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Exam 24: Remedies for Breach of Sales and Lease Contracts

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Question 21

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"Fixture Mishap." Trudy owns a hardware shop that also sells expensive bathroom fixtures. Theresa, a whiz with tools, purchased for $400 some expensive powder room fixtures for her bathroom. Trudy had only one set of the fixtures Theresa wanted. Although Theresa noticed a slight discoloration on one of the faucets, she went ahead with the contract because Trudy indicated that she would remedy the situation should the problem become worse. Because they were friends and attended the same church, Trudy gave Theresa 90 days in which to pay. A month later and before she paid for the fixtures, Theresa called Trudy and told her that the fixtures were corroding, the discoloration had worsened, and the fixtures looked terrible. Trudy told her that she would get replacements, but six months later they had not arrived. Trudy told Theresa that they were on back order. At that point, Theresa purchased fixtures elsewhere for $500 and informed Trudy that she could pick up the corroded fixtures at her front door. Trudy picked up the fixtures. They were obviously defective, but Trudy was able to resell them for $100. Trudy told Theresa that she would have gladly provided fixtures that would not corrode if she had only a bit more time, that Theresa should have given her a chance to do so, and that as far as Trudy is concerned, Theresa owes $300. -Is Trudy likely correct in that she owes Theresa no obligation?

A) Yes, Trudy is correct but only because a consumer transaction with a nonmerchant is involved.
B) Yes, but only because the fixtures were incorporated into real property.
C) Yes, because that is the only remedy she must provide under any circumstances.
D) Yes, but only because the fixtures had not yet been paid for by the buyer.
E) No, because Theresa had the right to revoke acceptance and cover.

F) B) and C)
G) D) and E)

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Question 22

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The case of Hill v. Gateway, discussed in the text, ruled that in order to be effective, a contract must be verbally read to a consumer who purchases a computer over the telephone.

A) True
B) False

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Question 23

Multiple Choice

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Which of the following is true regarding buyers or lessees who want to accept nonconforming goods and then seek monetary damages?

"Refused Furniture." Selina arranges to sell furniture from her furniture store to Roland for $3,000. Roland was supposed to give Selina a $500 deposit on February 1 and pay the remainder in monthly installments. Selina was to deliver the furniture by February 7. Roland did not pay Selina as promised on February 1. He asked her to wait until March 1, but she refused. She told him that the contract was canceled, and she refused to deliver the furniture at all. Selina was able to sell the furniture for only $2,500 because of a downturn in the economy. Roland told Selina that she had no right to withhold or sell his furniture and that he was suing. Selina also incurred $100 in additional amounts in advertising costs to advertise the furniture that Roland initially purchased. Selina saved $40 in delivery costs because she did not have to deliver the furniture to Roland. The subsequent purchaser picked up her own furniture. -Which of the following is true regarding any right of Selina to recover the additional advertising fees she incurred from Roland?

Which of the following must a buyer do in obtaining cover?

"Missed Payments." Robin, who loved water sports and relaxing in hot tubs, purchased a hot tub on an installment plan and was to pay the seller monthly. Her last payment was made on January 2, 2008. After several attempts at collection, the seller brought a lawsuit against her for sums remaining on the account on January 3, 2013. Robin defended on the basis that the statute of limitations had run. The seller claimed, however, that adequate time remained because the UCC applies a flexible statute of limitations; and, at any rate, sellers have at least five years in which to sue. Robin also arranged to purchase a personal watercraft. By contract with the seller, Robin was to pay an initial deposit within 10 days of the sale at which point she could take possession of the watercraft making monthly payments thereafter. Recognizing that a personal watercraft would not allow her to invite all her friends on lake trips, a couple of days after purchasing the personal watercraft, Robin purchased a pontoon boat. Because the seller of the pontoon boat demanded cash, Robin paid the total sales price prior to delivery. Unfortunately, when the pontoon boat was delivered, Robin found that it had a less powerful motor than the seller represented. Robin notified the seller of the problem, but the seller claimed to have no obligation to remedy the problem. Although recognizing that she paid too much for it, Robin decided that since lake season was underway, she would keep the pontoon boat. Because Robin paid full price for the pontoon boat, she was unable to pay within 10 days the deposit on the personal watercraft. The seller refused to deliver the watercraft, and sold it to another customer. Robin informed the seller that the refusal to deliver the watercraft was wrongful and that she was going to exercise her right to cover. -Which of the following is true regarding Robin's options in regard to the pontoon boat?

