to the seller or lessor.