Deck 12: Contract Performance, Breach, and Remedies

Question 1

Any breach excuses a nonbreaching party from the duty to perform.

Answer 1

False

Question 2

Misrepresentation of a material fact is an element of fraud.

Answer 2

True

Question 3

A duty to perform under a contract is never absolute.

Answer 3

False

Question 4

A party who substantially performs his or her duties under a con?tract can enforce the contract against the other party.

Question 5

After a contract is made, performance may become impossible in an objective sense and discharge the contract.

Question 6

A novation revokes and discharges a prior contract.

Question 7

When a contract party materially alters a written contract, the other party must adapt his or her performance accordingly.

Question 8

A mistake in judgment as to value is a ground to avoid a contract.

Question 9

Performance of an accord discharges an original contractual obligation.

Question 10

Most contracts are discharged by rescission.

Question 11

A contract entered into under undue influence is voidable.

Question 12

An intended beneficiary can sue directly to enforce a contract.

Question 13

An event must be certain to occur to constitute a contractual condition.

Question 14

Complete performance occurs when conditions in a contract are fully satisfied.

Question 15

An anticipatory repudiation is not a material breach of contract.

Question 16

Any breach entitles the nonbreaching party to sue for damages.

Question 17

A contract is substantially performed when performance creates sub?stan?tially the same benefits as those promised in the contract.

Question 18

If a contract condition is not satisfied, the obligations of the contracting parties are discharged.

Question 19

An innocent party can cancel a fraudulent contract.

Question 20

A transfer of contract rights to a third party is an assignment.

Question 21

Whether a contract's limitation-of-liability clause will be enforced depends on the type of breach that the clause excuses.

Question 22

Damages are designed to punish a breaching party and deter others from similar conduct.

Question 23

The purpose of the doctrine of election of remedies is to permit a double recovery.

Question 24

A contract may include a clause stating that no damages can be recovered for a certain type of breach.

Question 25

A liquidated damages clause typically requires a party who breaches a con?tract to pay a certain amount to the nonbreaching party.

Question 26

On the breach of a contract involving the sale of land, money damages is always the most appro?priate remedy.

Question 27

The four broad categories of damages in contract law are conciliatory, consecutive, punctual, and nominative.

Question 28

Gina induces Hu to enter into a contract for the purchase of a condominium about which Gina knowingly misrepresents a number of material features. When Hu discovers the truth, Hu can

A) not cancel the contract.
B) cancel the contract on the basis of fraud.
C) cancel the contract on the basis of mistake.
D) cancel the contract on the basis of undue influence.

Question 29

On a breach of contract, compensatory damages compensate the nonbreaching party for the loss of a bargain.

Question 30

Damages compensate a party for harm suffered as a result of another's wrongful act.

Question 31

Hillside Homes, Inc., and Idyll Builders, Inc., enter into a construction contract that includes si

A) allow the parties to cancel the contract.
B) award damages to Hillside for the mistakes.
C) award damages to Idyll for the mistakes.
D) enforce the contract without requiring changes.

Question 32

A contract will be discharged if foreseeable circumstances make it difficult or expensive to attain the contract's purpose.

Question 33

On the breach of a contract, the innocent injured party has a duty to reduce the damages that he or she suffers.

Question 34

Expenses that are caused directly by a breach of contract-such as those in?curred to obtain performance from another source-are inci?dental dam?ages.

Question 35

Reformation allows a court to rewrite a contract to reflect the parties' true intentions.

Question 36

Consequential damages are foreseeable damages that arise from a party's breach of a contract.

Question 37

Rally offers to sell Sophie, who is seventeen years of age, a car about which Rally intentionally misrepresents several material facts. In reliance on the misrepresentations, Sophie buys the car. To prove fraud in this transaction, Sophie would have to show that

A) Rally intentionally deceived Sophie.
B) Rally made statements that were obviously exaggerated.
C) Sophie does not know anything about cars.
D) Sophie is under eighteen years of age.

Question 38

Restitution involves one party's recapture of a benefit through which another party has been unjustly enriched.

Question 39

Dora, an accountant, uses undue influence to induce her client Emily to invest in Fiery Stocks, Ltd., a business with little potential. When Emily learns the truth, she can

A) do nothing.
B) enforce the contract but not cancel it.
C) enforce the contract or cancel it.
D) cancel the contract but not enforce it.

Question 40

Jahna and Ike contract for the sale of Jahna's horse for $1,000. Unknown to either party, the horse has died. Ike is

A) entitled to another horse of equivalent value.
B) not required to pay due to the mutual mistake.
C) not required to pay due to the unilateral mistake.
D) required to pay because he assumed the risk the horse might die.

Question 41

Ray breaches his lease with Sunny Properties and vacates the premises six months before the end of the term. In some states, Sunny would have to

A) avoid reletting the premises to recover damages from Ray.
B) make reasonable efforts to relet the premises to mitigate damages.
C) relet the premises to recover damages from Ray.
D) sell the premises to recover damages from Ray.

