Chapter 22

Question 1

Conforming goods

Answer 1

Goods that conform to contract specifications

Question 2

Tender of delivery

Answer 2

Under the UCC a sellers or lessors act of placing conforming goods at the disposal of the buyer or lessee and giving the buyer or lessee whatever notification is reasonably necessary to enable the buyer or lessee to take delivery

Question 3

Perfect tender rule

Answer 3

A common law rule under which a seller was required to deliver to the buyer goods that conformed perfectly to the requirements stipulated in the sales contract. A tender of nonconforming goods would automatically constitute a breach of contract. Under the UCC, the rule has been greatly modified

Question 4

Exceptions to the perfect tender rule

Answer 4

Agreement of the parties 
Cure
Substitution of carriers
Installment contracts 
Destruction of identified goods
Assurance and cooperation

Question 5

Cure

Answer 5

Under the UCC the right of a party who tenders nonconforming performance to correct his or her performance within the contract period

Question 6

Installment contract

Answer 6

Under the UCC, a contract that requires or authorizes delivery in two or more separate lots to be accepted and paid for separately

Question 7

When anticipatory repudiation occurs the nonbreaching party can:

Answer 7

1. Treat the repudiation as a final breach by pursuing a remedy
2. What to see if the repudiating party will decide to honor the contract despite avowed intention to renege

Question 8

If the buyer breaches the contract before the goods have been delivered the seller has the right to

Answer 8

1. Cancel the contract
2. Resell the goods and sue to recover damages
3. Sue to recover the purchase price or lease payments due
4. Sue to recover damages for the buyer’s nonacceptance of goods

Question 9

Requirements for stopping delivery

Answer 9

1. The buyer or lessee receives the goods
2. The carrier or Bailee acknowledges the rights of the buyer in the goods (by re shipping or holding the goods)
3. A negotiable document of title covering the goods has been properly transferred to the buyer in a sales transaction, giving the buyer ownership rights in the goods

Question 10

When the seller refuses to deliver the goods

Answer 10

1. Cancel the contract
2. Obtain goods that have been paid for if the seller is insolvent
3. Sue to obtain specific performance if the goods are unique or if damages are an adequate remedy
4. Buy other goods and recover damages from the seller
5. Sue to obtain identified goods held by a third party
6. Sue to obtain damages

Question 11

Cover

Answer 11

A buyers purchase on the open market of goods to substitute for those promised but never delivered by the seller. Under UCC, if the cost of cover exceeds the cost of the contract goods, the buyer can recover the difference plus incidental and consequential damages

Question 12

Letters of credit

Answer 12

A written instrument, usually issued by a bank on behalf of a customer or other person, in which the issuer promises to honor drafts or other demands for payment by third persons in accordance with the terms of the instrument