Question 1

A and B enter into a contract on January 1 of this year. A 's friend C tells A , "The law generally restricts the time within which an action can be brought by either party to a contract." C 's statement is:
A) false.
B) true because of statutes of limitations.
C) true because of the law of repudiation.
D) true because of covenants not to sue.

Accepted Answer

The statement is true because of statutes of limitations, which set a time limit for bringing a legal action related to a contract. After the set time period, the right to sue is lost. This varies depending on the type of contract and jurisdiction.

Question 2

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

Accepted Answer

Under the substantial performance doctrine, if a contractor completes a substantial portion of the work contracted for, the contractor is entitled to the contract price, less any damages caused by the incomplete work. In this case, Bob completed all but the gift taxes, which is a minor part of the work. Therefore, Marge will have to pay Bob for all the work completed, but can deduct a reasonable amount for the incomplete work.

Question 3

On November 1, Paula and Roberta enter into a contract where both parties are obligated to perform on December 31. On December 1, Paula tells Roberta, "I can, in no way, perform my duties in our contract." This statement is:
A) a material alteration.
B) anticipatory repudiation.
C) a nonmaterial breach since the statement is made before December 31.
D) an accord.

Accepted Answer

Paula's statement is an anticipatory repudiation because she is indicating that she will not perform her duties before they are due on December 31. This gives Roberta the option to terminate the contract and pursue legal action.

Question 4

Steven owes Theresa $100 for a used computer which he bought last year at Theresa's garage sale. The two agree that the debt can be paid by Steven's shoveling Theresa's driveway from January through March. The new contract is a(n):
A) accord.
B) satisfaction.
C) novation.
D) rescission.

Accepted Answer

An accord is a new agreement between parties that modifies the terms of an existing contract. In this scenario, Steven and Theresa have reached a new agreement that modifies the terms of their original contract (payment of $100 for the used computer) to be satisfied by Steven's shoveling Theresa's driveway. Therefore, the new contract is an accord.

Question 5

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 immediately liable to Jim for damages.
C) Jim must wait until June 1 to see if Kevin will perform his contractual duties and, if he does not, then Jim may sue Kevin for damages.
D) Jim must try to find "cover" to replace the breached contract, and if he is not able to do so before June 1, then Kevin is liable to Jim for damages.

Accepted Answer

Kevin has anticipatorily repudiated the contract by notifying Jim that he will not be making the trip. Jim can immediately sue Kevin for damages due to the breach of contract.

Question 6

Paul promises Marty $1,500 if he will completely landscape Paul's yard. Which of the following would discharge Paul'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 or grass.
D) Paul isn't satisfied with Marty's design.

Accepted Answer

The contract specifies that Marty must completely landscape Paul's yard. If he doesn't plant any flowers or grass, he has not fulfilled this requirement and Paul is not obligated to pay him. The other options may be considered breaches of contract, but they do not completely discharge Paul's obligations to pay.

Question 7

Which of the following would be considered a material breach of a contract?
A) Partial performance that omits some essential part of the contract.
B) Delivery of 50 chairs in a contract that calls for 100 chairs.
C) An intentional breach of the contract.
D) All of these would be material breaches.
E) Only (a) and (b) would be material breaches.

Accepted Answer

A material breach is a serious violation of a contract that goes to the heart of the agreement. All of the options listed would be considered material breaches. Partial performance that omits an essential part of the contract, delivery of only half the goods required under the contract, and an intentional breach all constitute material breaches.

Question 8

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.

Accepted Answer

Refusal of a tender of performance in a bilateral contract is treated as a repudiation by the non-tendering party. This repudiation excuses the tendering party from further performance under the contract, as their obligation to perform is contingent upon the other party's willingness to accept the performance or perform their part of the contract.

Question 9

Which of the following is 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.

