Question 1

A novation requires the existence of a previous, valid obligation.

Accepted Answer

A) True 
 B)False  True

Question 2

Build-well Construction LLC contracts to build a warehouse for Corporate Storage Inc. Corporate does not have to pay Build-well if the warehouse is not built. Their respective promises are

Accepted Answer

A)  conditioned on the occurrence of an event. 
B)  conditioned on the nonoccurrence of an event. 
C)  conditioned on Build-well's performance. 
D)  not conditioned. 
A)  conditioned on the occurrence of an event. 
B)  conditioned on the nonoccurrence of an event. 
C)  conditioned on Build-well's performance. 
D)  not conditioned. D

Question 3

Copper Circuit, Inc. and Direct Electric LLC sign an agreement that provides for the payment of "$1,000 by whichever party commits a material breach of the contract that creates damages difficult to estimate but approximately $1,000." This is

Accepted Answer

A)  a liquidated damages clause. 
B)  a mitigation of damages clause. 
C)  a consequential damages clause. 
D)  a penalty clause. 
A)  a liquidated damages clause. 
B)  a mitigation of damages clause. 
C)  a consequential damages clause. 
D)  a penalty clause. A

Question 4

Restitution is a way to avoid the unjust enrichment of one party at the expense of another.

Accepted Answer

A) True 
 B)False

Question 5

T he measurement of compensatory damages does not vary by type of contract.

Accepted Answer

A) True 
 B)False

Question 6

Ready Repair Service enters into a contract to fix washers and dryers in Scrub n' Dry Company's coin-operated laundries. Ready breaches the contract. Scrub n' Dry is awarded compensatory damages. The purpose is to

Accepted Answer

A)  establish, as a matter of principle, that Ready acted wrongfully. 
B)  provide Scrub n' Dry with funds for a loss beyond the contract. 
C)  provide Scrub n' Dry with funds for its loss of the bargain. 
D)  punish Ready and deter others from similar acts . 
A)  establish, as a matter of principle, that Ready acted wrongfully. 
B)  provide Scrub n' Dry with funds for a loss beyond the contract. 
C)  provide Scrub n' Dry with funds for its loss of the bargain. 
D)  punish Ready and deter others from similar acts .

Question 7

Restoration Inc. enters into a contract to refurbish an old bus depot for Quality Café LLC. If Restoration completes most of the work promised in the contract, its performance will be

Accepted Answer

A)  conditional . 
B)  complete . 
C)  material. 
D)  substantial. 
A)  conditional . 
B)  complete . 
C)  material. 
D)  substantial.

Question 8

When the subject matter of a contract is personal, the performance need only satisfy a reasonable person.

Accepted Answer

A) True 
 B)False

Question 9

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

Performance far below reasonable expecta

Question 10

Sara enters into a contract to sell her vacation condo to Ted for a certain price on a specific day. On that day, Sara unconditionally offers to perform. Sara's offer

Accepted Answer

A)  conditions Ted's promise to pay for the property. 
B)  constitutes tender of performance. 
C)  excuses the parties' performance under the contract. 
D)  suspends the parties' contractual obligations. 
A)  conditions Ted's promise to pay for the property. 
B)  constitutes tender of performance. 
C)  excuses the parties' performance under the contract. 
D)  suspends the parties' contractual obligations.

Question 11

If performance of a contract is not substantial, there is a material breach.

Accepted Answer

A) True 
 B)False

Question 12

The most common way to terminate contractual duties is by performance.

Accepted Answer

A) True 
 B)False

Question 13

Gliders, LLC, and Hang Time, Inc., are parties to a contract. They subsequently agree that In the Wind Inc. should take Gliders' place and assume all of its rights and duties under the contract. This is

Accepted Answer

A)  a mutual agreement to rescind. 
B)  an accord and satisfaction. 
C)  a novation. 
D)  specific performance. 
A)  a mutual agreement to rescind. 
B)  an accord and satisfaction. 
C)  a novation. 
D)  specific performance.

Question 14

East Bay Café orders seafood from Fresh Catch Company. Fresh places the goods at East's disposal. Fresh's performance under the contract is

Accepted Answer

A)  conditional . 
B)  complete . 
C)  material. 
D)  substantial. 
A)  conditional . 
B)  complete . 
C)  material. 
D)  substantial.

Question 15

Guido and Hal want to rescind their contract under which Guido sold Hal a mountain bike for $250. To rescind the contract

Accepted Answer

A)  Guido must return the $250 and Hal must return the bike. 
B)  Guido must return the $250 only. 
C)  Hal must return the bike only. 
D)  the parties can keep the "benefits" of their bargain. 
A)  Guido must return the $250 and Hal must return the bike. 
B)  Guido must return the $250 only. 
C)  Hal must return the bike only. 
D)  the parties can keep the "benefits" of their bargain.

