Helix BBQ: Contract Law- Performance, Breach, and Discharge - Course-of-Performance Matters with Explanations

 Under the UCC, when the parties’ agreement is silent as to identification, at what point does the buyer obtain an insurable interest in goods (other than crops) to be produced?

D.When the goods are shipped.

Answer option D is correct. The buyer obtains an insurable interest in the goods as soon as the goods are identified in accordance with the parties’ explicit agreement. If no such agreement exists, then the time identification occurs depends on whether the contract concerns existing goods or future goods. For goods already existing and identified, identification occurs when the contract is made. For future goods (other than crops), identification occurs when the goods are shipped, marked, or otherwise designated by the seller as the goods to which the contract refers.

According to the majority common law rule, who bears the risk of loss when the contract is silent on the matter?

B.The buyer.

Solution: The correct answer is B.

Answer option B is correct. If the risk of loss is not specified, the majority common law rule places the risk of loss on the buyer. This is known as the doctrine of equitable conversion.

 When either a buyer or a seller has reasonable grounds to believe the other party may not perform, it can request adequate assurance of due performance.

Which of the following does NOT accurately describe an aspect of this process?

A.The request may be made in writing or by any other reasonable means of communication.

Solution: The correct answer is A.

Answer option A is correct. A request for adequate assurance of due performance must be made in writing.

Which of the following circumstances would allow the buyer in an installment contract to cancel the agreement?

C.The seller’s mistakes substantially impair the value of the entire contract.

Solution: The correct answer is C.

Answer option C is correct. Nonconformity in an installment does not constitute a material breach of the contract unless it substantially impairs the value of the entire contract.

Which of the following would NOT be considered acceptance of goods under the perfect tender rule?

B.The buyer acknowledges to the seller that it has received the goods.

Solution: The correct answer is B.

Answer option B is correct. Acceptance occurs if the buyer tells the seller that the goods conform; fails to reject the goods after having a reasonable time to inspect them; or acts in a way inconsistent with the seller’s continued ownership of the goods (such as using the goods).

When are goods considered nonconforming under the perfect tender rule?

A.When they differ at all from the contractual specifications.

Solution: The correct answer is A.

Answer option A is correct. The perfect tender rule requires that the goods match all the specifications in the contract, including timing, place of delivery, and the nature of the goods. Any aberration from the specifications makes the goods nonconforming.

The perfect tender rule does NOT apply to which of the following?

C.Installment contracts.

Solution: The correct answer is C.

Answer option C is correct. The perfect tender rule does not apply to installment contracts.

Which of the following does NOT accurately describe an option of the buyer, under the perfect tender rule, upon receipt of nonconforming goods?

A.Refuse the buyer’s own obligations if the nonconformity constitutes a failure to substantially perform.

Solution: The correct answer is A.

Answer option A is correct. The perfect tender rule applies to contracts under the UCC. The substantial performance rule applies to common law.

Which of the following is an aspect of the common law duty of good faith?

D.Acting consistent with justified expectations.

Solution: The correct answer is D.

Answer option D is correct. Good faith at common law requires faithful execution of the parties’ common purpose and acting consistent with justified expectations.