Deck 7: Contracts: Ending Contracts

Question 1

Performance is when a party's contractual obligations are completed to the satisfaction of the other party.

Answer 1

True

Question 2

If all your reasonable expectations under a contract have been met, then the contract has been ended by operation of law.

Answer 2

False

Question 3

Parties can insert an option to terminate in their contract which allows them to end the contract.

Answer 3

True

Question 4

Parties can agree to end their contract in the agreement itself.

Question 5

Courts use the reasonable person test to determine if a contract has been performed.

Question 6

A breach occurs when both parties fail to perform their obligations under a contract.

Question 7

A breach is the failure of a party to perform its obligations to the other party's satisfaction.

Question 8

Since contracts are formed by agreement between the parties, they can also be ended or modified by agreement.

Question 9

A contract is discharged when each party has completed its obligations to the satisfaction of the other party.

Question 10

Frustration will end a contract only when the parties are aware that an event could occur prior to entering into the contract.

Question 11

Parties can end their contract by substituting a new agreement for the original one.

Question 12

A condition is a minor term of a contract.

Question 13

There are five (5) ways that a contract can come to an end.

Question 14

A discharge of a contract occurs when one party has completed its obligations to the satisfaction of the other party.

Question 15

If all your reasonable expectations under a contract have been met, then the contract has been performed.

Question 16

Parties can agree to end their contract only by signing another separate contract stating the end date.

Question 17

A condition is an essential term of a contract.

Question 18

Only an innocent party to a breach of contract has legal rights for a remedy to repair the breach.

Question 19

An unforeseen event making it impossible to perform a contract ends the contract by frustration.

Question 20

Obligations under a contract are ended when each party has performed or completed their obligations.

Question 21

Frustration occurs when an unforeseen outside event that makes the contract impossible to perform.

Question 22

Substantial performance occurs when the parties only have one condition left to complete on a contract.

Question 23

Parties have a duty of good faith in contracts for the purchase and sale of insurance.

Question 24

Derrick offered to purchase Perry's vehicle for $3,050 cash, with Perry to deliver the vehicle the next Wednesday, at which time Derrick would pay the $3,050. On the Wednesday, when Perry did not deliver, Derrick went to Perry's home, and found him in his garden. Derrick offered Perry the money, but Perry refused, saying that he had changed his mind, and did not wish to sell his automobile. If Derrick had offered Perry exactly $3,050 in cash, he had made a valid tender of performance.

Question 25

Novation is when one party to a contract is replaced with a new party.

Question 26

Breach of contract will end a contract when a minor term of a contract has been breached.

Question 27

When one party has performed almost all their obligations under the contract, substantial performance may end the contract.

Question 28

Gratuitous waiver is the release by one party of the other party from performing their contractual obligations.

Question 29

Chris, a carpenter, entered into a contract with Doug for the construction of a garage on Doug's property for $5,000. Chris had constructed all of the garage, except the door, when he refused to complete the contract. Chris has substantially performed his part of the agreement, and would be entitled to payment of the contract price, less the amount necessary to finish the building.

Question 30

Substantial performance is when the parties have completed all but a minor term of the contract.

Question 31

Tender of performance is when a party is ready, willing, and able to perform its obligations and attempts to do so.

Question 32

Accord and satisfaction is when the parties agree to end the contract on terms different than those in their contract.

Question 33

A duty of good faith imposes a duty to loyalty on parties to a contract.

Question 34

Novation is when a new party is substituted for one of the original parties with the consent of all the parties.

Question 35

A duty of good faith is implied in contract performance.

Question 36

A clause in a contract that says the contract will end when a certain condition is not met is a condition subsequent.

Question 37

In a contract for employment, parties have a duty of good faith when terminating an employee.

Question 38

A clause in a contract that says the contract will end when a certain condition is not met is a condition precedent.

Question 39

Self-induced frustration will end a contract.

Question 40

Breach of contract will end a contract when the essential terms of a contract have been breached.

Question 41

Antoine, a bush pilot, agrees to ferry an exploration crew from Gamma Oil to a remote part of Alberta in his helicopter, and to retrieve them a month later. Three weeks into the bush, the Gamma team learn through listening to local radio chatter on their short-wave radio that Antoine has sold his helicopter to a pilot in New Brunswick. The circumstances indicate express repudiation by Antoine.

Question 42

An assignment into bankruptcy can relieve a party from performance of a contract.

Question 43

Ken entered into a contract with Chris to haul gravel into his large tandem truck from Chris's gravel pit to a building site some three miles away distant, at $60 per load. Before Ken was to begin performance, his truck was destroyed in a serious traffic accident. Ken need not perform the contract as the contract was frustrated by the destruction of the truck.

Question 44

In March, Ken entered into an agreement with Bernadette whereby Ken would rent Bernadette his cottage for one week in July. In May earlier that same year, Ken negligently caused significant fire damage to the cottage while roasting marshmallows over a roaring fire in the cottage fireplace. As a result, the cottage was inhabitable for six months. Ken can successfully assert that this agreement is frustrated.

