Question

If the contract requires the seller to ship goods by carrier but does not require that the seller guarantee their delivery to a specific destination, when does risk pass from the seller to the buyer?

Multiple Choice

• When the goods are delivered to the carrier.

• When the buyer receives the document of title.

• When the goods are delivered to the buyer.

• When the buyer has the power to take possession of the goods.

• Leroy ordered a DVD player for his son's birthday. While the manufacturer guaranteed that it would ship the player within ten business days, the player was not shipped until three months after Leroy placed his order. By the time the DVD player arrived, Leroy's son's birthday had long since passed. When the player arrived, Leroy refused to sign for it. Under these circumstances:

  Multiple Choice

• Leroy holds title to the DVD player.

• The manufacturer can only regain title if it sues Leroy.

• Leroy and the manufacture have joint title.

• The manufacturer is automatically revested with title to the DVD player.

John, the promisor, contracted with Marla to paint Marla's house by October 15. John contacts Marla on October 10 to state that he would not paint the house because he got a great new job and decided to go to work out of state. Assuming he really did get an outstanding job that required an out-of-state move, which of the following statements is true?

• John has not breached the contract until October 15 and still may be able to fulfill his obligation.

• John has not breached the contract at all because he had a reasonable basis for refusing to do the work.

• John has committed an anticipatory breach. Marla must wait until after October 15 to sue John for breach of contract

• John has committed an anticipatory breach. Marla may sue John immediately for breach of contract.

Rachel agrees to sell her boat worth $3,000 to Jake for $2,000, but she later refuses to complete the deal. Jake sues for damages. What is the likely outcome?

Multiple Choice

• Rachel will be forced to sell the boat under the doctrine of specific performance but will receive the full value of $3,000 from Jake.

• Jake will be awarded $1,000 in compensatory damages.

• Jake will be awarded $3,000 in compensatory damages that he may use to buy a different boat.

• Rachel will be forced to sell the boat to Jake for $2,000 under the doctrine of specific performance.

• Which of the following is true regarding the duty to mitigate damages?

  Multiple Choice

• It falls on the courts.

• It falls on the non-breaching party.

• It is allocated equitably between the breaching and non-breaching party.

• It falls on the breaching party.

Answer 1

If the contract requires the seller to ship goods by carrier but does not require that the seller guarantee their delivery to a specific destination, when does risk pass from the seller to the buyer?

When the buyer has the power to take possession of the goods.

The risk of loss passes to the buyer as soon as the buyer has the right to take posession. This must be recognized by the middle men. In this case, it is the carrier. So irrespective of the mode of shipment, if the seller has given the goods to a carrier and it is understood that now buyer has the right to possess the goods, then the buyer becomes responsible for the loss.

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Leroy ordered a DVD player for his son's birthday. While the manufacturer guaranteed that it would ship the player within ten business days, the player was not shipped until three months after Leroy placed his order. By the time the DVD player arrived, Leroy's son's birthday had long since passed. When the player arrived, Leroy refused to sign for it. Under these circumstances:

The manufacturer is automatically revested with title to the DVD player

There has been a breach of contract through failure of performance. As a result, the buyer has the right to refuse the product. Since the product has not been delivered in it stipulated time, the buyer can refuse and the seller automatically has the title and risk of loss to the product.

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John, the promisor, contracted with Marla to paint Marla's house by October 15. John contacts Marla on October 10 to state that he would not paint the house because he got a great new job and decided to go to work out of state. Assuming he really did get an outstanding job that required an out-of-state move, which of the following statements is true?

John has committed an anticipatory breach. Marla may sue John immediately for breach of contract

This is an anticipatory breach as John does not plan to do his part of the contract. In case of anticipatory breach, Marla is no longer obliged to do her part (pay John) and can begin legal proceedings (sue) against John.

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Rachel agrees to sell her boat worth $3,000 to Jake for $2,000, but she later refuses to complete the deal. Jake sues for damages. What is the likely outcome?

Rachel will be forced to sell the boat under the doctrine of specific performance but will receive the full value of $3,000 from Jake

As per the contract, Jake is supposed to get a boat for $2000. Now, if we reinstate the situation before the breach (Rachel's refusal) of the contract then that should have happened. This calls for specific performance by Rachel.

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Which of the following is true regarding the duty to mitigate damages?

It falls on the non-breaching party.

The plaintiff (non-breaching party) should be the one who takes care to make sure that his/her loss is reduced/removed. Otherwise it is possible for the defendant to prove contributory negligence.