Deck 7: Contract Enforceability and Performance

Question 1

Robert and Philip are named as beneficiaries under Alan's insurance policy.Robert and Philip would specifically be considered to be beneficiaries of the policy.

Answer 1

intended

Question 2

Appointing another person to perform one's duties under a contract is called a(n) .

Answer 2

delegation

Question 3

Damages agreed to by the parties when the contract is written and prior to any actual breach are called damages.

Answer 3

liquidated

Question 4

The process by which the original parties to a contract agree to allow an outside party to perform the contract is called .

Question 5

A court order to refrain from performing a particular act is known as .

Question 6

When parties agree to an accord and satisfaction,the original obligation subject to the accord is immediately discharged.

Question 7

Toby is a licensed plumber and has a contract to install a replacement toilet for Claudia.When Toby realizes that he has booked two appointments simultaneously,he calls Sam,another licensed plumber,and asks him to install Claudia's toilet.In legal terms,Toby has assigned his duties to Sam.

Question 8

An assignment may be of current and/or future rights.

Question 9

Nominal damages are rarely awarded in contract cases.

Question 10

When one party fails to perform his or her duties under a contract,that party is said to be in total
.

Question 11

When a party breaches a contract,the non-breaching party always may choose between seeking legal or equitable remedies.

Question 12

Compensatory damages cover a broad spectrum of losses for recovery of damages suffered by the non-breaching party.

Question 13

In some states,another name for a "statute of limitations" is a "statute of ."

Question 14

The process by which parties to a contract perform their obligations in good faith and fulfill the terms of the contract is called .

Question 15

When a party successfully sues for an equitable remedy for a breach of contract,that party will not receive a monetary award.

Question 16

If one party to a contract unilaterally alters the contract,the other party may be discharged from performance due to operation of law.

Question 17

Restitution is classified as an equitable remedy.

Question 18

Pablo has entered into a contract to paint Linda's portrait.The next day,Pablo is called by the White House to paint the official portrait of the first family.Since it will be impossible for Pablo to do both simultaneously,Pablo calls Salvador and asks him to substitute for him and paint Linda's portrait.Because Salvador is a world-famous artist with paintings hanging in the New York Metropolitan Museum of Art and the Louvre in Paris,Salvador does not have to get Linda's permission for this novation as long as none of the contract terms and conditions are changed.

Question 19

Language such as "provided that" or "unless" in a contract that triggers a performance obligation is called a .

Question 20

Unless a contract for services calls for unique personal services,that contract cannot be discharged by impossibility.

Question 21

Assignments require the consent and agreement of all parties to the contract.

Question 22

Liquidated damages must be directly related to the breach of contract for which they are compensating the non-breaching party.

Question 23

Anticipatory repudiation may be used when a party has knowledge that either a complete or a partial breach will occur by the other party.

Question 24

Burt and Mel have entered into a contract in which Burt agrees to put a concrete driveway on Mel's property.If Burt delegates the duty of laying the driveway to Chuck and Chuck does an unacceptable job,Mel may sue Burt for damages.

Question 25

Incidental beneficiaries are identified during the formation of the contract and known to the parties.

Question 26

Impossibility of performance is subjective,meaning that one of the parties may unilaterally decide that performance is impossible,thus discharging the contract.

Question 27

Generally,courts do enforce a strict compliance standard for contract conditions.

Question 28

Kent Corp.(KC),a general contractor building a new dorm at a university,contracted with Fine Rugs Inc.(FRI)to have a certain grade of industrial rugs installed in the dorm.The contract price was $180,000.After the rugs were installed,KC was dissatisfied with the rug quality.FRI insisted that the rugs installed were appropriate to the contract specifications and demanded full payment.KC sends FRI a check for $120,000,which KC believes is the proper value for the rugs installed,and marks the check "Paid in Full." FRI writes "Under Protest" on the check and deposits it.FRI may now,in most states,successfully sue KC for the balance of $60,000.

