August-TIF Ch10

Chapter 10: Sales
True or False Questions
1. The Convention Relating to a Uniform Law on the International Sale of Goods (ULIS)
supersedes the United Nations Convention on Contracts for the International Sale of
Goods (CISG).
Answer: False
Diff: 1
Topic: United Nations Convention on Contracts for the International Sale of Goods
Skill: Legal Concepts
2. The CISG only governs contracts of international sales.
Answer: True
Diff: 2
Topic: Transactions Covered in CISG
3. CISG may apply even if the buyers and sellers places of business are not in a
contracting state.
Answer: True
Diff: 1
4. Sales transactions involving electricity are excluded from the CISG.
Answer: True
Diff: 1
5. Investment securities come under the purview of the CISG.
Answer: False
Diff: 1
6. Transactions involving auction sales come under the purview of the CISG.
Answer: False
Diff: 1
7. Contracts for goods to be manufactured are treated by the CISG as sales of goods
unless the buyer undertakes to supply a substantial part of the materials.
Answer: True
Diff: 1
8. CISG deals with the questions related to the legality of a contract.
Answer: False
Diff: 2
Topic: Contractual Issues Excluded from the Coverage of CISG
9. According to the CISG, the rules of private international law would be the final source
used for deciding legal questions governed by the convention.
Answer: True
Diff: 1
Topic: Interpreting CISG
10. Article 8 of the CISG establishes rules for interpreting the statements and conduct of
the parties.
Answer: True
Diff: 1
Topic: Interpreting Sales Contracts
11. The CISG requires that all contracts should be in writing.
Answer: False
Diff: 2
12. Offers that do not state that they are irrevocable can be revoked any time before the
offeree dispatches an acceptance.
Answer: True
Diff: 1
Topic: Formation of the Contract
13. Under the CISG, the acceptance has to be returned via the same medium in which the
original offer was sent.
Answer: False
Diff: 1
14. The doctrine of consideration does not apply to the CISG.
Answer: True
Diff: 1
15. If an offer is oral, the acceptance must be made immediately, unless the circumstances
indicate otherwise.
Answer: True
Diff: 1
16. A rejection becomes effective as soon as it is dispatched by an offeree.
Answer: False
Diff: 2
17. Goods do not conform to a contract if they are subject to third-party claims.
Answer: True
Diff: 1
Topic: Sellers Obligations
18. If a seller cures defects in his nonconforming goods, the buyer loses his or her right to
claim any damages under the CISG.
Answer: False
Diff: 1
19. In an in-transit contract, the risk of loss passes to the buyer at the time the contract is
concluded.
Answer: True
Diff: 1
Topic: Buyers Obligations
20. The price reduction remedy can be claimed by a buyer only if the buyer has accepted
nonconforming goods.
Answer: True
Diff: 1
Topic: Remedies
21. Suspension of performance is a remedy exclusively available to the seller.
Answer: False
Diff: 1
Topic: Remedies
22. Anticipatory avoidance cannot be claimed if the specific goods promised to the buyer
are wrongfully sold to a third party.
Answer: False
Diff: 1
Topic: Remedies
23. According to the foreseeability test, a breaching party is liable only for those damages
that he foresaw or ought to have foreseen.
Answer: True
Diff: 1
Topic: Remedies
24. The force majeure excuse can be used only as long as the underlying impediment
continues in existence.
Answer: True
Diff: 1
Topic: Excuses for Nonperformance
25. The force majeure excuse becomes applicable in the event of a natural disaster.
Answer: True
Diff: 1
Multiple Choice Questions
26. The UNs Convention on Contracts for the International Sale of Goods (CISG) differs
from the Convention Relating to a Uniform Law on the Formation of Contracts for the
International Sale of Goods (ULF) in that the CISG ________.
A. does not represent the legal systems of communist nations

B. contains provisions for domestic sales of goods
C. represents all major legal systems
D. does not contain provisions pertaining to the formation of contracts
Answer: C
Diff: 2
27. The ________ is a contractual provision that identifies the law to be applied in the
event of a dispute over the terms or the performance of the contract.
A. rule of reciprocity
B. choice-of-law clause
C. per se rule
D. Noerr doctrine
Answer: B
Diff: 1
28. A transaction involving which of the following types of goods is most likely to be
governed by CISG?
A. aircraft
B. electricity
C. negotiable instruments
D. agricultural products
Answer: D
Diff: 2
29. Which of the following types of transactions would be included in the purview of the
CISG?
A. sale of land at a foreclosure