Accepted Answer

Condition subsequent is a condition that, if it occurs, terminates the duty of the party favored by the condition to perform under the contract. A "sale or return" contract is an example of a contract with a condition subsequent, where the seller's duty to transfer title and right to possession is terminated if the buyer returns the goods. Conditions subsequent are not very common in contracts. Conditions precedent, on the other hand, are more common and must occur before performance is due under a contract. Therefore, option A and C are incorrect.

Question 10

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 law rule.

Accepted Answer

The perfect tender rule is a principle adopted by the Uniform Commercial Code (UCC) that requires strict adherence to contract terms related to delivery and performance of goods. This rule greatly alters the common law doctrine of material breach by stating that any nonconformity in the goods delivered constitutes a breach of the contract if the seller fails to cure it within the time allowed. It is a departure from the traditional view that any breach, no matter how minor, would constitute a material breach allowing the other party to cancel the contract.

Question 11

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) an accord.
B) a novation.
C) a rescission.
D) a satisfaction.

Accepted Answer

Ricardo's agreement to accept Bill's car washing and waxing as a means of settling the debt fulfills and thus satisfies their original obligation. This is known as a satisfaction.

Question 12

Ashley contracted to perform on her horse, Coronation, in the opening ceremonies of the World Equestrian Games. If, before the event, Coronation pulls a tendon in its leg and Ashley has to cancel her appearance, this is a case of:
A) subjective impossibility, which does not excuse Ashley from liability for breach of contract.
B) objective impossibility, which discharges Ashley's contractual duty.
C) frustation of purpose, which does not discharge Ashley's contractual duty.
D) commercial impracticability, which excuses nonperformance.

Accepted Answer

The fact that Coronation pulls a tendon in its leg is an objective impossibility, meaning it was unforeseeable and beyond Ashley's control. This discharges Ashley's contractual duty to perform, and she would not be liable for breach of contract.

Question 13

The definition of "discharge by breach" is:
A) performance that is incomplete but that does not defeat the purpose of the contract but entitles the injured party to damages.
B) wrongful failure to perform the terms of a contract that gives rise to a right to damages by the injured party.
C) a breach that prevents performance by either party.
D) None of these.

Accepted Answer

Discharge by breach occurs when one party wrongfully fails to perform the terms of a contract, giving rise to a right to damages by the injured party. This is the most accurate definition of discharge by breach out of the options given. Option A describes partial performance, while option C describes a situation where neither party can perform due to unforeseen circumstances, neither of which are examples of discharge by breach. Option D is incorrect because one of the options is the correct definition of discharge by breach.

Question 14

Anita, who is a seamstress, agrees to sew a suit for Bryan, who promises in return to pay Anita $500 for the suit if he is satisfied with it. Anita completes the suit, which fits Bryan perfectly. Nevertheless, he says that he is not satisfied and refuses to accept or pay for it. If Bryan is honest in his dissatisfaction, but he is unreasonable:
A) Bryan must pay for the suit even if he is dissatisfied.
B) this is an illusory contract, because only Anita is bound.
C) Bryan's approval is to be judged by an objective standard.
D) Anita has no recourse against Bryan, because she agreed to the subjective standard.

Accepted Answer

The answer of Anita, who is a seamstress, agrees to...

Question 15

Rebecca sees a pair of beautiful silver shoes in a store window. She goes in and tells the shopkeeper, "If I am asked to the prom, I will buy those shoes. Please hold them for me." If the shopkeeper signs a note that says, "Will hold for Rebecca silver shoes, style 1028, size 8," will he have to honor that promise?
A) Yes, and there is a condition precedent to the contract of sale.
B) Yes, there is a contract with a condition subsequent.
C) No, there is no contract but simply an illusory promise.
D) No, a contract is formed after Rebecca is asked to the prom.

Accepted Answer

The shopkeeper has accepted Rebecca's offer and signed a note that includes the specific details of the shoes that he will hold for her. The condition precedent is Rebecca being asked to the prom, which must occur before she will buy the shoes. This means there is a valid contract between Rebecca and the shopkeeper.