Question 29

Substantial performance will be enforced only if the deviation from complete performance is not material to the contract.

Question 30

Specific performance is almost always available when a real estate contract for the sale of land is involved.

Question 31

Mel is under contract with a textbook publisher to write an instructor's manual to accompany a new textbook.The contract states that the instructor's manual is to be completed by August 1.On July 1,the publisher calls Mel and asks for an update.Mel states that he's working hard and making progress.He then states that the August 1 deadline is "doable but it's going to be tough." Based on Mel's statement,the textbook publisher may claim an anticipatory repudiation and find another author to complete the project.

Question 32

In an assignment or delegation,third-party rights or duties occur after the contract is formed.

Question 33

A rescission of a contract may occur when one party chooses to end the agreement.

Question 34

Kathy and Tom have entered into a contract in which Mike has been named and included as an intended beneficiary by Kathy.Should Tom or Kathy breach the contract,Mike may sue both Tom and Kathy for breach of contract.

Question 35

Patios R Us contracts with Karl's Concrete to have 35 yards of concrete delivered to a job site it is working on.Payment is to be made 30 days after delivery.Five days after the concrete is delivered,Patios R Us files for bankruptcy and the filing is accepted by the court.Karl cannot sue to enforce the contract and receive payment.

Question 36

When an assignment is made,the assignee has the right to reform the contract and change the obligor's rights and duties as he or she sees fit.

Question 37

Lisa is doing some landscaping around her house and ordered a delivery of topsoil.Her contract with the landscape supply company states that the payment for the topsoil must be paid when the truck arrives at her house to deliver the soil.The requirement that payment be made on delivery is an example of a concurrent condition.

Question 38

Steve is an avid bicyclist and sends in a $150 fee to participate in an across-the-state ride in the Midwest.A week before the ride,he breaks his leg.Unless the contract specifically provides for no refunds under any conditions,he will be able to receive a refund based on impossibility.

Question 39

Carla has a contract with Alexis in which Alexis is to deliver 1,000 hand-decorated beverage holders in 60 days.When Carla calls the Psychic Hotline for her weekly reading,the psychic informs her that she has entered into a contract and the other party will not perform all the conditions and specifications in accordance with the agreement.Based on this knowledge,Carla may sue for an anticipatory repudiation.

Question 40

George has entered into a contract with Mark to supply raw materials to Mark's factory.The contract does not contain an anti-delegation clause.George then delegates his duty to supply the raw materials to Wayne,a competitor of Mark.This is an example of a valid delegation.

Question 41

Pete has been fired from his job and believes that he has been wrongfully terminated.As he decides how to fight the perceived injustice,how can he best mitigate his damages?

A) File his suit as soon as possible while the evidence is available and witnesses' recollections are fresh.
B) File for unemployment insurance as quickly as possible so that he doesn't sink too far into debt.
C) Call his former employer to determine the real reason he was fired.
D) Actively seek new employment as soon as possible.

Question 42

Clyde contracts with Seaside Resorts to rent an oceanfront room for a romantic weekend with his girlfriend Anne.In fact,Clyde intends to propose to Anne on the beach under the full moon during their stay.He made this decision after booking the room.The contract with Seaside Resorts requires a $250 deposit with the remaining $250 due upon check-in.The deposit is nonrefundable unless the reservation is canceled at least 48 hours prior to check-in.The day before they are to leave for the resort,Clyde and Anne have a huge fight and break up.If Clyde calls Seaside,cancels the reservation,and demands a refund of his deposit,is Seaside legally obligated to refund Clyde's money?

A) Yes. Clyde will get the refund because of impossibility; he can't propose if they are no longer speaking.
B) Yes. Clyde will get the refund because of impracticability; he can't stay at a romantic seaside room if he has no one to share it with.
C) Yes. Clyde will get the refund because of frustration of purpose; his intention was to propose and that is no longer possible.
D) No. Seaside is not legally obligated to provide a refund.

