Chapter 7 Contracts: Nature, Classification, Agreement, and Consideration 1. Cathy assures Don that she will deliver his products as he directs. An assertion that one will do something in the future is part of the definition of a. a declaration. b. a moral obligation. c. an ethical principle. d. a promise. 2. A-One Pavers, Inc., contracts with Best Building Corporation to repave Best’s parking lot. The elements of a contract do not include a. consideration. b. contractual capacity. c. legality. d. practicality. 3. Jill offers to pay Kyle $500 if he jogs across the Golden Gate Bridge. Kyle can accept the offer only by jogging across the bridge. If Kyle jogs across the bridge, he and Jill will have formed a. a bilateral contract. b. a moral obligation. c. a social contract. d. a unilateral contract. 4. Lana applies for a firefighter’s job with Metro City, which responds with a letter setting an appointment for a medical exam. The letter also states that it is “a conditional employment offer.” Based on the court’s reasoning in Case 7.1, Ardito v. City of Providence, this letter is a. a bilateral contract that Lana accepted by applying for the job. b. a quasi contract on which Lana can rely for employment. c. a unilateral contract that Lana can accept by passing the exam. d. no contract. 5. Jay tells Kim that he will buy her textbook from the last semester for $80. Kim agrees. Jay and Kim have a. an express contract. b. an implied-in-fact contract. c. an implied-in-law contract. d. a quasi contract. 6. Beth claims that her contract with Carl is voidable. If the contract is avoided a. both parties are released from it. b. neither party is released from it. c. only Beth is released from it. d. only Carl is released from it. 7. Curt promises to buy illegal copies of CDs and DVDs from Donna, who promises to deliver on May 1. These promises are most likely a. enforceable. b. valid. c. void. d. voidable. 8. Guy, an officer of Hi-Sales Corporation, makes overtures to Ilsa, a repre- sentative of Jiffy Distribution, Inc., regarding a business deal. Under the objective theory of contracts, Guy’s words and conduct mean what a. a reasonable person in Guy’s position would think that they meant. b. a reasonable person in Ilsa’s position would think that they meant. c. Guy subjectively intended them to mean. d. Ilsa subjectively thought that they meant. 9. Local Delivery Service, Inc., offers to deliver computers to Micro Store’s cus- tomers for a certain price. Local’s intent to extend a serious offer to Micro is determined by reference to Local’s a. assumptions. b. beliefs. c. intentions. d. words and conduct. 10. Owen announces that he plans to sell his business, Payroll Service Company (PSC), at a price below its market value. Quality Bookkeeping, Inc., gives Owen a check for the stated amount. Owen may refuse to accept the check a. because Owen only expressed an intent to do something in the future. b. if Owen had a “few” drinks before making his announcement. c. if Owen secretly intended not to sell PSC. d. under no circumstances. 11. Emma advertises a reward for the return of her lost dog. Frank, who does not know of the reward, finds and returns the dog. Frank cannot recover the re- ward because he a. did not confer a benefit on Emma by returning the dog. b. did not know of the reward when Frank found and returned the dog. c. does not need the money. d. returned the dog. 12. Kit offers to sell her boat to Liu. Liu accepts and, unknown to Kit, builds a dock for the boat. Kit’s later attempt to revoke the offer will be a. effective because Kit did not build the dock. b. effective because Kit did not know that Liu would build a dock. c. ineffective because Liu justifiably relied on Kit’s offer. d. ineffective because Liu showed a serious intent to close the deal. 13. Amber offers to buy a laser printer, with a case of paper and an extra car- tridge, from Best Office Products for $200. Cris, Best’s representative, says, “OK, but no paper and no extra cartridge.” Cris has a. accepted the offer. b. made a counteroffer without rejecting the offer. c. rejected the offer and made a counteroffer. d. rejected the offer without making a counteroffer. 