Deck 17: Performance, Breach, and Discharge

Question 1

A material breach by the seller will discharge the buyer from his obligations under a contract.

Answer 1

True

Question 2

Discharge by performance is the most frequent method of discharging a contractual duty.

Answer 2

True

Question 3

In all substituted contracts there must be an agreement among three parties where a new promise is substituted for an existing promise or a new promisor is substituted for an existing promisor.

Answer 3

False

Question 4

In building a $30,000 addition to the Murphys' house, the contractor used the wrong flooring, causing the Murphys
$2,000 in damages. Under the substantial performance doctrine, the contractor's performance is substantial and therefore he is entitled to the contract price of $30,000, but if the deviation from the specifications were considered material, the Murphys would not have to pay for the addition.

Question 5

An obligee's promise to accept a stated performance in satisfaction of the obligor's existing contractual duty creates an accord.

Question 6

In rescinding an executory, bilateral contract, no consideration is furnished.

Question 7

An accord and satisfaction discharges an existing debt.

Question 8

The UCC is substantially the same as the common law with regard to the doctrine of material breach of contract.

Question 9

Lou and David have an executory contract that is supposed to be performed on June 1. On May 1, David indicates that he has no intention of performing the contract as agreed. Lou must wait until June 1 before he can pursue any remedies for breach of contract against David.

Question 10

Substituted contracts discharge the original duties immediately.

Question 11

A breach of contract always discharges the injured party from performance under the contract.

Question 12

One party's unauthorized alteration of any of the material terms in a written contract discharges the entire contract.

Question 13

Robert and John entered into a bilateral contract. If they agree to a rescission of the contract while it is executory, there is a lack of consideration for the rescission.

Question 14

A condition may be inserted into a contract to terminate the duty to perform.

Question 15

The law assumes that respective performances under a contract are concurrent conditions, unless there is an agreement to the contrary.

Question 16

The "perfect tender rule" would allow a buyer to keep merchandise that deviates from the contract without having to perform himself.

Question 17

If there is a novation, the original promisor remains liable to the original promisee if the new promisor fails to perform.

Question 18

A person who has made a financially unsound contract may be relieved from performance under the doctrine of commercial impracticability.

Question 19

Mark agrees to a three-year employment contract with State University as long as they become accredited after one year. This contract contains a "condition subsequent."

Question 20

"Discharge" has to do with the termination of contractual duties.

Question 21

The Code and the Restatement have no provisions for discharge of contractual duties in cases involving commercial impracticability.

Question 22

The Restatement and the Code have made the traditional test of objective impossibility more stringent by requiring that the performance must be actually or literally impossible.

Question 23

An implied-in-fact condition and constructive condition are the same.

Question 24

Concurrent conditions occur when mutual duties of performance are to take place simultaneously.

Question 25

There is only one way to completely and legally discharge a contract.

Question 26

Breach of a contractual promise and failure of a condition have fundamentally the same effect.

Question 27

Cora and Bruce have an executory contract for the sale of some goods. Cora files for bankruptcy and is then discharged by the bankruptcy court. Cora has no obligation to perform under the contract.

Question 28

Marie owes Nathan $300 and the parties agree that Marie will paint Nathan's house in satisfaction of the debt. The debt is not discharged until Marie performs the substituted agreement by painting Nathan's house.

Question 29

After the coronation of Edward VII did not take place on the scheduled date and parties who had entered into contracts in anticipation of the event filed numerous suits, the doctrine of frustration of purpose was added to the law of contracts.

Question 30

A contract may condition the duty to accept and pay for the performance of the other party upon the approval of a third party.

Question 31

A novation is an agreement between two parties to have one substitute for the other in a contract.

Question 32

A change in Sal's financial condition, making it impossible for him to fulfill a contractual obligation, would be
considered objective impossibility, which would discharge his contractual duty.

Question 33

A contract contains the provision, "Walter Hamilton promises to pay Faye Weeks $1,200 for a 2005 V­6 motor provided that Phelps' Garage approves the quality of the motor." This provision:

A) makes the contract unenforceable since Walter's promise is illusory.
B) creates an express condition which must be met before Walter's duty to pay arises.
C) cannot create an express condition because it lacks the necessary words "on condition that."
D) cannot be valid since it makes Walter's duty to pay dependent upon the opinion of a third party.

Question 34

A(n) is a substituted contract that involves an agreement among three parties to substitute a new promisee in
Place of an existing promisee, or to replace an existing promisor with a new one.

A) accord
B) satisfaction
C) novation
D) mutual rescission

Question 35

Belinda has a household insurance policy, which requires that she notify the insurance company within thirty days of any loss before she is eligible to receive payment for her loss. The notification requirement is a condition precedent to the insurance company's obligation to perform, even though the notification must occur subsequent to the loss.