Question 43

Harry sees an AK-47 automatic assault rifle in a gun shop window.He inquires about the price and is told that it is $2,500.Harry signs a contract promising to pay the $2,500 on Friday,at which time he will take possession of the rifle.On Thursday,a law is enacted making the ownership,sale,or possession of an automatic rifle illegal.This contract

A) automatically terminates due to impossibility.
B) automatically terminates due to impracticability.
C) automatically terminates due to frustration of purpose.
D) is enforceable and not affected by the new law because it was entered into before the law took effect.

Question 44

Sharon has contracted with Craig to buy Craig's car.She has agreed to pay $5,000 in cash in exchange for the title and registration for the vehicle.Sharon and Craig agree to meet at 10 a.m.on Wednesday to exchange their consideration.Unfortunately,Craig dies Tuesday evening.

A) The contract automatically terminates due to impossibility caused by Craig's death.
B) The contract automatically terminates due to impracticability caused by Craig's death.
C) The contract is still valid and Craig's heirs must go through with it based on the agreed terms.
D) The contract is still enforceable; however, Craig's heirs may renegotiate the terms because they are now the owners of the car.

Question 45

Which of the following is not a discharge by mutual consent?
A) accord and satisfaction

A) rescission
B) novation
D) frustration of purpose

Question 46

Which of the following involves a third-party substitution?
A) novation

A) substitute agreement/modification
B) accord and satisfaction
D) rescission

Question 47

Larry has booked a hotel room for a conference at a rate of $100 per day for five days.When he arrives to check in,Larry is told that the hotel was overbooked and it cannot supply him with a room.Larry is forced to go to the only hotel in town with available rooms and pay $150 per night.If Larry sues the original hotel for damages and wins

A) he will be entitled to compensatory damages in the amount of $250.
B) he will be entitled to consequential damages in the amount of $250.
C) he will not be entitled to any damages because the additional costs were not foreseeable.
D) he will be entitled to liquidated damages in the amount of $250.

Question 48

Lon has just come home from serving in the Marines and contracts with a local car dealership to purchase a car.The car must be ordered,and payment is to be made when the car arrives.The next day,Lon receives orders to return to active duty.Realizing that he doesn't need the car,he brings Tony to the dealership and asks that Tony substitute for him.Tony will take delivery and ownership of the car,and Tony will pay the dealership upon delivery.The dealership agrees to have Tony substitute for Lon.What has occurred?
A) A delegation.

A) An assignment.
B) A novation.
D) An accord and satisfaction.

Question 49

In a delegation situation,the non-delegating party is called the

A) obligee.
B) delegate.
C) delegator.
D) obligor.

Question 50

In which of the following situations would anticipatory repudiation not be allowed?

A) Tom calls Dick and says that he can't find the raw materials to complete performance and doubts he can meet the contract's performance deadline.
B) Sally is buying Jane's car, with the money and car to be exchanged in a week; however, Sally meets Betty, who tells her she just bought Jane's car.
C) Mary Beth is scheduled for knee surgery next month with Dr. Slice but reads in the paper that Dr. Slice has lost his license to practice medicine.
D) Manny calls Moe and tells him that the sculpture he's creating for him is coming along slower than anticipated but he's pretty sure he'll be done by the contract deadline.

Question 51

Sally has just purchased a home and wants to have an in-ground pool installed.She calls Cool Pools,the company that put in her neighbors' pools.When the company rep comes to her property,he does some soil tests that are standard for the industry and gets the same results as he got when the other pools were put in,so the company gives her a price quote of $16,000.When Cool Pools begins excavating,it discovers solid rock four feet below ground level.The neighbors had no such rock.Cool Pools stops work and informs Sally that it will have to use explosives to remove the rock and the cost of the pool will now be $32,000.

A) Sally is under contract and will have to pay the new price.
B) Sally can have the contract discharged based on impracticability.
C) Sally can have the contract discharged based on impossibility.
D) Sally can have the contract discharged based on frustration of purpose.