Question 16

Which of the following is true with respect to substantial performance?
A) It does not apply to the construction industry.
B) Substantial performance does not defeat the purpose of the contract.
C) When one party to a contract has substantially performed, the other party cannot recover damages for the imperfect performance.
D) All of these.

Accepted Answer

Substantial performance means that a party has performed most of their duties under the contract, but there may be some minor imperfections or omissions. It applies to all industries and does not completely defeat the purpose of the contract. However, the other party may be entitled to a reduction in payment or recover damages for any remaining imperfect performance.

Question 17

In the case of Michael Silvestri v. Optus Software, Inc., the court held:
A) an objective standard is typically applied to satisfaction clauses in employment contracts.
B) an objective standard must be used in determining what is satisfactory performance in any "satisfaction" contracts.
C) idiosyncratic judgments as to what constitutes satisfactory employee performance are inherently unfair and should not be allowed.
D) in judging a high-level manager's satisfactory performance, a subjective test is appropriate.

Accepted Answer

In the case of Michael Silvestri v. Optus Software, Inc., the court held that in judging a high-level manager's satisfactory performance, a subjective test is appropriate. This acknowledges the complexity and nuanced nature of evaluating the performance of individuals in high-level managerial positions, where objective metrics may not fully capture the scope of their responsibilities or the qualitative aspects of their performance.

Question 18

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) impossibility of performance doctrine

Accepted Answer

The frustration of purpose doctrine discharges a contract if supervening circumstances make fulfillment of the purpose which both parties had in mind impossible, unless one of the parties contractually assumes the risk. The other options are not relevant to the concept of frustration of purpose.

Question 19

The principle illustrated in the Christy v. Pilkinton case is:
A) a breach of contract is material if it is an intentional breach.
B) subjective impossibility does not discharge the contractual duty of the party.
C) objective impossibility generally discharges the contractual duty of the party.
D) commercial impracticability occurs when performance can only be accomplished under unforeseen and unjust hardship.

Accepted Answer

The answer of The principle illustrated in the Christy v....

Question 20

Fred contracts to sell a certain tract of land to Mary for $20,000, but the contract is silent as to the time of delivery of the deed and payment of the price. In this case:
A) the payment of the $20,000 and the delivery of the deed are independent of each other.
B) the delivery of the deed is a condition subsequent to the payment of the $20,000.
C) the payment of the $20,000 and the delivery of the deed are mutually dependent and, in the absence of an agreement to the contrary, are concurrent conditions.
D) the payment of the $20,000 is a condition precedent to the delivery of the deed.

Accepted Answer

In the absence of an agreement to the contrary, the payment of the $20,000 and the delivery of the deed are mutually dependent and concurrent conditions. This means that neither party has an obligation to perform until the other party is ready and willing to perform their part of the contract. Therefore, both the payment and the delivery of the deed should happen at the same time.

Quiz 17: Performance, Breach, and Discharge

A and B enter into a contract on January 1 of this year. A 's friend C tells A , "The law generally restricts the time within which an action can be brought by either party to a contract." C 's statement is:

Bob, the 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:

On November 1, Paula and Roberta enter into a contract where both parties are obligated to perform on December 31. On December 1, Paula tells Roberta, "I can, in no way, perform my duties in our contract." This statement is:

Steven owes Theresa $100 for a used computer which he bought last year at Theresa's garage sale. The two agree that the debt can be paid by Steven's shoveling Theresa's driveway from January through March. The new contract is a(n) :

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

Which of the following would be considered a material breach of a contract?

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

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

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

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:

Ashley contracted to perform on her horse, Coronation, in the opening ceremonies of the World Equestrian Games. If, before the event, Coronation pulls a tendon in its leg and Ashley has to cancel her appearance, this is a case of:

The definition of "discharge by breach" is:

Which of the following is true with respect to substantial performance?

In the case of Michael Silvestri v. Optus Software, Inc., the court held:

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.

The principle illustrated in the Christy v. Pilkinton case is:

Fred contracts to sell a certain tract of land to Mary for $20,000, but the contract is silent as to the time of delivery of the deed and payment of the price. In this case: