Question 1

Arthur and Brian have entered into a contract with an enforceable liquidated damages provision that states that Brain's recovery will be $10,000 in the event of Arthur's breach. Arthur breaches the contract. Brain loses $50,000 in consequential damages as a result. Brain's recovery is limited to $10,000.

Accepted Answer

The enforceable liquidated damages provision limits Brain's recovery to $10,000, regardless of the amount of consequential damages he suffered.

Question 2

If there is no time specified in contract by the parties, then it is presumed that performance shall be completed whenever possible.

Accepted Answer

When no time for performance is stated or implied,performance must be completed within a "reasonable time," as judged by the circumstances of each case.

Question 3

For which of the following contracts, is a party's subjective dissatisfaction sufficient to excuse his performance under a "personal satisfaction" clause in a contract?

Accepted Answer

A "personal satisfaction" clause is typically included in contracts where the work to be performed is subjective in nature and requires personal taste or opinion. Painting someone's portrait falls under this category, as the client's satisfaction with the final product is subjective and based on their personal taste. However, constructing an intercontinental ballistic missile, building a steam boiler, and rebuilding an automobile engine are all objective tasks that can be measured and evaluated based on specific technical standards. In these cases, a party's subjective dissatisfaction is not likely to be sufficient to excuse their performance under a personal satisfaction clause.

Question 4

Which of the following is also known as an implied-in-law condition since it is imposed by law rather than by agreement of the parties?

Accepted Answer

A constructive condition, also known as an implied-in-law condition, is imposed by law rather than by agreement of the parties. A condition precedent is a condition that must be met before a contract can be fulfilled, an express condition is a condition that is explicitly stated in the contract, and a subsequent condition is a condition that is triggered by a future event.

Question 5

Pat promises to install granite countertops in the home at 123 Main Street that Bruce is purchasing "provided that the escrow on the sale of 123 Main Street closes." The close of escrow on the sale of 123 Main Street is a condition precedent to Pat's promise.

Accepted Answer

This statement describes a condition precedent, which means that Pat's promise is dependent on a certain condition (the close of escrow) occurring first. Therefore, the statement is true.

Question 6

In general, an employee who has been fired and who wants to sue for breach of contract need not do anything to limit or mitigate his damages, such as looking for another job. This would unfairly benefit an employer who has wrongfully breached a contract.

Accepted Answer

An employee who has been fired and wants to sue for breach of contract has a duty to mitigate their damages by looking for another job. Failure to mitigate damages may reduce the amount of damages awarded in a lawsuit.

Question 7

Roe promises to build a house for Crown for which, Crown agrees to pay him $10,000 when the house is complete. This example is related to the concept of:

Accepted Answer

This is an example of a constructive condition, where the occurrence or non-occurrence of an event is not specifically stated as a condition, but is implied by the nature of the transaction. In this case, the completion of the house is implied as a condition for Crown to pay Roe $10,000.

Question 8

In a contract for Adam to sell Carrie a steam boiler, Carrie's obligation to pay is conditioned upon her personal satisfaction with the boiler. Even though the boiler meets every mechanical test imaginable, Carrie refuses to pay because she just doesn't like the boiler for some reason. She is not obligated to pay, because the contract said that he must be personally satisfied, and a contract is a contract.

Accepted Answer

In a case like this,performance involves mechanical fitness or suitability;the court will apply a reasonable person test.Since a reasonable person would be satisfied with the boiler,Carrie is obligated to pay.

Question 9

An accountant who substantially performs her duties to her client triggers the client's duty to pay the contract price, less any damages resulting from defects in her performance.

Accepted Answer

This is known as the doctrine of substantial performance. Essentially, if a contract has been substantially performed, the other party is obligated to pay the contract price, even if there are minor defects or shortcomings in the performance. However, the other party may be entitled to damages for any defects or shortcomings that do arise.

Question 10

Specific performance is almost never awarded in contracts for the sale of land.

Accepted Answer

Specific performance may be awarded in contracts for the sale of land if monetary damages are inadequate to compensate the buyer. However, it is rare and generally only granted in special circumstances.

Question 11

Andy contracts with Yvonne to produce an advertisement for a Fourth-of-July fundraising party. Yvonne does not produce the advertisement until July 6. Here, Yvonne's breach of the contract is not a material breach unless the contract explicitly stated that time is of the essence.

Accepted Answer

In some contracts that do not specifically state the time for performance,the time can be inferred from the circumstances surrounding the contract.In this case,it is a 4th of July celebration and the court would consider this a material breach of contract by Yvonne.

Question 12

There cannot be subjective standards of personal taste and comfort when determining a promisee's performance.

Accepted Answer

Contracts sometimes provide that a promisor's duty to perform is conditioned on his personal satisfaction with the promisee's performance.In determining which standard of satisfaction to apply,courts distinguish between cases in which the performance bargained for involves personal taste and comfort and cases that involve mechanical fitness or suitability for a particular purpose.A promisor who is honestly dissatisfied with the promisee's performance has the right to reject the performance without being liable to the promisee.

Question 13

When a promisor's performance is an express condition of the promisee's duty to perform, that performance must meet a strict performance standard.

Accepted Answer

When performance is an express condition, it must be met strictly before the promisee's duty to perform arises. Therefore, the performance must meet a strict standard.

Question 14

Which of the following is a condition subsequent?

Accepted Answer

A condition subsequent is an event that terminates an existing obligation. In this case, "unless Al Gore is elected President in 2000" means that the obligation to do X will end if Al Gore is elected President in 2000.

Question 15

When a person owes an unconditional duty to another, then he/she must perform it unless the performance is excused.

Accepted Answer

An unconditional duty means that it must be performed without any conditions or exceptions, unless there is a valid excuse for not performing it.

Question 16

An uncertain future event, the occurrence of which is necessary for the existence of a contractual obligation is called:

Accepted Answer

A condition precedent is a future event that must occur for a contractual obligation to arise. It is a condition that must be met before any other obligation of the contract can be fulfilled.

Question 17

In the eyes of law, breach of any contract is of equal seriousness.

Accepted Answer

The seriousness of breach of contract depends on various factors such as the nature and importance of the contract, the extent of harm caused to the other party, and any willful or fraudulent conduct. Some breaches may be minor and can be resolved through compensation, while others may be serious enough to lead to legal action and heavy penalties.

Question 18

A condition subsequent cannot be a valid reason for the discharge of a duty.

Accepted Answer

A condition subsequent is a provision that stipulates that if certain circumstances occur, then the duty or obligation is terminated. This can be a valid reason for the discharge of a duty.

Question 19

If Grant promises to sell his regular season football tickets to Carson on condition that Indiana University wins the Rose Bowl, Indiana's winning the Rose Bowl is an express condition of Grant's duty to sell the tickets.

Accepted Answer

Grant's promise to sell the tickets is conditional on Indiana University winning the Rose Bowl, making it an express condition of his duty to sell the tickets.

Question 20

Bill contracts to build a building for Harvey. A few changes in the building code that were made after the contract was signed will increase Bill's costs in performing his duties. He is excused from performance under the contract.

Accepted Answer

A change in building code alone does not typically excuse a contractor from performance under a contract. The contract may include provisions for dealing with changes in the law or regulation, or Bill and Harvey may need to negotiate a change to the contract terms to account for the increased costs.

Quiz 18: Performance and Remedies