Question 52

Which of the following is classified as an equitable remedy?
A) consequential damages

A) restitution
B) reformation
D) liquidated damages

Question 53

Toy Tech (TT)has ordered 50,000 aluminum widgets from the Acme Widget Corporation (AWC)with delivery to be made on November 1.These widgets will be used in TT products to create toys for the holiday season.Under which circumstance may TT claim that AWC has made an anticipatory repudiation of the contract?

A) The cost of aluminum has risen, lowering AWC's profit margin, yet AWC insists that it will honor the contract.
B) The demand for widgets has suddenly decreased, and TT isn't sure it can sell the 50,000 widgets it ordered.
C) AWC's sole manufacturing plant burned down on October 1, yet AWC insists that it will rebuild and honor the contract.
D) TT has found another manufacturer that can provide less expensive widgets of the same quality as AWC's widgets.

Question 54

An event that occurs after the performance under a contract and discharges the parties' contractual obligations is best referred to as a(n)
A) condition prerequisite.

A) condition subsequent.
B) condition antecedent.
D) condition precedent.

Question 55

Max and Lew have entered into a contract for Lew to paint Max's house.The contract specifically states that the job was to be completed by August 25.Lew completes the job on August 26.Max has suffered no loss due to the delay.The job was otherwise done exactly to all contract requirements and specifications.If Max sues Lew for breach of contract due to the missed completion date and if the courts were to award damages,what type of damages would most likely be awarded?
A) punitive damages

A) restitution
B) consequential damages
D) nominal damages

Question 56

In DiFolco v.MSNBC,a TV commentator e-mailed her supervisors indicating that she wished to have a meeting to discuss her exit from the shows and to give MSNBC ample time to replace her.However,the commentator also wrote that she wanted to be part of the MSNBC team "for a long time to come." MSNBC claimed anticipatory repudiation.The court

A) found DiFolco did not manifest a clear and unequivocal repudiation and ruled in her favor on the issue of anticipatory repudiation.
B) found DiFolco's e-mails were unambiguous in expressing her intent to leave and ruled in MSNBC's favor on the issue of anticipatory repudiation.
C) found DiFolco's e-mails were ambiguous but her past employment issues were sufficient to indicate refusal to perform.
D) dismissed DiFolco's claim and ruled that the e-mails constituted DiFolco's anticipatory repudiation.

Question 57

Sam has contracted with Dave to purchase Dave's racing bike,with payment and delivery of the bicycle to be made 10 days after the contract was made.Three days later Sam hears that Dave is going to sell the bike to Gene in three days at a higher price.If Sam really wants the bike,what should he do?

A) Immediately sue for specific performance.
B) Immediately seek injunctive relief.
C) Immediately sue for compensatory damages.
D) Immediately sue for consequential damages.

Question 58

Moe has entered into a contract with Larry.Subsequently,Moe assigns his rights in that contract to Curly.Which of the following would not prevent that assignment?

A) The contract contains an anti-assignment clause.
B) The assignment would materially alter Larry's duties and cause an increased burden or risk to Larry.
C) Larry protests the assignment and demands that Moe not make the assignment.
D) The assignment would violate public policy matters.

Question 59

In which of the following situations would a delegation of contractual duties be allowed?
A) A sculptor hired to sculpt your bust.

A) A surgeon performing brain surgery.
B) An actor hired to perform in a play.
D) A painter hired to paint your home.

Question 60

A major-league baseball team based on the North side of Chicago is in the playoffs and doing well.Behind the left-field wall there is an apartment building,and the owner advertises,"Space available on the apartment building roof with a clear view of the field for the World Series.Bring a lawn chair,your radio,and a cooler and enjoy the game.Just $50 per game." Bart,a lifelong fan,answers the ad and pays the building owner $100 to reserve space for the first two games.Unfortunately,the team fails to advance to the World Series.

