3 - Performance Flashcards
Corey Haney, owner of Gold’s Gym fitness facility, orders a new commercial-grade elliptical aerobics machine for her gym from Heavy Metal. After one week of use by the gym’s clients, the new machine’s electronic heart-rate monitor starts to display inaccurate heart rates for the users of the machine. If Corey wishes to reject the machine at this point, which of the following factors will be LEAST relevant to her ability to do so?
(A) Whether her sales contract included a limitation of remedies to repair or replacement of defective parts.
(B) Whether Heavy Metal’s time for performance in the sales contract has already expired.
(C) Whether the defect in the heart-rate monitor amounts to a “substantial impairment” of the machine’s value to Corey.
(D) Whether Corey has had a reasonable opportunity to inspect the machine at this point.
(E) Whether Corey has done any act inconsistent with Heavy Metal’s ownership of the machine at this point.
C
Corey Haney, owner of Gold’s Gym fitness facility, orders a new commercial-grade elliptical aerobics machine for her gym from Heavy Metal. Corey accepted this machine the day after it arrived without knowing about the defective heart-rate monitor.
After one week of use by the gym’s clients, the new machine’s electronic heart-rate monitor starts to display inaccurate heart rates for the users of the machine. This machine is the first installment in a series of five elliptical machines that Heavy Metal promises to deliver to Corey’s gym every two weeks over the next two months. If Corey wishes to revoke her acceptance of the first machine at this point, which of the following factors will be LEAST relevant to her ability to do so?
(A) Whether this non-conformity substantially impairs the value of the whole installment contract.
(B) Whether there has been any substantial change in the condition of the machine that was not caused by the faulty heart-rate monitor.
(C) Whether Corey’s acceptance was reasonably induced by the difficulty of discovering the faulty heart-rate monitor.
(D) Whether Corey’s revocation of her acceptance occurs within a reasonable time after she discovered or should have discovered the faulty heart-rate monitor.
(E) Whether Corey’s acceptance was reasonably induced by Heavy Metal’s assurances about the high quality of the machine.
A
Corey Haney, owner of Gold’s Gym fitness facility, orders a new commercial-grade elliptical aerobics machine for her gym from Heavy Metal. After one week of use by the gym’s clients, the new machine’s electronic heart-rate monitor starts to display inaccurate heart rates for the users of the machine. If Corey attempts to reject the machine at this point, will Heavy Metal have the right to cure?
(A) Yes, but only if the contractual time for performance by Heavy Metal has not yet expired.
(B) Yes, as long as the contractual time for performance by Heavy Metal has not yet expired.
(C) Yes, but only if Heavy Metal had reasonable grounds to believe that the elliptical machine would be acceptable.
(D) Yes, as long as Heavy Metal had reasonable grounds to believe that the elliptical machine would be acceptable.
(E) Both (B) and (D) are true.
E
Corey Haney, owner of Gold’s Gym fitness facility, orders a new commercial-grade elliptical aerobics machine for her gym from Heavy Metal. After one week of use by the gym’s clients, the new machine’s electronic heart-rate monitor starts to display inaccurate heart rates for the users of the machine.
Upon discovering the problem with the machine, Corey sends a written notice of rejection to Heavy Metal. Shortly after Corey sends that notice, one of Corey’s wealthy gym members tells her that he loves this machine (despite the heart-rate monitor defect) and offers to purchase it from her for $3,000 more than she paid for it. Corey would now like to inform Heavy Metal that she is retracting her earlier rejection and will be accepting the machine by selling it to this gym member. Will Corey have the legal right to do that at this point without needing Heavy Metal’s assent?
(A) Yes, because under §2-606(1)(c), acceptance occurs when the buyer does any act inconsistent with the seller’s ownership, and selling the machine to a third party is clearly an act inconsistent with Heavy Metal’s ownership of the machine.
(B) Yes, because §2-603(1) says that a merchant seller like Gold’s Gym that rejects the goods is under a duty in any event to make reasonable efforts to sell the goods.
(C) Both (A) and (B) are true.
