OH Bar Performance 3 — Questions and Answers
Question 1: A wholesaler contracts to deliver 500 crates of oranges in five monthly installments. The second installment is slightly short but easily remedied. May the buyer cancel the entire contract?
- No, unless the nonconformity substantially impairs the value of the whole contract (Correct answer)
- Yes, under the perfect tender rule
- Yes, because any installment defect ends the contract
- No, because installment contracts can never be canceled
Correct answer: No, unless the nonconformity substantially impairs the value of the whole contract
In installment contracts, UCC 2-612 replaces perfect tender with a substantial impairment standard, and whole-contract cancellation requires impairment of the whole.
Question 2: A buyer accepts goods, then discovers a latent defect that substantially impairs their value. The buyer wants to return them. What must the buyer show to revoke acceptance?
- Acceptance was induced by difficulty of discovery or the seller's assurances, and revocation occurred within a reasonable time (Correct answer)
- Only that the goods are defective in any respect
- That the seller acted in bad faith
- That the buyer never paid for the goods
Correct answer: Acceptance was induced by difficulty of discovery or the seller's assurances, and revocation occurred within a reasonable time
UCC 2-608 permits revocation of acceptance only for substantial impairment where the defect was hard to discover or the seller gave assurances, and revocation must be timely.
Question 3: Before the performance date, a seller unequivocally tells the buyer, 'I will not deliver the goods.' Which option is NOT available to the buyer?
- Waiting until after the performance date to treat the statement as a breach and doing nothing to mitigate indefinitely (Correct answer)
- Suing immediately for anticipatory repudiation
- Suspending its own performance
- Urging retraction while awaiting performance for a commercially reasonable time
Correct answer: Waiting until after the performance date to treat the statement as a breach and doing nothing to mitigate indefinitely
A nonrepudiating party may sue immediately, suspend performance, or await performance for a commercially reasonable time, but cannot ignore mitigation indefinitely.
Question 4: After a seller repudiates, but before the buyer materially changes position or sues, the seller notifies the buyer it will perform after all. What is the effect?
- The repudiation is retracted and the contract duties are reinstated (Correct answer)
- The retraction is ineffective because repudiation is final
- The buyer may still cancel regardless of reliance
- The contract is renewed only if the buyer consents in writing
Correct answer: The repudiation is retracted and the contract duties are reinstated
A repudiation may be retracted before the aggrieved party cancels, materially relies, or indicates the repudiation is final, reinstating the contract.
Question 5: A buyer has reasonable grounds for insecurity about the seller's ability to perform and demands adequate assurance in writing under the UCC. The seller fails to respond for over 30 days. What result?
- The buyer may treat the contract as repudiated (Correct answer)
- The buyer must still tender payment on the delivery date
- The contract is automatically rescinded after 10 days
- The buyer may only sue after the delivery date passes
Correct answer: The buyer may treat the contract as repudiated
Under UCC 2-609, failure to provide adequate assurance within a reasonable time not exceeding 30 days operates as a repudiation.
Question 6: A contract requires goods to be shipped 'F.O.B. seller's city.' When does the risk of loss pass to the buyer?
- When the seller duly delivers the goods to the carrier (Correct answer)
- When the goods arrive at the buyer's location
- When the buyer pays the invoice
- When the contract is signed
Correct answer: When the seller duly delivers the goods to the carrier
F.O.B. seller's city creates a shipment contract, so risk of loss passes when the seller duly delivers conforming goods to the carrier.
Question 7: A builder abandons a project after completing 40% of the work, a material breach. Under the majority common-law rule, may the builder recover anything?
- Possibly restitution for the benefit conferred, minus the owner's damages (Correct answer)
- The full contract price
- A pro rata share of the contract price as of right
- Nothing under any theory
Correct answer: Possibly restitution for the benefit conferred, minus the owner's damages
A materially breaching party cannot recover on the contract but may in many jurisdictions recover in restitution for benefits conferred, offset by the owner's damages.
OH Bar Performance 3
A wholesaler contracts to deliver 500 crates of oranges in five monthly installments.
The second installment is slightly short but easily remedied.
May the buyer cancel the entire contract?