A) The building owner does not have to refund the money because Bart reserved space and the space is still there for him to use whether the games are played or not.
B) The building owner does not have to refund the money because it's not her fault that the team didn't make it to the World Series.
C) Bart will get a refund because of impracticability.
D) Bart will get a refund because of frustration of purpose.

Question 61

What is the difference between compensatory damages and consequential damages?

Question 62

Beth has just signed a contract to work for a bank.A clause in the contract says that before she begins work,she must pass a drug test and should drug use be discovered,the contract becomes void.This clause would be a

A) condition precedent.
B) condition subsequent.
C) concurrent condition.
D) nothing of consequence since Beth has already signed the contract.

Question 63

What is an anticipatory repudiation,and what must be shown for it to be enforced?

Question 64

Arnie and Matt are involved in a car accident.Immediately before the accident,Arnie was observed speeding and driving erratically.On the other hand,Matt was obeying the speed limit and driving in a very cautious and responsible manner.As a result of the accident,Matt's car needs $2,500 worth of repairs and Matt loses a week's salary because he has to take time off to recover from injuries sustained during the crash.Which of the following statements best describes the nature of the damages in this case?

A) Both the repairs and the lost wages are compensatory damages.
B) The repairs are compensatory damages, and the lost wages are consequential damages.
C) The repairs are consequential damages, and the lost wages are compensatory damages.
D) Both the repairs and the lost wages are consequential damages.

Question 65

Which of the following is not an equitable remedy?
A) reformation

A) specific performance
B) damages
D) injunctive relief

Question 66

Damages intended to punish a wrongdoer are called
A) nominal damages.

A) punitive damages.
B) consequential damages.
D) compensatory damages.

Question 67

In what way do legal remedies and equitable remedies differ?

Question 68

In which of the following scenarios would enforcement of specific performance be appropriate?

A) Your bookstore agrees to order a textbook for you but breaches its contract with you by canceling the order the next day.
B) You order 3 gallons of white ceiling paint from a local store, and the store breaches by not delivering or making available to you the 3 gallons.
C) You order a current-model, name-brand television from a department store, and a few days later the store breaches by not ordering it from the manufacturer.
D) You own the pistol used by Hamilton and contract to buy the pistol used by Burr in the Hamilton-Burr duel to complete your set, but despite the contract the Burr pistol owner refuses to sell at the last minute.

Question 69

When Olivia was a senior in high school,a small,private college to which she had been accepted announced plans to build a new and modern athletic complex with pools,spas,weight rooms,and exercise rooms for general student use.Although Olivia had been accepted at several other,less expensive colleges,she chose to enroll at the small,private school based largely on these plans as announced.However,the project was delayed,and actual construction of the facilities didn't begin until the final semester of Olivia's senior year.The facilities will not be completed before Olivia graduates from the school,and she will never get to use the facilities.What rights,if any,does Olivia have due to the delay that prevented her from using the facility?

Question 70

In Hadley v.Baxendale,when Hadley sued because Baxendale took unnecessary time to get a crankshaft repaired,causing Hadley's mill to close for an extended time,the court found

A) Baxendale owed Hadley compensatory damages because the mill was shut down for an extended time directly as a result of Baxendale's delayed delivery.
B) Baxendale owed Hadley consequential damages because the mill was shut down for an extended time as a result of Baxendale's delayed delivery and the shutdown was a foreseeable indirect result of Baxendale's delay.
C) Baxendale did not owe Hadley consequential damages because the extended closing time was not foreseeable despite Baxendale's delay in delivery.
D) Baxendale did not owe Hadley either compensatory or consequential damages but did owe punitive damages due to the unreasonable delay in delivery.