(D) No, because Gold’s Gym is not allowed to accept the machine until it has had a reasonable opportunity to inspect it.
(E) No, because a sale by Gold’s Gym under these circumstances would be wrongful as against the seller and therefore must first be ratified by the seller.
E
Finance Lessee arranges with Seller and Finance Lessor to have Seller sell a custom-made drill-press machine to Finance Lessor, who will then lease it (in a finance lease) to Finance Lessee for Finance Lessee’s factory. Finance Lessee meets with Seller to make sure that Seller understands the particular needs of Finance Lessee’s factory operations. Finance Lessee explains that the factory where this machine will be used has a very high level of humidity, so the drill-press machine must be able to operate even under very humid conditions. Seller assures Finance Lessee that this custom-made drill-press machine will operate effectively even in the most humid climates. Seller delivers the machine to Finance Lessee, and Finance Lessee accepts the machine and begins using it in the factory’s manufacturing operations. Two weeks into the finance lease, the drill-press machine breaks down because it turns out that it is not able to function effectively in humid climates. At this point, may Finance Lessee revoke its acceptance of the drill-press machine?
(A) Yes, because Finance Lessee’s failure to discover the non-conformity before acceptance was reasonably induced by Seller’s assurances.
(B) Yes, even if the finance lease contains an explicit “Hell or High Water” clause.
(C) No, because Finance Lessee failed to give notice of the non-conformity soon enough to preserve its right to revoke acceptance.
(D) No, but Finance Lessee will still have recourse against Seller.
(E) No, but only if the finance lease contains an explicit “Hell or High Water” clause.
D
Finance Lessee arranges with Seller and Finance Lessor to have Seller sell a custom-made drill-press machine to Finance Lessor, who will then lease it (in a finance lease) to Finance Lessee for Finance Lessee’s factory. Finance Lessee meets with Seller to make sure that Seller understands the particular needs of Finance Lessee’s factory operations. Finance Lessee explains that the factory where this machine will be used has a very high level of humidity, so the drill-press machine must be able to operate even under very humid conditions. Seller assures Finance Lessee that this custom-made drill-press machine will operate effectively even in the most humid climates. Seller delivers the machine to Finance Lessee, and Finance Lessee accepts the machine and begins using it in the factory’s manufacturing operations. Two weeks into the finance lease, the drill-press machine breaks down because it turns out that it is not able to function effectively in humid climates. Now assume that the lease between Finance Lessor and Finance Lessee is NOT a finance lease. Now when the machine breaks down, may Finance Lessee revoke its acceptance of the machine?
(A) Yes, because Finance Lessee accepted the machine on the reasonable assumption that the machine’s nonconformity would be cured, and it has not been seasonably cured.
(B) Yes, because Finance Lessee’s acceptance of the machine was reasonably induced by Seller’s assurances about the machine.
(C) Yes, because Finance Lessee’s acceptance of the machine was reasonably induced by the difficulty of discovery before acceptance.
(D) No, but Finance Lessee will still have recourse against Seller.
(E) No, but Finance Lessee will still have recourse against Finance Lessor.
C
Seller, a Toronto-based seller of textbooks, makes a contract with Bookstore, based in Syracuse, New York, for the sale of 800 chemistry textbooks to be delivered to Bookstore by August 15. The contract states that “time is of the essence,” since Bookstore needs to stock these books for its university’s fall-semester Introductory Chemistry classes. The books are ultimately delivered to Bookstore on August 22, and each of the books is missing the same three pages from the middle of the book. When Bookstore receives this delivery of textbooks, may it avoid its contract with Seller?
(A) Yes, but if Bookstore chooses to avoid the contract, then it thereby waives its rights to recover damages for Seller’s breach.
(B) Yes, and even if Bookstore chooses to avoid the contract, it retains its right to damages for Seller’s breach.
(C) Yes, but only if the missing pages amount to a “fundamental breach” of the contract.
(D) Both (B) and (C) are true.
(E) Both (A) and (C) are true.
