Deck 13: Contract Performance Breachapter and Remedies

Question 1

Only a mistake of value or quality makes a contract voidable.

Answer 1

False

Question 2

Anticipatory repudiation of a contract is treated as a present, material breach in order to give the non-breaching party an opportunity to seek a similar deal elsewhere.

Answer 2

True

Question 3

Because value is variable, mistakes of value affect the enforceability of contracts.

Answer 3

False

Question 4

Any breach of contract effectively excuses both parties from performing.

Question 5

The party on whom duress is exerted can choose to avoid the entire transaction.

Question 6

Only contracts that have been fully executed can be rescinded by agreement.

Question 7

A seller who places goods at the disposal of a buyer has tendered delivery but cannot yet demand payment.

Question 8

If one party's performance on a contract is substantial, the other party's duty to perform need only comport with the level of the rendered performance.

Question 9

The distinction between "seller's talk" and facts allows sellers to tout their products and services, thereby creating potential liability for fraud.

Question 10

Because of the potential for punitive damages, plaintiffs often include a claim for fraudulent misrepresentation in their contract disputes.

Question 11

Under a construction contract that is conditioned on the builder meeting certain specifications, complete performance is required to avoid material breach.

Question 12

If contracting parties attach materially different meanings to a contract word or term subject to more than one reasonable interpretation, a court may allow the contract to be rescinded.

Question 13

Once performance has been tendered, the party making the tender has done everything possible to carry out the terms of the contract.

Question 14

To provide a point at which contracting parties can know that their duties have ended, the duty to perform a contract is always absolute.

Question 15

Most contracts need to be performed to the personal satisfaction of each contracting party.

Question 16

Ordinarily, every party to a contract has a duty to come forward and disclose facts.

Question 17

Misrepresentation of law does not ordinarily entitle a party to avoid a contract.

Question 18

The essential feature of undue influence is that a party being taken advantage of suffers from a mental or physical impairment.

Question 19

If a contractor's bid was significantly low because he or she made a mistake in adding up the total estimated costs, any contract resulting from the bid is still normally enforceable.

Question 20

In the context of fraudulent misrepresentation, an opinion is objective and verifiable, whereas a fact is subject to debate.

Question 21

Sometimes, when a buyer breaches a contract for a sale of goods and the seller has not yet produced the goods, the seller can recover the lost profits.

Question 22

A contract clause that excludes liability for willful misconduct is enforceable if the provision is sufficiently prominent in the body of the contract.

Question 23

When a lapse of time and a change in circumstances make it substantially more burdensome for the parties to perform, a contract is discharged.

Question 24

Performance becomes commercially impracticable when a foreseeable, added burden of performing increases the cost slightly.

Question 25

In most situations, when a breach of contract occurs, the injured party is held to a duty to mitigate, or reduce, the damages that he or she suffers.

Question 26

The breach of a contract for a sale of goods qualifies for specific performance only when substantially identical goods can be bought or sold in the market.

Question 27

Beryl enters into a contract with Clay for a guided tour of Deep Canyon. Clay represents that he is an experienced, knowledgeable guide, when in reality he has never been in the canyon. Most likely, Beryl

A) could exert duress to obtain a new guide.
B) can rescind the deal based on fraudulent misrepresentation.
C) might recover damages for the mistake.
D) must comply with the contract because the representation is an opinion.

Question 28

At an auction, Ben bids on a 1957 Chevy coupe, believing that it is worth more than the price asked. When the car proves to need more repairs than Ben estimated, and thus is worth less as is, Ben is

A) still liable on the bid.
B) not liable on the bid because he underestimated the cost of repairs.
C) not liable on the bid because the auctioneer misrepresented the value.
D) not liable on the bid because the need for repair is not a material fact.

Question 29

A statute of limitations limits the amount of damages that the nonbreaching party can obtain for a breach.

Question 30

The measure of compensatory damages does not vary by type of contract.

Question 31

Open Range agrees to sell Pinewood Ranch a remote parcel of land for $15,000. Both parties believe the land to be worthless, but beneath it is shale rock containing oil. A court would

A) not rescind the contract.
B) rescind the contract on the basis of a mistake of quality.
C) rescind the contract on the basis of a mistake of value.
D) rescind the contract on the basis of a mistake of opinion.

Question 32

A covenant not to compete that is imposed as part of a sale of an ongoing business will be enforced even if the restraints are unreasonable.

Question 33

When a contract mistakenly specifies a crane instead of a forklift, a court could reform the contract to reflect the parties' original intent as to the equipment.

Question 34

On an architect's breach of contract after payment for the work, the owner can immediately hire a new architect and obtain restitution of the payment.

Question 35

When a buyer breaches a contract for a sale of land, the seller can recover the difference between the contract price and the market price of the land.

Question 36

Restaurant Food Inc. intends to sell a certain quantity of beef for $1,100. In e-mail, however, the firm's sales representative mistakenly offers to sell the beef to Steak House for $1,000, Steak's manager immediately accepts. The seller

A) is bound to the deal at the offered price.
B) can rescind the deal.
C) is bound to the deal but can charge the intended price.
D) can rescind the deal and recover damages for the mistake.

Question 37

When a seller breaches a contract for a sale of goods, knowing the buyer plans to resell the goods, the buyer can recover the lost profits from the planned resale.

Question 38

A novation requires the contracting parties to make restitution of whatever they received under the contract.

