Question 1

Why is it that many contract contain a force majeur provision in its terms?

Accepted Answer

A force majeur clause releases the parties from the obligations of the contract is a condition beyond their control, an act of God occurs. Examples of such events are threats of terrorism, natural disaster, strikes and embargoes. This clause releases the parties of their obligations automatically when an event occurs that is beyond contemplation or control.

Question 2

Myra agrees to sell Connie her house for $250,000.00. The next day, a tornado destroys the house. Will either party be bound by the terms of the contract?

Accepted Answer

A)  No because the contract becomes impossible due to the destruction of the subject matter. 
B)  No because the contract becomes impractical due to the destruction of the subject matter. 
C)  No unless both parties agree to rescind the contract. 
D)  Yes, however out of fairness the courts will allow additional time to repair the house. 
A)  No because the contract becomes impossible due to the destruction of the subject matter. 
B)  No because the contract becomes impractical due to the destruction of the subject matter. 
C)  No unless both parties agree to rescind the contract. 
D)  Yes, however out of fairness the courts will allow additional time to repair the house. A

Question 3

Hannah is employed by Munchin Financial. As an employee benefit, the employer will pay for employees to earn their Masters in Financial Accounting provided that they agree to work exclusively for Munchin Financial for five years following graduation. If an employee does not work the additional five years there, then that employee must repay Munchin Financial the total cost of the tuition. This provision of the contract is called

Accepted Answer

A)  Clawback 
B)  Buyback 
C)  Restitution 
D)  Reimbursement 
A)  Clawback 
B)  Buyback 
C)  Restitution 
D)  Reimbursement A

Question 4

Edith hires Randal an attorney at Parker Law Offices to write her will. Randal asks his paralegal, Polly, to write Edith's will while he goes on vacation and mail it to her to sign. Is this a proper accord and satisfaction?

Accepted Answer

A)  Yes because a paralegal can write a will. 
B)  Yes because Edith hired Randal to perform a service which his agent is providing. 
C)  No because Polly did not interview Edith. 
D)  No because as a paralegal, Polly is not licensed to write a will as the attorney is. 
A)  Yes because a paralegal can write a will. 
B)  Yes because Edith hired Randal to perform a service which his agent is providing. 
C)  No because Polly did not interview Edith. 
D)  No because as a paralegal, Polly is not licensed to write a will as the attorney is.

Question 5

The process by which the original parties to a contract agree to allow an outside party to perform the contract is called a

Accepted Answer

A)  Accord and Satisfaction 
B)  Novation 
C)  Discharge 
D)  Rescission 
A)  Accord and Satisfaction 
B)  Novation 
C)  Discharge 
D)  Rescission

Question 6

Renee's housekeeper has the stomach flu and cannot keep her scheduled cleaning appointment to clear Renee's house as scheduled. Has the contract been discharged?

Accepted Answer

A)  No and Renee can sue her for breach of contract. 
B)  Yes because an illness makes the contract unenforceable. 
C)  No because the reasonable person can still clean a house when sick. 
D)  No because her illness is temporary and will only suspend her duty. 
A)  No and Renee can sue her for breach of contract. 
B)  Yes because an illness makes the contract unenforceable. 
C)  No because the reasonable person can still clean a house when sick. 
D)  No because her illness is temporary and will only suspend her duty.

Question 7

All of the following are examples of a force majeur except

Accepted Answer

A)  Threat of terrorism 
B)  A broken engagement 
C)  A natural disaster 
D)  An embargo 
A)  Threat of terrorism 
B)  A broken engagement 
C)  A natural disaster 
D)  An embargo

Question 8

When both parties fulfill the terms of the contractual duties, the contract is terminated.

Accepted Answer

A) True 
 B)False

Question 9

Michael enters into a contract with Tara whereby she will make 500 chocolate truffles to be delivered the next day at 12:00 pm. Tara delivers the 500 truffles the next day at 12:05 pm. Michael refuses to pay her because he states she breached the term of the contract of delivery time. The court will agree with Michael because she did indeed breach the contract terms.

Accepted Answer

A) True 
 B)False

Question 10

In the Reading Pipe case, the contractor installed the wrong brand of piping throughout the building that was specifically stated in the contract. Once it was discovered, it was far too late in the construction process to replace all the pipes without a substantial extra cost to the contractor. What was the resolution of the case when the contractor was sued by his client for breach of contract?

Accepted Answer

A)  The court ordered the contractor to replace all the pipes to conform with the terms of the contract. 
B)  The court determined that the breach was not material as it did not frustrate the purpose of the contract. 
C)  The court determined there was a substantial breach since the contract specifically called for a certain brand of pipes. 
D)  The court determined that fairness required that the contract reimburse the client half of the value of the contract. 
A)  The court ordered the contractor to replace all the pipes to conform with the terms of the contract. 
B)  The court determined that the breach was not material as it did not frustrate the purpose of the contract. 
C)  The court determined there was a substantial breach since the contract specifically called for a certain brand of pipes. 
D)  The court determined that fairness required that the contract reimburse the client half of the value of the contract.

Question 11

When a contract has terms such as "provided that" or "unless" in a contract that indicates a performance obligation that is called a

Accepted Answer

A)  Condition subsequent 
B)  Condition precedent 
C)  Condition delegate 
D)  Condition substantive 
A)  Condition subsequent 
B)  Condition precedent 
C)  Condition delegate 
D)  Condition substantive

Question 12

Kelly agrees to provide a two hour goat yoga class for Tara and Gabby for $20.00 each. An hour and 50 minutes into the lesson, Kelly misreads the clock and dismisses Tara and Gabby from the lesson. Can Tara and Gabby sue for breach of contract?

Accepted Answer

A)  No if the court determines that 10 minutes less is not a material breach and Kelly acted in good faith. 
B)  Yes they will be able to recover a proportion of the cost of the class that was not fulfilled. 
C)  No because a 10 minute loss of a goat yoga lesson is not a recognizable damage. 
D)  Yes if the court determines that the reasonable person would have wanted the additional 10 minutes. 
A)  No if the court determines that 10 minutes less is not a material breach and Kelly acted in good faith. 
B)  Yes they will be able to recover a proportion of the cost of the class that was not fulfilled. 
C)  No because a 10 minute loss of a goat yoga lesson is not a recognizable damage. 
D)  Yes if the court determines that the reasonable person would have wanted the additional 10 minutes.

Question 13

Kristen hires Gabby to babysit her three children for the day. As soon as Gabby sees Kristen pull out of the driveway, she tells the kids to be quiet and just sit there because she wants to sleep. While Gabby sleeps, the wild children destroy the house. Is Kristen obligated to pay Gabby the price she agreed to for babysitting?

Accepted Answer

A)  Yes, except Kristen would be able to deduct the damages that the kids did while the house while Gabby slept. 
B)  Yes because Gabby was indeed at the house the entire day and the courts do not require perfect performance. 
C)  No because while courts do not require perfect performance, they do require a good faith attempt at perfect performance. 
D)  No because the contract was illegal as the fact pattern does not indicate that Gabby was properly licensed to babysit. 
A)  Yes, except Kristen would be able to deduct the damages that the kids did while the house while Gabby slept. 
B)  Yes because Gabby was indeed at the house the entire day and the courts do not require perfect performance. 
C)  No because while courts do not require perfect performance, they do require a good faith attempt at perfect performance. 
D)  No because the contract was illegal as the fact pattern does not indicate that Gabby was properly licensed to babysit.

Question 14

The process by which parties to a contract perform their obligations in good faith and fulfill the terms of the contract is called

Accepted Answer

A)  Completion 
B)  Novation 
C)  Delegation 
D)  Discharge 
A)  Completion 
B)  Novation 
C)  Delegation 
D)  Discharge

Question 15

Explain why courts generally accept substantial performance in addition to perfect performance under contract.

Accepted Answer

Perfect performance is when both parties

Question 16

Lorna visited Beaulah, her hair stylist every Friday of her adult life to have her hair fixed. She always paid a week ahead of time to ensure that Beaulah always reserved the time the following week. In between visits, Lorna dies and her family asked Beaulah to come to the funeral home and fix Lorna's hair there. Beaulah refuses. Will Lorna's family be successful in a breach of contract case because Beaulah refuses to fix Lorna's hair after her death?

Accepted Answer

A)  Yes as she made a promise to fix her hair and it does not matter if she is dead or alive. 
B)  No because the death of one of the parties of the contract makes the contract impossible and thus the parties are discharged. 
C)  Yes contracts that are created while both parties are alive are enforceable even when one of the parties dies if it is reasonably possible. 
D)  No because the reasonable person would not want to complete the terms of this contract. 
A)  Yes as she made a promise to fix her hair and it does not matter if she is dead or alive. 
B)  No because the death of one of the parties of the contract makes the contract impossible and thus the parties are discharged. 
C)  Yes contracts that are created while both parties are alive are enforceable even when one of the parties dies if it is reasonably possible. 
D)  No because the reasonable person would not want to complete the terms of this contract.

Question 17

In the case, Lucente v. IBM, differentiated when a covenant not to compete can be enforced by the employer against the employee and determined that it can be applied

Accepted Answer

A)  Never as all covenants not to compete are illegal per se 
B)  Only when the employee chooses to leave the employer 
C)  Only when the employer decides to terminate the employee 
D)  Any time an employee leaves a place of employment 
A)  Never as all covenants not to compete are illegal per se 
B)  Only when the employee chooses to leave the employer 
C)  Only when the employer decides to terminate the employee 
D)  Any time an employee leaves a place of employment

Question 18

When a contract is terminated it is called

Accepted Answer

A)  A contract dissolution 
B)  A contract discharge 
C)  A contract revocation 
D)  A contract rescission 
A)  A contract dissolution 
B)  A contract discharge 
C)  A contract revocation 
D)  A contract rescission

Question 19

Kylie rented a boat, from "Si Boat Rentals' Fireworks Viewing Boat Special" to view the 4th of July fireworks over the Mississippi River near St. Louis. She puts down a deposit of $100.00 with the balance due on the day of the rental. Two days after she reserves the boat with the deposit, the city of St. Louis announces that they have cancelled the fireworks. Kylie wants to cancel the boat rental and seeks to get her deposit back. Most likely, what will the outcome of the case be?

