- Under UCC Section 2-504, what are the seller's obligations when the contract requires the seller to ship goods by carrier (a shipment contract)?
Answer: The seller must put the goods in the possession of a carrier, make a reasonable contract for transportation given the nature of the goods, obtain and promptly deliver any documents necessary for the buyer to take delivery, and promptly notify the buyer of the shipment.
Under UCC Section 2-504, in a shipment contract, the seller must: (1) put the goods in the possession of such a carrier and make such a contract for their transportation as may be reasonable given the circumstances; (2) obtain and promptly deliver or tender any document necessary to enable the buyer to obtain possession of the goods; and (3) promptly notify the buyer of the shipment. Failure to notify may allow the buyer to reject if material delay or loss results. Answer A is too minimal - the contract must be reasonable and notification required. Answer B is incorrect because the seller need not accompany the goods. Answer D is incorrect because the seller is not required to insure the goods at their expense.
- Under UCC Section 2-709, the seller's action for the price (analogous to specific performance from the seller's perspective) is available in which of the following situations?
Answer: When the buyer has accepted the goods, when the goods were conforming and risk of loss has passed to the buyer and the goods were lost or damaged before the seller can cover, or when the goods cannot reasonably be resold.
Under UCC Section 2-709, the seller may sue for the full contract price (not just damages) in three situations: (1) the buyer has accepted the goods; (2) conforming goods were lost or damaged after risk of loss passed to the buyer; or (3) the seller has identified conforming goods to the contract and is unable to resell them at a reasonable price after reasonable effort. This remedy is analogous to specific performance for the seller. Answer B (30-day invoice rule) is not in the UCC. Answer C incorrectly requires written acceptance. Answer D gives the seller impermissible discretion to choose this remedy.
- Buyer rejects nonconforming goods after deadline; seller had reasonable grounds to believe they conformed. Seller may:
Answer: Cure within reasonable time
Under UCC 2-508(2), when a seller had reasonable grounds to believe nonconforming goods would be acceptable, the seller may notify the buyer and cure within a reasonable time even after the deadline. The tempting wrong answer is suing for the contract price, but that remedy requires conforming goods or accepted risk, not a valid rejection.
- Under UCC Section 2-714, a buyer who has accepted non-conforming goods may recover damages for breach of warranty. How are these damages measured?
Answer: The buyer recovers the difference between the value of the goods as accepted and the value they would have had if they had been as warranted, plus any incidental and consequential damages.
Under UCC Section 2-714(2), the measure of damages for breach of warranty is the difference between the value of the goods as accepted (what the non-conforming goods are actually worth) and the value they would have had if they had been as warranted (what conforming goods would have been worth), plus any incidental and consequential damages under Section 2-715. This formula compensates the buyer for the deficiency in value. Answer A is incorrect because the buyer recovers the value shortfall, not the full price. Answer B is incorrect because accepted goods may still support warranty damages with timely notice. Answer D is only the repair cost, which may understate the damages.
- Under UCC Section 2-615 and the doctrine of commercial impracticability, when may a seller's non-performance be excused?
Answer: When performance has been made impracticable by the occurrence of a contingency whose non-occurrence was a basic assumption of the contract, provided the seller gives timely notice to buyers who may be affected.
Under UCC Section 2-615, a seller is excused from delivery if performance has been made impracticable by the occurrence of a contingency whose non-occurrence was a basic assumption of the contract, and the seller did not assume the risk of the contingency. Examples include crop failures due to natural disaster, governmental regulations preventing performance, and destruction of the source of supply. The seller must give timely notice and, if only partially impracticable, must fairly allocate available goods among buyers. Answer A (increased expense) is generally insufficient. Answer B (more profitable buyer) is a breach, not impracticability. Answer C (ordinary market shortages) is insufficient because foreseeable market fluctuations are assumed risks.
- Under UCC Section 2-706, when a buyer wrongfully rejects or repudiates a contract, the seller may resell the goods and recover damages. Which of the following correctly describes the resale remedy?
