2 - Terms

Question 1

Second Wind Sports is a sporting goods retailer that sells both used and new sporting goods equipment. Sam Sedentary visits the store one day and tells the manager on duty, Frieda Fitness, that he is looking to buy a new treadmill in the $3,000 price range because he has decided that he would like to improve his aerobic fitness. Frieda suggests for him a True Brand PS100 Model treadmill. Frieda tells Sam that in her many years of selling treadmills, she believes that the True PS100 is the best treadmill in Sam’s price range. Sam listens closely and decides to purchase the treadmill. Has Frieda made an implied warranty of fitness for a particular purpose in this sale to Sam?

(A) Yes, because Frieda is a merchant with respect to goods of this kind.

(B) Yes, because Sam was clearly relying on Frieda’s skill or judgment to help select for him this particular treadmill.

(C) Yes, for both of the reasons stated in (A) and (B).

(D) No, because most people buy treadmills to improve their aerobic fitness.

(E) No, because Frieda’s express warranty about the treadmill supersedes any implied warranty that she might have made.

Answer 1

D

Question 2

Second Wind Sports is a sporting goods retailer that sells both used and new sporting goods equipment. Sam Sedentary visits the store one day and asks for a used treadmill in the $3,000 price range and tells Frieda that the most important feature for him in a treadmill is that it has excellent cushioning for shock absorption (due to Sam’s history of tendonitis in both of his knees). As a result, Frieda recommends that Sam purchase a used NordicTrack Elite 9700 Pro treadmill for that purpose. When Sam purchases that used treadmill, has Frieda made an implied warranty of merchantability with that sale?

(A) Yes, because Frieda is a merchant with respect to goods of this kind.

(B) Yes, because Sam was relying on Frieda’s skill and judgment in buying this particular treadmill for his special purpose.

(C) Yes, for both of the reasons stated in (A) and (B).

(D) No, because there is no implied warranty of merchantability with the sale of used goods.

(E) No, because an implied warranty of fitness for a particular purpose supersedes an implied warranty of merchantability.

Answer 2

A

Question 3

Tanya’s Tires sells new and used tires for automobiles. Carl Customer buys a set of four new high-end tires from Tanya for $200 each. Three days after the sale, Carl notices that one of his new tires is flat. Upon further examination, he sees that the tire has a slow leak due to a nail in the tire. Carl believes the nail was already in the tire when he bought the tire, but he cannot prove that. He returns the tire to Tanya and threatens to sue her for breach of the implied warranty of merchantability if she does not replace the tire. If Tanya wants to resist Carl’s claim for breach of the implied warranty of merchantability, would it be helpful for her to prove that her mechanics closely inspect each tire for nails or other foreign objects before installing the tires on a customer’s car?

(A) No, because warranty liability is strict liability rather than negligence, and therefore the seller’s due care is irrelevant to warranty liability.

(B) No, because it is possible that Tanya’s mechanics might have failed to notice the nail in the tire despite their inspection.

(C) Yes, because that evidence would be relevant to the question of whether the nail was already in the tire at the time Tanya sold it to Carl.

(D) Yes, because being a warrantor is not the same thing as being an insurer of goods.

(E) Both (C) and (D) are true.

Answer 3

E

Question 4

Buyer buys a new car from Car Dealer. The sales contract for the car does not include any disclaimers of warranty. Buyer’s adult son (“Son”), who still lives at home, borrows Buyer’s car. While Son is driving the car, the brakes on the car malfunction and Son suffers personal injuries in the ensuing accident. Son sues Car Dealer for damages for personal injuries on a theory of breach of implied warranty. Putting aside Magnuson-Moss and tort law, which of the following is true?

(A) In a §2-318 Alternative A jurisdiction, Son loses for lack of vertical privity.

(B) In a §2-318 Alternative A jurisdiction, Son loses for lack of horizontal privity.

(C) In a §2-318 Alternative A jurisdiction, Son wins because that Alternative allows him to overcome his vertical privity problem.

(D) In a §2-318 Alternative A jurisdiction, Son wins because that Alternative allows him to overcome his horizontal privity problem.

(E) In a §2-318 Alternative C jurisdiction, Son loses because he cannot show any property damage or economic loss.

Answer 4

D

Question 5

Buyer buys a new car from Car Dealer. The sales contract for the car includes a conspicuous and properly drafted disclaimer of the implied warranty of merchantability. Buyer’s adult son (“Son”), who still lives at home, borrows Buyer’s car. While Son is driving the car, the brakes on the car malfunction and Son suffers personal injuries in the ensuing accident. Son sues Car Dealer for damages for personal injuries on a theory of breach of implied warranty. Putting aside Magnuson-Moss and tort law, which of the following is true?