Question 36

William has a contract to build a new office building for Angela. The contract contains a provision requiring William to furnish a certificate of occupancy from the building inspector before Angela is required to pay. This provision is:

A) an express condition.
B) an implied-in-fact condition.
C) an implied-in-law condition.
D) a condition subsequent.

Question 37

A(n) is a contract between a promisee and a promisor by which the promisee agrees to accept and the
Promisor agrees to render a substituted performance in satisfaction of an existing contractual duty.

A) accord
B) mutual rescission
C) material alteration
D) novation

Question 38

An intentional breach of contract is generally held to be material.

Question 39

Forrest has a contract with Denzel to construct a new condominium complex. The contract provides that Forrest must furnish a certificate of occupancy and conformity with the local fire code before Denzel has an obligation to pay. The furnishing of the certificate is an implied in fact condition subsequent to the construction of the building.

Question 40

Which of the following is a contract with a condition subsequent?

A) Rhonda enters into a contract to buy a new car conditional upon her getting a loan from her bank.
B) Roger bought a DVD player, but he may return it within ten days and get all of his money back.
C) Both of these are examples of a condition subsequent.
D) Neither of these is an example of a condition subsequent.

Question 41

Phil, a tax accountant, promises to do Marge's individual federal, state, local, and gift taxes for the year. He completes all but the gift taxes. Under the substantial performance doctrine, Marge will:

A) not have to pay Phil.
B) not have to accept the work.
C) have to pay Phil for all but the gift taxes.
D) have to pay Phil the contract price.

Question 42

"The law generally restricts the time within which an action can be brought by either party to a contract." This statement is:

A) false.
B) true, because of statutes of limitation.
C) true, because of the law of repudiation.
D) true, because of covenants not to sue.

Question 43

Lynn, a tailor, agrees to sew a pair of drapes for Zach's living room. Zach promises to pay Lynn $300. Lynn completes the drapes using material selected by Zach, but Zach is not satisfied and refuses to pay for them. In this case:

A) whether Zach will have to pay for the drapes depends upon whether as a reasonable man he ought to be satisfied.
B) the standard applied here is a subjective standard of satisfaction.
C) the doctrine of frustration of purpose applies.
D) the condition of satisfaction is an express condition.

Question 44

Henry hires Ace Roofing to put a new roof on his house. When Ace comes, Henry refuses to let them on the roof, saying that he has a headache and doesn't want to listen to pounding. The next day, Henry still has a headache and he refuses to allow them on the roof. The day after, the baby is sleeping and Henry refuses to allow them to work. After four weeks of this, Ace:

A) may be discharged, but Henry is not.
B) may be discharged, and so would Henry.
C) can sue for damages, but must perform when Henry is ready.
D) has no choice but to keep coming back each day until Henry is ready.

Question 45

Arnold and Doug make a contract for Arnold to manufacture five leather chairs of a specified design. Prior to their manufacture, the factory is destroyed in an accidental fire that is no one's fault. The chairs are available from other sources. Arnold:

A) must supply the chairs, even if he must buy them elsewhere.
B) is discharged from his duty to deliver the chairs by the destruction of the factory.
C) has materially breached the contract if he fails to deliver the chairs.
D) must return any money paid by Doug.

Question 46

Refusal of a tender of performance by one party to a bilateral contract will:

A) be treated as a repudiation, excusing the tendering party from further duty of performance under the contract.
B) not discharge either party from further duty of performance under the contract.
C) be considered a condition subsequent.
D) None of these.

Question 47

The Code greatly alters the common law doctrine of material breach by adopting what is known as the:

A) perfect tender rule.
B) anticipatory repudiation rule.
C) prevention of performance rule.
D) discharge by operation of rule law.

Question 48

On December 1, Paula tells Roberta, "I can, in no way, perform my duties in our contract." This statement is a(n):

A) material alteration.
B) anticipatory repudiation.
C) nonmaterial breach since the statement is made before December 31.
D) accord.

Question 49

Unless one of the parties contractually assumes the risk, the discharges a contract if supervening
Circumstances make fulfillment of the purpose which both parties had in mind impossible.

A) bankruptcy law
B) frustration of purpose doctrine
C) perfect tender rule
D) subjective impossibility doctrine

Question 50

Russell promises Marty $1,500 if he will completely landscape Russell's yard. Which of the following would discharge Russell's obligations to pay under this contract?

A) Marty leaves a one-foot strip of land barren.
B) Marty doesn't begin work on the landscaping until after he finishes two other jobs.
C) Marty doesn't plant any flowers, shrubs, or grasses.
D) Russell isn't satisfied with Marty's design.

Question 51

Meg has contracted to paint a portrait of Julio, but dies before completing the portrait. Which of the following is correct?