14. First State Bank offers to lend money to Todd at 15 percent interest. Before Todd accepts, a statute is enacted prohibiting loans at interest rates greater than 12 percent. Todd and the bank have a. have a contract for a loan at 15 percent interest. b. have a contract for a loan at 12 percent interest. c. have a contract for a loan at 0 percent interest. d. no contract for a loan. 15. Andy offers to sell Barb ten computers for her office. Barb sends a rejection first, then later changes her mind and sends an acceptance. Whether they have a contract is determined by a. Barb’s rejection. b. Barb’s acceptance. c. whether Barb’s rejection or acceptance is received first. d. whether Barb’s rejection or acceptance is received last. 16. Alan promises to pay Beth $500 to install a pump in his factory. Beth completes the installation. The act of installing the pump a. imposes a moral obligation on Alan to pay Beth. b. imposes no obligation on Alan unless he is satisfied with the job. c. is not sufficient consideration because it is not goods or money. d. is the consideration that creates Alan’s obligation to pay Beth. 17. Ida promises to pay Jon, her son, $15,000 if he obtains his degree at Kappa University, where he is currently in his second year. Jon graduates. Ida is a. not required to pay, because Jon was already at Kappa. b. not required to pay, because obtaining a degree benefits Jon. c. required to pay, because a job can be hard to find after college. d. required to pay, because Jon obtained a degree at Kappa. 18. National Business Company and One-State Sales, Inc., agree to simultaneously rescind their contract and enter into a new agreement under which their duties are the same. National later sues One-State to enforce the new agreement. The court a. may apply the preexisting rule or allow the rescission. b. must allow the rescission. c. must apply the preexisting duty rule. d. must not apply the preexisting rule or allow the rescission. 19. Mary promises to pay her assistant Ned $10,000 in consideration of the services he provided over the years. Mary never pays Ned. Mary is a. liable for payment of the $10,000. b. liable only if Ned still works for Mary. c. not liable, because the consideration is in the past. d. not liable, because the consideration was unintentional. 20. Ann is injured in an accident caused by Bob. Bob agrees to pay Ann $2,500 if she agrees to release Bob from further liability. Ann agrees. If Ann’s damages ultimately exceed $2,500, Ann can a. collect the balance from Bob in a breach-of-contract suit. b. collect the balance from Bob on the ground of past consideration. c. collect the balance from Bob on the ground of unforeseen difficulties. d. not collect the balance from Bob. 21. Auto Body Repair Shop (ABRS) promises to pay Ben $1,000 a week to work for ABRS. Ben accepts and quits his job with Car Care Service. ABRS fails to provide a job for Ben. Ben has a cause of action based on a. an illusory promise. b. a release. c. past consideration. d. promissory estoppel. Chapter 8 Contracts: Capacity, Legality, Assent, and Form 22. Jill is fifteen. In most states, Jill would be considered a minor because she is under the age of a. sixteen. b. eighteen. c. twenty. d. twenty-one. 23. Clay, a minor, signs a contract to buy a car from Delta Motors by misrepre- senting his age as twenty-one. Clay fails to make the payments. Delta sues. In most states, Clay can a. not return the car nor avoid further liability. b. not return the car but can avoid further liability. c. return the car and avoid further liability. d. return the car but cannot avoid further liability. 24. While a minor, Jason buys a car that he continues to use and keep in repair after reaching the age of majority. Jason has a. disaffirmed the contract. b. ratified the contract. c. rejected the contract. d. rescinded the contract. 25. Lara is a real estate broker licensed only in Minnesota. Lara concludes a sale in North Dakota. She can successfully sue to a. collect the commission only. b. collect the commission or keep it if it has already been paid. c. keep the commission if it has already been paid but not to collect it. d. neither collect the commission nor keep it. 26. Lora signs a covenant not to compete with her employer, Midstate Distribution, Inc. The covenant will be enforced if it a. if it does not require either party to obtain a business license. b. if it is reasonable with respect to geographic area and time. c. if it is supported by consideration. d. under no circumstances. 27. A contract between Kim and Larry to lease real property contains an excul- patory clause. This clause is a. enforceable only if either party is in a business important to the public interest. b. enforceable only if the lease involves residential property. c. generally enforceable as a matter of public policy. d. generally unenforceable. 28. National Insurance Company violates a statute when selling an insurance policy to Opal. The policy may be enforced by a. National Insurance only. b. National Insurance or Opal. c. no one. d. Opal only. Fact Pattern 8-1 (Questions 16–17 apply) Nano Corporation offers to sell a robotic device to Onyx Assembly, Inc., but mistakenly transposes some of the digits in the price so that $15,400 appears in the offer as $14,500. Onyx accepts the written offer. 