- Which statement best describes Riley's remedy against Delgado?
Answer: Riley may recover the contract price because the conforming goods were lost within a commercially reasonable time after risk of loss had passed to Delgado, and the loss does not discharge Delgado's duty to pay that price.
Whenever you see a seller suing for the contract price under the UCC, your first move is to trace risk of loss. Here, the contract is a classic shipment contract because it expressly states risk passes to the buyer when the seller delivers conforming goods to the carrier. Riley did exactly that, and the carrier issued a clean bill of lading. The fire destroyed the goods five days later—well within a "commercially reasonable time." Because risk of loss had shifted to Delgado, the destruction does not discharge Delgado's duty to pay. Section 2-709(1) explicitly allows the seller to recover the price of conforming goods lost within a commercially reasonable time after risk of loss passed, so Riley gets the full $50,000.
Now for the distractors. The choice saying Riley may not recover the price but may recover damages for nonacceptance (contract price less market price) is the default remedy for a buyer's refusal, but it ignores the specific 2-709 exception for lost conforming goods—acceptance is not a prerequisite when the goods are destroyed after risk passes. The choice requiring a resale first is wrong because 2-709 is an alternative to resale damages; the seller can elect the price action when the statutory conditions are met. Finally, the choice stating risk passed only upon actual receipt misreads the contract—the parties specifically moved risk to the carrier, and the UCC's default rule for shipment contracts also places risk on the buyer upon delivery to the carrier.
Your study tip: When a seller seeks the price, always locate the risk-of-loss term in the contract. If it says "delivery to carrier," risk passes immediately, and a subsequent loss is the buyer's problem—making 2-709 available.
- Which of the following best describes Precision's remedy?
Answer: Precision may recover the $150,000 price because the lenses were identified to the contract and Precision is unable to resell them at a reasonable price.
This question tests the seller's remedy of an action for the price under UCC 2-709. When a buyer refuses conforming goods, the seller is not limited to lost profits or resale damages. Section 2-709(1)(b) permits the seller to recover the full contract price for goods identified to the contract if the seller is unable to resell them at a reasonable price. That is exactly what happened: Precision manufactured custom lenses stamped with Buyer's part number, tendered delivery, and made reasonable resale efforts that failed. So Precision may recover the $150,000 price.
The choice saying Precision may recover only lost profits because Buyer never accepted and risk of loss never passed is wrong: §2-709(1)(b) allows price recovery for identified goods even before risk passes when resale is impossible. The choice saying Precision must first resell the lenses and credit Buyer with net proceeds is also wrong: resale is not a precondition for an action for the price once inability to resell is shown. And the choice saying Precision is not required to hold the lenses for Buyer is directly contradicted by §2-709(2), which requires a seller suing for the price to hold identified goods for the buyer. Therefore, the correct answer is the one stating Precision may recover the price because the lenses were identified to the contract and Precision is unable to resell them at a reasonable price.
Study tip: whenever a seller sues for the contract price after the buyer refuses goods, ask whether the goods were identified to the contract and whether resale is feasible. If resale is impossible, the price action is available — but the seller must still hold the goods for the buyer.
- Which legal issue is raised by the printer's claim for lost profits?
Answer: Whether the printer may recover lost profits despite the replacement job because capacity existed for both
Whenever a seller sues after a buyer repudiates, think about the UCC's seller remedies. Here, the printer is seeking lost profits, which raises the "lost volume seller" doctrine. Because the printer had idle capacity, the replacement job paying $5,000 does not wipe out the printer's claim—the printer could have performed both contracts. Thus, the correct issue is whether the printer may recover lost profits despite the replacement job because capacity existed for both (the correct answer). The distractor about "whether the replacement job eliminates the printer's claim" is a trap for mitigation, but mitigation only offsets damages when capacity is not idle; here, the second job was not a substitute. The choice about "must first resell the brochures" misapplies UCC 2-706 (resale), which applies to goods already in hand—these brochures were never manufactured, and resale is not a precondition for lost profits. The choice about "recovering the full contract price because specially manufactured" wrongly invokes the action for the price (2-709), which requires completed goods or an inability to resell; since production hadn't begun, the printer is limited to its lost profit margin, not the price. Remember: when you see "idle capacity" or "lost volume," the replacement sale does not reduce the seller's lost profits—that phrase is your clue to the correct issue.
- Which of the following is the manufacturer most likely entitled to recover?
