Question 1

Leah and Mason are parties to a contract for the sale of Mason's day care facility to Leah. Before the deal closes, they agree to substitute Nell for Leah as a party to the deal. This does not require
A) the existence of a previous, valid obligation.
B) agreement by all the parties to a new contract.
C) performance of the original contract by all of the parties.
D) a new, valid contract.

Accepted Answer

The answer of Leah and Mason are parties to a...

Question 2

Discharging a contract by executing a new agreement with performance different from what was originally promised is
A) a material breach.
B) an accord and satisfaction.
C) a novation.
D) substantial performance.

Accepted Answer

The answer of Discharging a contract by executing a new...

Question 3

Fern, who owns and operates Garden Farm, agrees to sell Harvest Grocery a minimum quantity of fresh fruits and vegetables every week for three months. If bad weather destroys Fern's crops, the obligation to deliver produce to Harvest is
A) breached.
B) discharged.
C) not affected.
D) suspended.

Accepted Answer

The obligation is discharged due to impossibility of performance, as the crops were destroyed by bad weather, making it impossible for Fern to fulfill the contract.

Question 4

Business Center signs an agreement with Credit Lending Inc. to borrow $40,000 at 20 percent interest. Later, the state legislature passes a law lowering the maximum permissible rate of interest to 15 percent. The borrower's best argument for avoiding payment to the lender is that
A) performance of the contract is commercially impracticable.
B) payment of the loan would force the debtor into bankruptcy.
C) the law has rendered performance of the contract illegal.
D) the specific subject matter of the contract has been destroyed.

Accepted Answer

The borrower's best argument for avoiding payment to the lender is that the law has rendered performance of the contract illegal. The state legislature's passing of a law lowering the maximum permissible rate of interest would make Credit Lending Inc.'s original agreement with Business Center illegal and unenforceable.

Question 5

Floors n' More, Inc., hires Gordon to renovate Floors n' Mores showroom. Gordon submits plans that Floors n' More approves. Gordon completes the major reconstruction, paints the interior, and buys the fixtures and furnishings. Floors n' More rejects some of these items because they do not match the plans, and subsequently refuses to allow Gordon to finish the work or to collect payment. Could Gordon sue successfully for payment for the entire contract?

Accepted Answer

The answer of Floors n' More, Inc., hires Gordon to...

Question 6

Jason and Kelly enter into a contract for Jason to renovate Kelly's house by a certain date. Jason never performs. After the applicable limitations period has passed, Kelly decides to bring a suit against Jason for breach. This suit
A) must be filed within ten to twenty years, depending on state law.
B) can no longer be brought.
C) can be filed within four years after Kelly decides to sue.
D) must be filed between four and five years after Kelly decides to sue.

Accepted Answer

If the applicable limitations period has passed, it means that the time limit for bringing a lawsuit has expired. Therefore, Kelly can no longer bring a suit against Jason for breach of contract.

Question 7

City Delivery, Inc., enters into a contract to deliver furniture to Damien's house with payment due on July 4. On July 4, Damien's bank is closed, and for this reason, he claims that he cannot pay on time. In this situation
A) the bank is liable for breach.
B) Damien is in breach.
C) the contract is discharged.
D) the contract is suspended.

Accepted Answer

The bank's closure is not a valid excuse for Damien to not pay on time. Therefore, Damien is in breach of the contract.

Question 8

Adrian operates a recycled metals business and contracts to provide ten tons of scrap steel at $500 per ton to be delivered to Build-It-Rite Materials, Inc., in seven months. An unforeseen shortage of scrap steel suddenly develops, making it impossible for Adrian to fulfill the contract for less than $5,000 per ton. Adrian's best defense against performing the contract would be that
A) performance of the contract is commercially impracticable.
B) procuring the steel would force the seller into bankruptcy.
C) the law has rendered performance of the contract illegal.
D) the specific subject matter of the contract has been destroyed.