29. Refer to Fact Pattern 8-1. Onyx’s best argument in favor of enforcement of the contract is that a. a bilateral mistake does not afford relief from a contract. b. a mistake of value does not afford relief from a contract. c. a unilateral mistake does not afford relief from a contract. d. the price was below the prices of comparable devices. 30. Refer to Fact Pattern 8-1. Nano’s best defense against enforcement of the contract is that Onyx knew a. a bilateral mistake supports the cancellation of a contract. b. a mistake of value supports the cancellation of a contract. c. a unilateral mistake supports the cancellation of a contract. d. the price was below the prices of comparable devices. 31. Able Corporation agrees to buy 1,500 acres of land from Baker Properties, Inc. If the actual plot is smaller than Able and Baker believe, Able may a. avoid or enforce the contract. b. avoid the contract only. c. enforce the contract only. d. neither avoid nor enforce the contract. 32. Through fraudulent means, Roy induces Sal to sign a contract to invest with him her profits from Tasty Café. When Sal learns the truth, she may a. do nothing with respect to the contract. b. enforce the contract only. c. enforce the contract or recover the money paid. d. recover the money paid only. 33. Dale files a suit against Eva, alleging her fraud in entering into a contract with him. Proof of an injury is required a. to recover damages. b. to rescind the contract. c. to undo Eve’s influence. d. under no circumstances. 34. Gary threatens physical harm to force Hugh to sell his business, Imported Goods, Inc., to Gary for a below-market price. This is a. duress. b. fraud. c. puffery. d. undue influence. 35. Ace Properties. Inc., and Dandy Capital Corporation enter into a contract for a sale of land. To be enforceable, the contract must be in writing if the land is valued at a. $50. b. $500. c. $5,000. d. $50, $500, or $5,000. 36. Andy and Business Company (BC) enter into an oral contract under which Andy agrees to clean BC’s office for two years. This contract is enforceable by a. Andy only. b. BC only. c. either party. d. neither party. Fact Pattern 8-2 (Questions 26-27 apply) Macro Marketing, Inc., and National Food Corporation (NFC) discuss the terms of a contract. Macro then faxes NFC a memo on Macro’s letterhead that summarizes the items on which they agreed, including a two-year term. NFC begins to perform, but Macro refuses to pay. 37. Refer to Fact Pattern 8-2. The transaction between Macro and NFC falls within the Statute of Frauds’ a. collateral-promise provision. b. one-year rule. c. sales-of-goods stipulation. d. secondary-contracts section. 38. Refer to Fact Pattern 8-2. Between Macro and NFC, there is a. an oral contract only. b. a pre-contract only. c. a written contract. d. no contract. 39. Liu agrees to assume Mia’s debt to NuSales Corporation. Liu does not get any personal benefit for the agreement. To be enforceable, the promise must be in writing if the debt is for a. $50. b. $500. c. $5,000. d. $50, $500, or $5,000. 40. Quality Manufacturing, Inc., and Regional Sales Corporation orally agree to several contracts. Most likely enforceable is an oral contract involving a. a collateral promise. b. a sale of goods for $400. c. a sale of land. d. a sale that cannot be completed within a year. 41. Edie obtains a consumer loan from First State Bank at an interest rate that exceeds the state’s maximum. First State has a. calculated the optimum rate that the market will bear. b engaged in a restraint of trade. c. underestimated the risk of the loan’s nonpayment. d. violated the usury laws. 42. Property Development Company and Quality Land Corporation sign a written contract for a sale of land. In some states, to be enforceable, this contract must include a. a correct title, such as “Land Transfer” or “Real Estate Agreement.” b. a declaration of the subject matter. c. a statement of the consideration. d. the parties’ names. Chapter 9 Contracts: Third Party Rights, Discharge, Breach, and Remedies 43. National Steel, Inc., and Overland Transport Company enter into a contract. Superior Oil Corporation, which will indirectly benefit from the deal, is prevented from having rights under the contract by the principle of a. assignment. b. delegation. c. privity. d. vesting. 44. Jill and Kurt enter into a contract under which Jill agrees to pay Kurt $125 for a new briefcase. Kurt’s transfer of his right to receive this payment is a. a delegation. b. an assignment. c. a third party beneficiary contract. d. not a delegation, an assignment, or a third party beneficiary contract. 45. Pat, a world famous musician and composer, agrees to give ten piano lessons to Quinn in exchange for $1,000. Pat’s attempt to delegate his contract to Ruth, an inexperienced pianist, will probably be a. permitted because contracts may be freely delegated. b. permitted because the contract is concerned with music lessons. c. prohibited because contracts may not be freely delegated. d. prohibited because Pat and Ruth have very different skill levels. 