Question 1

Pam borrows $5,000 from Quality Auto Sales to buy a car. When Pam does not pay the loan or return the car,Quality wants to transfers the right to the payment to Rapid Collection Agency.Rapid agrees to pay Quality for this right,but for a price that is less than the amount owed.Can Quality transfer this right to Rapid without Pam's consent? If so,and Quality committed fraud in the deal with Pam,could Pam legiti-mately refuse to pay Rapid? Explain.

Accepted Answer

The answer of Pam borrows $5,000 from Quality Auto Sales...

Question 2

Lily is a farmer.When bad weather destroys her crop,her obliga-tion to deliver it un-der an outstanding contract with Macro Food Corporation is

Accepted Answer

When bad weather destroys Lily's crop, it becomes impossible for her to fulfill her obligation to deliver the crop to Macro Food Corporation. As a result, her obligation to deliver the crop is discharged, and she is not liable for breach of contract. This is known as the doctrine of frustration, which excuses a party from performing a contract when circumstances beyond their control make performance impossible.

Question 3

Ellen contracts to buy six cases of vintage Fertile Valley wine from Grapes & Vines Winery for $1,200.The contract states that delivery is to be made at Ellen's residence "on or before May 1,to be used for daughter's wedding reception on May 2." On May 1,Grapes & Vines's delivery van is involved in an accident,no wine is delivered that day,and no one from Grapes & Vines tells Ellen.On the morning of May 2,Ellen buys the wine from Happy Hill Winery.That afternoon,just before the reception,Grapes & Vines tenders delivery of the wine at Ellen's residence.She refuses tender.Grapes & Vines sues her for breach of contract.How is the court most likely to rule?

Accepted Answer

The answer of Ellen contracts to buy six cases of...

Question 4

Rocko owes Sybil $1,000 for yard work Sybil performed for Rocko.The money is due on May 1.On April 30,Rocko goes to the bank to get the money and discovers that the bank will be closed until May 2.Rocko

Accepted Answer

Rocko will be in breach of contract because the obligation to pay is not excused by the bank's closure; he should have planned to meet the payment deadline.

Question 5

Ben and Andrew are parties to a contract.They agree on a novation.The novation does not require

Accepted Answer

Novation replaces the original contract with a new one, so performance of the original contract is not required.

Question 6

Ruth contracts to provide Stan 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

Accepted Answer

Once a law has been passed making telepathic personal coaching illegal, it will become impossible for Ruth to perform her obligation under the contract. As a result, the contract will be discharged, and neither party will have any further obligation.

Question 7

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

Accepted Answer

Even-Bilt completed the construction as per the contract, therefore Discount E-Sales is not entitled to any further legal action or remedies.

Question 8

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

Accepted Answer

A novation is the substitution of a new contract for an existing one, in which the original parties agree to the discharge of their respective obligations under the original contract and the creation of new obligations under the new contract. In order for a novation to be valid, there must be a previous, valid obligation that is being discharged and replaced by the new contract. The other choices (B, C, and D) are not required for a novation.

Question 9

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

Accepted Answer

The answer of Red's Plumbing Service substantially performs its contract...

Question 10

Hal contracts with Credit Services,Inc.(CSI),to pay $500 for its serv-ices.After CSI performs,they sign an accord,in which Hal promises to pay $400 within ten days instead of the $500.Hal does not pay.CSI can sue Hal under

Accepted Answer

CSI can sue Hal under both the accord and the original contract. The accord is a modification of the original contract, and if Hal fails to fulfill his promise in the accord, CSI can still enforce the terms of the original contract.

Question 11

Juan and Isidro enter into a contract to buy,restore,and reopen the Coastal Park Carousel.Before either party begins to perform,they agree to cancel their deal.This is

Accepted Answer

Mutual rescission is when both parties agree to cancel a contract before either party begins to perform. This is the best choice because it explicitly states that both parties agreed to cancel the contract, which is the scenario presented in the question. The other choices do not accurately reflect the situation described.

Question 12

Wilson owes Shelby $5,000 for repairs on Wilson's Bobcat Skidsteer.Wilson has financial troubles and he and Shelby sign an accord,in which Wilson promises to pay $4,000 and give Shelby his mountain bike within thirty days instead of the $5,000.Wilson's delivery of the bike and $4,000 to Shelby is

Accepted Answer

The agreement between Wilson and Shelby is an accord, which is essentially an agreement between two parties to accept something other than the performance promised under the original contract. Wilson's promise to pay $4,000 and give Shelby his mountain bike in lieu of the $5,000 owed is the accord.

However, once Wilson delivers the bike and $4,000 to Shelby, this is considered satisfaction, which means that the obligation under the original contract (to pay for the repairs) has been discharged. Therefore, choice B is the correct answer.

Substantial performance refers to a situation where a party has not fully performed under a contract, but has performed to a degree that is satisfactory to the other party. This does not apply in this scenario.

Dovation is not relevant to this scenario, as it refers to a situation where a new contract replaces an existing one.

Quiz 12: Third Party Rights and Discharge