(A) In a §2-318 Alternative A jurisdiction, Son wins because Car Dealer cannot successfully disclaim the implied warranty of merchantability vs. the intended beneficiaries of that Alternative.

(B) In a §2-318 Alternative A jurisdiction, Son loses.

(C) In an Alternative C jurisdiction, Son wins because Son suffered personal injuries.

(D) Both (A) and (C) are true.

(E) Both (B) and (C) are true.

Answer 5

B

Question 6

Buyer buys a new car from Car Dealer. Car Dealer’s contract with Buyer includes the following conspicuous disclaimer: “Seller’s warranties, whether express or implied (and including the implied warranty of merchantability), extend only to the immediate buyer of the car and not to any other individuals.” Buyer’s adult son (“Son”), who still lives at home, borrows Buyer’s car. Son suffered personal injuries and his new iPhone is destroyed in the accident. While Son is driving the car, the brakes on the car malfunction and Son suffers personal injuries in the ensuing accident. Son sues Car Dealer for breach of warranty, seeking damages for both his personal injuries and the loss of his iPhone. Putting aside Magnuson-Moss and tort law, which of the following is true?

(A) In a §2-318 Alternative A jurisdiction, Son can recover for his personal injuries but not the loss of his iPhone.

(B) In a §2-318 Alternative C jurisdiction, Son can recover for his personal injuries but not the loss of his iPhone.

(C) In a §2-318 Alternative B jurisdiction, Son cannot recover for either his personal injuries or the loss of his iPhone.

(D) In a §2-318 Alternative C jurisdiction, Son can recover for both his personal injuries and the loss of his iPhone.

(E) Both (A) and (B) are true.

Answer 6

E

Question 7

Buyer buys a new car from Car Dealer. The sales contract for the car is a written Five-Year Limited Warranty and Magnuson-Moss applies. Buyer’s adult son (“Son”), who still lives at home, borrows Buyer’s car. While Son is driving the car, the brakes on the car malfunction and Son suffers no personal injuries in the accident, but Son’s new iPhone is destroyed in the accident. Son sues Car Dealer for loss of his $500 iPhone. Which of the following statements is true?

(A) In a §2-318 Alternative A jurisdiction, Son wins even without the help of Magnuson-Moss.

(B) In a §2-318 Alternative A jurisdiction, Son loses even with the help of Magnuson-Moss.

(C) In a §2-318 Alternative A jurisdiction, Son wins but only due to Magnuson-Moss.

(D) In a §2-318 Alternative C jurisdiction, Son loses even with the help of Magnuson-Moss.

(E) In a §2-318 Alternative C jurisdiction, Son wins but only due to Magnuson-Moss.

Answer 7

C

Question 8

Buyer buys a new car from Car Dealer. The sales contract for the car is a written Five-Year Limited Warranty and Magnuson-Moss applies. Buyer’s adult son (“Son”), who still lives at home, borrows Buyer’s car. While Son is driving the car, the brakes on the car malfunction and Son suffers no personal injuries in the accident, but Son’s new iPhone is destroyed in the accident. Son would like to use Magnuson-Moss to sue Car Dealer in federal court for breach of the written warranty and to recover attorney’s fees if he wins his case. Regarding Son’s prospects for prevailing on those two issues—federal jurisdiction for his lawsuit and recovery of attorney’s fees if he wins—which of the following statements is true?

(A) Son can sue in federal court, but cannot recover attorney’s fees even if he wins.

(B) Son cannot sue in federal court, but can recover attorney’s fees if he wins.

(C) Son can sue in federal court, and can recover attorney’s fees if he wins.

(D) Son cannot sue in federal court, but he can recover attorney’s fees whether he wins or loses.

(E) Son cannot sue in federal court, and cannot recover attorney’s fees even if he wins.

Answer 8

B

Question 9

Law School purchases a standard coffee maker from Appliance Store for use in Law School’s faculty lounge. The coffee maker includes a warranty that would qualify as a written warranty under the Magnuson-Moss Act. After two weeks of use, the coffee maker leaks badly and destroys the expensive new carpet in the faculty lounge, causing $5,000 worth of damages. Assume that the coffee maker would qualify as a “consumer product” under the Magnuson-Moss Act. Law School would like to bring a civil action in state court under the Magnuson-Moss Act for damages to the carpet due to breach of the written warranty given by Appliance Store on the coffee maker. Would Law School be eligible to bring such a suit under Magnuson-Moss?

(A) Yes, because Law School was damaged by the failure of a warrantor to comply with a written warranty on a consumer product.

