Question 1

Even-Bilt Construction contracts to build a warehouse for Discount E-Sales Company. Even-Bilt completely performs. Discount E-Sales is entitled to
A) an accord.
B) rescission.
C) novation.
D) nothing more.

Accepted Answer

Even-Bilt has completely performed their obligation under the contract, therefore Discount E-Sales is not entitled to any further action or remedy.

Question 2

Fact Pattern 14-1 
Moses sells an apartment building to Noelle with a promise to install a new heating and air conditioning system , before September 1. The following February 1, Moses sends Ollie, an HVAC technician, to begin the installation. Noelle orders Ollie to leave and refuses to make further payments to Moses, who files a suit against Noelle.
-Refer to Fact Pattern 14-1. Noelle's refusal to make further payments is most likely
A) a material breach.
B) complete performance.
C) excused by Moses's failure to timely install the ventilation system.
D) substantial, but not complete, performance.

Accepted Answer

Moses's failure to install the heating and air conditioning system by the promised date of September 1 constitutes a breach of contract, excusing Noelle from making further payments.

Question 3

Gliding Light, LLC, and Hang Gliders, Inc., are parties to a contract. They subse?quently agree that High Riders Inc. should take Gliding Light's place and assume all of its rights and duties under the contract. This is
A) a mutual agreement to rescind.
B) an accord and satisfaction.
C) a novation.
D) a settlement agreement.

Accepted Answer

This is a novation, which involves substituting one party to a contract with another party who assumes all rights and duties of the original party.

Question 4

Fact Pattern 14-2 
Medical Accounts Collection enters into a contract to employ Natalie as a billing and credit manager for two years. During the first year, Natalie is often absent without explanation and when present fails to adequately do her job.
-Refer to Fact Pattern 14-2. Natalie's performance most likely
A) discharges Medical Accounts from the contract.
B) has no effect on Medical Accounts's performance.
C) undercuts Medical Accounts's duties under the contract.
D) suspends Medical Accounts's duty to perform.

Accepted Answer

Natalie's failure to adequately perform her job and her frequent unexplained absences constitute a breach of her employment contract. As a result, Medical Accounts may discharge Natalie and terminate the contract due to her non-performance. However, Medical Accounts must follow any contractual or legal procedures for termination, such as providing notice and a chance to cure the performance issues, if required by the contract. Additionally, Medical Accounts may be entitled to sue Natalie for any damages incurred as a result of her breach of contract.

Question 5

Barbara and Johann are parties to a contract. They agree on a novation. The novation requires
A) the existence of a previous, valid obligation.
B) consideration greater than $5,000.
C) performance of the original contract by all of the parties.
D) an accord and satisfaction.

Accepted Answer

A novation involves the substitution of a new obligation for an old one. Therefore, it requires the existence of a previous, valid obligation that the parties agree to replace with a new obligation. Consideration amount and performance of the original contract are not necessarily required for a novation. An accord and satisfaction refers to an agreement to settle a dispute over a debt, which is different from a novation.

Question 6

CrossCountry Trucking & Transport enters into a contract with Discount Outlet Stores to load, transport, deliver, and unload the cargo that Discount designates. CrossCountry's offer to perform, when the company is ready, willing, and able to do so, is
A) complete.
B) substantial.
C) tender.
D) absolute.

Accepted Answer

CrossCountry's offer to perform, when it is ready, willing, and able to do so, is a tender. This means that CrossCountry is offering to perform the contract, and Discount Outlet Stores has the option to accept or reject the offer. The offer is not complete or absolute, as it is contingent upon CrossCountry's readiness, willingness, and ability to perform. The offer is also not substantial, as that term generally refers to a performance that is partially complete.

Question 7

Hilton enters into a contract to erect a fence around Irene's cattle pasture. When the fence is built, Hilton's performance will be
A) absolute.
B) complete.
C) conditional.
D) substantial.

Accepted Answer

The answer of Hilton enters into a contract to erect...

Question 8

Herb's Hot Dog Vending, Inc., enters into a contract to pay Idris for a business survey and review of Herb's competitors, which Idris delivers on August 1. Herb's offer, on the same date, to pay Idris is
A) a concurrent condition.
B) a novation.
C) tender.
D) mutual rescission.

Accepted Answer

The offer to pay Idris is an example of tender, which is an unconditional offer to perform a contractual obligation. In this case, the obligation is to pay Idris for the business survey and review.

Question 9

Kali contracts to sell Leony her car for $3,000. This contract will be fully discharged when Kali and Leony
A) agree to sign a bill of sale.
B) exchange the car for the $3,000.
C) sign a receipt.
D) shake hands and go their separate ways.