In transit means that the seller or lessor has delivered the goods to a carrier or bailee, but the carrier or bailee has not yet turned them over to the buyer.

Which of the following is true regarding a liquidated damages provision?

Assuming proper proof, which of the following represents damages a buyer or lessee may recover in the event of a breach?

Define punitive damages, set forth how the UCC handles the issue of punitive damages, and discuss whether you believe they should be available in breach of contract actions.

What does the UCC say regarding a limitation of consequential damages for commercial losses?

Which of the following usually requires that the seller or lessor deliver the particular goods identified in the contract?

"Missed Payments." Robin, who loved water sports and relaxing in hot tubs, purchased a hot tub on an installment plan and was to pay the seller monthly. Her last payment was made on January 2, 2008. After several attempts at collection, the seller brought a lawsuit against her for sums remaining on the account on January 3, 2013. Robin defended on the basis that the statute of limitations had run. The seller claimed, however, that adequate time remained because the UCC applies a flexible statute of limitations; and, at any rate, sellers have at least five years in which to sue. Robin also arranged to purchase a personal watercraft. By contract with the seller, Robin was to pay an initial deposit within 10 days of the sale at which point she could take possession of the watercraft making monthly payments thereafter. Recognizing that a personal watercraft would not allow her to invite all her friends on lake trips, a couple of days after purchasing the personal watercraft, Robin purchased a pontoon boat. Because the seller of the pontoon boat demanded cash, Robin paid the total sales price prior to delivery. Unfortunately, when the pontoon boat was delivered, Robin found that it had a less powerful motor than the seller represented. Robin notified the seller of the problem, but the seller claimed to have no obligation to remedy the problem. Although recognizing that she paid too much for it, Robin decided that since lake season was underway, she would keep the pontoon boat. Because Robin paid full price for the pontoon boat, she was unable to pay within 10 days the deposit on the personal watercraft. The seller refused to deliver the watercraft, and sold it to another customer. Robin informed the seller that the refusal to deliver the watercraft was wrongful and that she was going to exercise her right to cover. -Which of the following is true regarding any right to "cover" in regard to a buyer's rights under the UCC?

Which of the following includes lost profits so long as those damages are not too speculative?

Under which of the following circumstances will a court refuse to uphold modifications or limitations to remedies agreed upon by the parties?

Which of the following are damages identified before the breach occurs?

What does the UCC say regarding a limitation of consequential damages for injury to the person in the case of consumer goods?

"Refused Furniture." Selina arranges to sell furniture from her furniture store to Roland for $3,000. Roland was supposed to give Selina a $500 deposit on February 1 and pay the remainder in monthly installments. Selina was to deliver the furniture by February 7. Roland did not pay Selina as promised on February 1. He asked her to wait until March 1, but she refused. She told him that the contract was canceled, and she refused to deliver the furniture at all. Selina was able to sell the furniture for only $2,500 because of a downturn in the economy. Roland told Selina that she had no right to withhold or sell his furniture and that he was suing. Selina also incurred $100 in additional amounts in advertising costs to advertise the furniture that Roland initially purchased. Selina saved $40 in delivery costs because she did not have to deliver the furniture to Roland. The subsequent purchaser picked up her own furniture. -Which of the following is true regarding whether Selina had a right to cancel the contract?

Specific performance usually requires that the seller or lessor cover.

Which of the following may a buyer/lessee do when the seller/lessor delivers nonconforming goods?