Question 1

Damages are not available for an anticipatory breach because the time for performance has not arrived.

Accepted Answer

Damages can be available for an anticipatory breach if the non-breaching party treats the anticipatory breach as a present breach and terminates the contract.

Question 2

Courts have generally held that an exemption clause will not excuse a fundamental breach.

Accepted Answer

Courts have established the principle that an exemption clause will not be able to excuse a fundamental breach of a contract. This means that if a party is guilty of a serious breach of the terms of an agreement, they cannot avoid liability simply by invoking an exemption clause. This principle helps to protect the interests of parties who may be vulnerable to unfair contract terms and ensures that contracts are entered into and performed in good faith.

Question 3

Where an exemption clause is so broad that it protects a wrongdoer from liability, the courts have usually declared the breach to be a fundamental breach.

Accepted Answer

When an exemption clause is so broad that it protects a wrongdoer from liability, the courts generally consider the breach to be a fundamental breach, which cannot exclude the injured party's claim for damages.

Question 4

A breach of a minor term will not discharge a contract, but a major major term that is broken in only a minor respect will discharge a contract.

Accepted Answer

A breach of a major term, even if it is a minor one, can discharge a contract.

Question 5

Which of the following is not true?

Accepted Answer

A breach of contract may lead to civil liability but not criminal liability unless it involves a separate criminal act, such as fraud or embezzlement. A breach of contract alone cannot be considered a criminal offense unless it is part of a larger criminal scheme. None of the options mentioned describe a criminal act that could arise from a breach of contract.

Question 6

Michael's Shop has a standard from contract that includes an exemption clause. Michael enters into an agreement with Jill. Jill signs the agreement without reading it because she says she trusts Michael. When Michael fails to perform his part of the agreement, Jill tries to sue. The court in considering the effect of the exemption clause, will most likely

Accepted Answer

When one party signs a contract without reading it, they are deemed to have accepted the terms and conditions within the document. Therefore, the court will most likely strictly construe the exemption clause against Michael since Jill did not have a chance to negotiate or vary the terms of the standard form contract.

Question 7

A breach can have the effect of terminating a contract. However, not every breach may discharge a contract.

Accepted Answer

A breach may give the innocent party the right to terminate a contract, but it will depend on the nature and gravity of the breach. Some breaches may not be significant enough to warrant termination, and the innocent party may choose to continue the contract while seeking other remedies such as damages.

Question 8

Where a court finds that a breach is a fundamental breach, an exemption clause will be treated as ineffective to excuse the breach.

Accepted Answer

This statement is true. If a breach is deemed fundamental by a court, an exemption clause will be seen as ineffective in excusing the breach. This is because a fundamental breach is a breach so serious that it goes to the root of the contract, and therefore cannot be excused by any clause in the contract.

Question 9

Exemption clauses are generally strictly construed against the party that is not seeking to rely on them.

Accepted Answer

Exemption clauses are generally strictly construed against the party that is seeking to rely on them, as they are trying to limit their liability through these clauses.

Question 10

The doctrine of substantial performance says that there will be rescission if each party does not substantially perform its obligations under the contract.

Accepted Answer

The doctrine of substantial performance says that a party's failure to perform its obligations under the contract does not necessarily give rise to rescission, as long as the performance is deemed to be substantial enough to warrant payment.

Question 11

Michael's Shop has a standard form contract that includes an exemption clause. What must Michael do to ensure that the use of the exemption clause is accepted by a court as proper?

Accepted Answer

To ensure that the use of the exemption clause is accepted by a court as proper, Michael must bring the exemption clause to the attention of any person with whom he seeks to enter into a contract. This is known as the doctrine of reasonable notice, where the party seeking to rely on an exemption clause must take reasonable steps to bring it to the other party's attention before the contract is entered into. This can be done through highlighting the clause or making it a separate document to be signed. Collateral agreements are not required, modifying the clause may not be necessary, and notifying the court beforehand is not relevant.