46. Uma makes a contract with Val with the intent to benefit Wat. This is a. a delegation. b. an assignment. c. a third party beneficiary contract. d. not a delegation, an assignment, or a third party beneficiary contract. 47. Dale and Elin sign a contract that intentionally confers a benefit on Flo. Flo’s rights under the contract will vest a. automatically. b. if she manifests assent to the contract or materially alters her position in detrimental reliance on it. c. only if she manifests assent. d. only if she materially alters her position in detrimental reliance. Fact Pattern 9-1 (Questions 7-8 apply) AAA Properties, Inc., contracts with Best Builders, Inc., to construct an office building. AAA agrees to obtain insurance to cover the project, after which the parties waive their rights against the subcontractors. AAA obtains the policy from City Insurance Company. When the new building is destroyed in a storm, City pays AAA and then files a suit against the subcontractors. 48. Refer to Fact Pattern 9-1. In relation to the waiver in AAA’s contract with Best, the subcontractors are a. incidental beneficiaries and thus liable to City. b. incidental beneficiaries and thus not liable to City. c. intended beneficiaries and thus liable to City. d. intended beneficiaries and thus not liable to City. 49. Fred and Ed sign a contract by which Fred agrees to deliver a washing machine on July 31 in exchange for Ed’s promise to pay the $500 purchase price on July 31. The delivery of the washing machine and the payment of $500 are ex- amples of a. conditions precedent. b. concurrent conditions. c. conditions subsequent. d. illegal conditions. 50. Jean contracts to sell her backhoe to Kyla for $2,000. Before performing, Jean and Kyla decide to cancel the deal. This is an example of a. a material breach. b. an anticipatory repudiation. c. a novation. d. a rescission. 51. Diners Restaurant signs an agreement with Eagle Bank to borrow $10,000 at 20 percent interest. Later, the state legislature passes a law lowering the maximum permissible rate of interest from 15 percent. Diners’ best argument for avoiding payment to Eagle is that a. performance of the contract is commercially impossible. b. the agreement violates the mirror image rule. c. the law has rendered performance of the contract illegal. d. the specific subject matter of the contract has been destroyed. 52. Frank agrees to lease an apartment from Gina for one day to see Harry, the president of the United States, deliver a speech in the street below. The speech is canceled ten days before its delivery date. The contract a. is discharged. b. is not affected. c. is postponed until another event is scheduled. d. must be performed immediately. 53. Kris contracts to work exclusively for Local Company during May for $5,000. On April 30, Local cancels the contract. Kris finds another job during May but earns only $3,000. Kris files a suit against Local. As compensatory damages, Kris can recover a. $3,000. b. $2,000. c. $1,000. d. nothing. 54. Carol pays Dick $10,000 for Dick to design an advertising campaign for Carol's health club. The next day, Dick tells Carol that he has accepted a job in New York and cannot design the campaign. Carol files a suit against Dick. Carol can recover a. $100,000. b. $10,000. c. $1,000. d. nothing. 55. Great Hardware Store agrees to hire Holly for one year at a salary of $500 per week. When Great cancels the contract, Holly spends $100 to obtain a similar job that pays $450 per week for a year. Holly is entitled to recover a. the amount of the wages that Great promised only. b. the difference between the wages at the two jobs only. c. the difference between the wages at the two jobs plus $100. d. $100 only. 56. Fine Properties, Inc., negotiates with General Maintenance Corporation to include a liquidated damages clause in their contract. To be enforceable, at the time of the contract, an estimate of the damages from a breach must be a. definite. b. difficult. c. easy. d. possible. 57. Lou and Mira want to rescind their contract under which Lou sold a laser printer to Mira for $200. To rescind the contract a. Lou must return the $200 only. b. Mira must return the printer only. c. Lou must return the $200 and Mira must return the printer. d. the parties can keep the “benefits” of their bargain. 58. A contract for a sale of land from Best Properties, Inc., to Commercial Investments Corporation contains an erroneous legal description. The most appropriate remedy for these parties is a. damages. b. reformation. c. rescission. d. specific performance. 