CPA Regulation Reg Quiz: Rights Obligations Of Buyers And Sellers

What this quiz covers

This quiz focuses on Rights Obligations Of Buyers And Sellers, giving you a quick way to practice the rules, question types, and explanations that matter most for CPA Regulation Reg.

How to use this quiz

Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

Question 1

1. The seller must deliver the goods to the buyer's home regardless of contract terms.
2. The seller must tender delivery of conforming goods in accordance with the contract terms, including quantity, quality, and time and place of delivery. (correct answer)
3. The seller must deliver goods accompanied by a written warranty for every item sold.
4. The seller must accept any return of goods the buyer decides to send back within one year.

Explanation: Under UCC Section 2-301, the seller's basic obligation is to transfer and deliver conforming goods, and the buyer's basic obligation is to accept and pay for them. Conforming goods are those that meet every aspect of the contract description (quantity, quality, specifications, and delivery terms). The seller must make tender of delivery - placing conforming goods at the buyer's disposal and giving reasonable notification so the buyer can take delivery. Answer A incorrectly specifies the delivery location. Answer C is incorrect because written warranties are not always required. Answer D is incorrect because there is no automatic one-year return right.

Question 2

1. The seller notifies the buyer that the goods are ready and waits indefinitely.
2. The seller puts and holds conforming goods at the buyer's disposition and gives the buyer any notification reasonably necessary to enable the buyer to take delivery; the seller must do this at a reasonable hour and keep the goods available for a reasonable period. (correct answer)
3. The seller ships the goods without notifying the buyer of the shipment.
4. The seller deposits the goods at a public warehouse and sends the buyer the receipt.

Explanation: Under UCC Section 2-503(1), tender of delivery requires the seller to put and hold conforming goods at the buyer's disposition and give the buyer any notification reasonably necessary for the buyer to take delivery. This must be at a reasonable hour and for a reasonable period. Proper tender entitles the seller to acceptance and payment in accordance with the contract. Answer A is incorrect because the seller cannot wait indefinitely. Answer C is incorrect because notification is required. Answer D describes one form of tender (through a document of title) but overstates it as the general rule.

Question 3

1. The buyer must pay within 30 days of delivery regardless of the contract terms.
2. The buyer must pay only after physically inspecting and accepting the goods.
3. The buyer may delay payment by requesting additional time as long as the request is made in writing.
4. The buyer must tender payment concurrent with the seller's tender of delivery, unless the contract provides otherwise; payment may be made by any means customary in the ordinary course of business. (correct answer)

Explanation: Under UCC Section 2-511(1), unless otherwise agreed, payment is due at the time and place at which the buyer is to receive the goods. The buyer must tender payment concurrently with the seller's tender of delivery - the exchange is simultaneous. Payment may be made by any means or in any manner current in the ordinary course of business, but the seller may demand payment in legal tender and give a reasonable time extension to obtain it. Answer A imposes a 30-day rule not found in the UCC. Answer B is incorrect because payment need not await post-inspection acceptance in all cases. Answer C is incorrect because written extensions are not automatically available.

Question 4

1. The buyer recovers the full contract price paid.
2. The buyer recovers nothing once acceptance occurs.
3. The buyer recovers the difference between the value of the goods as accepted and the value they would have had if they had been as warranted, plus any incidental and consequential damages. (correct answer)
4. The buyer recovers the cost to repair the goods only.

Explanation: Under UCC Section 2-714(2), the measure of damages for breach of warranty is the difference between the value of the goods as accepted (what the non-conforming goods are actually worth) and the value they would have had if they had been as warranted (what conforming goods would have been worth), plus any incidental and consequential damages under Section 2-715. This formula compensates the buyer for the deficiency in value. Answer A is incorrect because the buyer recovers the value shortfall, not the full price. Answer B is incorrect because accepted goods may still support warranty damages with timely notice. Answer D is only the repair cost, which may understate the damages.

Question 5

1. The seller may demand payment before delivering the goods.
2. The seller is entitled to payment only after the buyer's inspection period has ended.
3. The seller is entitled to payment at any time within 90 days of shipment.
4. Tender of delivery is a condition to the buyer's duty to accept and pay; once the seller makes a proper tender, the buyer's obligation to pay arises concurrently. (correct answer)

Explanation: Under UCC Section 2-507(1), tender of delivery is a condition to the buyer's duty to accept the goods and, unless otherwise agreed, to the buyer's duty to pay for them. Tender and payment are concurrent conditions - neither party need perform first. The seller's proper tender triggers the buyer's obligation. Answer A incorrectly allows pre-delivery payment demands. Answer B is incorrect because payment is not automatically delayed pending inspection. Answer C invents a 90-day payment window not found in the UCC.