Answer: The seller may recover the difference between the resale price and the contract price, plus incidental damages, less expenses saved; the resale must be made in a commercially reasonable manner.
Under UCC Section 2-706, when a buyer breaches, the seller may resell the goods and recover the difference between the resale price and the unpaid contract price, plus incidental damages, minus expenses saved due to the buyer's breach. The resale must be made in good faith and in a commercially reasonable manner. The seller must give reasonable notification of the resale to the buyer unless the goods are perishable or threaten to decline rapidly in value. Answer A is incorrect because the resale price may differ from the contract price. Answer B is incorrect because damages include the price differential, not just storage costs. Answer D is incorrect because court approval is not required for a proper resale.
- Under UCC Section 2-507, when does a seller's tender of delivery entitle the seller to payment?
Answer: Tender of delivery is a condition to the buyer's duty to accept and pay; once the seller makes a proper tender, the buyer's obligation to pay arises concurrently.
Under UCC Section 2-507(1), tender of delivery is a condition to the buyer's duty to accept the goods and, unless otherwise agreed, to the buyer's duty to pay for them. Tender and payment are concurrent conditions - neither party need perform first. The seller's proper tender triggers the buyer's obligation. Answer A incorrectly allows pre-delivery payment demands. Answer B is incorrect because payment is not automatically delayed pending inspection. Answer C invents a 90-day payment window not found in the UCC.
- Under UCC Section 2-716, when may a buyer obtain specific performance as a remedy for the seller's breach?
Answer: Specific performance may be ordered when the goods are unique or in other proper circumstances, such as when the buyer cannot reasonably obtain substitute goods on the market.
Under UCC Section 2-716(1), specific performance may be decreed where the goods are unique or in other proper circumstances. Unique goods include rare art, custom-made items, or goods that cannot be purchased elsewhere. 'Other proper circumstances' may include situations where the market for the goods has dried up, the buyer cannot obtain substitute goods, or the goods have special characteristics that make cover impossible. Answer A is incorrect because specific performance requires uniqueness or inability to cover, not mere preference. Answer B (90-day rule) is not in the Code. Answer D (dollar threshold) is not a UCC requirement.
- Under UCC Section 2-610, when a party anticipatorily repudiates a contract before performance is due, what options does the aggrieved party have?
Answer: The aggrieved party may immediately treat the repudiation as a present breach, await performance for a commercially reasonable time, or urge the repudiating party to retract the repudiation; the aggrieved party may also suspend their own performance.
Under UCC Section 2-610, when a party to a sales contract anticipatorily repudiates before their performance is due, the aggrieved party may: (1) await performance for a commercially reasonable time (hoping for retraction); (2) resort to any remedy for breach immediately; (3) suspend performance; and (4) urge the repudiating party to retract. Answer A is incorrect because the aggrieved party need not wait until the performance date; they may act immediately on the repudiation. Answer C is incorrect because various remedies including cover and market price damages are available. Answer D is incorrect because a demand for assurance is required when there are grounds for insecurity but the other party has not yet repudiated; once repudiation occurs, immediate remedies are available.
- Under UCC Section 2-608, when may a buyer revoke acceptance of non-conforming goods?
Answer: A buyer may revoke acceptance when: the non-conformity substantially impairs the value of the goods to the buyer; and the buyer accepted either on the reasonable assumption that the non-conformity would be cured, or without discovery of the non-conformity due to the difficulty of discovering it before acceptance. Revocation must occur within a reasonable time.
Under UCC Section 2-608, revocation of acceptance requires: (1) the non-conformity substantially impairs the value of the goods to the buyer; and (2) the buyer accepted because they reasonably assumed the seller would cure, or because the non-conformity was difficult to discover before acceptance. Revocation must occur within a reasonable time after the buyer discovers or should have discovered the grounds, before any substantial change in condition of the goods. Answer A invents a one-year period. Answer B (change of mind) has no basis in the Code. Answer C is too narrow; the non-conformity need not have existed at delivery if it subsequently emerged and was difficult to discover.
