Question 1

Al contracted to sell his house to Bev.Subsequently,they both changed their minds and decided to cancel the contract.The contract between Al and Bev is discharged by

Accepted Answer

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

Question 2

Commercial impracticability means some event has occurred that neither party anticipated and fulfilling the contract would now be extraordinarily difficult and unfair to one party.

Accepted Answer

A) True 
 B)False  True

Question 3

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

Accepted Answer

Substantial performance occurs when one party fulfills enough of its contract obligations to warrant payment.In other words,it is performance that is less than perfect,yet it complies with the essential purpose of the contract.In a contract for services,a party that substantially performs its obligations will receive the full contract price minus the value of the defects.The following factors are often considered: How much benefit has the promisee received? If it is a construction contract,can the owner use the thing for its intended purpose ?Can the promisee be compensated with money damages for the defects? Did the promisor act in good faith?

Question 4

The Grand Performance Hall is in the process of remodeling and is scheduled to open for business after being closed for 50 years.As part of the remodeling,it is installing a new sound system.The sound system is to be installed by Sound Systems,Inc.on or before April 10.Opening night of the hall is May 1.The contract states that "time is of the essence" because of the opening-night deadline.Sound Systems has some financial difficulties and doesn't deliver the system until April 20.Grand Hall refuses to accept it,and Sound Systems sues.What will be the result?

Accepted Answer

A) Grand Hall wins;the contract date was strictly enforceable. 
B) Sound Systems wins;the contract was substantially performed. 
C) Grand Hall wins;there was commercial frustration. 
D) Sound Systems wins;there was a true impossibility. 
A) Grand Hall wins;the contract date was strictly enforceable. 
B) Sound Systems wins;the contract was substantially performed. 
C) Grand Hall wins;there was commercial frustration. 
D) Sound Systems wins;there was a true impossibility.

Question 5

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

Accepted Answer

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

Question 6

Generally,neither a "time is of the essence" clause nor a "force majeure" clause will be recognized by the courts because these types of clauses are seen as a violation of public policy.

Accepted Answer

A) True 
 B)False

Question 7

Southern Fuels Co.and Langham-Hill Petroleum,Inc.are both in the business of buying and selling large quantities of petroleum products.In October,the parties entered into a fixed price contract wherein Southern agreed to purchase 4.2 million gallons of No.2 fuel oil at a specified price per gallon to be delivered in four monthly installments.The contract included a force majeure clause.The first three monthly shipments of oil were purchased by Southern as agreed.In January of the next year,the price of oil in the world market collapsed as a result of Saudi Arabian attempts to regain its share of the world oil market.Southern refused to purchase the last shipment under the contract.Southern informed Langham-Hill that because the drop in world oil prices was caused by Saudi Arabians who were "outside Southern's control" that it was invoking the force majeure clause.Langham-Hill sued for damages in the amount of $306,075.What is a force majeure clause? Southern's basic argument is that it can now buy oil at a substantially lower price.Will Southern succeed on this basis?

Accepted Answer

A force majeure clause is a provision in

Question 8

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.

Accepted Answer

A) True 
 B)False

Question 9

Dodger bought an insurance contract from Liberty Farm Co.The policy contained a clause stating that all claims for losses had to be reported within 45 days after the date of the loss or the claim would be barred.Time is stated to be of the essence.Dodger sustained a covered farm loss,but did not report it to Liberty Farm until 50 days later.Liberty Farm denied coverage for the claim.If Dodger sues,who wins?

Accepted Answer

A) Dodger wins;the contract was substantially performed. 
B) Liberty Farm wins;there was failure of a condition subsequent. 
C) Dodger wins;courts will not enforce a time-of-the-essence clause. 
D) Liberty Farm wins;the impossibility doctrine applies. 
A) Dodger wins;the contract was substantially performed. 
B) Liberty Farm wins;there was failure of a condition subsequent. 
C) Dodger wins;courts will not enforce a time-of-the-essence clause. 
D) Liberty Farm wins;the impossibility doctrine applies.

