Deck 12: Performance of a Contract

Question 1

A party may make either an assignment or a delegation, but cannot make both an assignment and a delegation simultaneously.

Answer 1

False

Question 2

Robert hired James, a CPA, to prepare his tax returns. James was too busy and delegated the work to Sara, also a CPA. This delegation is

A)enforceable, as Sara is also a CPA.
B)enforceable, as there was no expectation James would do the work.
C)not enforceable, as Robert hired James to perform personal services.
D)not enforceable, as this violates public policy.

Answer 2

C

Question 3

Lawrence took out a life insurance policy in which his daughter, Madeline, is named as a beneficiary. Madeline is a(n)

A)promisor.
B)obligor.
C)intentional beneficiary.
D)incidental beneficiary.

Answer 3

C

Question 4

Char-Glo Industries contracted with Evergreen Lawn Service to mow and trim the company's lawn. In the contract, Char-Glo included a clause prohibiting Evergreen from delegating its duties. Courts will ordinarily not enforce such a clause.

Question 5

Martina hires Alexander to renovate her home and specifies that Alexander use Spiffy Painting for all the painting because of Spiffy's excellent reputation. In this case, Spiffy is a(n)

A)creditor beneficiary.
B)incidental beneficiary.
C)intended beneficiary.
D)debtor beneficiary.

Question 6

If Valley Bridge contracts with Rainbow Painters to paint a bridge and the contract requires that only Sherwin Williams paint be used, then Sherwin Williams, as third party beneficiary, will most likely be able to enforce the contract against either Valley Bridge or Rainbow Painters.

Question 7

Johann, a well-known musician, agrees to give ten guitar lessons to Elton for $2,000. Nothing in the contract itself prohibits a delegation. If Johann delegates his obligation to Eugene, a second-year musical student and enthusiastic guitar player, then the delegation will probably be

A)permitted because contracts may be freely delegated.
B)permitted because the contract is just for music lessons.
C)prohibited because the contract is for service from a specific person.
D)prohibited by the UCC because this is a sale of services.

Question 8

Wright Company contracted with the city of St. Louis to train and employ disadvantaged youths. If Wright fails to fulfill the contract and is sued by one of the disadvantaged youths, the youth would

A)win, as he is an intended beneficiary.
B)win, as he is a donor beneficiary.
C)lose, as he is a creditor beneficiary.
D)lose, as he is an incidental beneficiary.

Question 9

Which statement most accurately describes third party beneficiary rights?

A)A beneficiary may enforce a contract if the parties intended to benefit him and if enforcing the promise will satisfy a duty of the promisee to the beneficiary.
B)If a promisee intended to make a gift to the beneficiary, the beneficiary may not enforce the contract.
C)An intended third party beneficiary has no enforceable rights in a contract.
D)Incidental beneficiaries have enforceable rights against both contracting parties.

Question 10

A party who benefits from the contract although the contract was not designed for that party's benefit is a(n)

A)donee beneficiary.
B)incidental beneficiary.
C)creditor beneficiary.
D)contractual beneficiary.

Question 11

Assignment is prohibited when the obligor is agreeing to perform personal services.

Question 12

The status of a third party is determined by

A)the type of contract.
B)whether the third party gave consideration.
C)the reasonable expectations of the third party.
D)the intent of the contracting parties.

Question 13

If Ray agrees to rake leaves for Michelle in exchange for Michelle's promise to pay off the debt Ray owes to Dean, then Dean is a donee beneficiary of the agreement between Ray and Michelle.

Question 14

A donee beneficiary

A)is not entitled to enforce a contract against either party.
B)usually does not give consideration in return for the gift.
C)will generally become a creditor beneficiary after his or her rights vest.
D)is an incidental beneficiary.

Question 15

Most types of duties may be delegated.

Question 16

Tyron purchased a vacant lot and entered into a contract with BZ Inc. to construct a shopping center on the site. Douglas heard about this contract and built a restaurant on an adjoining piece of property because of the planned shopping center. Tyron was unable to raise the necessary capital and was unable to perform the contract with BZ, Inc. Douglas sued Tyron for breach of contract as a third party beneficiary. Douglas will probably

A)win as a third party creditor beneficiary.
B)win as a third party donee beneficiary.
C)lose as a third party incidental beneficiary.
D)lose as a third party creditor beneficiary.

Question 17

A third party beneficiary's status occurs

A)after an assignment and delegation.
B)when the third party is informed of the contract.
C)when the third party beneficiary agrees to the contract terms.
D)when the contract is created.

Question 18

Norm and Frank have a legal contract that is silent with regard to an assignment of the contract. In order for Norm to assign all or part of his rights under a contract, Frank must grant such permission to Norm.

Question 19

If Casey assigns her rights to receive income from rental property to Errol, then Errol will legally acquire any rights to the income held by Casey.

Question 20

Once a duty is delegated, it relieves the delegator of his or her own liability to perform the contract.

Question 21

Garth's Imports sold a car to Wally on credit for $30,000. Garth assigned to Cassandra all of his rights to receive money from Wally. Cassandra did not inform Wally of the assignment. Therefore, Wally continued to make the next three payments directly to Garth. Shortly thereafter, Garth left the country with the money. If Cassandra sues Wally for the missing three payments

A)Cassandra will not be able to collect the money from Wally.
B)Cassandra will be able to collect the money from Wally.
C)Wally is liable for the three payments because Cassandra paid consideration for the assignment rights.
D)Wally cannot raise the defense of previous payment.

Question 22

Mohammed suffers a substantial financial loss when Olson Company breaches a contract. Under the statute of limitations, to receive damages Mohammed must file suit against Olson Company within

A)one year.
B)two years.
C)five years.
D)It depends on the state where Mohammed lives.

Question 23

Generally, in comparison to a donee beneficiary, a creditor beneficiary has

A)about the same legal rights.
B)substantially greater legal rights.
C)substantially fewer legal rights.
D)virtually no legal rights.

Question 24

Susan took out a life insurance policy on herself, paying all of the premium payments. She named her daughter, Jessica, as the beneficiary under the policy. Jessica has not given anything in consideration for the policy. Jessica is a(n)

A)donee beneficiary who has rights to enforce the policy once Susan dies.
B)creditor beneficiary who has rights to enforce the policy once Susan dies.
C)incidental beneficiary because Jessica did not give any consideration for the policy and therefore cannot enforce the policy even when Susan dies.
D)promisor in the contract with no enforcement rights.

Question 25

The legal right to sue for a breach of contract is subject to a statute of limitations.

Question 26

A rock group assigns its payment under a performance contract to the Costume Shop, a business that has supplied the group with outrageous stage outfits, and to which the group owes a great sum of money. Under this arrangement the rock group is the

A)assignor.
B)assignee.
C)delegator.
D)delegatee.

Question 27

Shirley is an actress under contract with Twentieth Century. Shirley agreed to perform the lead role in a musical to be filmed in Hollywood by Twentieth Century. At the last minute, Twentieth Century decided to scrap the musical and assigned its rights in Shirley to MGM. MGM was planning to film a western in Australia requiring Shirley to spend six months filming in Australia. Can Shirley successfully prevent this assignment?

Question 28

Cheryl enters into a contract with Gabe. In this contract, Cheryl asks Gabe to pay the money he owes her from the contract to her friend Leah because Leah is having financial troubles. Leah is

A)a third party creditor beneficiary.
B)a third party donee beneficiary.
C)a third party incidental beneficiary.
D)the promisee in the contract.

Question 29

Monumental, Inc. contracts with Champion Builders to erect a three-story office building on a parcel of land it has purchased. Before construction begins, the local zoning board changes the zoning of the parcel and those adjoining it to residential use only. Monumental's contract with Champion is discharged.

Question 30

Most contracts are discharged by mutual agreement of the parties.

Question 31

In which case would true impossibility NOT apply?

A)Nelson contracted with a local restaurant to supply 10,000 pounds of potatoes, but a tornado tore through his field, completely destroying it.
B)A record company contracted with Darlene to produce a CD of traditional folk ballads; unfortunately, Darlene died before recording began.
C)Reed agrees to purchase an expensive piece of jewelry for $25,000; a week later, he tells the jeweler that he simply does not have that kind of money.
D)None of these are correct.

Question 32

Statutes of limitations

A)define how much money the injured party can sue for under a breach of contract claim.
B)define whether there has been substantial performance of a contract or a material breach.
C)limit the time in which an injured party may sue.
D)only apply to the sale of goods. There is no statute of limitations on a service contract.

Question 33

Which of the following duties can probably be delegated?

A)an agreement to perform an operation
B)a contract to paint a picture
C)an agreement by an attorney to draft a contract
D)an agreement to paint a house

Question 34

Assume that Jessie and Lester have formed a contract whereby Jessie agrees to deliver 10,000 dozen "Grade A Large Eggs" to be shipped in paper cartons. A shortage of paper makes paper cartons much more expensive, so Jessie uses styrofoam cartons and ships the eggs. Lester is entitled to cancel the contract based on a material breach of the contract.

Question 35

Abdulla hired Granite Construction to build an addition onto his home. Granite Construction dug the foundation but then abandoned the project. Granite Construction is entitled to receive the full contract price minus the value of the defects.

Question 36

M & E contracted to sell 500 music stands to Coda, Inc. M & E shipped the stands in accordance with the agreement. Coda paid for the stands as promised. The contract between M & E and Coda is discharged by

A)full performance.
B)agreement.
C)rescission.
D)accord and satisfaction.

Question 37

Andrew Durham was injured in a job-related accident that resulted in a workers' compensation settlement agreement with the employer's insurance carrier, Traveler's Indemnity Company. The settlement agreement required Traveler's to pay Durham $2,500 per month for the rest of his life. To finance its obligation, Traveler's purchased an annuity in its name. The settlement agreement required Traveler's approval or written consent prior to an assignment of the annuity payments. Durham later decided to open a business and went to a credit union for a $214,000 loan. The credit union loaned the money, taking a security interest in Durham's monthly annuity payments. Traveler's consent was never secured. Discuss the conditions in which a right may not be assigned and assess if this was a valid assignment.

Question 38

When is an assignment enforceable against an obligor?

A)from the moment the assignment is made
B)from the moment the obligor signs the contract
C)from the moment the assignee gives consideration
D)from the moment the obligor is notified of the assignment

Question 39

Briefly discuss the enforceability of contracts by third parties.

Question 40

In January 2018, Professor Noe entered into a contract with State University. She agreed to teach full time during the 2018-2019 academic year. Professor Noe died on May 31, 2018. Her estate

A)is obligated to find another person who will agree to teach during the academic year.
B)is discharged from any further obligations under the contract.
C)will be discharged from any obligations under the contract only if it can be shown that her death was unexpected.
D)will not be discharged. If the University has to pay more in order to hire a comparable substitute professor at the last minute, then the estate will be responsible for the difference in pay.

Question 41

Ralph is a professional football player. He signs a valid contract with the Jets. Later, the Giants offer him more money, so he signs a contract with them. If the Jets sue Ralph, what would the most likely result be?

A)The court will order Ralph to play with the Jets.
B)The court will order Ralph to play with the Jets, but Ralph is entitled to be paid the amount he negotiated under the Giants contract.
C)The court will issue a preliminary injunction barring Ralph from playing with any team other than the Jets during the course of the lawsuit.
D)The court will order Ralph to pay compensatory damages in the amount of the difference between the two contracts.

Question 42

The concept that expectation interest is designed to put the injured party in the position he or she would have been in had both sides fully performed their obligations is found in

A)Bi-Economy Market, Inc . v. Harleysville Ins. Co. of New York.
B)Hadley v. Baxendale.
C)Hawkins v. McGee .
D)None of these are correct.

