Question 1

Roy and Sheila are parties to a contract. They subse?quently agree that Tony should take Roy's place and assume all of his rights and duties under the contract. This is
A) a novation.
B) an accord and satisfaction.
C) an assignment.
D) a modification.

Accepted Answer

A novation occurs when all parties to a contract agree to substitute a new contract for the old one. In this case, Roy is being replaced by Tony, who will assume all of Roy's rights and duties under the contract. This is a clear example of a novation. An assignment would involve Roy transferring some of his rights under the contract to Tony, but still retaining some himself. An accord and satisfaction involves a settlement of a dispute over the terms of the contract, and a modification involves a change to the existing agreement.

Question 2

Flo agrees to work as Gary's personal accountant for one year but dies in the sixth month of the contract. Flo's estate
A) is discharged from any contractual liability.
B) must find a competent accountant to fulfill the contract.
C) must pay liquidated damages.
D) must refund any money paid to Flo on the contract.

Accepted Answer

Flo's death in the middle of the contract makes it impossible to fulfill the agreement. In this case, the estate is discharged from any contractual liability as the event that caused the breach of contract was out of their control.

Question 3

Fact Pattern 17-A2 
Eve, who owns and operates Eve's Garden, agrees to sell Fresh Produce Company ten bush?els of apples.
-Refer to Fact Pattern 17-A2. Eve dies before the apples are delivered to Fresh Produce. This circumstance
A) breaches the contract.
B) discharges the contract.
C) has no effect on the contract.
D) suspends the contract.

Accepted Answer

The death of Eve does not affect the contract because the obligation to deliver the apples can be fulfilled by Eve's estate or successors. The contract remains in effect.

Question 4

Jane and Kelly want Lucy to replace Kelly as a party to their con?tract. They can best accomplish this by
A) accord and satisfaction.
B) novation.
C) reinvention.
D) specific performance.

Accepted Answer

A novation occurs when a new party is substituted for one of the original parties to a contract, with the consent of all parties involved. In this case, Jane and Kelly want Lucy to replace Kelly in the contract. A novation will accomplish this by releasing Kelly from any further obligations and replacing her with Lucy as a new party to the agreement.

Question 5

Diners Restaurant signs an agreement with Eagle Bank to borrow $10,000 at 20 percent interest. Later, the state legislature passes a law lowering the maximum permissible rate of interest from 15 per?cent. Diners' best argument for avoiding payment to Eagle is that
A) performance of the contract is commercially impossible.
B) the agreement violates the mirror image rule.
C) the law has rendered performance of the contract illegal.
D) the specific subject matter of the contract has been destroyed.

Accepted Answer

The state legislature passing a law lowering the maximum permissible rate of interest from 15 percent has rendered the performance of the contract illegal. Therefore, Diners can avoid payment to Eagle under the legal doctrine of illegality.

Question 6

Fact Pattern 17-B2 
Bell Medical Education Service enters into a contract to employ Chris as an instructor for two years to begin May 1. One month before the term begins, Bell is underbid by a competitor and loses a major client, Delta Hospital Center. Bell now refuses to hire Chris.
-Refer to Fact Pattern 17-B2. Under the circumstances, with respect to damages, Chris can
A) bring an action immediately.
B) bring an action only after the contract's two-year term begins.
C) bring an action only after the contract's two-year term ends.
D) do nothing.

Accepted Answer

Chris can bring an action immediately because Bell has breached the contract by refusing to hire him. Chris can seek damages for the breach of contract, such as lost wages for the period of time he was supposed to be employed. Waiting for the contract term to begin or end would not be necessary in this situation.

Question 7

Fact Pattern 17-B2 
Bell Medical Education Service enters into a contract to employ Chris as an instructor for two years to begin May 1. One month before the term begins, Bell is underbid by a competitor and loses a major client, Delta Hospital Center. Bell now refuses to hire Chris.
-Refer to Fact Pattern 17-B2. Bell's repudiation is most likely
A) a material breach.
B) a minor breach.
C) Chris's breach.
D) no breach.

Accepted Answer

Bell's refusal to hire Chris one month before the term begins without any valid reason is a breach of contract. This breach is likely to be a material breach as Bell's obligation to hire an instructor is a fundamental aspect of the contract. This breach is significant as it goes to the heart of the agreement and deprives Chris of the main benefit he would have received under the contract.

Question 8

On April 1, KO Contractors, Inc., contracts to build a store for Lo-Cost Jewelry at a specific location in Metro City. On May 1, Metro changes its zoning laws to prohibit the construction of a commercial building at that location. Lo-Cost files a suit against KO. In this situation
A) KO is in breach of contract.
B) Lo-Cost is in breach of contract.
C) the contract is discharged.
D) the contract is suspended.

Accepted Answer

When an unforeseeable event occurs after a contract is formed that substantially affects the party's performance, it is known as a frustration of purpose. In this situation, the zoning law change frustrates the purpose of the contract, and since it is outside both parties' control, it would discharge the contract. Therefore, neither party is in breach of the contract, nor is it suspended.