Question 42

Quality Contractors contracts to build a warehouse for Retail Sales Company. Quality completely performs. Retail Storage is entitled to

A) damages.
B) rescission.
C) specific performance.
D) nothing more.

Question 43

Fact Pattern 12-1 (Questions 14-15 apply)
Building Restoration, Inc. (BRI), enters into a contract to refurbish an old train depot for Casual Dining, Inc., to open as Eat Up! Restaurant. BRI completes most of the work promised in the contract.
Refer to Fact Pattern 12-1. Casual Dining is entitled to

A) damages.
B) nothing.
C) reformation.
D) specific performance.

Question 44

Riley and Sheila enter into a contract for the sale of Riley's condominium to Sheila. Sheila transfers her right to be recorded as the owner of the property to her daughter Tricia. This transfer is

A) a delegation.
B) an assignment.
C) an accord and satisfaction.
D) a negotiation.

Question 45

Lake Port Services enters into a contract to load Max's Great Lakes barges with the cargo that Max designates. Lake Port's offer to perform, when it is ready, willing, and able to do so, is called

A) complete.
B) substantial.
C) tender.
D) tough.

Question 46

Equity Company and Faye enter into a contract for Faye to cater a meeting of Equity's shareholders. When Faye's schedule conflicts, she asks Gudren to serve Faye's coffee and pastries at the meeting. This transfer of duties is

A) a delegation.
B) an assignment.
C) a third party beneficiary contract.
D) prohibited under the doctrine of privity of contract.

Question 47

Fact Pattern 12-1 (Questions 14-15 apply)
Building Restoration, Inc. (BRI), enters into a contract to refurbish an old train depot for Casual Dining, Inc., to open as Eat Up! Restaurant. BRI completes most of the work promised in the contract.
Refer to Fact Pattern 12-1. BRI's performance is

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

Question 48

Erté holds 1,000 pounds of perishable fruit in storage for Fresh Stuff Corpo?ration. Fresh Stuff does not pay for the storage. Erté sells the fruit to Green Grocers, Inc. This sale represents café

A) a breach of contract.
B) a mitigation of damages.
C) rescission and restitution.
D) specific performance.

Question 49

Fact Pattern 12-2 (Questions 17-19 apply)
Bell Medical Education Service enters into a contract to employ Chris as an instructor for two years to begin May 1. One month before the term begins, Bell is underbid by a competitor and loses a major client, Delta Hospital Center. Bell now refuses to hire Chris.
Refer to Fact Pattern 12-2. Under the circumstances, with respect to damages, Chris can

A) bring an action immediately.
B) bring an action only after the contract's two-year term begins.
C) bring an action only after the contract's two-year term ends.
D) do nothing.

Question 50

Fact Pattern 12-2 (Questions 17-19 apply)
Bell Medical Education Service enters into a contract to employ Chris as an instructor for two years to begin May 1. One month before the term begins, Bell is underbid by a competitor and loses a major client, Delta Hospital Center. Bell now refuses to hire Chris.
Refer to Fact Pattern 12-2. With respect to Chris's obligations, Bell's repudiation most likely

A) discharges Chris from the contract.
B) has no effect on Chris's obligations.
C) increases Chris's obligations under the contract.
D) suspends Chris's obligation to perform.

Question 51

Carol pays Dick $10,000 to design an ad campaign for Carol's Coffee Stand chain. The next day, Dick tells Carol that he has accepted a job in New York and cannot design her campaign. Carol files a suit against Dick. As compensatory damages, Carol can recover

A) $100,000.
B) $10,000.
C) $1,000.
D) $0.

Question 52

Roy and Sheila are parties to a contract. They subse?quently agree that Tony should take Roy's place and assume all of his rights and duties under the contract. This is

A) a consideration.
B) a modification.
C) an accord and satisfaction.
D) a novation.

Question 53

Fact Pattern 12-2 (Questions 17-19 apply)
Bell Medical Education Service enters into a contract to employ Chris as an instructor for two years to begin May 1. One month before the term begins, Bell is underbid by a competitor and loses a major client, Delta Hospital Center. Bell now refuses to hire Chris.
Refer to Fact Pattern 12-2. Bell's repudiation is

A) a material breach.
B) a minor breach.
C) Chris's breach.
D) no breach.

Question 54

Juli buys a new textbook for $100 and a used car for $5,000, and signs a one-year lease for an apartment for $1,000 monthly rent to start at the beginning of the next month. To be enforceable, there must be a writing that evidences

A) the apartment lease, and the textbook and car purchases.
B) the apartment lease and the car purchase only.
C) the apartment lease only.
D) the textbook and car purchases only.

Question 55

Clay buys an MP3 player for $200 and a pair of stereo speakers for $600 from a Discount City store, and downloads $300 worth of digital music from e-music.com. To be enforceable, the contract that must be in writing is the purchase of

A) the digital music, the MP3 player, and the speakers.
B) the digital music and the speakers only.
C) the speakers only.
D) none of these items.