59. Applied Services, Inc., contracts with Bankers Corporation, which breaches their contract. Applied has several remedies available. Under the common law, Applied must a. accept a double recovery. b. allow the remedies to cumulate. c. elect which remedy to pursue. d. permit Bankers to choose a remedy. Chapter 10 E-Contracts and E-Signatures 60. Gamma Software Corporation sells its products to business and consumer end- users. Like most sales of software, Gamma’s sales involve a. a passage of title only. b. a right to use the software only. c. a passage of title and a right to use the software. d. none of the above. 61. Quality Sales Corporation enters into contracts over the Internet. Quality can protect itself against disputes involving these contracts by making important terms a. clear. b. difficult to notice. c. impossible to find. d. standardized. 62. American Manufacturing, Inc., orders supplies online from Best Parts Company. To complete the order, the buyer is required to click on a button that says, in reference to certain terms, “I agree.” This is a. a click-on agreement. b. a default agreement. c. an attribution agreement. d. a shrink-wrap agreement. 63. General Electronics, Inc., uses shrink-wrap agreements. In most cases, a shrink- wrap agreement is between a. any seller and buyer. b. the manufacturer of hardware or software and a retailer. c. the manufacturer of hardware or software and its user. d. none of the above. 64. In Case 10.2, Specht v. Netscape Communications Corp., the court held that because the plaintiffs did not expressly assent to the terms of the contract, they a. must pay for the product downloaded from the defendant. b. must stop using the product downloaded from the defendant. c. must submit to arbitration according to the contract. d. need not submit to arbitration. 65. Kay and Lucy enter into a contract that falls within the provisions of the UETA. Under the UETA, “an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record” is a. an e-document. b. an e-signature. c. an e-transaction. d. a record. 66. Standard Purchasing Corporation and Total Sales, Inc., enter into a partnering agreement. Under a partnering agreement, parties agree a. in advance to terms that apply to their future e-transactions. b. to become partners. c. to conduct transactions solely in electronic form. d. to resolve all disputes without involving a third party. 67. Central Processing Corporation and Digital Data, Inc., enter into a contract online in a state that has enacted an unmodified version of the UETA. With regard to the E-SIGN Act a. the E-SIGN Act does not preempt this version of the UETA. b. the E-SIGN Act preempts this version of the UETA. c. the two acts “cancel” each other’s application. d. none of the above. 68. Select Food Company and Tasty Goods, Inc., enter into a contract that the UETA covers. The UETA covers issues relating to a. agency and contract formation. b. agency only. c. contract formation only. d. neither agency nor contract formation. 69. National Shipping Corporation and Office Software Company (OSC) make a deal for OSCs products, communicating entirely online. Under the UETA, an electronic record is considered sent a. only at a midway point between the sender and recipient. b. only on coming into the recipient’s control. c. only on leaving the sender’s control. d. when it leaves the sender’s control or comes into the recipient’s control. Chapter 11 Sales and Leases: Formation, Title, and Risk 70. Suzy pays Triple-A Office Supply Company $1,500 for a new laptop computer. According to the UCC, this is a. a gift. b. a lease. c. a sale. d. not a gift, a lease, or a sale. 71. Safe Chemical Company agrees to sell a storage tank on its premises to Toxic Processing, Inc. The tank can be removed by disconnecting a pipe. This deal is governed by a. neither real property law nor the UCC. b. real property law and the UCC. c. real property law only. d. the UCC only. 72. In a dispute over a sales contract involving skis, Dave argues that as to this deal, Elle is a merchant. A court may determine whether Elle is a merchant by assessing whether she a. enjoys skiing. b. has sold any skis within the last year. c. holds herself out by occupation as having knowledge or skill unique to the skis in the transaction. d. subscribes to Skis, a biweekly trade magazine. 73. Standard Office Corporation pays Tech Products $100 to use a Tech computer for a month. For purposes of the UCC, this is a. a bailment. b. a consignment. c. a lease. d. a sale. 74. Variety Goods, Inc., and World Sales Corporation enter into a contract that does not specify the payment terms. Payment may be made in a. any commercially acceptable means except cash. b. cash only. c. cash or any commercially acceptable substitute. d. cash or check only. 75. NuTech Company agrees to sell computer equipment to Office Stores, Inc. (OSI) for OSI to market to its customers. Their contract will be unenforceable if it does not include a. the duration of the deal. b. the price of the goods. c. the quantity of the goods. d. the requirements of OSI’s customers. 