Answer: The profit it would have earned on the canceled contract, because its capacity allowed it to have supplied both the original buyer and the replacement buyer.
Whenever you see a seller suing for breach after a buyer cancels, think of UCC Article 2 remedies—specifically, the "lost volume seller" doctrine. Here, the key fact is that the manufacturer had ample capacity to produce brewers for the original chain and the replacement chain at the same time. Because the resale to the second chain did not actually mitigate the loss from the first breach (the manufacturer would have made two sales, not one), the manufacturer is entitled to recover the profit it would have earned on the canceled contract under UCC 2-708(2).
The full $100,000 contract price is a trap—that remedy applies only when goods have been identified to the contract and the seller is unable to resell them, or after the buyer accepts them. Here, the brewers were never manufactured, so the seller cannot recover the price. The difference between the contract price and the resale price, plus incidental damages, is the standard 2-706 resale remedy, but it applies only when the seller resells the specific goods that were rejected or repudiated. Since the manufacturer had capacity to supply both, the resale did not replace the lost sale, making the lost volume rule the appropriate measure. Finally, recovering its costs incurred in preparing to perform plus overhead is a reliance-based measure, but the manufacturer incurred no additional costs and the UCC explicitly grants lost profit in this lost volume scenario.
Remember: when a seller has ample capacity and resells to another buyer, that's the classic "lost volume" trigger—award lost profit, not the resale price difference or contract price.
- Which of the following legal issues is most likely dispositive?
Answer: Whether the restaurant's continued use of the refrigerator after the dealer promised to cure the defect waived its right to return the refrigerator and obtain a refund.
Whenever a seller delivers goods that a buyer has already accepted, the question moves from "can the buyer reject?" to "can the buyer revoke acceptance?" Under UCC Section ike 2-608, revocation requires that the nonconformity substantially impairs the goods' value to the buyer, that acceptance was induced by the seller's assurance the defect would be cured, and that revocation occurs within a reasonable time. But once a buyer knows of a defect and keeps using the goods, a second issue lurks: did that continued use waive the right to revoke? That is exactly the issue most likely to decide this dispute. The dealer told the restaurant to "keep using it in the meantime" while sent a technician, and the restaurant complied through three repairs over two months. Because that use happened at the seller's express request as part of the cure process, it is not inconsistent with the restaurant's later demand for a refund. If the use is held to waive revocation, the restaurant loses;if not, it may cancel and recover the full price. So the dispositive question is whether continued use after the promise to cure waived the right to return the refrigerator.
The substantial-impairment choice may look important, but the facts already establish it: a commercial refrigerator that cannot cool below 50 degrees—far above safe food-storage temperatures—clearly substantially impairs its value for a restaurant's intended purpose. No real dispute, so it isn't dispositive. As for anticipatory repudiation, that doctrine applies only when a party refuses to perform before performance is due; the refrigerator was already delivered, and three failed repair attempts are attempts to cure, not a repudiation. Finally, acceptance of delivery does not automatically limit the buyer's remedies to repair costs. Acceptance surrenders the right to reject, not the right to revoke under 2-608; a repair-or-replace remedy would need to come from an enforceable exclusive remedy clause, which the facts never establish. So when you see a cure-and-continued-use pattern, ask: who requested the continued use? If the seller told the buyer to keep using the goods during repairs, use is likely not a waiver.
- Which legal right is the manufacturer asserting by instructing the carrier not to deliver?
Answer: Stoppage of delivery while the fabric is in transit
Whenever you see a seller trying to stop goods in the hands of a carrier before the buyer gets them, think of the Article 2 remedy commonly called stoppage of delivery in transit. The seller must show the buyer is insolvent and the goods are still in transit. Here, the retailer's bankruptcy filing shows it can't pay, payment was due on delivery, and the fabric was still with the common carrier. The manufacturer's call directing the carrier not to deliver is exactly that right.
The wrong choices reflect timing traps. Reclamation of the fabric from the retailer would apply only after the goods had actually reached the retailer's possession; reclamation is for an insolvent buyer who already received goods on credit. Since the carrier has not yet delivered, there is nothing to reclaim from the retailer. Resale and recovery of the difference in price is a possible later step—after stopping delivery, a seller may resell and sue for damages—but the immediate instruction is not a resale; it is the act of stopping. An action for the full contract price is unavailable because the retailer never accepted or received the goods, and risk of loss had not passed; a full-price action requires acceptance or the seller's performance being due, neither of which applies here.
Study tip: on the bar exam, map seller remedies by timing. Stoppage happens before the buyer receives goods; reclamation happens just after delivery to an insolvent buyer; damages and resale come later. If goods are sitting with a carrier insolvent, answer is stoppage.
- What amount may Buyer recover from TeeCo?
Answer: $20,500, because cover damages are the cover-price difference plus incidental damages, less expenses saved in consequence of the breach.
Whenever you see a repudiation followed by a replacement purchase, think UCC cover damages. The formula is straightforward: cover price minus contract price, plus incidental damages, minus expenses saved. Because the buyer actually covered, the market price is irrelevant — the cover cost controls.
Here, cover damages are the $70,000 cover cost minus the $50,000 contract price, giving a $20,000 difference. Add the $1,000 expedited shipping as incidental damages, since it was a commercially reasonable charge in effecting cover. Then subtract the $500 freight charge the buyer saved because the substitute supplier was local. That yields $20,500.
The $20,000 answer incorrectly stops at the price difference and ignores both the incidental damages and the expenses saved. The $21,000 answer correctly adds the shipping but fails to subtract the $500 saved freight — the statute explicitly requires deducting expenses saved. The $10,500 answer is the trap: it applies the market-price formula ($6 per shirt) instead of the actual cover price, but UCC 2-712 lets the buyer recover based on cover when a good-faith cover purchase was made, even without notifying TeeCo.
Your study takeaway: if the buyer covers, always use the cover price; reserve market-price damages for cases where the buyer never covers. Also, remember that incidental damages add, but saved expenses subtract — both are part of the same equation.
- Will Buyer likely obtain specific performance?
Answer: Yes, because Buyer's inability to cover the flour from another source is an 'other proper circumstance.'
Whenever you see a UCC sales question about specific performance, focus on Section 2-716(1): a buyer may obtain specific performance when goods are unique or in other proper circumstances. That second phrase is the key here. Buyer contracted for Seller's entire output of Heritage Blend, and because only Seller produces that flour and Buyer cannot get equivalent flour elsewhere, Buyer cannot cover. That inability to cover is exactly an "other proper circumstance." Even though flour might normally be fungible, the statutory test is not limited to one-of-a-kind goods; it asks whether substitute goods are practically available. If they are not, specific performance is proper.
The wrong answers each miss this. The choice saying specific performance is limited to unique or irreplaceable goods and flour is fungible confuses the statute: the "other proper circumstances" prong reaches beyond uniqueness, and fungible goods can still be irreplaceable in context. The answer requiring bad faith imports an intent requirement that Section 2-716 does not demand; a repudiating seller's good faith does not cure Buyer's lack of cover. Finally, the claim that Buyer's remedy is limited to damages is simply wrong—specific performance is an available equitable remedy under the UCC when damages are inadequate.
Study tip: on bar questions, if a buyer cannot reasonably cover with substitute goods, that is a strong signal for specific performance under "other proper circumstances," even if the goods are not inherently unique.
- What amount of damages may Seller recover from Buyer?
Answer: $4,000, because Seller lost the profit on the original sale and the resale was an additional, not substitute, sale.
Whenever you see a resale by a seller after a buyer's breach, ask: did the seller have the capacity to make both sales? If yes, the resale is an additional, not substitute, sale, and the seller is a "lost-volume" seller. That is the key to this question.
Here, Seller's cost was $26,000, and the contract price was $30,000. Had Buyer performed, Seller would have earned $4,000 profit on that sale—and still could have sold the second Model X to the other buyer. Because Seller had another car in inventory, the resale to the second buyer was an independent sale, not a replacement for Buyer's deal. Under UCC 2-708(2) and the rule from Harwick Motors, the proceeds from that additional resale are not credited against Seller's recovery. Thus, Seller may recover the lost $4,000 profit.
The "$1,000” choice incorrectly treats the loss as the difference between the contract price and resale price—that logic applies only when the seller does not have the capacity to make both sales. The “$3,000" choice focuses on the profit from the resale, but that is separate income; it does not erase the profit lost on the breached contract. The "$0" choice wrongly assumes a resale always eliminates loss, ignoring the lost-volume doctrine.
Study tip: On the bar exam, spot lost-volume sellers by the phrase "had the capacity to sell to both" or "could have sold both." If the seller has unlimited or sufficient inventory, the resale proceeds are ignored, and damages equal the profit on the original contract ($30,000 − $26,000 = $4,000).