Question 71

Mark is an accounting major at a private university.His goal is to go to graduate school to obtain the education and appropriate credits necessary to become a certified public accountant.Mark's goals are well-known to his instructors and to the administration,who are also aware that Mark's parents and grandparents are CPAs,as are his older brothers and sisters.As Mark enters his junior year,and after paying his tuition and room and board fees in full,his school loses its regional accreditation,making any degree issued by the school essentially worthless.A worthless degree will not be recognized by graduate schools and will not be recognized by state accounting boards.When Mark demands a refund of his tuition and fees,the school refuses,claiming that it will still provide classes and knowledge.On what grounds,if any,can Mark have the contract terminated and receive a refund?

Question 72

Josh entered into a contract with Donna in which she was to pay $50,000 for Josh's hunting cabin.All negotiations,witnessed by various third parties,stated the $50,000 figure as the sales price.When the contract was written,a typographic error was made indicating a price of $5,000.At settlement,Donna tendered $5,000 and demanded the deed in accordance with the written contract.Must Josh sell the cabin for $5,000?

Question 73

Which of the following is rarely awarded in contract cases?
A) consequential damages

A) punitive damages
B) compensatory damages
D) liquidated damages

Question 74

Amos owns a piece of land along a country dirt road.Very few cars use the road,and the land is relatively secluded.One day Amos hears that the county is planning to build a major highway that will go right along the border of his property.He checks the newspaper and sees that plans to build the road are being made and funds are being arranged.Amos immediately drains his modest bank account and borrows money from his family and friends to erect a diner on his property to attract the highway drivers.Just as he finishes construction of the diner,the county changes its plans and decides to build the highway along another route,miles from Amos's property.Amos now has a shiny new diner,miles from any traffic and essentially in the middle of nowhere.What legal options does Amos have,if any?

Question 75

When examining and enforcing conditions precedent and conditions subsequent,courts generally will

A) Give stricter enforcement to conditions precedent and find conditions subsequent rarely enforceable.
B) Give stricter enforcement to conditions subsequent and find conditions precedent rarely enforceable.
C) Not recognize any substantive difference between the two categories of conditions.
D) Hold that, under modern law, both conditions subsequent and conditions precedent should only rarely be enforced.

Question 76

Your state's bar association is planning its annual banquet and fund-raiser and has decided to feature a speaker who will attract a huge crowd.The association contracts with Robert Shapiro,a member of O.J.Simpson's so-called Dream Team of defense attorneys,to be the keynote speaker.However,a week before the event,Robert calls and says that he would like to give his law clerk,Susan,the opportunity to speak.Robert still plans to attend,but he plans to sit in the audience rather than speak.What legal options,if any,does the bar association have,regarding its previous agreement?

Question 77

Tina is an adjunct professor who is teaching under a one-course contract.With six weeks to go in the course,she is offered a tenure track position at another school that requires her to start within a week.When Tina approaches the administration,what options are available,if any,regarding the adjunct contract and her desire to leave early?

Question 78

How does an assignment differ from a delegation? When are they permitted,and when are they not permitted?

Question 79

In which of the following situations is a court most likely to find substantial performance?

A) KM Corporation orders 500 boxes of copy paper from MK supply, but MK can deliver only 450 boxes.
B) Young orders a set of four specially made chrome rims for her car, but the supplier can deliver only three.
C) Olivia orders 3 gallons of paint for the exterior of her house, based on square footage covered and needed, but the paint supplier can deliver only 2 gallons.
D) April orders a fully equipped car from a dealer, but although perfect in every way, the car delivered has an automatic transmission rather than the manual transmission that she ordered.

Question 80

Fred's Flooring (FF)contracted with Harry homeowner to install wood flooring throughout Harry's home.Harry was to purchase the flooring,and the contract was solely for installation.Payment was to be 20 percent at the time that the work commenced and 80 percent once the flooring was installed.Harry purchased the flooring materials and paid the 20 percent,so FF began work.When FF's work was halfway completed,Harry realized that he didn't have the money to pay FF on completion,so he bolted the doors and refused access.If FF wants to rescind the contract and be paid for work completed,FF would sue for
A) compensatory damages.

A) restitution.
B) consequential damages.
D) liquidated damages.