Question 1

To rescind a contract,the parties must make a second agreement that satisfies the legal requirements for a contract.

Accepted Answer

A) True 
 B)False  True

Question 2

Any breach entitles the nonbreaching party to sue for damages.

Accepted Answer

A) True 
 B)False  True

Question 3

Most contracts need to be performed only to the satisfaction of a reasonable person unless they expressly state otherwise.

Accepted Answer

A) True 
 B)False  True

Question 4

Drainage & Irrigation Equipment,Inc.,contracts to sell its assets to Earth & Sky Aquatic Corporation.Before either party has performed,rescission of this contract requires

Accepted Answer

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

Question 5

Any breach discharges the nonbreaching party from the contract.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) is discharged from any contractual liability. 
B) must find a competent assistant to fulfill the contract. 
C) must pay damages. 
D) must refund any money paid to Lana on the contract. 
A) is discharged from any contractual liability. 
B) must find a competent assistant to fulfill the contract. 
C) must pay damages. 
D) must refund any money paid to Lana on the contract.

Question 7

Omar and Penn want to discharge their contract by executing a new agreement with performance different from what they originally promised.They can best accomplish this by

Accepted Answer

A) a mutual agreement to rescind. 
B) an accord and satisfaction. 
C) a novation. 
D) an alteration of the original contract. 
A) a mutual agreement to rescind. 
B) an accord and satisfaction. 
C) a novation. 
D) an alteration of the original contract.

Question 8

Restoration,Inc.,contracts to repair a crack in a supporting beam for Stagecraft Theater for $10,000.If Restoration does not perform,Stagecraft must pay

Accepted Answer

A) $10,000. 
B) $5,000. 
C) $1,000. 
D) $0. 
A) $10,000. 
B) $5,000. 
C) $1,000. 
D) $0.

Question 9

When a party's performance is perfect,it is said to be complete.

Accepted Answer

A) True 
 B)False

Question 10

Able Builders,Inc.,contracts with Beach Assets Company to build a Cool Juice stand near Divers' Beach.The work is to begin on April 1 and be done by June 1,so that the stand can open for the summer.Able Builders does not finish until June 14.The stand opens but Beach Assets loses two weeks' early summer sales due to the delay.Is Beach Assets's duty to pay for the construction of the stand discharged

Accepted Answer

No.Able Builders substantially performed

Question 11

Kali contracts to sell Leony her car for $3,000.This contract will be fully discharged when Kali and Leony

Accepted Answer

A) agree to sign a bill of sale. 
B) exchange the car for the $3,000. 
C) sign a receipt. 
D) shake hands and go their separate ways. 
A) agree to sign a bill of sale. 
B) exchange the car for the $3,000. 
C) sign a receipt. 
D) shake hands and go their separate ways.

Question 12

Polly agrees to buy Quinn's Cycle World store business on the express condition that Ridgeline Credit Union approves the financing.This approval is

Accepted Answer

A) not a condition. 
B) a condition precedent. 
C) a concurrent condition. 
D) a condition subsequent. 
A) not a condition. 
B) a condition precedent. 
C) a concurrent condition. 
D) a condition subsequent.

Question 13

After a contract is made,a supervening event may make performance impossible in an objective sense.

Accepted Answer

A) True 
 B)False

Question 14

On April 1,Construction Contractors,Inc.,contracts to build a store for Discount Retail,Inc.,at a specific location in Electro City.On April 10,Electro changes its zoning law to prohibit the construction of a commercial building at that location.Discount Retail files a suit against Construction Contractors.In this situation

Accepted Answer

A) Construction Contractors is in breach of contract. 
B) Discount Retail is in breach of contract. 
C) the contract is discharged. 
D) the contract is suspended. 
A) Construction Contractors is in breach of contract. 
B) Discount Retail is in breach of contract. 
C) the contract is discharged. 
D) the contract is suspended.

Question 15

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

A) damages. 
B) nothing more. 
C) to be excused from performance. 
D) suspend performance. 
A) damages. 
B) nothing more. 
C) to be excused from performance. 
D) suspend performance.

Question 16

A contractual obligation may not be discharged through novation.

Accepted Answer

A) True 
 B)False

Question 17

When an anticipatory repudiation occurs,it is treated as a material breach of a contract.

Accepted Answer

A) True 
 B)False

Question 18

OnTrack Rehabilitation Center signs an agreement with Platinum Bank 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.OnTrack's best argument for avoiding payment to Platinum Bank is that

Accepted Answer

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. 
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.

Question 19

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

Accepted Answer

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. 
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.

Question 20

Fact Pattern 18-B1 (Questions B9-B10 apply)
Moses sells an apartment building to Noelle with a promise to install a new heating and air conditioning system before September 1.The following February 1,Moses sends Ollie,an HVAC technician,to begin the installation.Noelle orders Ollie to leave and refuses to make further payments to Moses,who files a suit against Noelle.
-Refer to Fact Pattern 18-B1.Noelle's refusal to make further payments is most likely

Accepted Answer

A) a material breach. 
B) complete performance. 
C) excused by Moses's failure to timely install the ventilation system. 
D) substantial,but not complete,performance. 
A) a material breach. 
B) complete performance. 
C) excused by Moses's failure to timely install the ventilation system. 
D) substantial,but not complete,performance.

Exam 18: Performance and Discharge in Traditional E-Contracts

To rescind a contract,the parties must make a second agreement that satisfies the legal requirements for a contract.

Any breach entitles the nonbreaching party to sue for damages.

Most contracts need to be performed only to the satisfaction of a reasonable person unless they expressly state otherwise.

Drainage & Irrigation Equipment,Inc.,contracts to sell its assets to Earth & Sky Aquatic Corporation.Before either party has performed,rescission of this contract requires

Any breach discharges the nonbreaching party from the contract.

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

Omar and Penn want to discharge their contract by executing a new agreement with performance different from what they originally promised.They can best accomplish this by

Restoration,Inc.,contracts to repair a crack in a supporting beam for Stagecraft Theater for $10,000.If Restoration does not perform,Stagecraft must pay

When a party's performance is perfect,it is said to be complete.

Kali contracts to sell Leony her car for $3,000.This contract will be fully discharged when Kali and Leony

Polly agrees to buy Quinn's Cycle World store business on the express condition that Ridgeline Credit Union approves the financing.This approval is

After a contract is made,a supervening event may make performance impossible in an objective sense.

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

A contractual obligation may not be discharged through novation.

When an anticipatory repudiation occurs,it is treated as a material breach of a contract.

OnTrack Rehabilitation Center signs an agreement with Platinum Bank 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.OnTrack's best argument for avoiding payment to Platinum Bank is that

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