Question 6

1. The seller warrants that the title conveyed is good, the transfer is rightful, and the goods are delivered free from any security interest or other lien or encumbrance of which the buyer has no knowledge. (correct answer)
2. The seller warrants that the goods will perform satisfactorily for at least one year.
3. The seller warrants that the goods are free from all liens, including those the buyer knew about when buying.
4. The warranty of title requires a separate written statement; it is not implied by law.

Explanation: Under UCC Section 2-312, the warranty of title is implied in every contract for sale unless specifically disclaimed. It warrants: (1) good title is conveyed; (2) the transfer is rightful; and (3) the goods are free from any security interest, lien, or encumbrance of which the buyer at the time of contracting had no knowledge. Answer B describes a performance warranty, not a title warranty. Answer C incorrectly includes liens the buyer knew about; known liens are not covered by the warranty. Answer D is incorrect because the warranty of title is implied and does not require a separate written statement.

Question 7

1. When the seller breaches, the risk of loss remains with the buyer until the seller cures.
2. Risk of loss shifts to the buyer automatically upon shipment regardless of breach.
3. When the tender or delivery of goods fails to conform to the contract (giving the buyer a right of rejection), the risk of loss remains on the seller until cure or acceptance. (correct answer)
4. When the seller breaches, risk of loss is shared equally between buyer and seller.

Explanation: Under UCC Section 2-510(1), when a tender or delivery of goods fails to conform to the contract such that the buyer has a right of rejection, the risk of loss remains on the seller until cure or acceptance. This prevents the seller from transferring risk to the buyer through non-conforming tender. If the seller cures the defect or the buyer accepts despite the non-conformity, risk then passes to the buyer. Answer A reverses the rule; the risk stays with the breaching seller, not the buyer. Answer B is incorrect because conforming tender is required for risk to pass in a shipment contract. Answer D (shared risk) has no basis in Article 2.

Question 8

1. Identification gives the buyer a special property interest and an insurable interest in the goods; it also allows the buyer to seek specific performance or replevin in appropriate cases and fixes the goods that are subject to the contract. (correct answer)
2. Identification transfers title to the buyer immediately upon the seller designating the goods.
3. Identification has no legal significance under the UCC.
4. Identification allows the seller to substitute different goods at any time before delivery.

Explanation: Under UCC Section 2-501, identification of goods to a contract gives the buyer a special property interest in the identified goods and an insurable interest in them. Once goods are identified, the buyer may: (1) seek specific performance or replevin in cases where the goods are unique or the buyer is unable to cover; (2) recover goods under Section 2-502 if the seller becomes insolvent within 10 days of the buyer's first installment payment; and (3) recover damages based on market price at the time of identification. Answer B is incorrect because identification does not automatically transfer title. Answer C is incorrect because identification has significant legal effects. Answer D is incorrect because identification commits those specific goods to the contract.

Question 9

1. A buyer may always obtain specific performance if they prefer it to money damages.
2. A buyer may obtain specific performance only if the goods were ordered more than 90 days before the breach.
3. Specific performance may be ordered when the goods are unique or in other proper circumstances, such as when the buyer cannot reasonably obtain substitute goods on the market. (correct answer)
4. Specific performance is only available for goods with a value exceeding $100,000.

Explanation: Under UCC Section 2-716(1), specific performance may be decreed where the goods are unique or in other proper circumstances. Unique goods include rare art, custom-made items, or goods that cannot be purchased elsewhere. 'Other proper circumstances' may include situations where the market for the goods has dried up, the buyer cannot obtain substitute goods, or the goods have special characteristics that make cover impossible. Answer A is incorrect because specific performance requires uniqueness or inability to cover, not mere preference. Answer B (90-day rule) is not in the Code. Answer D (dollar threshold) is not a UCC requirement.

Question 10

1. A buyer may revoke acceptance at any time within one year of delivery.
2. A buyer may revoke acceptance whenever they change their mind about the purchase.
3. A buyer may revoke acceptance only if the goods were defective at the time of delivery.
4. A buyer may revoke acceptance when: the non-conformity substantially impairs the value of the goods to the buyer; and the buyer accepted either on the reasonable assumption that the non-conformity would be cured, or without discovery of the non-conformity due to the difficulty of discovering it before acceptance. Revocation must occur within a reasonable time. (correct answer)

Explanation: Under UCC Section 2-608, revocation of acceptance requires: (1) the non-conformity substantially impairs the value of the goods to the buyer; and (2) the buyer accepted because they reasonably assumed the seller would cure, or because the non-conformity was difficult to discover before acceptance. Revocation must occur within a reasonable time after the buyer discovers or should have discovered the grounds, before any substantial change in condition of the goods. Answer A invents a one-year period. Answer B (change of mind) has no basis in the Code. Answer C is too narrow; the non-conformity need not have existed at delivery if it subsequently emerged and was difficult to discover.