Question 45

Statute law has modified the common law approach to allow recovery of losses that occurred from frustration.

Question 46

Marnie fails to deliver any of the fruit pies she had contracted to make for Benny's Bakery. If Benny treated Marnie's failure to perform as a breach of warranty, the contract would not end but, to the extent that Marnie's breach had caused him injury, she would have to pay Benny damages.

Question 47

Frustration occurs when the operation of law makes performance of the obligations under the contract illegal.

Question 48

Helen offered to sell her 10-speed touring bicycle to Jane for $200 on her return from a two-week bicycle trip to a distant city. At the end of the first week, Jane received a long distance telephone call from Helen, in which Helen advised Jane that she had decided not to sell the bicycle on her return. Jane was disappointed as a similar bicycle on the market would cost her at least $250. She decided to wait until Helen returned then urge her to go through with the sale. Before Helen reached home, her bicycle was stolen and never found. Helen's decision not to proceed with the sale was an express repudiation of the contract.

Question 49

A warranty is a minor term in a contract.

Question 50

Marnie fails to deliver any of the fruit pies she had contracted to make for Benny's Bakery. If Benny really wanted the pies and felt that Marnie would be able to meet her commitments, he could choose to treat the breach of condition as if it were a breach of warranty.

Question 51

Guthrie Caterers failed to turn up as contracted to cater George and Susan's wedding reception. The deposit, which was the only money paid to that point, was returned by courier the next morning without comment. There was an express repudiation of the contract when Guthrie failed to arrive when and where it should have.

Question 52

Minor terms that would normally be considered warranties can be stated as conditions in a contract.

Question 53

An assignment into bankruptcy will not relieve a party from performance of a contract.

Question 54

Marnie fails to deliver any of the fruit pies she had contracted to make for Benny's Bakery. Since this is a breach of a condition of the contract, Benny is released from any obligations he has under the contract, and the contract is at an end.

Question 55

A warranty is a major term in a contract.

Question 56

Damages is a remedy that is in the form of money.

Question 57

When a party misses a limitation period, the contract can come to an end by operation of law.

Question 58

Repudiation before the date fixed for performance is known as anticipatory breach.

Question 59

Guthrie Caterers failed to turn up as contracted to cater George and Susan's wedding reception. The deposit, which was the only money paid to that point, was returned by courier the next morning without comment. This was an implied repudiation since Guthrie did not contact George and Susan and actually tell them, "We will not be catering your wedding."

Question 60

Antoine, a bush pilot, agrees to ferry an exploration crew from Gamma Oil to a remote part of Alberta in his helicopter, and to retrieve them a month later. Three weeks into the bush, the Gamma team learn through listening to local radio chatter on their short-wave radio that Antoine has sold his helicopter to a pilot in New Brunswick. Antoine is in breach of contract.

Question 61

Canadian courts view an award of damages in a breach of contract as compensation.

Question 62

An award of damages is for actual losses and not any emotional consequences caused to the innocent party.

Question 63

Major terms that would normally be considered conditions cannot be stated as warranties in a contract.

Question 64

An innocent party to a breach of contract may be awarded less damages if they have not taken steps to mitigate the breach of contract.

Question 65

A clause in a contract that places a limit on the amount of damages due from a breach is a limitation of liability clause.

Question 66

A person can be compensated for the loss of profit caused by a breach of contract.

Question 67

A legal remedy is an order that court is entitled to issue when an innocent party to a contract sues for breach.

Question 68

Major terms that would normally be considered conditions can be stated as warranties in a contract.

Question 69

A clause in a contract that specifies the amount of damages due from a breach is a liquidated damages clause.

Question 70

Mario, a professional entertainer, entered into a one-year contract with Barnum to perform exclusively at Barnum's theatre and nowhere else during that period of time. A week after the agreement was signed, Mario entered into another agreement with a competitor of Barnum to perform at his opera house. Barnum is entitled to treat Mario's actions as a breach of his contract.

Question 71

The purpose for an award of punitive damages in a breach of contract is to punish the party who breached the contract.

Question 72

Damages will not be awarded in a breach of contract if the losses were too remote.

Question 73

The purpose for an award of damages in a breach of contract is to put the innocent party in the same position it would have been in if the contract had been performed.

Question 74

A court will award damages for unforeseen losses from a breach of contract.

Question 75

An indemnification clause is a promise by one party to pay for the damages incurred by another party when a contract is breached.

Question 76

A clause in a contract that specifies the amount of damages due from a breach is a limitation of liability clause.

Question 77

Minor terms that would normally be considered warranties cannot be stated as conditions in a contract.

Question 78

The purpose for an award of punitive damages in a breach of contract is to put the innocent party in the same position it would have been in if the contract had been performed.

Question 79

Canadian courts view an award of damages in a breach of contract as punishment.

Question 80

A clause in a contract places a limit on the amount of damages due from a breach is a liquidated damages clause.