A) Meg's executor must find a capable artist to complete the work to Julio's satisfaction.
B) Meg's contractual duty is discharged due to objective impossibility.
C) A novation must be entered between Julio and a third person in order to discharge Meg's duty under the contract.
D) Meg's contractual duty is discharged due to subjective impossibility.

Question 52

Janice contracts to sell a certain tract of land to Anthony for $5,000, but the contract does not state a time for delivery of the deed and payment of the price. In this situation:

A) the contract will be considered void for lack of essential terms.
B) the law will imply that the respective performances are independent of each other and may occur whenever "reasonable under the circumstances."
C) courts will treat the promises to deliver the deed and to pay the $5,000 as mutually dependent. Anthony's duty to pay is conditioned upon Janice's delivery of the deed and Janice's duty to deliver the deed is conditioned upon Anthony's payment or tender of $5,000 to Janice.
D) Janice's duty to deliver the deed and Anthony's duty to pay the $5,000 are "implied­in­fact" conditions.

Question 53

A tailor agrees to sew a suit for Bryan, who promises in return to pay $500 for the suit if he is satisfied with it. The tailor completes the suit, which fits Bryan perfectly. Nevertheless, he says that he is not satisfied and refuses to accept or pay for it. Bryan is honest in his dissatisfaction, but he is unreasonable. In this case:

A) Bryan must pay for the suit even if he is dissatisfied.
B) this is an illusory contract, because only the tailor is bound.
C) Bryan's approval is an objective standard.
D) the tailor has no recourse, because he agreed to the subjective standard.

Question 54

Miller has a contract to sell 1,000 bushels of wheat to a bakery. The wheat is stored in a grain elevator and has become infested with insects. Miller is:

A) discharged from performance because of impossibility if he doesn't have other wheat to substitute.
B) discharged because of frustration.
C) not discharged, but must substitute wheat or pay damages to the bakery for breach of contract.
D) discharged if he can prove that he did not cause the damages to his wheat.

Question 55

Jim contracted with Kevin to serve as a guide for Kevin on his three-week fishing trip to Canada. The contract was made on April 1 with the trip to begin on June 1. On May 1, Kevin notified Jim that he had changed his mind and would be unable to make the trip. He also refused to pay Jim any compensation. In this case:

A) because the contract is executory, Jim has suffered no damages, and Kevin has no obligation to pay any compensation.
B) Kevin has anticipatorily repudiated the contract and is liable to Jim for damages.
C) Jim is discharged from his duty to serve as guide, but he must wait until after June 1 to bring suit against Kevin.
D) All of these.

Question 56

Louis agreed to provide all the apples that Cindy's Cider Mill will need at $3 per bushel unless weather conditions require additional labor to be hired. The rate would then be $3.50 per bushel. A freeze warning required Louis to hire 100 additional overtime workers, raising the cost per bushel to $4.75. Louis wants to get out of his contract. Can he?

A) No, the parties expected the hardship and provided for it in their contract
B) No, there is no hardship
C) Yes, the contract is impracticable
D) Yes, the freeze is a supervening event

Question 57

An express condition is usually preceded by such words as:

A) if.
B) because.
C) how.
D) All of these.

Question 58

Which of the following is/are correct with regard to conditions subsequent?

A) Conditions subsequent are quite common in contracts.
B) A "sale or return" contract is an example of a contract with a condition subsequent.
C) A condition subsequent must occur before performance is due under a contract.
D) All of these are correct.

Question 59

Bill recently borrowed $50 from Ricardo for a couple of weeks. Bill, still short of cash, tells Ricardo, "I will wash and wax your car in exchange for the $50 I owe you." Ricardo tells Bill, "OK, that's great!" Ricardo's performance of his new duty will be a(n):

A) accord.
B) novation.
C) rescission.
D) satisfaction.

Question 60

Conditions may be classified:

A) by how they are imposed.
B) by when they affect a duty of performance.
C) Both of these; they are not mutually exclusive.
D) Neither of these.

Question 61

What is a condition? Give an example of each of the following: condition precedent, condition concurrent, and condition subsequent.

Question 62

Professor Glass is hired by Towers University to teach business law at a salary of $3,000 per month. After school
has been in session for two months, the Business Administration Building is destroyed by fire. The University refuses to pay him any further salary, claiming they are discharged from their obligation of performance. Is the University discharged from its obligation of performance? Is Professor Glass discharged from his obligation of performance? Explain, citing the legal principles involved.

Question 63

Which of the following generally is not grounds for discharge of a contract by operation of law?
a. Objective impossibility
b. Subsequent illegality
c. Running of the statute of limitations
d. Bankruptcy

Question 64

Explain what may constitute a material breach and list the relevant factors in determining if a material breach exists.

Question 65

What is the difference between implied-in-fact and express conditions?