Question 11

1. The buyer may cancel the contract and recover any price paid, seek cover and recover the difference between the cover price and the contract price, recover market-price damages, or in appropriate cases seek specific performance or replevin. (correct answer)
2. The buyer may only recover the contract price paid.
3. The buyer must accept substitute goods offered by the seller.
4. The buyer may recover damages only after exhausting all cover options.

Explanation: Under UCC Section 2-711, when the seller fails to deliver or repudiates, the buyer's remedies include: (1) cancellation of the contract and recovery of any amounts paid (Section 2-711(1)); (2) cover under Section 2-712 - purchase substitute goods and recover the difference between the cover price and the contract price; (3) market-price damages under Section 2-713 (contract price minus market price) if the buyer does not cover; and (4) specific performance or replevin for unique goods under Section 2-716. Answer B limits recovery to the contract price, which is insufficient. Answer C is incorrect because the buyer has no obligation to accept substitute goods. Answer D is incorrect because cover is optional, not required.

Question 12

1. The seller's only obligation is to deliver the goods to any carrier.
2. The seller must accompany the goods during transit.
3. The seller must put the goods in the possession of a carrier, make a reasonable contract for transportation given the nature of the goods, obtain and promptly deliver any documents necessary for the buyer to take delivery, and promptly notify the buyer of the shipment. (correct answer)
4. The seller must insure the goods during transit at the seller's expense.

Explanation: Under UCC Section 2-504, in a shipment contract, the seller must: (1) put the goods in the possession of such a carrier and make such a contract for their transportation as may be reasonable given the circumstances; (2) obtain and promptly deliver or tender any document necessary to enable the buyer to obtain possession of the goods; and (3) promptly notify the buyer of the shipment. Failure to notify may allow the buyer to reject if material delay or loss results. Answer A is too minimal - the contract must be reasonable and notification required. Answer B is incorrect because the seller need not accompany the goods. Answer D is incorrect because the seller is not required to insure the goods at their expense.

Question 13

1. When the contract becomes more expensive than the seller anticipated.
2. When the seller finds a more profitable buyer for the same goods.
3. When the seller has supply shortages caused by ordinary market conditions.
4. When performance has been made impracticable by the occurrence of a contingency whose non-occurrence was a basic assumption of the contract, provided the seller gives timely notice to buyers who may be affected. (correct answer)

Explanation: Under UCC Section 2-615, a seller is excused from delivery if performance has been made impracticable by the occurrence of a contingency whose non-occurrence was a basic assumption of the contract, and the seller did not assume the risk of the contingency. Examples include crop failures due to natural disaster, governmental regulations preventing performance, and destruction of the source of supply. The seller must give timely notice and, if only partially impracticable, must fairly allocate available goods among buyers. Answer A (increased expense) is generally insufficient. Answer B (more profitable buyer) is a breach, not impracticability. Answer C (ordinary market shortages) is insufficient because foreseeable market fluctuations are assumed risks.

Question 14

1. The seller has an unlimited right to cure as long as the contract period has not expired.
2. If the time for performance has not yet expired, the seller may cure by notifying the buyer and making a conforming delivery before expiration; if the seller had reasonable grounds to believe the non-conforming tender was acceptable, the seller may also cure after the delivery date within a further reasonable time. (correct answer)
3. The seller may cure only if the non-conformity was accidental and not intentional.
4. Cure is only available for goods worth more than $1,000.

Explanation: UCC Section 2-508 provides a two-part cure right: (1) Under Section 2-508(1), if the time for performance has not yet expired, the seller may seasonably notify the buyer and make a conforming delivery within the contract time; and (2) Under Section 2-508(2), even after the delivery date has passed, if the seller had reasonable grounds to believe the non-conforming tender would be acceptable (e.g., based on prior dealings or trade practice), the seller may cure within a further reasonable time after notifying the buyer. Answer A is incorrect because there are limits on the cure right. Answer C is incorrect because cure is not limited to accidental non-conformities. Answer D is incorrect because there is no dollar threshold for cure rights.

Question 15

1. The buyer must reject all goods; partial acceptance is not permitted.
2. The buyer must accept all the goods and then seek damages.
3. The buyer may reject the whole, accept the whole, or accept any commercial unit and reject the rest. (correct answer)
4. The buyer may only accept conforming units and must automatically reject non-conforming ones.

Explanation: Under UCC Section 2-601, when goods fail to conform to the contract, the buyer may: (1) reject the whole shipment; (2) accept the whole shipment despite non-conformity (with a right to damages); or (3) accept any commercial unit or units and reject the rest. A 'commercial unit' is a unit of goods that commercial usage treats as a single whole for sale purposes. This flexibility allows buyers to retain useful portions while rejecting defective portions. Answer A is incorrect because partial acceptance is allowed. Answer B is incorrect because rejection is available. Answer D incorrectly makes the selection automatic.