Question 12

A major breach amounting to a repudiation of a contract will only occur at the commencement of a contract and not later.

Accepted Answer

A major breach can occur at any point during the contract, not just at the commencement.

Question 13

Where a contract contains an exemption clause, and a party in breach seeks to avail itself of the clause, the courts will most likely permit the party in breach to shelter under the clause.

Accepted Answer

Courts typically interpret exemption clauses narrowly and may not allow a party in breach to use them if the clause is ambiguous or if the breach is fundamental.

Question 14

What is an express repudiation?

Accepted Answer

The answer of What is an express repudiation?...

Question 15

The problems created by a failure of performance, arise typically

Accepted Answer

Problems created by a failure of performance typically arise only when the time for performance arrives or during performance. At this point, it becomes clear whether one of the parties will be unable or unwilling to carry out their obligations under the agreement. The other choices do not accurately reflect when problems created by a failure of performance arise.

Question 16

Where a person has a contractual obligation, he or she has to perform the whole obligation before being entitled to enforce the contract. He or she cannot perform part of the obligation and then seek to enforce the contract.

Accepted Answer

The answer of Where a person has a contractual obligation,...

Question 17

Where the courts have been faced with an exemption clause that exempts a breach that is so serious that it defeats the whole purpose of the contract, the court, to prevent the party in breach from sheltering behind the exemption clause,

Accepted Answer

When a breach is classified as a fundamental breach, it means that it is so serious that it goes to the root of the contract and defeats its essential purpose. In such a case, the party in breach cannot rely on any exemption clause in the contract to avoid liability. Therefore, choice D is the best option.

Question 18

Which of the following is not true?

Accepted Answer

A breach of a fundamental term allows the party not in breach to elect to discharge the contract, not the party committing the breach.

Question 19

If one party breaches a condition of a contract, the other party will generally be entitled to repudiate the contract.

Accepted Answer

When one party breaches a condition of a contract, the other party may consider the breach to be a fundamental breach and may choose to terminate the contract or sue for damages. This is known as repudiation.

Question 20

Which of the following is not a reason why exemption clauses are attractive?

Accepted Answer

Exemption clauses are not related to the ability of a supplier to enter into contracts with third parties. They are primarily used to limit liability and manage risk within existing contracts.

Quiz 14: The Effect of Breach

Damages are not available for an anticipatory breach because the time for performance has not arrived.

Courts have generally held that an exemption clause will not excuse a fundamental breach.

Where an exemption clause is so broad that it protects a wrongdoer from liability, the courts have usually declared the breach to be a fundamental breach.

A breach of a minor term will not discharge a contract, but a major major term that is broken in only a minor respect will discharge a contract.

Which of the following is not true?

A breach can have the effect of terminating a contract. However, not every breach may discharge a contract.

Where a court finds that a breach is a fundamental breach, an exemption clause will be treated as ineffective to excuse the breach.

Exemption clauses are generally strictly construed against the party that is not seeking to rely on them.

The doctrine of substantial performance says that there will be rescission if each party does not substantially perform its obligations under the contract.

Michael's Shop has a standard form contract that includes an exemption clause. What must Michael do to ensure that the use of the exemption clause is accepted by a court as proper?

A major breach amounting to a repudiation of a contract will only occur at the commencement of a contract and not later.

Where a contract contains an exemption clause, and a party in breach seeks to avail itself of the clause, the courts will most likely permit the party in breach to shelter under the clause.

What is an express repudiation?

The problems created by a failure of performance, arise typically

Where a person has a contractual obligation, he or she has to perform the whole obligation before being entitled to enforce the contract. He or she cannot perform part of the obligation and then seek to enforce the contract.

Where the courts have been faced with an exemption clause that exempts a breach that is so serious that it defeats the whole purpose of the contract, the court, to prevent the party in breach from sheltering behind the exemption clause,

Which of the following is not true?

If one party breaches a condition of a contract, the other party will generally be entitled to repudiate the contract.

Which of the following is not a reason why exemption clauses are attractive?