Question 10

The statement,"You will have a job with Snelling & Snelling as long as you complete your degree in business administration this May" does not create a condition because it does not include the phrase "provided that."

Accepted Answer

A) True 
 B)False

Question 11

Melody is a recent graduate of State Law School.She lands an impressive employment contract with the firm of Dewey,Cheathem,and Howe,Attorneys at Law,on the stated provision that she pass the upcoming bar exam.This provision in the employment agreement is a(n)

Accepted Answer

A) condition precedent. 
B) condition subsequent. 
C) implied condition. 
D) concurrent condition. 
A) condition precedent. 
B) condition subsequent. 
C) implied condition. 
D) concurrent condition.

Question 12

Mary contracted to buy 100 table lamps.Under the terms of the agreement,Mary is to pay for the lamps upon delivery.This is an example of a

Accepted Answer

A) condition precedent. 
B) concurrent condition. 
C) condition subsequent. 
D) service condition. 
A) condition precedent. 
B) concurrent condition. 
C) condition subsequent. 
D) service condition.

Question 13

In negotiating the purchase of a vehicle,the sales representative told Karla,"I guarantee that you will be personally satisfied with this car." The guarantee was written on the contract when Karla purchased the car.If a controversy arises over Karla's satisfaction,the court will apply a subjective standard,which means Karla's judgment must be reasonable.

Accepted Answer

A) True 
 B)False

Question 14

Alice signs a contract with Bob to buy Bob's house for $150,000,with the clause,"if I am able to obtain a mortgage loan for $125,000,at no more than 7% interest,payable over 15 years." Assume that Alice tries but is unable to obtain the described loan,and therefore refuses to proceed with the purchase.Alice is in breach of the contract.

Accepted Answer

A) True 
 B)False

Question 15

In January,All Seasons,Inc.ordered $4,000 of fireworks from Kaboom Ltd.with delivery to be on or before June 1.On April 15,Kaboom notifies All Seasons that it will not be able to perform the contract as agreed.How will the law characterize Kaboom's actions? Does All Seasons have to wait until June 1 before buying fireworks from another supplier?

Accepted Answer

Kaboom's actions amount to an anticipato

Question 16

Linda agrees to buy Missy's Greyhound race dog for $2,000.Linda is to deliver the money and take possession of the dog the next morning.That night,running his best race ever,the dog runs away from Missy,never to be seen again.What will be the outcome in this case?

Accepted Answer

A) Linda must give $2,000 for the dog,but only if the dog was insured. 
B) Linda must give $2,000 for the dog,but only if Missy can find a replacement dog within a reasonable time. 
C) Missy must find another dog for Linda or pay her $2,000. 
D) Linda does not have to pay for the dog;the contract duties are discharged. 
A) Linda must give $2,000 for the dog,but only if the dog was insured. 
B) Linda must give $2,000 for the dog,but only if Missy can find a replacement dog within a reasonable time. 
C) Missy must find another dog for Linda or pay her $2,000. 
D) Linda does not have to pay for the dog;the contract duties are discharged.

Question 17

What is the key to all conditional clauses?

Accepted Answer

A) If a condition in a contract does not occur,public policy will require only substantial performance by the party for whom the condition failed. 
B) If a contract contains a conditional clause,the requirement of good faith will be eliminated. 
C) If a condition in a contract does not occur,one party will probably be discharged without having to perform his or her obligations under the contract. 
D) If a contract contains a conditional clause,it must be expressly written with specific language. 
A) If a condition in a contract does not occur,public policy will require only substantial performance by the party for whom the condition failed. 
B) If a contract contains a conditional clause,the requirement of good faith will be eliminated. 
C) If a condition in a contract does not occur,one party will probably be discharged without having to perform his or her obligations under the contract. 
D) If a contract contains a conditional clause,it must be expressly written with specific language.

Question 18

Ron operates a garbage pickup business.He contracts to pick up garbage from an apartment complex for the next 52 weeks at a price of $150 per week.Unexpectedly,the landfill center where Ron takes the garbage to dispose of it,files for bankruptcy.As a result,Ron must travel an additional 100 miles to the nearest landfill center,turning Ron's expected profit into a loss of $40 per week.Ron's best argument in support of his petition to be discharged from the contract is

Accepted Answer

A) the mail box rule. 
B) commercial impracticability. 
C) frustration of purpose. 
D) true impossibility. 
A) the mail box rule. 
B) commercial impracticability. 
C) frustration of purpose. 
D) true impossibility.

Question 19

The distinction between a condition precedent and a condition subsequent

Accepted Answer

A) is important because it determines whether the burden of proof is beyond a reasonable doubt or preponderance of the evidence. 
B) seldom arises in insurance cases. 
C) determines who has the burden of proof. 
D) is important because it determines whether the condition must be express or whether it can be implied. 
A) is important because it determines whether the burden of proof is beyond a reasonable doubt or preponderance of the evidence. 
B) seldom arises in insurance cases. 
C) determines who has the burden of proof. 
D) is important because it determines whether the condition must be express or whether it can be implied.

Question 20

A wholesaler of coffee notifies a retailer that it cannot fulfill its contractual obligation to deliver 1,000 pounds of coffee at the agreed upon price of $2.00 per pound next month because of recent price increases in coffee.The retailer may treat the wholesaler as having breached the contract and sue for damages even though the wholesaler's performance is not due until next month.

Accepted Answer

A) True 
 B)False

Exam 18: Contract Termination

Al contracted to sell his house to Bev.Subsequently,they both changed their minds and decided to cancel the contract.The contract between Al and Bev is discharged by

Commercial impracticability means some event has occurred that neither party anticipated and fulfilling the contract would now be extraordinarily difficult and unfair to one party.

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

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

Generally,neither a "time is of the essence" clause nor a "force majeure" clause will be recognized by the courts because these types of clauses are seen as a violation of public policy.

The statement,"You will have a job with Snelling & Snelling as long as you complete your degree in business administration this May" does not create a condition because it does not include the phrase "provided that."

Melody is a recent graduate of State Law School.She lands an impressive employment contract with the firm of Dewey,Cheathem,and Howe,Attorneys at Law,on the stated provision that she pass the upcoming bar exam.This provision in the employment agreement is a(n)

Mary contracted to buy 100 table lamps.Under the terms of the agreement,Mary is to pay for the lamps upon delivery.This is an example of a

Linda agrees to buy Missy's Greyhound race dog for $2,000.Linda is to deliver the money and take possession of the dog the next morning.That night,running his best race ever,the dog runs away from Missy,never to be seen again.What will be the outcome in this case?

What is the key to all conditional clauses?

The distinction between a condition precedent and a condition subsequent

Introduction to Law

Ethics and Corporate Social Responsibility

International Law

Common Law, Statutory Law, and Administrative Law

Constitutional Law

Dispute Resolution

Crime

Intentional Torts and Business Torts

Negligence, Strict Liability, and Product Liability

Privacy and Internet Law

Introduction to Contracts

Agreement: Offers and Acceptances

Consideration

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Voidable Contracts: Capacity and Consent

Written Contracts

Third Parties

Remedies

Practical Contracts

Introduction to Sales

Ownership, Risk and Warranties

Performance and Remedies

Secured Transactions

Creating a Negotiable Instrument

Liability for Negotiable Instruments

Accountants Liability

Agency Law

Employment and Labor Law

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Starting a Business: Llcs and Other Options

Partnerships

Life and Death of a Corporation

Management Duties

Shareholder Rights

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Personal Property and Bailment

Planning for the Future: Wills, Trusts and Insurance

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