Question 16

1. The aggrieved party must wait until the performance date before taking any action.
2. The aggrieved party may immediately treat the repudiation as a present breach, await performance for a commercially reasonable time, or urge the repudiating party to retract the repudiation; the aggrieved party may also suspend their own performance. (correct answer)
3. The aggrieved party may only seek damages; specific performance is not available.
4. The aggrieved party must demand assurance under Section 2-609 before treating the repudiation as a breach.

Explanation: Under UCC Section 2-610, when a party to a sales contract anticipatorily repudiates before their performance is due, the aggrieved party may: (1) await performance for a commercially reasonable time (hoping for retraction); (2) resort to any remedy for breach immediately; (3) suspend performance; and (4) urge the repudiating party to retract. Answer A is incorrect because the aggrieved party need not wait until the performance date; they may act immediately on the repudiation. Answer C is incorrect because various remedies including cover and market price damages are available. Answer D is incorrect because a demand for assurance is required when there are grounds for insecurity but the other party has not yet repudiated; once repudiation occurs, immediate remedies are available.

Question 17

1. Rejection must occur within a reasonable time after delivery or tender, and the buyer must seasonably notify the seller of the rejection; the buyer must also hold the goods with reasonable care for the seller's disposal. (correct answer)
2. Rejection is effective only if made in writing.
3. Rejection requires the buyer to return the goods to the seller at the buyer's expense.
4. Rejection is effective at any time before the buyer uses the goods.

Explanation: Under UCC Section 2-602, an effective rejection requires: (1) rejection within a reasonable time after delivery or tender; (2) seasonable notification to the seller of the rejection; and (3) the buyer must hold the goods with reasonable care at the seller's disposition for a reasonable time. If the buyer fails to properly reject (fails to notify or fails to act within a reasonable time), the rejection is ineffective and the buyer is deemed to have accepted the goods. Answer B is incorrect because the rejection need not be in writing. Answer C is incorrect because the buyer is not required to return the goods; the buyer holds them for the seller's disposal. Answer D is incorrect because rejection must occur within a reasonable time.

Question 18

1. A buyer who receives 990 widgets when the contract specified 1,000 may reject the entire delivery because it does not conform to the contract quantity. (correct answer)
2. A buyer may reject goods only if the defect is material and substantially impairs the value of the contract.
3. A buyer may reject goods only if both the quantity and quality fail to conform.
4. The perfect tender rule allows the buyer to reject goods only if the price has not yet been paid.

Explanation: The perfect tender rule under UCC Section 2-601 gives the buyer the right to reject any goods that fail to conform to the contract in any respect - even a minor shortfall in quantity or quality. Receiving 990 widgets when 1,000 were contracted for is a non-conformity (wrong quantity), giving the buyer the right to reject the entire shipment. Answer B describes the substantial impairment standard applicable to installment contracts, not single-delivery contracts. Answer C incorrectly requires both quantity and quality defects. Answer D incorrectly conditions the rejection right on payment status.

Question 19

1. The contract must have resulted in actual financial loss to one party.
2. The contract or clause must be unconscionable at the time it was made; the court may refuse to enforce the entire contract, enforce the remaining terms, or limit the application of the unconscionable clause. (correct answer)
3. The unconscionability must be proven by clear and convincing evidence.
4. The party seeking relief must show fraudulent intent by the other party.

Explanation: Under UCC Section 2-302, if a court finds a contract or any clause to be unconscionable at the time it was made, the court may: (1) refuse to enforce the contract; (2) enforce the remainder of the contract without the unconscionable clause; or (3) limit the application of the unconscionable clause to avoid an unconscionable result. The unconscionability is evaluated as of the time of contract formation. Answer A is incorrect because actual financial loss is not required; unconscionability may be procedural or substantive. Answer C is incorrect because no specific evidentiary standard beyond the court's finding is required. Answer D is incorrect because fraud is not required; unconscionability focuses on fairness and oppressiveness.

Question 20

1. When the buyer has accepted the goods, when the goods were conforming and risk of loss has passed to the buyer and the goods were lost or damaged before the seller can cover, or when the goods cannot reasonably be resold. (correct answer)
2. Whenever the buyer fails to pay the invoice within 30 days.
3. Only when the buyer accepts the goods in writing.
4. When the seller decides that resale would be too inconvenient.

Explanation: Under UCC Section 2-709, the seller may sue for the full contract price (not just damages) in three situations: (1) the buyer has accepted the goods; (2) conforming goods were lost or damaged after risk of loss passed to the buyer; or (3) the seller has identified conforming goods to the contract and is unable to resell them at a reasonable price after reasonable effort. This remedy is analogous to specific performance for the seller. Answer B (30-day invoice rule) is not in the UCC. Answer C incorrectly requires written acceptance. Answer D gives the seller impermissible discretion to choose this remedy.