- Under UCC Section 2-508, when does a seller have the right to cure a defective tender or delivery?
Answer: If the time for performance has not yet expired, the seller may cure by notifying the buyer and making a conforming delivery before expiration; if the seller had reasonable grounds to believe the non-conforming tender was acceptable, the seller may also cure after the delivery date within a further reasonable time.
UCC Section 2-508 provides a two-part cure right: (1) Under Section 2-508(1), if the time for performance has not yet expired, the seller may seasonably notify the buyer and make a conforming delivery within the contract time; and (2) Under Section 2-508(2), even after the delivery date has passed, if the seller had reasonable grounds to believe the non-conforming tender would be acceptable (e.g., based on prior dealings or trade practice), the seller may cure within a further reasonable time after notifying the buyer. Answer A is incorrect because there are limits on the cure right. Answer C is incorrect because cure is not limited to accidental non-conformities. Answer D is incorrect because there is no dollar threshold for cure rights.
- Under UCC Section 2-513, what is the buyer's right to inspect goods before payment or acceptance?
Answer: Unless otherwise agreed, the buyer has the right to inspect goods at any reasonable place and time and in any reasonable manner before payment or acceptance; the buyer must bear the expenses of inspection.
Under UCC Section 2-513, the buyer has the right to inspect goods before payment or acceptance, unless the contract provides otherwise (such as a C.O.D. term or a bill of lading that expressly provides for payment against documents). Inspection may occur at any reasonable place and time and in any reasonable manner. The buyer bears the inspection expenses unless the goods fail to conform, in which case the costs may be charged to the seller. Answer A is incorrect because the inspection right is a fundamental buyer protection. Answer C incorrectly limits inspection to the seller's location. Answer D is incorrect because signing the purchase contract does not waive inspection rights.
- Under UCC Section 2-601, the perfect tender rule states that the buyer may reject goods if they fail to conform to the contract in any respect. Which of the following correctly applies the perfect tender rule?
Answer: A buyer who receives 990 widgets when the contract specified 1,000 may reject the entire delivery because it does not conform to the contract quantity.
The perfect tender rule under UCC Section 2-601 gives the buyer the right to reject any goods that fail to conform to the contract in any respect - even a minor shortfall in quantity or quality. Receiving 990 widgets when 1,000 were contracted for is a non-conformity (wrong quantity), giving the buyer the right to reject the entire shipment. Answer B describes the substantial impairment standard applicable to installment contracts, not single-delivery contracts. Answer C incorrectly requires both quantity and quality defects. Answer D incorrectly conditions the rejection right on payment status.
- Under UCC Section 2-501, what is the significance of a seller 'identifying' goods to a contract?
Answer: Identification gives the buyer a special property interest and an insurable interest in the goods; it also allows the buyer to seek specific performance or replevin in appropriate cases and fixes the goods that are subject to the contract.
Under UCC Section 2-501, identification of goods to a contract gives the buyer a special property interest in the identified goods and an insurable interest in them. Once goods are identified, the buyer may: (1) seek specific performance or replevin in cases where the goods are unique or the buyer is unable to cover; (2) recover goods under Section 2-502 if the seller becomes insolvent within 10 days of the buyer's first installment payment; and (3) recover damages based on market price at the time of identification. Answer B is incorrect because identification does not automatically transfer title. Answer C is incorrect because identification has significant legal effects. Answer D is incorrect because identification commits those specific goods to the contract.
- Under UCC Section 2-511, what is the buyer's obligation regarding payment when the seller makes a proper tender of delivery?
Answer: The buyer must tender payment concurrent with the seller's tender of delivery, unless the contract provides otherwise; payment may be made by any means customary in the ordinary course of business.
Under UCC Section 2-511(1), unless otherwise agreed, payment is due at the time and place at which the buyer is to receive the goods. The buyer must tender payment concurrently with the seller's tender of delivery - the exchange is simultaneous. Payment may be made by any means or in any manner current in the ordinary course of business, but the seller may demand payment in legal tender and give a reasonable time extension to obtain it. Answer A imposes a 30-day rule not found in the UCC. Answer B is incorrect because payment need not await post-inspection acceptance in all cases. Answer C is incorrect because written extensions are not automatically available.