B. sale by an auction
C. sale of patent rights
D. sale of negotiable instrument
Answer: C
Diff: 2
30. Which of the following features of a contract is excluded from the CISG?
A. the rights of third parties

B. the formation of the contract
C. the remedies available to the buyer
D. the remedies available to the seller
Answer: A
Diff: 2
31. Which of the following features is covered in the CISG?
A. rights of the parties involved in the sale of stocks and shares

B. the remedies available to the buyer
C. the competency of the third parties
D. the rights of third parties
Answer: B
Diff: 2
32. To determine if CISG applies to a particular contractual issue, one must look to the
convention itself. If the convention does apply, domestic law is preempted. This means
that ________.
A. the case will be handled by the WTO
B. the remedies provided in CISG are the only remedies available
C. the domestic law will take precedence over the CISG
D. both domestic and the CISG laws are applied together
Answer: B
Diff: 2
33. The CISG differs from the United States Uniform Commercial Code (UCC) in that
the CISG ________.
A. does not enforce unconscionable contracts

B. requires that parties act in good faith
C. defines goods as movable and tangible
D. applies sales laws only to merchants
Answer: D
Diff: 2
34. The ________ states that a statute or treaty is to be interpreted only from the words
contained within the statute or treaty.
A. foreseeability test
B. Ultravires rule
C. plain meaning rule
D. per se rule
Answer: C
Diff: 1
35. Using the ________ method of interpreting a statute would require understanding the
legislative history leading up to the adoption of that statute.
A. nolo contendere
B. force majeure
C. de minimis
D. travaux prparatoires
Answer: D
Diff: 1
36. The ________ is a rule that contracts should be interpreted according to the
understanding that a reasonable person would have had at the time the agreement was
made.
A. objective intent approach

B. parol evidence rule
C. plain meaning rule
D. stabilization clause
Answer: A
Diff: 1
37. The subjective intent approach differs from the objective intent approach in that the
subjective intent approach _______.
A. tries to interpret the conduct of the parties involved

B. tries to interpret the intent of the parties involved
C. is considered an inferior form of interpretation
D. is only used when objective intent cannot be interpreted
Answer: B
Diff: 2
38. The ________ comes into effect when a contract describes itself as being complete
and final, preliminary or informal agreements made prior to or at the same time the
contract was made will be ignored when interpreting it.
A. choice-of-law clause
B. Ultravires rule
C. parol evidence rule
D. per se rule
Answer: C
Diff: 1
39. A(n) ________ is a proposal addressed to specific persons indicating an intention by
the person making the proposal to be bound to the sale or purchase of particular goods for
a price.
A. agreement
B. advertisement
C. revocation
D. offer
Answer: D
Diff: 1
40. Which of the following makes an offer effective?
A. when the offeror makes the proposal

B. when it reaches the offeree
C. when it mentions a fixed price for the goods
D. when it is addressed to the public
Answer: B
Diff: 2
41. With regard to the promise of irrevocability, the CISG differs from the UCC in that
the CISG ________.
A. requires the promise of irrevocability to be signed by both parties

B. requires the promise of irrevocability to be limited by time
C. does not require for the promise of irrevocability to be in writing
D. makes it mandatory only for the offeree, and not for the offeror, to obey the promise of
irrevocability
Answer: C
Diff: 2
42. A firm offer is an offer ________.
A. in which a fixed price is not mentioned for the goods or the services being sold
B. in which the offeree is an individual and the offeror is an organization
C. which is governed by the laws of the WTO
D. that the offeror promises to keep open for a fixed period of time
Answer: D
Diff: 2
43. A contract comes into existence when an offeree communicates his/her ________ to
the offeror.
A. acceptance
B. counteroffer
C. revocation
D. firm offer
Answer: A
Diff: 1
44. Which of the following statements is true regarding the acceptance of an offer?
A. If the offer is oral, the acceptance must be communicated to the offeror within 2
months of receiving the offer.
B. An offeree must express assent in the form of writing.
C. Silence or inactivity, in and of itself, constitute acceptance.
D. Acceptance must be received by the offeror within the time period specified in the
offer.
Answer: D
Diff: 3
45. Which of the following is true under the CISG if the offeree dispatches a rejection
and an acceptance to the offeror?
A. both the acceptance and the rejection would be considered void

B. whichever reaches the offeror first would take precedence over the other
C. rejection would take precedence over an acceptance
D. an acceptance would take precedence over a rejection
Answer: B
Diff: 2
46. Which of the following is true of the remedy of avoidance used by an injured party of
a contract?
A. It can be used without notification to the injuring party.