Question 9

Rod operates a scrap metal business and contracts to provide ten tons of scrap steel at $50 per ton to be delivered to Pablo in six months. An un?fore?seen shortage of scrap steel suddenly develops, making it impossible for Rod to fulfill his contract for less than $500 per ton. Rod's best de?fense against performing the contract would be
A) the mirror image rule.
B) impossibility of performance.
C) commercial impracticability.
D) none of the choices.

Accepted Answer

The best defense for Rod in this scenario would be commercial impracticability. This defense is used when performance of a contract becomes extremely difficult or costly due to unforeseen events or circumstances that were not considered at the time the contract was created. In this case, the unforeseen shortage of scrap steel has made it impossible for Rod to fulfill his contract for less than $500 per ton, which would make the performance commercially impracticable.

Question 10

Fact Pattern 17-A2 
Eve, who owns and operates Eve's Garden, agrees to sell Fresh Produce Company ten bush?els of apples.
-Refer to Fact Pattern 17-A2. A strike delays delivery of the apples by ten days. This circumstance
A) breaches the contract.
B) discharges the contract.
C) has no effect on the contract.
D) suspends the contract.

Accepted Answer

The strike delays the delivery but does not discharge or breach the contract. However, it does suspend the contract during the time of the strike and the parties may need to renegotiate the delivery date or agree on other terms.

Question 11

Super Toolmakers, Inc., contracts to sell its business to True Hardware Corpo?ration. Before either party has performed, rescission of this con?tract requires
A) a mutual agreement to rescind.
B) consideration.
C) performance by all of the parties.
D) none of the choices.

Accepted Answer

Rescission of a contract before performance typically requires a mutual agreement to rescind, as neither party has yet performed any obligations under the contract. Consideration and performance by all parties would only come into play if the contract had already been partially or fully performed.

Question 12

Hu contracts with Internet Service, Inc. (ISI), to pay $500 for its serv?ices. After ISI performs, they sign an accord, in which Hu promises to pay $400 within ten days instead of $500. Hu does not pay. ISI can sue Hu under
A) neither the accord nor the contract.
B) the accord only.
C) the accord or the contract.
D) the contract only.

Accepted Answer

ISI can sue Hu under both the accord and the original contract. The accord is a new agreement that modifies the terms of the original contract, and creates a legal obligation for Hu to pay $400 within ten days. However, if Hu fails to pay the reduced amount, ISI can still enforce the original contract and seek damages of $500. Therefore, both the accord and the contract provide legal remedies for ISI in case of non-payment.

Question 13

Ruth contracts to provide Shelly with fifty hours of telepathic personal coaching. The state legisla?ture sub?sequently passes a law making tele?pathic personal coaching illegal. This law will
A) discharge the contract.
B) fulfill the contract.
C) not affect the contract.
D) require immediate performance of the contract.

Accepted Answer

The passing of the law making telepathic personal coaching illegal makes Ruth's performance impossible and illegal. Thus, the contract is discharged due to impossibility of performance.

Question 14

Standard Construction, Inc. (SCI), contracts to build a store for Tasty Confection Company (TCC), with TCC's payment due on June 1. On June 1, TCC's bank is closed, and for this reason, TCC claims it cannot pay SCI on time. In this situation
A) SCI is in breach of contract.
B) TCC is in breach of contract.
C) the contract is discharged.
D) the contract is suspended.

Accepted Answer

TCC is in breach of contract for failing to make payment on the agreed-upon date. The fact that their bank is closed is not a valid excuse for non-payment. However, SCI may need to provide TCC with a reasonable amount of time to make the payment before pursuing legal action.

Question 15

Fact Pattern 17-A2 
Eve, who owns and operates Eve's Garden, agrees to sell Fresh Produce Company ten bush?els of apples.
-Refer to Fact Pattern 17-A2. Through no fault of Eve's Garden, a fire de?stroys the apples before they are delivered. This circumstance
A) breaches the contract.
B) discharges the contract.
C) has no effect on the contract.
D) suspends the contract.

Accepted Answer

The destruction of the subject matter of the contract (the apples) before delivery is an example of an impossibility of performance. This discharges the contract, as neither party can perform their obligations due to unforeseeable circumstances beyond their control.

Question 16

Fact Pattern 17-B1 
Kip sells an apartment building to Lacy with a promise to repair the roof, which violates the local housing code, within six months. One year later, Kip sends Milo, a carpenter, to fix the roof. Lacy orders Milo to leave and refuses to make further payments to Kip, who files a suit against Lacy.
-Refer to Fact Pattern 17-B1. Lacy's refusal to make further payments is most likely
A) a material breach.
B) complete performance.
C) excused by Kip's failure to fix the roof.
D) substantial, but not complete, performance.

Accepted Answer

The answer of Fact Pattern 17-B1 
Kip sells an apartment...

