National American University

BUSINESS L 3100

Chapter 26-OBLIGATIONS AND PERFORMANCE

TRUE/FALSE

1)The obligation of all parties to perform in good faith is the same because everyone is required to be honest.

 

                                           

 

2. The UCC imposes a higher degree of good faith on a merchant seller or buyer of goods than on a non- merchant seller or buyer of goods.

 

                                           

 

3. In a cash sale not requiring the movement of goods, each party has the right to demand that the other perform at the same time.

 

                                           

 

4. When a party refuses to perform a contract when the time for performance arises, an anticipatory repu- diation has occurred.

 

                                           

 

5. The statement, "I doubt that I can perform the contract," is a repudiation of the contract.

 

                                           

 

6. When a party refuses to perform a contract at the time of performance, a repudiation has occurred.

 

                                           

 

7. A party to a sales contract may demand at any time that the other party provide adequate assurance of performance.

 

                                           

 

8. The person on whom a demand for assurance is made must reply in writing for the assurance to be deemed "adequate."

 

                                           

 

9. The UCC does not specify the form that the assurance of performance is to take.

 

                                           

 

10. If a person upon whom the assurance is demanded does not have a good reputation or economic posi- tion, a guarantee of performance or a pledge of security may be required.

 

                                           

11. If adequate assurance of performance is not given within five (5) business days from the time of the demand for assurance, the demanding party may treat the contract as repudiated.

 

                                           

 

12. A seller's duty to deliver goods requires the seller to transport the goods to the place designated by the buyer.

 

                                           

 

13. A delivery is sufficient if it is made in accordance with the terms of the contract to sell.

 

                                           

 

14. Unless otherwise specified, the place of delivery is the seller's place of business.

 

                                           

 

15. When a method of transportation called for by a contract becomes unavailable for any reason, the con- tract is automatically voided.

 

                                           

 

16. When a contract to sell identified goods does not specify a place of delivery, but both parties know that the goods are in a place other than the seller's place of business, that other place is the place of deliv- ery.

 

                                           

 

17. A buyer has a right to insist that all the goods be delivered at one time.

 

                                           

 

18. A buyer always has a right to examine the goods to determine if, in fact, the goods conform to the con- tract.

 

                                           

 

19. The standard for rejection requires that any defect in the good be material.

 

                                           

 

20. A buyer has the right to accept some commercial units of a shipment and reject other commercial units.

 

                                           

 

21. The seller’s right to cure a defective tender means that the seller will be given a second chance to make a proper tender of conforming goods.

 

                                           

 

22. Upon a seller's tender of nonconforming goods and the buyer's rejection of them, the transaction has ended.

                                           

 

23. Unless otherwise agreed by the parties, payment by a buyer requires payment either in cash or by certi- fied check.

 

                                           

 

24. The standard for determining commercial impracticability is objective, not subjective.

 

                                           

 

25. An acceptance of goods can be done either expressly or by implication.

 

                                           

 

26. Substantial impairment requires proof that goods are worthless.

 

                                           

 

MULTIPLE CHOICE

 

1. In a cash sale that does not require the physical moving of the goods, the:
   1. parties are required to perform concurrently.
   2. seller is required to tender the goods before the buyer must pay for them.
   3. buyer must pay for the goods in advance.
   4. buyer must actually receive the goods before he or she is required to pay for them.  
2. A party to a sales contract who is afraid that the other party will not perform may seek to gain addi- tional confidence by demanding some form of:
   1. bailment.
   2. security.
   3. assurance.
   4. assignment.

                                           

 

3. If appropriate assurance is not given in response to a demand for assurance of performance, the de- manding party may:
   1. treat the contract as repudiated.
   2. sue for libel.
   3. file for an insurance payment.
   4. not replace the repudiated contract.

                                           

 

4. After a proper demand has been made, for assurance of performance to be adequate, it must:
   1. include consideration.
   2. allow for the additional examination of the goods.
   3. be sufficient to assure a reasonable person that the contract will be performed.
   4. be written.

                                           

5. The obligations of the parties to a sales contract include:
   1. the seller's duty to deliver the goods to the buyer's place of business.
   2. the buyer's duty to always accept the goods.
   3. the seller's duty to arrange for appropriate transport.
   4. the buyer's duty to pay for the goods.

                                           

 

6. If a contractually-specified mode of transportation is not available, the:
   1. contract is automatically voided.
   2. seller must make delivery by a commercially-reasonable substitute.
   3. buyer must arrange to pick up the goods.
   4. seller must make personal delivery.

                                           

 

7. Unless otherwise agreed, the proper place for the delivery of goods is:
   1. the buyer's place of business.
   2. the seller's home.
   3. a delivery service selected by the seller.
   4. the seller's place of business.

                                           

 

8. When goods are shipped COD:
   1. the buyer always has the right to examine them before making payment.
   2. the underlying contract must specify when the buyer may inspect the goods.
   3. the buyer has no right to examine the goods until payment is made.
   4. the buyer gives up all rights to inspection of the goods.

                                           

 

9. The right to                             is a second chance for a seller to make a proper tender of conforming goods.
   1. rehabilitate
   2. repair
   3. heal
   4. cure

                                           

 

10. When a buyer demonstrates in some way that the goods conform to the contract, the buyer has made a(n):
    1. acceptance of the goods.
    2. assignment of the goods.
    3. substitution of the goods.
    4. avoidance of the contract.

                                           

 

11. Which of the following does not constitute an acceptance?
    1. An express statement of approval by the buyer.
    2. The buyer’s examination of the goods.
    3. The buyer’s retention of goods for an unreasonable period of time.
    4. The buyer’s modification of the goods.

                                           

 

12. Substantial impairment:
    1. only requires proof that goods do not conform to the contract.
    2. requires that the goods are shown to be worthless.
    3. requires proof that the use to the buyer is materially different than the contract promised.
    4. none of the above.

                                           

 

13. Once goods have been accepted:
    1. the buyer may never revoke that acceptance.
    2. the buyer may only revoke acceptance if the defect was known at the time of the original acceptance.
    3. the buyer may revoke acceptance without cause or reason.
    4. none of the above.

                                           

 

14. Which method of payment gives the buyer credit by postponing the time for payment?
    1. a promissory note
    2. a check
    3. a draft
    4. a certified check

                                           

 

15. The standard for commercial impracticability is:
    1. hypothetical.
    2. conjectural.
    3. objective.
    4. subjective.

                                           

 

CASE

 

1. In January, a buyer and a seller agreed on the sale of 10,000 pounds of tomatoes to be delivered on July The contract stated that the seller would set the price on June 15 and that the buyer would pay the price on delivery. On June 15, the market price of tomatoes was approximately 75 cents per pound. The seller set the price at $50 per pound and the buyer demanded that the price be lowered.

 

When the parties could not agree, a lawsuit developed. The key issue was whether the seller had the right to set the $1.50 price. Decide.