B. It revokes all the provisions governing the rights and duties of the parties.
C. It cancels out any provisions in the contract concerning the settlement of disputes,
once used.
D. It can be used in case a fundamental breach of the contract has been observed.
Answer: D
Diff: 3
Topic: General Standards of Performance
47. The remedy of sending out a notification by a party that he or she is canceling a
contract and returning everything already received would constitute a(n) ________.
A. avoidance
B. counteroffer
C. revocation
D. replevin
Answer: A
Diff: 1
48. Which of the following terms refers to a court order directing a party to carry out the
obligations he had contractually promised to do?
A. replevin
B. specific performance
C. cease and desist
D. prior restraint
Answer: B
Diff: 1
49. Which of the following describes the term passage of risk?
A. the period given to the seller to rectify nonconforming goods

B. a period during shipment when neither buyer nor seller bears the risk of loss
C. the period during which the seller is responsible for losses to the goods
D. the point in time when the buyer becomes responsible for losses to the goods
Answer: D
Diff: 2
Topic: The Passing of Risk
50. Which of the following is necessitated once the passage of risk has been completed?
A. The buyer must pay the agreed-upon price for the goods involved.
B. The seller must pay monetary compensation for nonconforming goods.
C. The seller must absorb the cost of loss of goods.
D. The buyer no longer remains responsible for loss or risk of the goods.
Answer: A
Diff: 1
51. Which of the following is true of the CISGs risk allocation between parties of a
contract?
A. If a seller fails to take delivery, then the buyer has to assume the risk for any damage
to the goods after that time.
B. The CISG defines some trade terms, which can be used by the parties to allocate risk
among themselves.
C. It allows parties to use Incoterms for risk allocation.
D. The CISGs risk allocation is affected by breach of contact.
Answer: C
Diff: 3
52. ________ are contracts that require the seller to deliver the goods to a carrier for
further transfer and do not require the seller to deliver them to a particular place.
A. Destination contracts
B. Transshipment contracts
C. In-transit contracts
D. Shipment contracts
Answer: D
Diff: 1
53. If a contract requires the seller to deliver the goods to a carrier at a named place, who
will then carry the goods to the buyer, the risk of loss passes to the buyer ________.
A. when the goods leave the warehouse of the seller

B. as soon as he/she accepts the contract in writing
C. when the goods are handed over to the carrier at that place
D. at the time the contract is concluded
Answer: C
Diff: 2
54. In the case of a destination contract, the risk of loss passes to the buyer ________.
A. when the goods are handed over or placed at his disposal at that place
B. as soon as he/she accepts the contract in writing
C. when the goods are handed over to the first carrier for shipment
D. at the time the contract is concluded
Answer: A
Diff: 2
55. Unlike the U.S. Uniform Commercial Code and some other domestic sales laws, the
CISG rules on risk of loss are not concerned with breach of contract. Which of the
following contracts is an exception to this?
A. a shipment contract
B. an in-transit contract
C. a destination contract
D. a transshipment contract
Answer: B
Diff: 1
56. Which of the following is true of the buyers remedies under the CISG?
A. The right to recover damages is not lost if a buyer exercises any other available
remedy.
B. The right to recover can only be availed after the seller is given a period of grace in
which to comply.
C. The right to recover does not include reduction in price of the goods.
D. The type of remedy applicable in a case depends on whether the sellers breach affects
the whole contract or only a part.
Answer: A
Diff: 3
Topic: Remedies
57. Under the CISG, the fixing by the buyer of an additional reasonable period of time in
which the seller may perform is known as ________.
A. dlai de grce
B. de minimis
C. nolo contendere
D. Nachfrist notice
Answer: D
Diff: 1
Topic: Remedies
58. If a seller delivers early, ________.
A. the buyer must accept the goods and pay the money immediately
B. the right of the buyer to recover damages is lost
C. the buyer is under no obligation to take delivery
D. the buyer will become entitled to a reduction in price
Answer: C
Diff: 2
Topic: Remedies
59. ________ is a remedy that allows a seller to ascertain requirements himself when the
buyer fails to supply them as required by the contract or within a reasonable time after the
seller requests them.
A. Missing specifications
B. Special performance
C. Nachfrist notice
D. Suspension of performance
Answer: A
Diff: 1
Topic: Remedies
60. Which of the following is a remedy available to both buyers and sellers?
A. missing specifications
B. avoidance of an installment contract
C. specific performance
D. reduction in price
Answer: B
Diff: 1
Topic: Remedies
61. ________ is a remedy available to either party when it becomes clear that the other
party will commit a fundamental breach.
A. Anticipatory avoidance
B. Missing specifications
C. Special performance
D. Avoidance of an installment contract
Answer: A
Diff: 1
Topic: Remedies
62. In which of the following cases can anticipatory avoidance be claimed?
A. if the buyer willingly agrees to accept nonconforming goods