Question 16

The amount of compensatory damages is based on the level of wrongdoing by the breaching party.

Accepted Answer

A) True 
 B)False

Question 17

Cow's Milk LLC needs a certain part for its pasteurizing equipment to continue its operations and orders one for $3,000 from Dairy Supplies Inc. Cow's Milk tells Dairy Supplies that it must receive the part by Tuesday or it will lose $10,000. Dairy Supplies ships the part late. Cow's Milk can recover

Accepted Answer

A)  $13,000. 
B)  $10,000. 
C)  $3,000. 
D)  $0. 
A)  $13,000. 
B)  $10,000. 
C)  $3,000. 
D)  $0.

Question 18

Verna enters into a contract to work as a lifeguard at Water Park for the summer in exchange for a weekly paycheck. The duties under this contract will be discharged when the duties are

Accepted Answer

A)  avoided . 
B)  breached. 
C)  conditioned. 
D)  performed. 
A)  avoided . 
B)  breached. 
C)  conditioned. 
D)  performed.

Question 19

Special damages that compensate for a loss that goes beyond the contract itself are compensatory damages .

Accepted Answer

A) True 
 B)False

Question 20

A breach of contract occurs when a party fails to perform part or all of the required duties under a contract.

Accepted Answer

A) True 
 B)False

Exam 16: Termination and Remedies

A novation requires the existence of a previous, valid obligation.

Build-well Construction LLC contracts to build a warehouse for Corporate Storage Inc. Corporate does not have to pay Build-well if the warehouse is not built. Their respective promises are

Copper Circuit, Inc. and Direct Electric LLC sign an agreement that provides for the payment of "$1,000 by whichever party commits a material breach of the contract that creates damages difficult to estimate but approximately $1,000." This is

Restitution is a way to avoid the unjust enrichment of one party at the expense of another.

T he measurement of compensatory damages does not vary by type of contract.

Ready Repair Service enters into a contract to fix washers and dryers in Scrub n' Dry Company's coin-operated laundries. Ready breaches the contract. Scrub n' Dry is awarded compensatory damages. The purpose is to

Restoration Inc. enters into a contract to refurbish an old bus depot for Quality Café LLC. If Restoration completes most of the work promised in the contract, its performance will be

When the subject matter of a contract is personal, the performance need only satisfy a reasonable person.

Sara enters into a contract to sell her vacation condo to Ted for a certain price on a specific day. On that day, Sara unconditionally offers to perform. Sara's offer

If performance of a contract is not substantial, there is a material breach.

The most common way to terminate contractual duties is by performance.

Gliders, LLC, and Hang Time, Inc., are parties to a contract. They subsequently agree that In the Wind Inc. should take Gliders' place and assume all of its rights and duties under the contract. This is

East Bay Café orders seafood from Fresh Catch Company. Fresh places the goods at East's disposal. Fresh's performance under the contract is

Guido and Hal want to rescind their contract under which Guido sold Hal a mountain bike for $250. To rescind the contract

The amount of compensatory damages is based on the level of wrongdoing by the breaching party.

Verna enters into a contract to work as a lifeguard at Water Park for the summer in exchange for a weekly paycheck. The duties under this contract will be discharged when the duties are

Special damages that compensate for a loss that goes beyond the contract itself are compensatory damages .

A breach of contract occurs when a party fails to perform part or all of the required duties under a contract.

Introduction to the Law

Ethics in Business

The Courts and Our Legal System

Constitutional Law

Business Torts

Intellectual Property

Business Crimes

Introduction to Contracts

Offer and Acceptance

Consideration

Capacity

The Legality of Agreements

Voluntary Consent

Written Contracts

Third Party Rights

Introduction to Sales and Lease Contracts

Title and Risk of Loss

Performance and Breach

Warranties and Product Liability

Consumer Protection

The Essentials of Negotiability

Negotiable Instruments: Transfer and Liability

Banking in the Digital Age

Agency Relationships

Employment, Immigration, and Labor Law

Employment Discrimination

Types of Business Organizations

Formation and Ownership of a Corporation

Management of a Corporation

Combining and Dissolving a Corporation

Credit and Security

Mortgages

Bankruptcy

Insurance

Personal Property

Bailments

Real Property

Landlord and Tenant Law

Wills and Trusts

Administrative Law

Antitrust Law

International and Space Law

Filters