76. Alpha Company offers to sell Beta, Inc., 1,000 computers for a $1 million, states that the offer will be open for six days, and asks for a response by fax. On the fourth day, Beta sends an acceptance to Alpha via the mail, which is received on the sixth day. In this deal a. a contract is formed. b. no contract is formed, because Alpha asked for a response by fax. c. no contract is formed, because Alpha received the acceptance late. d. no contract is formed, because Beta sent the acceptance late. 77. United Farms offers to sell Value Bakeries, Inc., fifty bushels of wheat. Value’s representative Wendy responds, “We agree to buy fifty bushels only if the wheat is Grade A quality.” Wendy’s statement is a. a breach of the parties’ contract. b. a counteroffer. c. a fulfillment of the parties’ contract. d. an acceptance. 78. All-Rite Clothiers, Inc., sells t-shirts to Brand Name Stores, Inc., under an existing contract. When textile costs increase, Brand agrees to a price in- crease, but later wants to cancel the contract. Brand may a. cancel the contract immediately. b. cancel the contract only after accepting a final shipment. c. cancel the contract only on reasonable notice. d. not cancel the contract. 79. Recreational Supplies, Inc. (RSI), and Sam, the owner of a Tourist Time shop, orally agree to a sale of beach balls and seashells for $1,000. Sam gives RSI a check for $400 as a partial payment. This contract is a. enforceable to the extent of $400. b. fully enforceable because it is for specially made goods. c. fully enforceable because it is oral. d. not enforceable. 80. Timber Products, Inc., and Walt, a consumer, enter into a contract for a sale of plywood. If the contract includes a clause that is perceived as grossly unfair to Walt, its enforcement may be challenged under the doctrine of a. good faith. b. square dealing. c. the mere image rule. d. unconscionability. 81. Pam buys from Qual-Tee Motors a used sport utility vehicle (SUV). The SUV was manufactured by Road Rager, Inc., and previously owned by Sid. After the sale, Pam has the title of a. Qual-Tee. b. Road Rager. c. Sid. d. the state. 82. Global Produce Corporation in Hawaii sells fifty tons of pineapple to Ideal Groceries, Inc., in California, F.O.B. Hawaii. The cost of transporting the produce to California will be paid by a. California. b. Global Produce c. Ideal Groceries. d. Hawaii. 83. Gina pays $2,000 for a new HDTV to Imagine Corporation. Imagine holds the set until Gina picks it up. Imagine is a. a bailee. b. a consignee. c. a lessee. d. a seller. 84. Regal Recreation Sales, Inc., allows Sandy to take a Regal boat for a “test run.” Sandy tries the boat for a few hours, returns, and buys it. This is a. a bailment. b. a consignment. c. a sale on approval. d. a sale or return. 85. Orange Music, Inc., sells Pad-brand MP3 players to Quik Pik Stores and other retailers. Orange has an insurable interest in the players as long as a. Orange remains in business. b. Orange retains title to the goods. c. the goods are in existence. d. there is no risk of loss. Chapter 12 Performance and Breach of Sales and Lease Contracts 86. Clear Sight Company, which is based in Delaware, agrees to sell fifty windows, currently stored in Florida, to Great View, Inc., which is based in Hawaii. Absent an agreement to the contrary, delivery will occur in a. California. b. Delaware. c. Florida. d. Hawaii. 87. Food Packages, Inc., agrees to sell 50,000 6-ounce yogurt containers to Great Dairy Company. Food can obtain only 20,000 of the 6-ounce containers, but also ships 30,000 more expensive 8-ounce containers for the same price. Under these circumstances, Great a. cannot reject the delivery, and Food cannot later replace the noncon- forming containers. b. cannot reject the delivery, but Food can later replace the noncon- forming containers. c. may reject the delivery, and notice to Great of Food’s intent to cure will give Food a reasonable time to replace the nonconforming containers. d. may reject the delivery, but Food cannot later replace the noncon- forming containers. 88. Sweet Produce Company contracts with Tasty Restaurant to ship six hundred heads of lettuce in three equal installments. When the first installment arrives, ten heads of lettuce are rotten. Tasty may a. cancel the contract. b. recover from Sweet for breach of the entire contract. c. reject the first installment only. d. use as much of the lettuce as it wishes without paying for it. 89. According the court in Case 12.1, Maple Farms, Inc. v. City School District of Elmira, the defense of commercial impracticability will not excuse the performance of a contractual obligation when there is an increase in the seller’s costs while the contract is in force a. unless the increase in the seller’s costs is substantial. b. under any circumstances. c. unless the increase in the seller’s costs makes it impossible for the seller to perform without losing money. d. unless the increase in the seller’s costs was not foreseeable at the time the contract was formed. 