Question 43

What does it mean if a party to a contract has been discharged ?

A)It means that person has been "let go" and has terminated the contract.
B)It means that person has "transferred" by assigning his or her duties to another party.
C)It means that person is "finished" and has no more duties under the contract.
D)It means that person has "delegated" and chosen to give up his or her contract rights.

Question 44

To win expectation damages, the injured party must prove the breach of contract caused damages that can be quantified with reasonable certainty.

Question 45

What does the term "substantial performance" mean? What factors are generally considered when determining whether one of the parties has substantially performed?

Question 46

Expectation interest can best be described as money spent in reliance upon the agreement.

Question 47

The goal of expectation interest is to

A)serve as a penalty for breaching a contract.
B)award damages under the UCC when the sale of goods is the subject of the contract.
C)put the non-breaching party in the position it would have been in had the contract never been formed.
D)put the non-breaching party in the position it would have been in if the contract hadn't been breached.

Question 48

Identify and describe the principal contract interests a court may seek to protect.

Question 49

Buddy was hired to play drums for a rock group scheduled to tour the Midwest. Part way through the tour, Buddy was tragically killed in a plane crash. The tour had to be discontinued until a new drummer could be found. The band lost money on the tour. Is Buddy's estate or agent responsible for the loss to the band?

Question 50

Injunctions are frequently used by courts to force employees to complete their contractual obligations with their employers.

Question 51

Dr. Gonzalez ordered specialized surgical equipment from Physician's Supply Co., but the company informed Dr. Gonzalez that it would not be able to meet his order by the agreed date. Even if Dr. Gonzalez does nothing to secure equipment from another source, he will be able to recover damages since the contract was breached by Physician's Supply, not Gonzalez.

Question 52

Ernest operates an ice cream stand during the months of May, June, July, and August. Ernest's ice cream machine is broken and needs a new part to run. He contracts to have the part shipped to him by special carrier. Ernest emphasizes that the part needs to be delivered by April 25 and the carrier agrees, knowing that Ernest intends to open his stand May 1. If the shipper fails to deliver the part on April 25, Ernest will be able to recover consequential damages caused by the delay.

Question 53

The expectation interest is designed to put the injured party in the position he or she would have been in had both sides fully performed their obligations.

Question 54

Larry wanted to buy a 1957 Cadillac once owned by Reggie Jackson. Larry entered into a contract with the owner agreeing to pay $102,000. The owner subsequently changed his mind. If Larry sues, what remedies are potentially available?

Question 55

Carlos is hired to paint a house for $700. Before he starts, the woman who hired Carlos tells him she does not want the job done after all. Carlos finds another house-painting job that afternoon, but it pays only $500. If Carlos sues the woman for damages and is awarded $200, that amount is an example of

A)direct damages.
B)nominal damages.
C)consequential damages.
D)incidental damages.

Question 56

Specific performance is available when the subject matter of the contract is unique.

Question 57

Jackie hires Charles to lay new carpet in her bedroom. Charles does such a bad job, that the only way to fix the carpet is to start over and relay the carpet. Which of the following best describes this situation?

A)This is substantial performance. Jackie must still pay something to Charles.
B)This is a material breach. Jackie must still pay something to Charles.
C)This is substantial performance. Jackie owes nothing to Charles.
D)This is a material breach. Jackie owes nothing to Charles.

Question 58

Specific performance may be available for the breach of a contract to sell

A)an original painting.
B)20 shares of Walmart stock.
C)a Nintendo Wii video game system.
D)a 2007 Mustang in mint condition.

Question 59

Which of the following is an example of incidental damages you might be awarded if you are wrongfully terminated from your job?

A)the costs of psychological counseling
B)the costs of mailing resumes to prospective employers
C)the costs of a new wardrobe for future interviews
D)the costs of cosmetic surgery