Accepted Answer

A)  Assuming that the cancelation was unforeseeable and the boat rental place knew the purpose of the rental, Kylie will get her money back. 
B)  Kylie will not get her deposit back, but will not be required to pay the balance. 
C)  Kylie will owe the remaining balance even if she does not use the boat. 
D)  The boat rental must attempt to rent the boat to another to mitigate the damages. 
A)  Assuming that the cancelation was unforeseeable and the boat rental place knew the purpose of the rental, Kylie will get her money back. 
B)  Kylie will not get her deposit back, but will not be required to pay the balance. 
C)  Kylie will owe the remaining balance even if she does not use the boat. 
D)  The boat rental must attempt to rent the boat to another to mitigate the damages.

Question 20

Lonnie's Liquor store agreed to purchase 90 proof moonshine from Moonshine Manufacturing Inc. Before Moonshine Manufacturing can ship the product to Lonnie's, a law is passed making the production, sale and consumption of moonshine illegal. Which statement below is correct?

Accepted Answer

A)  Since the parties agreed to the terms of the contract while it was still legal, this contract is grandfathered and the parties will be bound by it. 
B)  The parties will be bound by the terms of the contract unless the both agree to rescind it. 
C)  The contract is impossible to complete due to the law now making the subject matter illegal. 
D)  The contract is now impractical and the parties can renegotiate the terms. 
A)  Since the parties agreed to the terms of the contract while it was still legal, this contract is grandfathered and the parties will be bound by it. 
B)  The parties will be bound by the terms of the contract unless the both agree to rescind it. 
C)  The contract is impossible to complete due to the law now making the subject matter illegal. 
D)  The contract is now impractical and the parties can renegotiate the terms.

Exam 10: Performance

Why is it that many contract contain a force majeur provision in its terms?

Myra agrees to sell Connie her house for $250,000.00. The next day, a tornado destroys the house. Will either party be bound by the terms of the contract?

Edith hires Randal an attorney at Parker Law Offices to write her will. Randal asks his paralegal, Polly, to write Edith's will while he goes on vacation and mail it to her to sign. Is this a proper accord and satisfaction?

The process by which the original parties to a contract agree to allow an outside party to perform the contract is called a

Renee's housekeeper has the stomach flu and cannot keep her scheduled cleaning appointment to clear Renee's house as scheduled. Has the contract been discharged?

All of the following are examples of a force majeur except

When both parties fulfill the terms of the contractual duties, the contract is terminated.

When a contract has terms such as "provided that" or "unless" in a contract that indicates a performance obligation that is called a

Kelly agrees to provide a two hour goat yoga class for Tara and Gabby for $20.00 each. An hour and 50 minutes into the lesson, Kelly misreads the clock and dismisses Tara and Gabby from the lesson. Can Tara and Gabby sue for breach of contract?

The process by which parties to a contract perform their obligations in good faith and fulfill the terms of the contract is called

Explain why courts generally accept substantial performance in addition to perfect performance under contract.

In the case, Lucente v. IBM, differentiated when a covenant not to compete can be enforced by the employer against the employee and determined that it can be applied

When a contract is terminated it is called

Lonnie's Liquor store agreed to purchase 90 proof moonshine from Moonshine Manufacturing Inc. Before Moonshine Manufacturing can ship the product to Lonnie's, a law is passed making the production, sale and consumption of moonshine illegal. Which statement below is correct?

Legal Foundations and Thinking Strategically

Business, Societal, and Ethical Contexts of Law

Business and the Constitution

The American Judicial System, Jurisdiction, and Venue

Resolving Disputes: Litigation and Alternative Dispute Resolution

Contracts: Overview, Definition, Categories, and Source of Law

Mutual Assent: Agreement and Consideration

Capacity and Legality

Enforceability

Breach and Remedies

Contracts for the Sale of Goods: Overview of Article 2

Sales Contracts: Agreement, Consideration, and the Statute of Frauds

Title, Allocation of Risk, and Insurable Interest

Performance and Cure in Sales Contracts

Breach and Remedies in a Sales Transaction

UCC Article 2A: Lease Contracts

Sales Warranties

Definition, Creation, and Categories of Negotiable Instruments

Negotiation, Endorsements, and Holder in Due Course

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Choice of Business Entity and Sole Proprietorships

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Corporations: Formation and Organization

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Overview of the Securities Market: Definition, Categories, and Regulation

Regulation of Issuance: The Securities Act of 1933

Regulation of Trading: The Securities Exchange Act of 1934

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Duties and Liabilities of Principals and Agents

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