B. if the seller does not get payment from the buyer
C. if the sellers only employee capable of producing the goods dies or is not available
D. if the buyer notices that the goods are defective after accepting the goods
Answer: C
Diff: 2
Topic: Remedies
63. Which of the following is true of damages under the CISG?
A. Damages for breach of contract by one party do not include loss of profit suffered by
the other party as a consequence of the breach.
B. The party claiming damages is under an obligation to mitigate losses.
C. The foreseeability test cannot be applied in cases involving damage claim.
D. The breaching party is not liable for any foreseeable damages.
Answer: B
Diff: 2
Topic: Remedies
64. A party can claim the excuse of ________ if he or she can prove that the failure to
perform on his or her part was due to an event or effect that could not be reasonably
anticipated or controlled.
A. dirty hands
B. Nachfrist notice
C. force majeure
D. nolo contendere
Answer: C
Diff: 1
65. According to the excuse of ________, a party may not rely on a failure of the other
party to perform, to the extent that such failure was caused by the first partys act or
omission.
A. nachfrist notice
B. force majeure
C. anticipatory avoidance
D. dirty hands
Answer: D
Diff: 1
Essay Questions
66. Briefly explain how the CISG is organized.
Answer: The CISG is organized in four parts: Part I (Articles 113) contains the
conventions general provisions, including rules on the scope of its applications and rules
of interpretation. Part II (Articles 1424) governs the formation of contracts. Part III
(Articles 2588) governs the rights and obligations of buyers and sellers. Part IV
(Articles 89101) contains provisions for the ratification and the entry into force of the
Convention.
Diff: 1
67. How is sales defined in the CISG?
Answer: The CISG does not directly define sales. Instead, it speaks of the sellers and
buyers obligations. The seller is to deliver the goods, hand over any documents relating
to them and transfer the property in the goods, as required by the contract and this
Convention; the buyer, in exchange, is to pay the price. Although not stated in a single
article, this is the same definition found in many domestic laws, including the U.S.
Uniform Commercial Code, which describes a sale as the passing of title from the seller
to the buyer for a price.
Diff: 2
68. Why are auction sales and sales otherwise by authority of law excluded from the
CISG?
Answer: Auction sales, sales on execution, and sales otherwise by authority of law are
excluded because of the uniqueness of the transactions involved. Auction sales present
problems in determining when the contract was formed. Executions and other kinds of
forced sales do not involve the negotiation of terms by the parties. Special local laws
govern these sales, and the CISG does not disturb that arrangement.
Diff: 2
69. Compare between product liability in domestic law and the CISG.
Answer: Under domestic law, to prove product liability the injured buyer must typically
show (1) that the goods failed to conform to the contract, (2) that the damage resulted
from the defect, and sometimes (3) the buyer must also show that the seller failed to
exercise due care, especially if the suit involves a claim of negligence. Under the CISG,
however, a remedy is available if the goods failed to conform to the contract (Article 35)
and damage resulted from the defect (Article 74).
Diff: 2
70. How are the general principles of the CISG interpreted when dealing with a dispute?
Answer: The CISG calls for courts to look to the general principles on which the
convention is based when interpreting its provisions, but it gives no list of general
principles. It is for the courts to divine those principles. The following two have been
suggested: (1) A party to a contract has the duty to communicate information needed by
the other party, and (2) parties have the obligation to mitigate damages resulting from a
breach. Both concepts appear, in varying forms, throughout the convention. Although the
CISG does not give a list of general principles, it does set out the mechanism for
determining them. They must be derived (as is the case for the suggestions listed above)
from particular sections of the convention and then extended, by analogy, to the case at
hand.
Diff: 2
71. How is the place for delivery decided for contracts?
Answer: The first source for place for delivery is the place agreed to in the contract;
otherwise, it is (1) the first carriers place of business if the contract involves the carriage
of goods or (2) the place where the parties knew the goods were located or were to be
manufactured or produced. If the contract requires the seller to arrange for shipping but
does not specify the carrier or the terms, the transportation selected must be appropriate
in the circumstances and made according to the usual terms for such transportation.
Also, if the seller is not required to arrange for insurance, he must, at the buyers
request, provide him with all available information necessary to enable him to effect such
insurance.
Diff: 2
72. What is the buyers obligation for payment?
Answer: The buyer is obliged to take whatever preliminary steps are necessary under the
contract or any laws or regulations to enable payment to be made. He is then to pay the
price at the time and place designated in the contract. If no time is specified, the buyer is
to pay when the goods or the documents controlling their disposition are delivered. The
buyer has to pay without the need for any request or compliance with any formality on
the part of the seller. However, unless the parties agree otherwise, the buyer does not
have to pay until after he has had a chance to examine the goods. If the parties have not
agreed to a place for payment but have agreed to a place for the delivery of either the
goods or their controlling documents, then payment will be made at that place. If they did
not specify a place for delivery, then the buyer must pay at the sellers place of business.
Diff: 2
Topic: Buyers Obligations
73. How does the risk of loss pass when goods are delivered without being transported?
Answer: When goods are not shipped to the buyer, the risk of loss passes when the goods
are handed over by the seller or otherwise put at the buyers disposal. The goods are not
considered to be put at the buyers disposal, however, until they are clearly identified to
the contract.
Diff: 1
74. List out the remedies that are unique to a buyer.
Answer: The remedies that are unique to the buyer are (1) to compel specific
performance, (2) to avoid the contract for fundamental breach or nondelivery, (3) to
reduce the price, (4) to refuse early delivery, and (5) to refuse excess quantities.
Diff: 1
Topic: Remedies
75. Explain the sellers remedy of avoidance of installment contracts.
Answer: The CISGs rule for avoiding installment contracts uses the same logic found in
its other avoidance provisions. First, as to a particular installment, if there was a
fundamental breach with respect to that installment, then the other party may declare
the contract avoided with respect to that installment. Second, if the breach of one
installment gives a party good grounds to believe that a fundamental breach of later
installments will occur, then those later installments may be anticipatorily avoided.
Finally, if the installments are interdependent, a fundamental breach of one installment
will allow a party to avoid the entire contract.
Diff: 2
Topic: Remedies