Question 17

Fact Pattern 17-A2 
Eve, who owns and operates Eve's Garden, agrees to sell Fresh Produce Company ten bush?els of apples.
-Mona and Nero want to discharge their contract by executing and per?forming a new agreement. They can best accomplish this by
A) accord and satisfaction.
B) novation.
C) reinvention.
D) specific performance.

Accepted Answer

The answer of Fact Pattern 17-A2 
Eve, who owns and...

Question 18

Sam contracts to harvest Tina's crop on August 1. Due to bad weather, Sam cannot perform on the specified date. In this situation
A) Sam is in breach of contract.
B) the contract is discharged.
C) the contract is suspended.
D) Tina is in breach of contract.

Accepted Answer

The contract is suspended, meaning that the performance is temporarily delayed due to unforeseen circumstances, such as bad weather. The parties should agree on a new performance date or termination of the contract. Neither party is in breach of contract at this point.

Question 19

Frank agrees to lease an apart?ment from Gina for one day to see Harry, the president of the United States, deliver a speech in the street below. The speech is can?celed ten days before its delivery date. The con?tract
A) is discharged.
B) is not affected.
C) is postponed until another event is scheduled.
D) must be performed immediately.

Accepted Answer

The contract is discharged, as its only purpose was to lease the apartment for the specific event of the president's speech. With the cancellation of the speech, there is no reason or event for the contract to continue.

Question 20

Luke is a farmer. When bad weather destroys his crop, his obliga?tion to deliver that crop un?der an existing contract with Macro Food Corporation is
A) discharged.
B) enforced completely.
C) enforced only to the extent of finding an alterna?tive supply.
D) enforced only to the extent of transferring to the next year's crop.

Accepted Answer

Luke's obligation to deliver the crop is discharged due to the fact that a natural disaster or bad weather is considered an uncontrollable event that is beyond his control. Therefore, he cannot be held responsible for the non-delivery of the crop.

Quiz 17: Performance and Discharge

Roy and Sheila are parties to a contract. They subse?quently agree that Tony should take Roy's place and assume all of his rights and duties under the contract. This is

Flo agrees to work as Gary's personal accountant for one year but dies in the sixth month of the contract. Flo's estate

Fact Pattern 17-A2 Eve, who owns and operates Eve's Garden, agrees to sell Fresh Produce Company ten bush?els of apples. -Refer to Fact Pattern 17-A2. Eve dies before the apples are delivered to Fresh Produce. This circumstance

Jane and Kelly want Lucy to replace Kelly as a party to their con?tract. They can best accomplish this by

Diners Restaurant signs an agreement with Eagle Bank to borrow $10,000 at 20 percent interest. Later, the state legislature passes a law lowering the maximum permissible rate of interest from 15 per?cent. Diners' best argument for avoiding payment to Eagle is that

On April 1, KO Contractors, Inc., contracts to build a store for Lo-Cost Jewelry at a specific location in Metro City. On May 1, Metro changes its zoning laws to prohibit the construction of a commercial building at that location. Lo-Cost files a suit against KO. In this situation

Fact Pattern 17-A2 Eve, who owns and operates Eve's Garden, agrees to sell Fresh Produce Company ten bush?els of apples. -Refer to Fact Pattern 17-A2. A strike delays delivery of the apples by ten days. This circumstance

Super Toolmakers, Inc., contracts to sell its business to True Hardware Corpo?ration. Before either party has performed, rescission of this con?tract requires

Hu contracts with Internet Service, Inc. (ISI) , to pay $500 for its serv?ices. After ISI performs, they sign an accord, in which Hu promises to pay $400 within ten days instead of $500. Hu does not pay. ISI can sue Hu under

Ruth contracts to provide Shelly with fifty hours of telepathic personal coaching. The state legisla?ture sub?sequently passes a law making tele?pathic personal coaching illegal. This law will

Standard Construction, Inc. (SCI) , contracts to build a store for Tasty Confection Company (TCC) , with TCC's payment due on June 1. On June 1, TCC's bank is closed, and for this reason, TCC claims it cannot pay SCI on time. In this situation

Fact Pattern 17-A2 Eve, who owns and operates Eve's Garden, agrees to sell Fresh Produce Company ten bush?els of apples. -Refer to Fact Pattern 17-A2. Through no fault of Eve's Garden, a fire de?stroys the apples before they are delivered. This circumstance

Fact Pattern 17-A2 Eve, who owns and operates Eve's Garden, agrees to sell Fresh Produce Company ten bush?els of apples. -Mona and Nero want to discharge their contract by executing and per?forming a new agreement. They can best accomplish this by

Sam contracts to harvest Tina's crop on August 1. Due to bad weather, Sam cannot perform on the specified date. In this situation

Frank agrees to lease an apart?ment from Gina for one day to see Harry, the president of the United States, deliver a speech in the street below. The speech is can?celed ten days before its delivery date. The con?tract

Luke is a farmer. When bad weather destroys his crop, his obliga?tion to deliver that crop un?der an existing contract with Macro Food Corporation is