(B) No, because Magnuson-Moss is a federal statute and therefore any lawsuit under Magnuson-Moss can only be brought in federal court.

(C) No, because even though the coffee maker is a consumer product, Law School is not a consumer.

(D) No, because Magnuson-Moss does not allow damages for economic loss such as the damages to Law School’s carpet.

(E) Both (B) and (D) are true.

Answer 9

A

Question 10

Lessee needs a new widget production machine for its factory. Lessee approaches Seller and chooses a machine from Seller’s inventory that suits Lessee’s needs. Lessee then convinces Bank to purchase the machine from Seller and lease it to Lessee for 10 years. The machine has an expected useful life of 20 years. Lessee has final approval rights over the sales contract between Seller and Bank, which makes no promises about the performance of the machine and says nothing about warranties. Bank purchases the machine, which is delivered directly to Lessee’s factory. After one month, the machine breaks down and needs extensive maintenance in order to function effectively. Lessee sues both Seller and Bank for recovery of the maintenance costs. What is the likely outcome of that lawsuit?

(A) Lessee will prevail vs. Bank for breach of implied warranty, but will not prevail vs. Seller because of lack of vertical privity.

(B) Lessee will not prevail vs. Bank for breach of implied warranty, and will not prevail vs. Seller because of lack of vertical privity.

(C) Lessee will prevail vs. Bank for breach of implied warranty, and will also prevail vs. Seller for breach of implied warranty (subject to no double recovery).

(D) Lessee will not prevail vs. Bank for breach of implied warranty, but will prevail vs. Seller for breach of implied warranty.

(E) Lessee will not prevail vs. Bank for breach of implied warranty, but will prevail vs. Seller for breach of express warranty.

Answer 10

D

Question 11

Lessee needs a new widget production machine for its factory. Lessee approaches Seller and chooses a machine from Seller’s inventory that suits Lessee’s needs. Lessee then convinces Bank to purchase the machine from Seller and lease it to Lessee for 10 years. The machine has an expected useful life of 20 years. Lessee has final approval rights over the sales contract between Seller and Bank includes a conspicuous disclaimer of the implied warranty of merchantability. Bank purchases the machine, which is delivered directly to Lessee’s factory. When the machine breaks down and needs repairs after one month, must Lessee continue making lease payments to Bank even while the machine is not functioning?

(A) Yes, because Lessee’s promises to make lease payments to Lessor are now irrevocable and independent of the performance of the leased goods.

(B) Yes, but Lessee will still have a right to recover against Seller for breach of the implied warranty of merchantability.

(C) Yes, and Lessee will not even have a right to recover against Seller for breach of the implied warranty of merchantability.

(D) Both (A) and (C) are true.

(E) No, because Lessee can at least insist that the machine is functioning before it needs to continue making rent payments to Bank.

Answer 11

D

Question 12

Lessee needs a new widget production machine for its factory. Lessee approaches Seller and chooses a machine from Seller’s inventory that suits Lessee’s needs. Lessee then convinces Bank to purchase the machine from Seller and lease it to Lessee for 10 years. The machine has an expected useful life of 10 years, and lessee has no right to terminate the lease. Lessee has final approval rights over the sales contract between Seller and Bank, which makes no promises about the performance of the machine and says nothing about warranties. Bank purchases the machine, which is delivered directly to Lessee’s factory. After one month, the machine breaks down and needs extensive maintenance in order to function effectively. When Lessee sues both Seller and Bank for recovery of the maintenance costs, what is the likely outcome of that lawsuit?

(A) Lessee will prevail vs. Bank for breach of implied warranty, but will not prevail vs. Seller because of lack of vertical privity.

(B) Lessee will not prevail vs. Bank for breach of implied warranty, and will not prevail vs. Seller because of lack of vertical privity.

(C) Lessee will prevail vs. Bank for breach of implied warranty, and will also prevail vs. Seller for breach of implied warranty (subject to no double recovery).

(D) Lessee will not prevail vs. Bank for breach of implied warranty, but will prevail vs. Seller for breach of implied warranty.

(E) Lessee will not prevail vs. Bank for breach of implied warranty, but will prevail vs. Seller for breach of express warranty.

Answer 12

B

Question 13

Merchant Seller (“Seller”) sells a drill press machine to Merchant Buyer (“Buyer”). Buyer makes it clear to Seller prior to the sale that Buyer needs this machine for the unique purpose of manufacturing custom-made widgets at Buyer’s factory. Seller agrees orally that the machine being sold will be suitable for Buyer’s special purpose. Seller and Buyer then both sign a written contract that includes an express warranty that the machine being sold will not require any maintenance for at least two years. The written contract also includes a conspicuous disclaimer that the machine is being sold “AS IS.” There is no merger clause in the written contract. Which, if any, of the following warranties, does the “AS IS” term in the written contract effectively disclaim: the two-year express warranty promising maintenance-free performance, the implied warranty of merchantability, and/or the implied warranty of fitness for a particular purpose?

