BUS 115 - Unit 4 Review

The transfer of one's contract rights is called a delegation.

• True

• False

Answer explanation

Transfer of Rights = Assignment

Transfer of Duties = Delegation

Before either party has a duty to perform, one of the parties may refuse to perform that party's contractual obligations. This is referred to as an anticipatory repudiation.

• True

• False

Answer explanation

This is a material breach.

All of these are types of damages in a breach of contract action (choose all applicable answers).

• nominal

• compensatory

• punitive

• wrongful

Answer explanation

Nominal - Recognize wrongdoing when no monetary loss is shown

Compensatory - Cover direct losses and costs

Punitive - To punish and deter wrongdoing

Consequential - To cover indirect and foreseeable losses

Reese contracts to sell her Spicy Pizza restaurant to Titan. As part of the deal, Reese agrees not to open a competing business within a hundred-mile radius for ten years. Reese later sues Titan, alleging that the agreement is illegal. To enforce the covenant not to compete, the court will most likely.

• award damages for Reese's complete compliance with the terms

• reform the contract to make the distance and time limits reasonable

• rescind the contract and require restitution

• order specific performance

Grass Farm LLC offers to sell 50 bales of hay at a certain price to Horse Stable, Inc. The owner of the stable responds, "We agree if you agree to make it 60 bales for the price." Their contract is formed according to

• the new terms of the acceptance

• whatever is reasonable

• the terms of the original offer

• none of the terms, it is a counteroffer

On a contract - "F.O.B. New York" - for a sale of almonds by a broker in California, the risk of loss passes to the buyer when conforming goods are placed in the possession of the carrier.

• True

• False

Answer explanation

FOB Destination - Seller retains responsibility until goods reach the buyer (destination)

FOB Shipping - Buyer takes responsibility for loss or damage the moment the goods get to the shipper

In response to an order for a hundred baseballs, the shipment of a hundred basketballs is

• an acceptance of the offer

• breach of the contract

• both

• neither

The statute of limitations to file actions under the UCC is three years after the cause of action accrues, or the breach occurs.

• True

• False

Answer explanation

1-4 years

Coal Mine Company buys an excavator from Dig Equipment, Inc. Coal Mine is unaware that Equity Company holds a lien against the excavator. If Equity repossesses the goods, Coal Mine can recover for breach of warranty from

• Dig

• None of the parties

• Maker of the excavator

• Equity

Fiesta LLC contracts to buy 1,000 balloons from Gas Bags, Inc. for $1 per item. When the market price decreases to 50 cents per balloon, Fiesta refuses to go through with the deal. Gas Bags can recover

• $1,500

• $1,000

• $500

• $0