- Which legal theory best supports the bakery's demand for a refund?
Answer: Revocation of acceptance of the mixer
Whenever you see a buyer trying to return goods after using them for a while, stop to ask whether the buyer already accepted the goods. Acceptance is pivotal: using the mixer daily for three months was conduct inconsistent with the dealer's ownership, so the bakery accepted it. Once a buyer accepts, it cannot simply reject the goods; instead, if the nonconformity existed at delivery and substantially impairs value, the buyer may revoke acceptance under UCC 2-608. Here, the hairline fracture was a latent defect present when delivered; it caused the shaft to snap and production losses, showing substantial impairment. The bakery acted after discovering the defect, so revocation of acceptance is the theory that best supports returning the mixer and refunding the price.
"Rejection for nonconformity" fails because rejection must occur before acceptance or within a reasonable time after delivery or tender — not three months later. The bakery's daily use established acceptance, ending its right to reject. "Cover by purchasing a replacement and recovering the price difference" is also off: cover is a damages remedy for a seller's failure to deliver or for goods that were rightfully rejected; it assumes the buyer moves forward with replacement goods, not that the seller refunds the full price for goods returned. "Breach of warranty damages measured by the cost of repairs" similarly does not support a refund: it would justify paying to fix the shaft, while the bakery is demanding rescission and a full refund. A repair-cost measure leaves the sale intact; revocation undoes it.
Remember this pattern: acceptance kills rejection and creates revocation. On an exam, if a buyer has used goods for months before discovering a defect that existed at delivery, look for revocation of acceptance — and be wary of repair-damages answer choices, because they address the cost of cure, not the buyer's right to hand the goods back.
- Which of the following is the most significant legal issue raised by these facts?
Answer: Whether Dana may revoke her acceptance of the espresso machine.
Whenever a buyer has taken delivery, signed for the goods, and paid, they have accepted the goods under the UCC. After acceptance, the buyer cannot simply "reject"; the remedy shifts to revocation of acceptance. That is the pivotal issue here. Dana's signing and payment mean she accepted, so the real legal question is whether her immediate email can be treated as a revocation: did the hidden boiler defect substantially impair the machine's value, was it discovered after acceptance, and did she act promptly? That is why the answer is whether Dana may revoke her acceptance.
The offer to repair is a possible seller response, but cure becomes relevant only if revocation is otherwise available—it is not the central issue. The effective rejection choice misunderstands timing: rejection must occur before acceptance, and Dana had already accepted. The required return of the machine choice is also a remedy detail: a revoking buyer may need to hold the goods or make them available, but the significant issue is whether revocation is available at all, not how the refund mechanics work.
Study tip: read the fact pattern for acceptance triggers—delivery, inspection, signed receipt, payment. Once acceptance occurs, shift your analysis from rejection to revocation. That framing will keep you from choosing the tempting but premature alternatives.
- What amount, if any, may Buyer recover from Seller?
Answer: $14,500, because the liquidated damages clause is an unenforceable penalty and Seller may retain only the statutory $500.
Whenever you see a deposit and a liquidated damages clause, your first job is to test the clause against UCC 2-718(1). A clause is an unenforceable penalty if the amount is unreasonable compared to the anticipated or actual loss, especially when losses were readily calculable at formation. Here, the shelving had an active resale market, so $15,000 is grossly disproportionate to a $100 actual loss—the clause is void as a penalty.
Because the clause is void, you apply the restitution formula in 2-718(2). The seller may automatically retain the lesser of 20% of the price ($20,000) or $500, so the seller keeps only $500. The buyer therefore recovers $15,000 minus $500, which equals $14,500.
Now for the wrong answers. The choice saying $0 wrongly enforces a penalty clause; contract language cannot override the UCC's prohibition on unreasonable liquidated damages. The choice saying $14,900 traps you into deducting the seller's $100 actual loss from the deposit. While a seller could potentially sue for actual damages separately under 2-718(3), the statutory cap of $500 is the automatic retention limit from the payment itself—the $100 is a distractor here. Finally, the choice saying $15,000 is wrong because it ignores the seller's statutory right to retain the $500 offset; the buyer is not entitled to the entire deposit when the seller justifiably withheld delivery.
Your study tip: on the bar exam, immediately check if a liquidated damages clause is a penalty. If it is, don't just void it—apply the 2-718(2) formula and remember the $500/20% statutory cap is the seller's floor, regardless of the actual loss.