- Under UCC Section 2-601 and the options available upon rejection, which of the following is a buyer's option when a seller tenders non-conforming goods?
Answer: The buyer may reject the whole, accept the whole, or accept any commercial unit and reject the rest.
Under UCC Section 2-601, when goods fail to conform to the contract, the buyer may: (1) reject the whole shipment; (2) accept the whole shipment despite non-conformity (with a right to damages); or (3) accept any commercial unit or units and reject the rest. A 'commercial unit' is a unit of goods that commercial usage treats as a single whole for sale purposes. This flexibility allows buyers to retain useful portions while rejecting defective portions. Answer A is incorrect because partial acceptance is allowed. Answer B is incorrect because rejection is available. Answer D incorrectly makes the selection automatic.
- Under UCC Section 2-607, what must a buyer do after accepting goods to preserve their warranty claims?
Answer: Notify the seller of any breach within a reasonable time after the buyer discovers or should have discovered the breach; failure to give timely notice bars any remedy.
Under UCC Section 2-607(3)(a), once a buyer has accepted goods, they must notify the seller of any breach within a reasonable time after the buyer discovers or should have discovered the breach. Failure to provide this notice bars the buyer from any remedy. The notice requirement is important because it gives the seller an opportunity to cure, investigate the claim, or arrange a return of the goods before evidence is lost. Answer A (6-month lawsuit) is incorrect because there is no such fixed timeline; reasonable notice is required. Answer C (30-day return) is not a UCC requirement. Answer D (10-day inspection) is not specified in the Code.
- Under UCC Section 2-711, what remedies are available to a buyer when the seller fails to deliver or repudiates the contract?
Answer: The buyer may cancel the contract and recover any price paid, seek cover and recover the difference between the cover price and the contract price, recover market-price damages, or in appropriate cases seek specific performance or replevin.
Under UCC Section 2-711, when the seller fails to deliver or repudiates, the buyer's remedies include: (1) cancellation of the contract and recovery of any amounts paid (Section 2-711(1)); (2) cover under Section 2-712 - purchase substitute goods and recover the difference between the cover price and the contract price; (3) market-price damages under Section 2-713 (contract price minus market price) if the buyer does not cover; and (4) specific performance or replevin for unique goods under Section 2-716. Answer B limits recovery to the contract price, which is insufficient. Answer C is incorrect because the buyer has no obligation to accept substitute goods. Answer D is incorrect because cover is optional, not required.
- Buyer repudiates. Seller resells for $800 less than contract, spends $150, saves $100. Seller recovers:
Answer: $850, net of saved costs
Seller recovers the contract-resale gap of 800, plus incidental costs of 150, minus 100 in saved expenses. That gives 800 + 150 - 100 = 850. The tempting error is 950, which adds the incidental costs but forgets to subtract the expenses the seller avoided.
- Under UCC Section 2-605, what is the effect on a buyer's rejection if the buyer fails to specify the defect that justifies rejection when the defect is ascertainable upon reasonable inspection?
Answer: If the defect is one that could have been cured if stated seasonably, the buyer is precluded from relying on that defect to justify rejection or to establish breach if the seller had a right to cure; a merchant seller may demand a written statement of all defects.
Under UCC Section 2-605, a buyer's failure to state in connection with a rejection a particular defect that is ascertainable upon reasonable inspection precludes the buyer from relying on the unstated defect to justify the rejection or establish breach when: (1) the seller could have cured the defect if it had been seasonably stated, or (2) between merchants, the seller has made a written request for a full statement of all defects. This rule encourages buyers to promptly communicate defects so sellers can cure and avoids buyers from using vague rejections to escape contracts. Answer A is incorrect because the buyer cannot later assert uncommunicated curable defects. Answer B is incorrect because the rejection is not void; only the unstated defects are precluded. Answer C is incorrect because re-delivery is not required.