(A) None of those warranties.

(B) All three of those warranties.

(C) Only the implied warranty of merchantability and the implied warranty of fitness for a particular purpose.

(D) Only the implied warranty of merchantability and the express written warranty regarding maintenance.

(E) Only the implied warranty of fitness for a particular purpose and the express written warranty regarding maintenance.

Answer 13

C

Question 14

Merchant Seller (“Seller”) sells a drill press machine to Merchant Buyer (“Buyer”). Buyer makes it clear to Seller prior to the sale that Buyer needs this machine for the unique purpose of manufacturing custom-made widgets at Buyer’s factory. Seller agrees orally that the machine being sold will be suitable for Buyer’s special purpose. Also, Seller orally told Buyer, “I hereby disclaim all warranties, including merchantability, fitness for a particular purpose, and any express warranties.” Seller and Buyer then both sign a written contract that includes an express warranty that the machine being sold will not require any maintenance for at least two years. The written contract contained a merger clause. Now which of the three warranties have been effectively disclaimed by Seller?

(A) None of those warranties.

(B) All three of those warranties.

(C) Only the implied warranty of merchantability and the implied warranty of fitness for a particular purpose.

(D) Only the implied warranty of merchantability and the express warranty.

(E) Only the implied warranty of fitness for a particular purpose and the express warranty.

Answer 14

A

Question 15

Homeowner agrees to purchase a new home from Builder. In the written sales contract, the only reference to a warranty is a conspicuous statement that reads: “Two-Year Builder’s Warranty. Builder warrants that this new home is free from any structural defects, but this warranty is limited to any defects that manifest themselves within two years from the date of buyer’s purchase of the home.” Three years after Homeowner buys the home, the foundation cracks and causes water to leak into the home’s basement every time it rains. A typical foundation in new homes in this area would remain crack-free for at least 10 years. If Homeowner wishes to recover from Builder for the cracked foundation, should Homeowner prevail?

(A) No, because the crack in the foundation occurred following the two-year time period that was clearly specified in the written warranty.

(B) No, because the two-year express warranty that was given by Builder is inherently inconsistent with and therefore displaces any open-ended implied warranty that the common law has created for builders of new homes.

(C) Both (A) and (B) are true.

(D) Yes, because it is not inherently inconsistent for Homeowner to “stack” the more open-ended implied warranty on top of the two-year express warranty, given that the written contract does not specifically disclaim the implied warranty.

(E) Yes, even though the two-year express warranty that was given by Builder is inherently inconsistent with any open-ended implied warranty that the common law has created for builders of new homes.

Answer 15

D

Question 16

Consumer Buyer (“Buyer”) purchases a used treadmill from Merchant Seller (“Seller”) and signs a contract that includes a description of warranty and remedy coverage that is entitled “LIMITED TWO-YEAR WARRANTY.” Underneath that heading is a conspicuous statement that “Any implied warranties, including the implied warranty of merchantability, are hereby limited to three years.” The contract also includes a conspicuous exclusive remedy that limits the buyer to repair or replacement of defective parts, and a separate conspicuous exclusion of consequential damages. If the treadmill ends up malfunctioning four years after the date of purchase (and putting aside the possibility of personal injury and tort law), which of the various disclaimers and limitations in the contract—the limitation on duration of implied warranties, the exclusive remedy, and the separate exclusion of consequential damages—will be effective to limit Buyer’s rights against Seller?

(A) None of them.

(B) Just the exclusive remedy and the limitation on duration of implied warranties.

(C) Just the exclusive remedy and the separate exclusion of consequential damages.

(D) Just the separate exclusion of consequential damages and the limitation on duration of implied warranties.

(E) All three of them.

Answer 16

E

Question 17

Consumer Buyer (“Buyer”) purchases a used treadmill from Merchant Seller (“Seller”) and signs a contract that includes a description of warranty and remedy coverage that is entitled “LIMITED TWO-YEAR WARRANTY.” Underneath that heading is a conspicuous statement that “Any implied warranties, including the implied warranty of merchantability, are hereby limited to three years.” The contract also includes a conspicuous exclusive remedy that limits the buyer to repair or replacement of defective parts, and a separate conspicuous exclusion of consequential damages. Buyer is personally injured by the treadmill malfunction that occurs four years after the date of purchase. Putting aside tort law, which of the various disclaimers and limitations in the contract—the limitation on duration of implied warranties, the exclusive remedy, and the separate exclusion of consequential damages—will be effective to limit Buyer’s rights against Seller?