B
Seller, a Toronto-based seller of textbooks, makes a contract with Bookstore, based in Syracuse, New York, for the sale of 800 chemistry textbooks to be delivered to Bookstore by August 15. The contract states that “time is of the essence,” since Bookstore needs to stock these books for its university’s fall-semester Introductory Chemistry classes. The books are ultimately delivered to Bookstore on August 4, and each of the books is missing the same three pages from the middle of the book. If Bookstore tries to avoid this contract, will Seller have a right to cure if Seller can deliver 800 conforming books before August 15?
(A) No, because the missing pages amount to a “fundamental breach” of Seller’s obligations.
(B) No, because the contract states that “time is of the essence.”
(C) No, because a seller cannot cure in a situation where a buyer has the right to avoid the contract.
(D) Yes, because the replacement shipment should not cause Bookstore unreasonable inconvenience.
(E) Yes, and Seller would still have a right to cure even if Seller were unable to deliver the replacement books until August 22.
D
The Gainesville, Florida franchisee for Planet Fitness orders 10 complete sets of rubber-coated steel dumbbells from Heavy Metal’s Chicago, Illinois factory. Planet Fitness uses a purchase order that Heavy Metal signs and accepts, but the purchase order does not include any delivery term and does not otherwise address risk of loss. Heavy Metal makes a delivery contract with Dependo, a nationwide carrier that Heavy Metal has used with great success many times in the past. Heavy Metal promptly notifies Planet Fitness when it puts the goods into Dependo’s possession. Unfortunately, the Dependo truck gets hijacked along the way and the dumbbells destined for Gainesville are stolen. Which party, as between Heavy Metal and Planet Fitness, has risk of loss in this case?
(A) Heavy Metal, because the UCC default mode for risk of loss is a destination contract.
(B) Heavy Metal, because the UCC default mode for risk of loss is a shipment contract.
(C) Planet Fitness, because the UCC default mode for risk of loss is a shipment contract.
(D) Planet Fitness, because the UCC default mode for risk of loss is a destination contract.
(E) The two parties will share the loss since neither side bothered to indicate what the risk of loss should be.
C
The Gainesville, Florida franchisee for Planet Fitness orders 10 complete sets of rubber-coated steel dumbbells from Heavy Metal’s Chicago, Illinois factory. Planet Fitness uses a purchase order that Heavy Metal signs and accepts; the purchase order specifically indicated that this contract is “FOB Seller’s Factory.” Heavy Metal makes a delivery contract with Dependo, a nationwide carrier that Heavy Metal has used with great success many times in the past. Heavy Metal promptly notifies Planet Fitness when it puts the goods into Dependo’s possession. Heavy Metal accidentally ships steel dumbbells that are not rubber-coated and therefore would not be suitable for the needs of Planet Fitness. Unfortunately, the Dependo truck gets hijacked along the way and the dumbbells destined for Gainesville are stolen. When the dumbbells get stolen en route, which party, as between Heavy Metal and Planet Fitness, has risk of loss in this case?
(A) Heavy Metal, even though this was a shipment contract.
(B) Heavy Metal, unless the purchase order that Heavy Metal accepted included a limitation of remedies to repair or replacement of defective dumbbells.
(C) Both (A) and (B) are true.
(D) Planet Fitness, because this was a shipment contract.
(E) Planet Fitness, because Planet Fitness never actually rejected the steel dumbbells that lacked the rubber coating.
A
The Gainesville, Florida franchisee for Planet Fitness orders 10 complete sets of rubber-coated steel dumbbells from Heavy Metal’s Chicago, Illinois factory. Planet Fitness uses a purchase order that Heavy Metal signs and accepts, which states no delivery terms. Heavy Metal makes a delivery contract with Dependo, a nationwide carrier that Heavy Metal has used with great success many times in the past. Heavy Metal promptly notifies Planet Fitness when it puts the goods into Dependo’s possession. Heavy Metal accidentally ships steel dumbbells that are not rubber-coated and therefore would not be suitable for the needs of Planet Fitness.
Planet Fitness at first accepts the dumbbells without noticing the lack of rubber coating, but then properly revokes its acceptance when it discovers the nonconformity. While Planet Fitness is holding the dumbbells for Heavy Metal to pick up, there is a flood in the Planet Fitness gym (through no fault of Planet Fitness) that ends up rusting and destroying the dumbbells. Which party will have the risk of loss in this case?
