Business Law, Chapter 22: "Performance and Breach of Sales and Lease Contracts" flash cards

Conforming Good

(22-1) A good that conforms to contract specifications.

Tender of Delivery

(22-1a) A seller’s or lessor’s act of placing conforming goods at the disposal of the buyer or lessee, along with giving them whatever notification is reasonably necessary to enable the buyer or lessee to take delivery (UCC definition).

Perfect Tender Rule

(22-1d) A rule under which a seller was required to deliver to the buyer goods that conformed perfectly to the requirements stipulated in the sales contract (common law definition).

Installment Contract

(22-1e) A contract that requires or authorizes delivery in two or more separate lots to be accepted and paid for separately (UCC definition).

Letter of Credit

(22-6) A written instrument, usually issued by a bank on behalf of a customer or other party, in which the issuer promises to honor drafts or other demands for payment by third parties in accordance with the terms of the instrument.

C) Transfer and deliver conforming goods.

8) In the performance of a sales or lease contract, the basic obligation of the seller or lessor is to:
A) Offer conforming goods.
B) Accept and pay for conforming goods.
C) Transfer and deliver conforming goods.
D) Produce conforming goods and price them fairly.

C) When the buyer fails to inform the seller of the defect that could have been cured.

10) Under the UCC, when may a buyer lose the right to reject defective goods?

A) When the buyer changes their mind after accepting the goods.
B) When the goods are slightly delayed in delivery.
C) When the buyer fails to inform the seller of the defect that could have been cured.
D) When the defect is discovered after warranty period ends.

B) Wait and hope that the repudiating party will perform.

19) As a rule, which of the following may a non-breaching party do when faced with an anticipatory repudiation by the other party?
A) Request an annulment.
B) Wait and hope that the repudiating party will perform.
C) Sue for punitive damages.
D) File a claim against the breaching party with the FDA.

A) Pay for conforming goods.

20) Under the Uniform Commercial Code (UCC), the basic obligation of the buyer or lessee, concerning contract performance, is to:

A) Pay for conforming goods.
B) Insure the contract goods before delivery.
C) Deliver conforming goods.
D) Tender conforming goods.

D) No more time to cure.

22) Pep Paints agrees to sell Quality Painters Grade A-1 latex outdoor paint to be delivered on May 8. On May 7, Pep tenders Grade B-2 paint. Quality rejects the Grade B-2 paint. Two days later, Pep tenders Grade C-3 paint with an offer of price allowance. Pep has:

A) One more day to cure.
B) A reasonable, additional time to cure.
C) Additional, unlimited time to cure.
D) No more time to cure.

C) Yes, under the doctrine of anticipatory repudiation.

25) Sid and Tony enter a contract for the sale of Sid’s collection of electric guitars. Before the time for the performance, Sid tells Tony that he does not want to deliver the guitars. Has Tony breached the contract?

A) No, because a repudiation may be retracted.
B) Yes, under the doctrine of retraction.
C) Yes, under the doctrine of anticipatory repudiation.
D) No, because the contract time has not yet expired.

A) Contract for transportation of the cutlery and tender to Diners documents to obtain its possession.

27) Custom Tableware, Inc., contracts for the sale of cutlery to Diners Cafe under a shipment contract. Custom must:
A) Contract for transportation of the cutlery and tender to Diners documents to obtain its possession.
B) Neither contract for transportation of the cutlery nor tender to Diners documents to obtain its possession.
C) Only contract for the transportation of the cutlery.
D) Only tender to Diners documents to obtain possession of the cutlery.

A) Yes, because anticipatory repudiation is a breach.

28) Radio Inc. has ordered parts from Electro Co. to be delivered on January 31. On January 28, Electro Co. tells Radio that the parts will not be delivered until February 2. Has Electro breached the contract?

A) Yes, because anticipatory repudiation is a breach.
B) No, because the January 28 communication was only anticipatory.
C) No, because two days is not a material delay.
D) Yes, because the communication materially changed Electro’s position.

B) Shipment.

30) When a sale is made on credit, the credit period usually begins on the date of:
A) Acceptance.
B) Shipment.
C) Delivery.
D) Agreement.