Accepted Answer

The doctrine of commercial impracticability may apply in this situation. Commercial impracticability excuses a party’s performance if it becomes impracticable due to an unforeseeable event that makes performance commercially impracticable. Here, the unforeseen shortage of scrap steel could potentially fall under this doctrine as it was an unforeseeable event and it makes performance of the contract commercially impracticable. Therefore, Adrian's best defense against performing the contract would be that performance of the contract is commercially impracticable.

Question 9

New Builders, Inc., enters into a contract with O'Reilly to refurbish a garage on his property as an auto repair shop. O'Reilly's neighbor Pete challenges the project as a violation of the local zoning laws. A court orders a halt to the project. O'Reilly's contract with New Builders is
A) breached.
B) discharged.
C) not affected.
D) suspended.

Accepted Answer

The contract is discharged because a legal impediment (court order due to violation of zoning laws) prevents the fulfillment of the contract, making it impossible for New Builders Inc. to complete the project as agreed.

Question 10

Rene contracts with Scot to pay him $5,000 for repairs to Rene's lake cabin. After Scot performs, Rene tells him that she cannot pay him in full immediately. They sign an agreement in which Rene promises to pay $2,500 now instead of $5,000 later. This is
A) a mutual agreement to rescind.
B) an accord and satisfaction.
C) a novation.
D) specific performance.

Accepted Answer

This is an example of an accord and satisfaction. The agreement between Rene and Scot is that Rene will pay $2,500 now instead of the original $5,000 in exchange for Scot's agreement to accept the reduced amount as full payment for his services. This is a valid accord and satisfaction, as long as both parties agree to the terms and there is no duress or coercion involved.

Question 11

Lana agrees to work as Michelle's personal assistant for one year but dies in the ninth month of the contract. Lana's death
A) discharges the contract.
B) breaches the contract.
C) requires Lana's estate to pay damages.
D) suspends performance of the contract.

Accepted Answer

Lana's death makes it impossible for her to continue fulfilling the contract, thus discharging it due to impossibility of performance.

Question 12

Quest Resources, Inc., contracts with Ring Communications Corporation (RCC) for RCC to design and build an all-weather communications system for Quest's field operations. RCC builds the system, but it functions effectively only in good weather. Is this a breach of the contract? If so, what remedies does Quest have?

Accepted Answer

The answer of Quest Resources, Inc., contracts with Ring Communications...

Quiz 16: Performance and Discharge

Leah and Mason are parties to a contract for the sale of Mason's day care facility to Leah. Before the deal closes, they agree to substitute Nell for Leah as a party to the deal. This does not require

Discharging a contract by executing a new agreement with performance different from what was originally promised is

Fern, who owns and operates Garden Farm, agrees to sell Harvest Grocery a minimum quantity of fresh fruits and vegetables every week for three months. If bad weather destroys Fern's crops, the obligation to deliver produce to Harvest is

Business Center signs an agreement with Credit Lending Inc. to borrow $40,000 at 20 percent interest. Later, the state legislature passes a law lowering the maximum permissible rate of interest to 15 percent. The borrower's best argument for avoiding payment to the lender is that

Jason and Kelly enter into a contract for Jason to renovate Kelly's house by a certain date. Jason never performs. After the applicable limitations period has passed, Kelly decides to bring a suit against Jason for breach. This suit

City Delivery, Inc., enters into a contract to deliver furniture to Damien's house with payment due on July 4. On July 4, Damien's bank is closed, and for this reason, he claims that he cannot pay on time. In this situation

New Builders, Inc., enters into a contract with O'Reilly to refurbish a garage on his property as an auto repair shop. O'Reilly's neighbor Pete challenges the project as a violation of the local zoning laws. A court orders a halt to the project. O'Reilly's contract with New Builders is

Rene contracts with Scot to pay him $5,000 for repairs to Rene's lake cabin. After Scot performs, Rene tells him that she cannot pay him in full immediately. They sign an agreement in which Rene promises to pay $2,500 now instead of $5,000 later. This is

Lana agrees to work as Michelle's personal assistant for one year but dies in the ninth month of the contract. Lana's death