(A) Planet Fitness, since risk of loss passed to Planet Fitness once Planet Fitness accepted the goods.
(B) Planet Fitness, because this was a shipment contract.
(C) Both (A) and (B) are true.
(D) Heavy Metal, even if Planet Fitness has effective insurance that covers this loss.
(E) Heavy Metal, unless Planet Fitness has effective insurance that covers this loss.
E
Heavy Metal agrees to custom-build a treadmill for Consumer that has twice the shock absorption of a typical treadmill. Consumer, who lives in the same city as Heavy Metal’s main warehouse, pre-pays the $10,000 purchase price and agrees to pick up the treadmill from the warehouse when it is completed. When the treadmill is finished, Heavy Metal calls Consumer to let her know. Consumer says that she will bring her pickup truck to get the treadmill in the next day or two. Three days following that call, Consumer has not yet picked up the treadmill and there is a lightning storm that causes a fire in the warehouse that destroys Consumer’s custom-built treadmill. As between Heavy Metal and Consumer, who has risk of loss as to the destroyed treadmill?
(A) Consumer, because Heavy Metal had clearly tendered the treadmill by the time it was destroyed.
(B) Heavy Metal, because Consumer never received the treadmill.
(C) Heavy Metal, because this was a destination contract.
(D) Consumer, because this was a shipment contract.
(E) Heavy Metal, because the destruction of the treadmill was clearly not Consumer’s fault.
B
Lessor and Lessee enter into a finance lease under which Supplier will deliver a machine by third-party carrier to Lessee’s factory for a five-year lease term. Nothing is said in the lease contract about the passage of risk of loss. Supplier puts a conforming machine into the possession of a reliable third-party carrier and gives timely notice to Lessee of the delivery, but Lessee fails to get insurance on the machine during transit. The machine then gets destroyed en route to Lessee through no fault of Lessor, Supplier, or Lessee. As between Lessor and Lessee, who has risk of loss as to the destroyed machine?
(A) Lessor, but only because this is a finance lease.
(B) Lessee, but only because this is a finance lease.
(C) Lessee, and that would be true even if this were not a finance lease.
(D) Lessor, because even with a finance lease the risk will not pass until Lessee has accepted the goods.
(E) Lessee, because Lessee should have insured the goods once it received notice of delivery from Supplier.
D
Lessor and Lessee enter into a lease under which states “FOB Lessee’s Factory” for a five-year lease term. Lessor ships a conforming machine and gives timely notice to Lessee of the delivery, but Lessee fails to get insurance on the machine during transit. When the machine gets destroyed en route to Lessee through no fault of Lessor or Lessee, who has risk of loss as to the destroyed machine?
(A) Lessor, because in a non-finance lease risk of loss does not pass to Lessee.
(B) Lessor, because this was a destination contract.
(C) Lessee, because this was a shipment contract.
(D) Lessor, and that would also be true if the delivery term in the lease were “FOB Lessor’s Factory.”
(E) Lessee, because Lessor did nothing to cause the loss.
B
Heavy Metal makes a contract to sell a dozen Precor PS800 treadmills to a Gold’s Gym franchise in Toronto, Canada. The contract provides that Heavy Metal will pay for delivery to Toronto, but nothing is said in the contract concerning risk of loss. Heavy Metal places the 12 conforming treadmills on a truck headed to Toronto, but the truck gets carjacked along the way and the treadmills never make it to Toronto. Which party, as between Heavy Metal and Gold’s Gym, will have risk of loss for the stolen treadmills under the CISG?
(A) Gold’s Gym, because the default under the CISG is a shipment contract.
(B) Heavy Metal, because the default under the CISG is a destination contract.
(C) Heavy Metal, because the default under the CISG is a shipment contract.
(D) Gold’s Gym, because the default under the CISG is a destination contract.
(E) Heavy Metal, because by agreeing to pay for delivery to Toronto, Heavy Metal turned this into a destination contract.
A
