BUSINESS LAW

/in /by

          John M. Harding, Esq.

The partners of Sterling Cooper have moved the firm to Gotham, California. Assume that all persons named are natural persons (and not corporate or other entities) and are residents of California, unless the question states otherwise1.

In all instances, apply either the standard common law rules of contract or the UCC rules, as appropriate.

In selecting an answer, if several seem possible, choose the best answer.

1.       Ken over at Big Al’s Auto Emporium leases Roger a BMW 750i automobile, delivery to Roger’s house by July 1. On June 15, however, Ken delivers a BMW 550i to Roger, who indignantly rejects it. What are Ken’s options?

a)       Demand acceptance of 550i as an accommodation

b)       Replace 550i with 750i by July 1

c)       Replace 550i with 750i by a reasonable time after July 1 

d)       No acceptance or cure possible

2.       Harry contracts to sell George Habash 500 cartons of Popular Chips. When Harry tenders delivery, George inspects the cartons and notices some of the Chips were damaged in transit. If George does not expressly reject delivery, which of the following actions by George would NOT constitute implied acceptance?

a)       Putting the Chips temporarily in storage 

b)       Putting the Chips in storage for a year

c)       Offering the Chips for sale 

d)       Selling the Chips 

3.       Jiang contracts with Betty to sell her 100 lbs. of Workers’ Playtime coffee for $1,000, in 10 even deliveries, payment in installment on approval of each delivery. Jiang hires UPS, and has used them to make 8 deliveries when Betty tells Jiang that the deal is off. Jiang wants to resell the 9th and 10th shipments to Roger for $300 total (i.e., for both shipments). If Jiang sues Betty for breach of contract, what measure of damages?

a)       ($100) Credit to Betty

b)       $0

c)       $100

d)       $200  

4.       Bert is trying to sell his valuable painting “The Kraken” to Lane for $50,000. During negotiations, Lane asks Bert what the appraised value of the painting is, and Bert winks at him. Is there an express warranty?

a)       Yes: affirmation of fact or promise about goods

b)       Yes: description of goods

c)       No: statement of opinion

d)       No: no statement

5.       Don is an ad executive who sells his truck to Betty for $10,000. Betty has told Don that she needs a truck that can pull her horse trailer, and Don says, “My truck is great!” After Betty buys the truck she soon finds that not only can it not pull a horse trailer, it cannot even be safely driven in ordinary traffic. Betty sues Don for breach of express warranty (EW), implied warranty of merchantability (IWM) and implied warranty of fitness for particular purpose (IWF). Who wins?

a)       Betty: breach of EW

b)       Betty: breach of IWM

c)       Betty: breach of IWM and IWF

d)       Don: no actionable warranties

6.       EXTRA CREDIT. What did Hayes buy?

a)       Diamonds

b)       Emeralds

c)       Rubies

d)       Sapphires