(A) None of them.

(B) Just the limitation on duration of implied warranties.

(C) Just the exclusive remedy and the limitation on duration of consequential damages.

(D) Just the separate exclusion of consequential damages and the limitation on duration of implied warranties.

(E) All three of them.

Answer 17

B

Question 18

Consumer Buyer (“Buyer”) purchases a used treadmill from Merchant Seller (“Seller”) and signs a contract that includes a description of warranty and remedy coverage that is entitled “FULL TWO-YEAR WARRANTY.” Underneath that heading are 2 conspicuous statements: (1) “Any implied warranties, including the implied warranty of merchantability, are hereby limited to three years” and (2) “This used treadmill is sold AS IS with all faults.” The contract also includes a conspicuous exclusive remedy that limits the buyer to repair or replacement of defective parts, and a separate conspicuous exclusion of consequential damages. Now if the treadmill ends up malfunctioning four years after the date of purchase (and putting aside the possibility of personal injury and tort law), will the “AS IS” clause be effective to disclaim the implied warranty of merchantability, and will the limitation on duration of implied warranties be effective?

(A) Both will be effective.

(B) The “AS IS” clause will be effective, but not the limitation on duration of implied warranties.

(C) Neither will be effective, and the “AS IS” clause would not have been effective to disclaim the implied warranty of merchantability even if it had used the word “merchantability” as part of the disclaimer.

(D) Neither will be effective, but the “AS IS” clause would have been effective to disclaim the implied warranty of merchantability if it had used the word “merchantability” as part of the disclaimer.

(E) The limitation on duration of implied warranties will be effective, but not the “AS IS” clause.

Answer 18

C

Question 19

Customer orders by phone a model “Malibu CX” multi-station weightlifting machine from retail store Fitness Warehouse and pays over the phone with a credit card. Immediately following that call, the manager of the Fitness Warehouse store puts a large sticker with Customer’s name and order number on one of the many Malibu CX machines that are in Fitness Warehouse’s store. The machine is scheduled to be shipped to Customer the next day. That night, a fire caused by faulty electrical wiring damages a portion of the store, including the area where Customer’s pre-tagged Malibu CX machine is located. The machine itself suffers significant damage from the fire. Which of the following best describes the rights and obligations of Customer and Fitness Warehouse with respect to the weight-machine contract?

(A) If the loss of the machine is total, then the contract is avoided under UCC §2-613.

(B) If the loss of the machine is total, then the contract is avoided under UCC §2-615.

(C) If the loss of the machine is less than total, then the buyer may demand inspection of the machine and either treat the contract as avoided or accept the goods with a reduction in the price reflecting their damage.

(D) Both (A) and (C) are true.

(E) Fitness Warehouse must deliver a different (and undamaged) Malibu CX machine to Customer.

Answer 19

E

Question 20

Chicago Butcher (“Butcher”) agrees to buy from Iowa Seller (“Seller”) 200 pounds of filet mignon steaks for a total cost of $4,000. Seller is relying on obtaining the steaks for this contract from Nebraska Supplier (“Supplier”), a cattle farmer that has supplied steaks to Seller many times in the past. The day that Supplier’s delivery of the steaks is supposed to take place, Supplier calls Seller to let Seller know that Supplier will not be able to supply the 200 pounds of steaks as promised. Given this short notice from Supplier, Seller is unable to obtain steaks from any other suppliers in time to deliver the steaks on time to Butcher. Assuming that Seller gives timely notice of this excuse to Butcher, will Seller thereby avoid any damages to Butcher for the delay or non-delivery of these steaks?

(A) Yes, as long as Butcher knew that Supplier was Seller’s exclusive source of supply in this contract, and Supplier itself had a valid excuse for failing to perform its contract with Seller.

(B) Yes, as long as Butcher knew that Supplier was Seller’s exclusive source of supply in this contract, even if Supplier itself did not have a valid excuse for failing to perform its contract with Seller.

(C) Yes, whether or not Butcher knew that Supplier was Seller’s exclusive source of supply in this contract, and even if Supplier itself did not have a valid excuse for failing to perform its contract with Seller.
(D)
Yes, whether or not Butcher knew that Supplier was Seller’s exclusive source of supply in this contract, as long as Supplier itself had a valid excuse for failing to perform its contract with Seller.
(E)
No, because failure of a source of supply cannot count as a grounds for excuse under UCC §2-615.

