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Exam 24: Remedies for Breach of Sales and Lease Contracts

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Question 51

True/False

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A seller or lessor is allowed to sell goods to another buyer when the original buyer is in breach but has to wait sixty days before they can do so.

A) True
B) False

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Question 52

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

A) Yes, Samantha 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 Maddie had the right to revoke acceptance and cover.

F) A) and D)
G) B) and C)

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Question 53

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[Missed Payments] Blake, 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, 2011. After several failed attempts at collection, the seller brought a lawsuit against Blake for sums remaining on the account on January 3, 2016. Blake defended on the basis that the statute of limitations had expired on the claim. The seller argued, 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. Blake also arranged to purchase a personal watercraft. According to the terms of his contract with the seller, Blake was to pay an initial deposit within 10 days of the sale, at which point she could take possession of the watercraft and make monthly payments thereafter. A couple of days after purchasing the personal watercraft, Blake realized that a personal watercraft would not allow her to invite all her friends on lake trips and purchased a pontoon boat instead. Because the seller of the pontoon boat demanded cash, Blake paid the total sales price prior to delivery. Unfortunately, when the pontoon boat was delivered, Blake found that it had a less powerful motor than the seller represented. Blake notified the seller of the problem, but the seller claimed to have no obligation to remedy the problem. Although she knew that she paid too much for it, Blake decided that since lake season was underway, she would keep the pontoon boat. Because Blake 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. Blake informed the seller that the refusal to deliver the watercraft was wrongful and that she was going to exercise her right to cover. -Does a buyer have a right to "cover" under the UCC?

Ciara purchased a new trampoline from Jump Around Trampolines. The purchase agreement she signed released Jump Around Trampolines from any consequential damages for personal injury. Unfortunately, the trampoline ripped while she was using it causing Ciara to fall and break her leg. She asked Jump Around for damages but the manager refused. The manager referenced her agreement whereby she signed away her rights to consequential damages for personal injury. Is the manager right, and why or why not?

Liquidated damages are identified before a contract breach occurs.

Matt, who owned an appliance store, contracted with Stella to supply all the new equipment for Stella's new restaurant. Stella wanted all the equipment by October 15th in order to get the restaurant started in time for the holidays. Matt and Stella entered into an agreement by which Matt would pay Stella $300 per day for every day he was late in providing the appliances. Which of the following is a true statement regarding the section of the agreement involving the late charges?

[Refused Furniture] Maya arranged to sell furniture from her furniture store to Luke for $3,000. Luke was required to give Maya a $500 deposit on February 1 and pay the remainder in monthly installments. Maya was to deliver the furniture by February 7. Luke did not pay Maya the deposit 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. Due to a downturn in the economy, Maya was able to sell the furniture for only $2,500. Luke told Maya that she had no right to withhold or sell his furniture to another buyer, and that he was going to file suit. Maya also incurred $100 in additional advertising costs to advertise the furniture that Luke initially purchased. Maya saved $40 in delivery costs because she did not have to deliver the furniture to Luke and the subsequent purchaser picked up her own furniture. -Which of the following statements is true regarding whether Maya had a right to cancel the contract?

Which of the following statements is true concerning cancellation of a contract?

[Missed Payments] Blake, 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, 2011. After several failed attempts at collection, the seller brought a lawsuit against Blake for sums remaining on the account on January 3, 2016. Blake defended on the basis that the statute of limitations had expired on the claim. The seller argued, 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. Blake also arranged to purchase a personal watercraft. According to the terms of his contract with the seller, Blake was to pay an initial deposit within 10 days of the sale, at which point she could take possession of the watercraft and make monthly payments thereafter. A couple of days after purchasing the personal watercraft, Blake realized that a personal watercraft would not allow her to invite all her friends on lake trips and purchased a pontoon boat instead. Because the seller of the pontoon boat demanded cash, Blake paid the total sales price prior to delivery. Unfortunately, when the pontoon boat was delivered, Blake found that it had a less powerful motor than the seller represented. Blake notified the seller of the problem, but the seller claimed to have no obligation to remedy the problem. Although she knew that she paid too much for it, Blake decided that since lake season was underway, she would keep the pontoon boat. Because Blake 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. Blake 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 Blake's options in regard to the pontoon boat?

Henrietta is a solvent buyer but breaches her contract by not paying for goods that are in transit. At this point, which of the following is true?