Accepted Answer

The contract will only be fully discharged when Kali and Leony exchange the car for the $3,000, as this is the actual transfer of the consideration specified in the contract. Choice A is not sufficient on its own, as the agreement to sign a bill of sale does not complete the transfer of the car or the payment. Choice C is also not sufficient on its own, as the signing of a receipt only confirms that the payment has been made, but does not complete the transfer of the car. Choice D is not sufficient, as it does not involve the actual transfer of consideration and is not a legally binding way to discharge a contract.

Question 10

Bernadette enters into a contract to operate a Caramel Coffee franchise, which Caramel Coffee agrees to support as long as Bernadette maintains her business license. Caramel Coffee's duty to perform is
A) not a condition.
B) a condition precedent.
C) a concurrent condition.
D) a condition subsequent.

Accepted Answer

The answer of Bernadette enters into a contract to operate...

Question 11

Fact Pattern 14-3 
Business Computer Solutions Education Service enters into a contract to employ Chandra as an instructor for two years to begin June 1. One month before the term begins, Business Computer is underbid by a competitor and loses a major client, Debt Consolidation Corporation. Business Computer now refuses to hire Chandra.
-Refer to Fact Pattern 14-3. Under the circumstances, with respect to damages, Chandra 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

Chandra can bring an action immediately for breach of contract by Business Computer Solutions Education Service. Business Computer's refusal to hire Chandra constitutes a breach of contract even though the contract has not yet begun. Chandra is entitled to damages resulting from this breach.

Question 12

Restoration, Inc., contracts to repair a crack in a supporting beam for Stagecraft Theater for $10,000. If Restoration does not per?form, Stagecraft must pay
A) $10,000.
B) $5,000.
C) $1,000.
D) $0.

Accepted Answer

The answer of Restoration, Inc., contracts to repair a crack...

Question 13

Fact Pattern 14-2 
Medical Accounts Collection enters into a contract to employ Natalie as a billing and credit manager for two years. During the first year, Natalie is often absent without explanation and when present fails to adequately do her job.
-Refer to Fact Pattern 14-2. Natalie's performance is most likely
A) a material breach.
B) a minor breach.
C) a reasonable breach.
D) no breach.

Accepted Answer

Natalie's repeated absences and failure to adequately perform her duties likely constitutes a material breach of the employment contract.

Question 14

Elton and Florida sign a contract by which Elton agrees to deliver and install a utility sink on May 15 in exchange for Florida's promise to pay the $250 price on May 15. The delivery and installation of the sink and the payment of the price are ex?amples of
A) conditions precedent.
B) concurrent conditions.
C) conditions subsequent.
D) implied conditions.

Accepted Answer

The delivery and installation of the sink and the payment of the price are concurrent conditions, meaning they are intended to occur simultaneously. Elton is obligated to deliver and install the sink at the same time that Florida is obligated to pay the price.

Question 15

Fact Pattern 14-3 
Business Computer Solutions Education Service enters into a contract to employ Chandra as an instructor for two years to begin June 1. One month before the term begins, Business Computer is underbid by a competitor and loses a major client, Debt Consolidation Corporation. Business Computer now refuses to hire Chandra.
-Refer to Fact Pattern 14-3. Business Computer's repudiation of its contract to employ Chandra is most likely
A) a material breach.
B) a minor breach.
C) a condition subsequent.
D) not a breach.

Accepted Answer

By refusing to hire Chandra one month before the contract term begins, Business Computer Solutions Education Service is committing a material breach of the contract. This is because they are not fulfilling one of the essential terms of the contract, which is to employ Chandra as an instructor for two years starting on June 1. The loss of a major client and being underbid by a competitor does not excuse their performance under the contract.

Question 16

Red's Plumbing Service substantially performs its contract with Shady Grove Condominiums, Inc. Shady Grove is entitled to
A) damages.
B) nothing more.
C) repudiation.
D) alteration.

Accepted Answer

Since Red's Plumbing Service substantially performs its contract with Shady Grove Condominiums, Inc., Shady Grove is entitled to damages for any minor deviations or defects. They are not entitled to repudiation or alteration of the contract. And since Red's Plumbing Service has substantially performed, Shady Grove cannot claim that they are entitled to nothing more.

Question 17

Fact Pattern 14-1 
Moses sells an apartment building to Noelle with a promise to install a new heating and air conditioning system , before September 1. The following February 1, Moses sends Ollie, an HVAC technician, to begin the installation. Noelle orders Ollie to leave and refuses to make further payments to Moses, who files a suit against Noelle.
-Refer to Fact Pattern 14-1. Moses's late attempt to install the ventilation system is most likely
A) a material breach.
B) complete performance.
C) excused by Noelle's refusal to make further payments.
D) substantial, but not complete, performance.