Answer 20

B

Question 21

Chicago Butcher (“Butcher”) agrees to buy from Toronto Seller (“Seller”) 200 pounds of filet mignon steaks for a total cost of $4,000. Seller is relying on obtaining the steaks for this contract from Germany Supplier (“Supplier”), a cattle farmer that has supplied steaks to Seller many times in the past. The day that Supplier’s delivery of the steaks is supposed to take place, Supplier calls Seller to let Seller know that Supplier will not be able to supply the 200 pounds of steaks as promised. Given this short notice from Supplier, Seller is unable to obtain steaks from any other suppliers in time to deliver the steaks on time to Butcher. Assuming that Seller gives timely notice of this excuse to Butcher, will Seller thereby avoid any damages to Butcher for the delay or non-delivery of these steaks?

(A) Yes, as long as Butcher knew that Supplier was Seller’s exclusive source of supply in this contract, and Supplier itself had a valid excuse for failing to perform its contract with Seller.

(B) Yes, as long as Butcher knew that Supplier was Seller’s exclusive source of supply in this contract, even if Supplier itself did not have a valid excuse for failing to perform its contract with Seller.

(C) Yes, whether or not Butcher knew that Supplier was Seller’s exclusive source of supply in this contract, and even if Supplier itself did not have a valid excuse for failing to perform its contract with Seller.

(D) Yes, whether or not Butcher knew that Supplier was Seller’s exclusive source of supply in this contract, as long as Supplier itself had a valid excuse for failing to perform its contract with Seller.

(E) No, because failure of a source of supply cannot count as a grounds for excuse under CISG Article 79.

Answer 21

A

Question 22

Consumer Buyer (“Buyer”), who has never before owned a computer, goes to Merchant Seller (“Seller”) and purchases a used computer for the posted price of $4,000. Buyer is not pressured to purchase this computer, nor does Buyer do any research about the product or even compare prices of comparable computers at another store. The computer comes with no written warranty and in fact Seller emphasizes orally to Buyer that all sales in this store, including this sale of the used computer, are “as is.” It turns out that this exact model of computer sells for $1,000 brand-new at any number of local computer discount stores. It further turns out that this particular used computer breaks down two weeks after Buyer purchases it. If Buyer wishes to rescind the sale on the grounds of unconscionability, what is the likely result in most courts?

(A) Buyer wins, because it is per se unconscionable to include an “as is” clause with the sale of used goods.

(B) Buyer wins, because there is clearly procedural unconscionability in this case.

(C) Buyer wins, because there is clearly substantive unconscionability in this case.

(D) Buyer loses, because although there may well be substantive unconscionability, there does not appear to be procedural unconscionability.

(E) Buyer loses, because although there may well be procedural unconscionability, there does not appear to be substantive unconscionability.

Answer 22

D

Question 23

Consumer Lessee, who has never before owned a computer, goes to Merchant Lessor and purchases a used computer for the posted price of $4,000. Lessee is not pressured to purchase this computer, nor does Lessee do any research about the product or even compare prices of comparable computers at another store. The computer comes with no written warranty and in fact Lessor emphasizes orally to Lessee that all leases in this store, including this lease of the used computer, are “as is.” It turns out that this exact model of computer sells for $1,000 brand-new at any number of local computer discount stores. It further turns out that this particular used computer breaks down two weeks after Lessee leases it. What is the outcome?

(A) Lessee (as compared to Buyer) might receive attorney’s fees if she wins.

(B) Lessee (as compared to Buyer) might be liable for attorney’s fees if she loses.

(C) Lessor (as compared to Seller) might be liable for unconscionable conduct in collecting from Lessee (as compared to Buyer) if the full price has not been paid up-front.

(D) Answers (A) and (B) are true, but not (C).

(E) Answers (A), (B), and (C) are all true.

Answer 23

E

Question 24

Consumer buys a new car from Dealer that has a Three-Year Limited Warranty. Among the warranty’s provisions is a clause that claims to limit the buyer’s remedy to repair or replacement of defective parts. A year following Consumer’s purchase, the car’s brakes fail and Consumer is injured. Consumer seeks to recover under warranty law for the personal injuries, but Dealer says that Dealer will only pay to replace the faulty brakes, consistent with its exclusive remedy that allows only repair or replacement of defective parts. Assume that Consumer sues Dealer and the court determines that the exclusive remedy clause in the contract is unconscionable. What are the possible remedies that the court can provide to Consumer under these circumstances?

(A) The court can strike the exclusive remedy altogether.

(B) The court can leave the exclusive remedy in place but not allow it to prevent Consumer’s recovery for personal injuries.

(C) Both (A) and (B) are true.

(D) The court can allow the jury to determine what the appropriate remedy should be here.

