Question

1. RV Company agrees to buy a certain quantity of vintage campers from Sales Inc. Their contract limits consequential damages for lost profits resulted from the use of the goods. This limit is not neccessarily unconscionable because

A. Consequential damages cover only reasonable foreseeable losses

B. the transaction is a sale, not a lease

C. the loss would be commercial in nature

D. lost profits are indirect losses

2. In a letter-of-credit transaction, Unum Inc., a U.S. firm, delivers a bill of lading to Verity Bank to prove that a contracted-for shipment was made to Wallaby Ltd., an Australian company. Verity must pay Unum

a. before policing the underlying contract.

b. after verifying the facts that the bill of lading purports to reflect.

c. against the bill of lading, without more.

d. coincident with the buyer’s assurance of its receipt of the goods.

Answer 1

1.Answer: A

consequential damages cover only reasonable foreseeable losses.

Explanation:

The contract limits the consequential damages for the lost profits resulted from the use of goods.The limit is not necessarily unconscionable because the lost profits are not necessarily foreseeable and may be considered as direct or indirect loss. The other options are incorrect because the contract can be applicable to both lease and sale and excluding something from contract just because it is a commercial loss doesn't make sense.

2 Answer :D

coincident with the buyer’s assurance of its receipt of the goods.

Explanation:

when the seller present the bill of lading to its bank to secure payment, the payment is not necessarily made to the seller immediately after the bill of lading is provided, but after the buyer has taken ownership of the consignment and confirmed that it meets the specification stated in the contract (quantity, quality, and condition). Therefore, verity must pay Unum only after buyer's assurance of the receipt of goods