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Chapter 10: Sales

True or False Questions

2. The CISG only governs contracts of international sales.

4. Sales transactions involving electricity are excluded from the CISG.

5. Investment securities come under the purview of the CISG.

8. CISG deals with the questions related to the legality of a contract.

11. The CISG requires that all contracts should be in writing.

14. The doctrine of consideration does not apply to the CISG.

16. A rejection becomes effective as soon as it is dispatched by an offeree.

21. Suspension of performance is a remedy exclusively available to the seller.

Multiple Choice Questions

A. does not represent the legal systems of communist nations

A. sale of land at a foreclosure

A. the rights of third parties

31. Which of the following features is covered in the CISG?

A. rights of the parties involved in the sale of stocks and shares

A. does not enforce unconscionable contracts

A. objective intent approach

A. tries to interpret the conduct of the parties involved

40. Which of the following makes an offer effective?

A. when the offeror makes the proposal

A. requires the promise of irrevocability to be signed by both parties

42. A firm offer is an offer ________.

A. both the acceptance and the rejection would be considered void

A. It can be used without notification to the injuring party.

49. Which of the following describes the term passage of risk?

A. the period given to the seller to rectify nonconforming goods

A. when the goods leave the warehouse of the seller

58. If a seller delivers early, ________.

62. In which of the following cases can anticipatory avoidance be claimed?

A. if the buyer willingly agrees to accept nonconforming goods

63. Which of the following is true of damages under the CISG?

66. Briefly explain how the CISG is organized.

71. How is the place for delivery decided for contracts?

72. What is the buyers obligation for payment?

74. List out the remedies that are unique to a buyer.

75. Explain the sellers remedy of avoidance of installment contracts.

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