(E) The court can require Dealer to give Consumer a new car instead of allowing Consumer’s recovery for personal injuries.

Answer 24

C

Question 25

Neighbor buys Next-Door Neighbor’s used car in a consumer-to-consumer sale. Neighbor pays Next-Door Neighbor for the car with a $10,000 personal check that is later returned to Next-Door Neighbor for insufficient funds. When Next-Door Neighbor gets the check back, Next-Door Neighbor demands that Neighbor make good on the dishonored check or give the car back. Neighbor tells Next-Door Neighbor that he has already transferred the car as a gift to his adult son (“Son”) who lives in a different town. It turns out that the same day Son received the car as a gift, Son sold the car to a good-faith purchaser (“Buyer”) for $10,000 in cash. Neighbor is now broke and cannot reimburse Next-Door Neighbor for the bad check. Therefore, Next-Door Neighbor locates Buyer and demands the car back from Buyer on the basis that Next-Door Neighbor has superior title to the car. If Next-Door Neighbor brings a lawsuit against Buyer for return of the car, who has superior title to the vehicle?

(A) Buyer, because Buyer purchased from a seller that had voidable title to the car.

(B) Buyer, because Buyer purchased from a seller that had good title to the car.

(C) Next-Door Neighbor, because Neighbor had void title by paying for the car with a bad check and that prevents any later party from getting good title to the car.

(D) Next-Door Neighbor, because as a mere donee of the car rather than a purchaser for value, Son himself could not have had voidable title to the car when he sold it to Buyer.

(E) In order to answer this question, we need to know whether Neighbor knew that the check Neighbor used to buy the car was going to be dishonored.

Answer 25

A

Question 26

Buyer purchased a used car in good faith from Son, who had voidable title to the Next-Door Neighbor’s car. Next-Door Neighbor sued Buyer for return of the car on the basis of superior title, but Buyer wins that lawsuit. Buyer spends $1,000 in attorney’s fees in a successful defense to the title lawsuit brought by Next-Door Neighbor. Now Buyer would like to recover those attorney’s fees from Son by suing Son for breach of the warranty of title. Neither Son nor Buyer had specifically mentioned the warranty of title in their car deal, although Son had told Buyer before selling the car that the sale of the car was “as is.” If Buyer sues Son for the $1,000 in attorney’s fees on a breach of title warranty theory, who should prevail?

(A) Son, because the “as is” disclaimer, even when given orally, is sufficient to disclaim all implied warranties including the warranty of title.

(B) Son, as long as we assume that Son was unaware that Neighbor, his donor, had bought the car with a bad check.

(C) Son, because in this case Son did transfer good title to Buyer and therefore did not even breach the warranty of title.

(D) Son, because non-merchant sellers like Son don’t even give the implied warranty of title in a sale of goods.

(E) Buyer, because even though Buyer did receive good title to the car here, Son’s transfer was not “rightful” as against the original owner, Next-Door Neighbor.

Answer 26

E

Question 27

Thief breaks into Owner’s house and steals Owner’s antique clock. Thief then brings the clock into Merchant for repairs. Merchant is in the business of repairing and selling antique clocks, but Merchant has no reason to believe that Thief is not the owner of the clock. While the clock is in Merchant’s store for repairs, one of Merchant’s clerks accidentally sells the clock to Buyer, a buyer in the ordinary course of business. Owner is ultimately able to locate the clock in Buyer’s possession. When Owner sues Buyer to recover the clock from Buyer, what is the most accurate statement of the likely outcome?

(A) Buyer wins, because Buyer was a buyer in the ordinary course of business that purchased the clock from a merchant who deals in goods of that kind.

(B) Buyer wins, because the clock was entrusted by Thief to merchant, thereby giving Merchant voidable title.

(C) Buyer loses, because Buyer can only inherit Thief’s rights in this case.

(D) Buyer loses, because Buyer only has voidable title, which is not good enough to defeat Owner’s title.

(E) Both (C) and (D) are true.

Answer 27

C

Question 28

Owner brings his clock into Merchant for repairs. Merchant is in the business of repairing and selling antique clocks. While the clock is in Merchant’s store for repairs, one of Merchant’s clerks accidentally sells the clock to Buyer, a buyer in the ordinary course of business. After Buyer purchases the clock from Merchant, Buyer gives the clock as a birthday gift to Niece. Owner is ultimately able to locate the clock in Niece’s possession. When Owner sues Niece to recover the clock from Niece, what is the most accurate statement of the likely outcome?

(A) Owner wins, because Niece does not qualify as a buyer in the ordinary course of business.

(B) Owner wins, because Niece only has voidable title to the clock, which is not good enough to defeat Owner’s title.