90. Quality Equipment Company contracts for a sale of goods to Regional Sales Corporation. Quality can enforce its right to payment a. only after Regional has actually inspected the goods. b. only after Regional has had an opportunity to inspect the goods. c. only before Regional has inspected the goods. d. whether or not Regional has had the chance to inspect the goods. Fact Pattern 12-1 (Questions 13-14 apply) Internet Cafes, Inc., contracts to buy all of its requirements for coffee, at a minimum of 1 million pounds per year, from Java Corporation for six years. After three years, Internet tells Java that it plans to sell its company to Kwik Eateries, Inc. Kwik refuses to assure Java that it will continue Internet’s contract. 91. Refer to Fact Pattern 12-1. Kwik’s refusal constitutes a. a justified response based on Kwik’s relation to the contract. b. an assignment of Internet’s rights under the contract. c. a reasonable suspension of performance under the contract. d. a repudiation of the contract. 92. Refer to Fact Pattern 12-1. Java can a. assign its rights under the contract but cannot terminate it. b. do nothing. c. suspend performance under the contract until Java is fully paid. d. terminate the contract and seek damages. 93. On May 1, A-Plus Auto Sales agrees to sell a car to Bob. Five days later, Bob cancels the contract. A-Plus is entitled to a. force Bob to take the car. b. recover any resulting damages from Bob but not resell the car. c. resell the car and recover any resulting damages from Bob. d. resell the car but not recover any damages from Bob. 94. Square B Ranch and Tom enter into a contract on August 1 in which Square B agrees to sell 200 cattle to Tom. Tom cancels the contract ten days later. Square B is entitled to a. force Tom to accept the cattle and recover the contract price. b. keep the cattle and recover the contract price from Tom. c. recover any resulting damages from Tom. d. none of the above. 95. Superior Furniture Company contracts to buy from Timber Products, Inc., a shipment of wood that Superior will use to make furniture. Half of the wood does not conform to the contract. Superior can recover damages equal to the difference between the contract price and a. the cost to manufacture the furniture. b. the cost to obtain the rest of the wood elsewhere. c. the profit that Superior would have made on the furniture. d. the sale price of the furniture. 96. Drew contracts for a sale of tools to Engineering Company (EC). If the tools fail to conform to the contract, EC a. may accept or reject the shipment in part or in whole. b. must accept the shipment. c. must reject the shipment. d. must renegotiate the contract. 97. Good Food, Inc., orders “Grade A” rice from Happy Farms to process and sell to Imperial Grocers. Happy Farms ships “Grade B” rice, which Good Food accepts. To recover damages for the nonconformity, Good Food must give notice of the breach within a reasonable time to a. Happy Farms only. b. Imperial only. c. Happy Farms, Imperial, and the appropriate government agency. d. the appropriate government agency only. 98. Java Company orders coffee beans from Kwik Sales Corporation. Java accepts the beans before discovering that the goods are nonconforming. To revoke acceptance, Java must notify Kwik a. any time. b. only after the beans undergo any substantial change not caused by their defects. c. only before the beans undergo any substantial change not caused by their defects. d. only while the beans undergo any substantial change not caused by their defects. 99. Digital Video Company contracts to sell DVD players to E-lectric Stores, Inc. Digital Video ships nonconforming goods, which E-lectric accepts. E-lectric can recover damages equal to the difference between a. E-lectric’s sale price and the contract price. b. the contract price and the value of the goods as promised. c. the value of the goods as promised and their value as accepted. d. the value of the goods as accepted and E-lectric’s sale price. 100. A-1 BBQ, Inc., makes and sells barbecue grills to Big Mart, a retailer, which sells a grill to Carl, a consumer. A-1 and Big Mart include in their sales contracts a limitation on consequential damages for personal injuries from a breach of warranty. This is prima facie unconscionable with respect to a. A-1 only. b. A-1 and Big Mart, but not Carl. c. Big Mart and Carl, but not A-1. d. Carl only.
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