Accepted Answer

Moses's failure to install the heating and air conditioning system by the agreed date of September 1 constitutes a material breach of the contract, as it significantly deviates from the terms agreed upon.

Question 18

Phil enters into a contract to hire Bob's Building Business to build a warehouse for Phil. The contract specifies that the warehouse should be built with HighQual Bricks. When construction starts, HighQual Bricks cannot provide enough bricks for the warehouse. Bob's Building Business substitutes Big Red Bricks, which are comparable in quality and price to HighQual Bricks. This deviation from the contract
A) discharges Phil from the contract.
B) has no effect on the contract.
C) increases Bob's Building Business's duties under the contract.
D) suspends Bob's Building Business's duty to perform.

Accepted Answer

The substitution of Big Red Bricks, which are comparable in quality and price, does not materially breach the contract. Therefore, the contract remains in effect and is not affected by the deviation.

Question 19

Carpets n' Rugs, Inc., agrees to carpet Downtown Realty's offices, using a particular brand of durable carpet. Carpets n' Rugs completes the job but uses a dif?ferent brand of wear- and weather-resistant carpeting. This is most likely
A) a good-faith reason for Downtown Realty to rescind the contract.
B) a material breach.
C) complete performance.
D) substantial performance.

Accepted Answer

Substantial performance occurs when a party fulfills enough of its contract obligations to warrant payment, even if there are minor deviations from the terms. In this case, using a different brand of carpet that is still wear- and weather-resistant may qualify as substantial performance.

Question 20

Carol enters into a contract to hire Joanne to paint a portrait of Carol's favorite cat. Joanne agrees to do the portrait to Carol's satisfaction for $100. When Joanne finishes the portrait, Carol announces that she is not satisfied with the portrait because it does not look like her cat. Carol
A) must accept the portrait and pay Joanne $100.
B) must accept the portrait and pay Joanne $50.
C) must accept the portrait and pay Joanne $25.
D) does not have to accept the portrait or pay Joanne any money.

Accepted Answer

Since the contract was for Joanne to paint a portrait to Carol's satisfaction, if Carol is not satisfied, she is not obligated to accept the portrait or pay Joanne any money.

Quiz 14: Performance and Discharge

Even-Bilt Construction contracts to build a warehouse for Discount E-Sales Company. Even-Bilt completely performs. Discount E-Sales is entitled to

Gliding Light, LLC, and Hang Gliders, Inc., are parties to a contract. They subse?quently agree that High Riders Inc. should take Gliding Light's place and assume all of its rights and duties under the contract. This is

Barbara and Johann are parties to a contract. They agree on a novation. The novation requires

CrossCountry Trucking & Transport enters into a contract with Discount Outlet Stores to load, transport, deliver, and unload the cargo that Discount designates. CrossCountry's offer to perform, when the company is ready, willing, and able to do so, is

Hilton enters into a contract to erect a fence around Irene's cattle pasture. When the fence is built, Hilton's performance will be

Herb's Hot Dog Vending, Inc., enters into a contract to pay Idris for a business survey and review of Herb's competitors, which Idris delivers on August 1. Herb's offer, on the same date, to pay Idris is

Kali contracts to sell Leony her car for $3,000. This contract will be fully discharged when Kali and Leony

Bernadette enters into a contract to operate a Caramel Coffee franchise, which Caramel Coffee agrees to support as long as Bernadette maintains her business license. Caramel Coffee's duty to perform is

Restoration, Inc., contracts to repair a crack in a supporting beam for Stagecraft Theater for $10,000. If Restoration does not per?form, Stagecraft must pay

Elton and Florida sign a contract by which Elton agrees to deliver and install a utility sink on May 15 in exchange for Florida's promise to pay the $250 price on May 15. The delivery and installation of the sink and the payment of the price are ex?amples of

Red's Plumbing Service substantially performs its contract with Shady Grove Condominiums, Inc. Shady Grove is entitled to

Carpets n' Rugs, Inc., agrees to carpet Downtown Realty's offices, using a particular brand of durable carpet. Carpets n' Rugs completes the job but uses a dif?ferent brand of wear- and weather-resistant carpeting. This is most likely

Carol enters into a contract to hire Joanne to paint a portrait of Carol's favorite cat. Joanne agrees to do the portrait to Carol's satisfaction for $100. When Joanne finishes the portrait, Carol announces that she is not satisfied with the portrait because it does not look like her cat. Carol