(C) Niece wins, because Niece’s voidable title is strong enough to defeat Owner’s title.

(D) Niece wins, because as between Niece and Owner, Niece could not have done anything to prevent the mistake by Merchant, but it was Owner who chose to entrust the clock to Merchant.

(E) Niece wins, because Niece inherits whatever title that Buyer had, and that was good title to the clock.

Answer 28

E

Question 29

Owner sells his painting for $20,000 to Neighbor, who purchases the painting with a personal check that is ultimately dishonored for insufficient funds in Neighbor’s checking account. Before Owner realizes that Neighbor’s check has been dishonored, Neighbor leases the painting to Next-Door Neighbor, a good-faith lessee for value, in a two-year lease contract under which Next-Door Neighbor is obligated to pay Neighbor $300 per month. When Owner is able to locate the painting in Next-Door Neighbor’s possession just one month into the lease, Owner demands that Next-Door Neighbor return the painting immediately to Owner. Next-Door Neighbor refuses to turn over the painting to Owner, instead insisting that the lease with Neighbor is valid. Because Owner has learned that Neighbor is now insolvent, Owner sues Next-Door Neighbor for immediate return of the painting. What should be the outcome of that lawsuit?

(A) Owner gets immediate return of the painting because of §2-403(1).

(B) Owner gets immediate return of the painting because of §2A-304(1).

(C) Owner does not get immediate return of the painting because of §2-403(1), but Owner rather than Neighbor gets the monthly rent and also return of the painting at the end of the lease term.

(D) Owner does not get immediate return of the painting because of §2A-304(1), but Owner rather than Neighbor gets the monthly rent and also return of the painting at the end of the lease term.

(E) Owner does not get immediate return of the painting, nor does Owner get the monthly rent or return of the painting at the end of the lease term.

Answer 29

C

Question 30

Owner leases his painting to Neighbor for 1 year. Neighbor pays with a personal check that is ultimately dishonored for insufficient funds in Neighbor’s checking account. Before Owner realizes that Neighbor’s check has been dishonored, Neighbor leases the painting to Next-Door Neighbor, a good-faith lessee for value, in a two-year lease contract under which Next-Door Neighbor is obligated to pay Neighbor $300 per month. When Owner is able to locate the painting in Next-Door Neighbor’s possession just one month into the lease, Owner demands that Next-Door Neighbor return the painting immediately to Owner. Next-Door Neighbor refuses to turn over the painting to Owner, instead insisting that the lease with Neighbor is valid. Because Owner has learned that Neighbor is now insolvent, Owner sues Next-Door Neighbor for immediate return of the painting. When Owner sues Next-Door Neighbor for immediate return of the painting, what should be the outcome of that lawsuit?

(A) Owner gets immediate return of the painting.

(B) Owner gets return of the painting after one year, and has the right to receive rent from Next-Door Neighbor in the meantime.

(C) Owner gets return of the painting after two years, and has the right to receive rent from Next-Door Neighbor in the meantime.

(D) Owner gets return of the painting after one year, but has no right to receive rent from Next-Door Neighbor in the meantime.

(E) Owner gets return of the painting after two years, but has no right to receive rent from Next-Door Neighbor in the meantime.

Answer 30

B

Question 31

Music Store rents, sells, and repairs used musical instruments. Player, a lessee in the ordinary course of business, leases a rare antique cello from Music Store under a two-year lease term for $100 per month. One month into that lease, a string breaks on the cello and Player brings the cello into Music Store to have it repaired. After the string is fixed on the cello, a new clerk at Music Store makes a mistake and leases the cello to Singer, a lessee in the ordinary course of business, in a three-year lease for $100 per month. When Player comes to the store to get the repaired cello, Player is very upset to learn that the cello has been leased to Singer. Player manages to locate Singer and insists that Singer relinquish possession of the cello to Player, at least for the remainder of Player’s two-year lease. If Player sues Singer in order to enforce Player’s rights to the cello, what should be the outcome?

(A) Singer gets to enforce its three-year lease despite Player’s existing lease, and the result would be the same even if Music Store were not a merchant with respect to goods of this kind.

(B) Singer gets to enforce its three-year lease despite Player’s existing lease, but the result would be different if Music Store were not a merchant with respect to goods of this kind.

(C) Player gets to enforce its two-year lease only because it was entered into prior to Singer’s lease.

(D) Player gets to enforce its two-year lease only because Music Store is a merchant that deals in goods of this kind.

(E) Player gets to enforce its two-year lease both because it was entered into prior to Singer’s lease and because Music Store is a merchant that deals in goods of this kind.

Answer 31

B