Question 56

Home Delivery Corporation and Interstate Transport, Inc., sign an agree?ment that provides for the payment of "$1,000 by whichever party commits a material breach of the contract that creates damages difficult to esti?mate but approximately $1,000." This is

A) a liquidated damages clause.
B) a mitigation of damages clause.
C) a no-damages clause.
D) a penalty clause.

Question 57

Fashion Retail Center enters into a contract with Great Promotions, Inc., to provide Fashion with a plan to retool its merchandising strategy. If Great Promotions breaches the contract, Fashion has a duty to

A) reduce the damages that Fashion might otherwise suffer.
B) reduce the loss that Great Promotions might otherwise suffer.
C) punish Great Promotions and deter others from similar acts.
D) take no action.

Question 58

Esther and Faisal agree that Esther will fix Faisal's car in exchange for his paying a preexisting debt owed by Esther to Gladys. This is

A) a delegation.
B) an assignment.
C) a third party beneficiary contract.
D) prohibited under the doctrine of privity of contract.

Question 59

Rory threatens physical harm to force Suki to sell her business, Toney Tours, Inc., to Rory for a below-market price. This is

A) a legitimate business tactic.
B) duress.
C) fraud.
D) undue influence.

Question 60

Development Associates (DA) agrees to buy five acres of land from Eastside Properties for $15,000. Eastside fails to go through with the deal on the agreed date, when the market price of the land is $17,000. If DA cannot recover the land, DA may recover in damages

A) $17,000.
B) $15,000.
C) $2,000.
D) $0.

Question 61

Creekside Property Corporation enters into a contract with Delta Management Associates to manage and maintain Creekside's apartment complex. Their contract provides that neither party can recover damages for a non-fraudulent or unintentional breach. This is

A) a limitation-of-liability clause.
B) an exculpatory clause.
C) an illegal clause.
D) a quasi contract.

Question 62

Irrigation Piping Company ships its only pump to National Hydraulics Corporation, the manufacturer, for repair. Irrigation hires Overland Transport, Inc., to take the pump to National Hydraulics and to return it to Irrigation as soon as the repair is complete. Irrigation is forced to suspend operations without a pump, but Overland does not know this. Irrigation expects to be without the pump for five days and to lose profits of $5,000. When the pump is not returned by the end of the fifth day, Irrigation rents a pump at a cost of $100 per day. Overland delays five more days before returning the pump. Irrigation files a suit against Overland, asking for compensatory and consequential damages. Will Irrigation recover Explain.

Question 63

Ira orally agrees to buy a unique collection of sports memorabilia for $1,000 from Jane and sends her $250 as a down payment. When Ira sends her the rest of the price, Jane refuses to ship Ira the collection. Ira should seek

A) damages.
B) reformation.
C) rescission.
D) specific performance.

Question 64

General Equity Corporation enters into a contract with Honi, who agrees to create artwork for General's main office building. Honi delays and eventually refuses to perform. Meanwhile, General contracts to sell the building to Ideal Investments, Inc., but before the transaction is complete, Jewel Funds Company offers to pay a higher price. General refuses to transfer the building to Ideal. In separate suits by General against Honi and by Ideal against General, each plaintiff seeks specific performance. How might the court rule in each case, and why

Question 65

Rural Utility, Inc., enters into a contract with Shovel Excavation Service to dig up, replace, and rebury Rural's cables in a certain location. Rural advances Shovel 10 percent of its cost. If the parties rescind the contract, Shovel's refund of the payment would be

A) a penalty.
B) liquidated damages.
C) restitution.
D) specific performance.

Question 66

Outdoor Properties, Inc. (OPI), agrees to sell certain acreage to Pia. OPI repudiates the deal. Pia sues OPI and recovers dam?ages. Pia can now obtain

A) an amount in a quasi-contractual recovery.
B) damages representing restitution.
C) specific performance of the deal.
D) nothing more.

Question 67

Super Toolmakers, Inc., contracts to sell its business to True Hardware Corpo?ration. Before either party has performed, rescission of this con?tract requires

A) a mutual agreement to rescind.
B) consideration.
C) performance by all of the parties.
D) Super's payment of damages to True.

Question 68

Grady enters into a contract to buy 440 acres from Hollis to expand Grady's ranch. If Hollis breaches the contract, Grady's normal remedy would be

A) damages.
B) quasi contract.
C) reformation.
D) specific performance.

Question 69

A contract for a sale of an apartment complex from Unique Properties, Inc., to Variety Investments Corporation contains an erroneous legal description. The most appropriate remedy for these parties is

A) damages.
B) reformation.
C) rescission.
D) specific performance.

Question 70

A contract between E-Debits, Inc., and First Credit Corporation includes a provision excluding liability as a result of fraud. This provision is

A) enforceable because the parties are protected from liability.
B) enforceable because the parties consented to it.
C) enforceable if the parties have equal bargaining power.
D) not enforceable.

Question 71

Refined Commodities, Inc., agrees to deliver ten tons of sheet metal to Select Builders Corporation. The agreement states that delivery is to be within "3" days, although the parties intend "30" days. Refined cannot convince Select to amend the contract. Refined should seek

A) damages.
B) reformation.
C) rescission.
D) specific performance.