Question 39

Analytics LLC processes misinterpreted data furnished by Botch Services to propose a marketing plan for Clientele Inc. Analytics and Clientele are both ignorant of the mistaken data. Their contract can be rescinded on the basis of

A) a bilateral mistake.
B) a mistake of quality.
C) a unilateral mistake.
D) none of the choices.

Question 40

On the breach of a contract for a sale of land when the seller has sold the property to someone else, an award of specific performance is unavailable.

Question 41

Luc, a vehicle dealer, offers to sell Mel a truck and trailer, which Luc claims can haul a certain weight. He knows nothing about the capability of the truck, but it is not as he asserts. Mel buys the truck. On learning the truth, Mel confronts Luc, who says he was not trying to fool Mel-he was only trying to make a sale. This is

A) a mistake of value.
B) a valid defense to a charge of fraud.
C) fraudulent misrepresentation.
D) puffery.

Question 42

Bee is an employee of Credit Agency Inc. On the termination of Bee's position, Credit pays Bee $10,000 to agree not to disclose the employer's confidential information. Later, Bee sells the information to Debt Records LLC for $100,000. In a suit for breach, Credit is most likely to recover

A) $10,000 from Bee.
B) $110,000 from Bee.
C) $100,000 from Debt.
D) all future profits from Debt.

Question 43

Eugene, an accountant, convinces his client Faye to enter into a contract to invest her savings in Gather, a non-existent social media site. There is clear and convincing evidence that Faye did not act out of her free will. This is

A) fraudulent misrepresentation.
B) undue influence.
C) mistake.
D) duress.

Question 44

Drain Equipment Inc. contracts to sell its assets to Excavation Corporation. Before either party has performed, rescission of this contract requires

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

Question 45

Restoration Inc. enters into a contract to refurbish an old bus depot for Quality Diners LLC. If Restoration completes most of the work promised in the contract, its performance will be

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

Question 46

Faiz enters into a contract to buy 350 acres from Grain Farm to cultivate hops and open a brewery. Faiz fails to make the purchase. Grain Farm's remedy is most likely

A) the amount that Faiz expected to invest in the brewery.
B) a percentage of Faiz's unrealized profit.
C) the difference between the contract and market prices of the land.
D) nothing-Grain Farm still owns the land.

Question 47

Rene contracts with Scot to pay him $5,000 for repairs to Rene's lake cabin. After Scot performs, Rene tells him that she cannot pay him in full immediately. They sign an agreement in which Rene promises to pay $2,500 now instead of $5,000 later. This is

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

Question 48

Gliders LLC and Hang Time Inc. are parties to a contract. They subsequently agree that In the Wind Inc. should take Gliders' place and assume all of its rights and duties under the contract. This is

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

Question 49

Architect LLC enters into a contract with Barn & Silo Inc. to provide designs for a certain number of farm buildings. Architect provides fewer than half of the designs by the time specified in the contract because the firm is busy with other projects. Architect's performance is most likely

A) a material breach.
B) a minor breach.
C) a reasonable breach.
D) no breach.

Question 50

Trucking LLC enters into a contract to deliver a certain quantity of potatoes to United Foods's refrigerated warehouse in exchange for a specified payment. Trucking delivers the spuds to the location. United's duty to pay is

A) discharged.
B) conditioned.
C) absolute.
D) qualified.

Question 51

State University provides housing on campus and in some adjacent off-campus neighborhoods. To lease a university house or apartment, a person must be a student at State. This requirement is

A) a condition.
B) a novation.
C) a breach of contract.
D) an operation of law.

Question 52

Jamal and Keri enter into a contract for Jamal to renovate Keri's house by a certain date. Jamal never performs. After the applicable limitations period has passed, Keri decides to bring a suit against Jamal for breach. This suit

A) must be filed within ten to twenty years, depending on state law.
B) can no longer be brought.
C) can be filed within four years of notice to Jamal that Keri decided to sue.
D) must be filed between four and five years after Keri decides to sue.

Question 53

Fess convinces Gwyn to enter into a contract for the purchase of a Falafel Waffle Food Cart by knowingly misrepresenting a number of material features about the facility and the business. Most likely, Gwyn can rescind the contract on the basis of

A) fraudulent misrepresentation.
B) undue influence.
C) duress.
D) none of the choices.

Question 54

Len contracts to work for Media Corporation during May for $4,500. On April 30, Media cancels the contract. Len declines a similar job with New Ads Inc., which would have paid $3,500. Len files a suit against Media. As compensatory damages, Len can recover

A) $4,500.
B) $3,500.
C) $1,000.
D) $0.

Question 55

Dom enters into a contract to buy Ezra's office building for a certain price subject to an appraiser's evaluation of the structure's condition. If the appraiser deems the condition to be substandard, the parties' obligations will be

A) discharged.
B) breached.
C) altered.
D) performed.

Question 56

Food Court Inc. leases space to Gourmet Café. Gourmet abandons the premises when the amount of the rent due on the lease is $5,000. Food finds a new tenant, Hasty Bowls, which agrees to pay $3,500 for the space over the remainder of Gourmet's term. Food's measure of damages is

A) $5,000.
B) $1,500, minus any expenses reduced by mitigating the damages.
C) $1,500, plus any additional expenses to find the new tenant.
D) $6,500.

Question 57

East Bay Café orders seafood from Fresh Catch Company. Fresh places the goods at East's disposal. Fresh's performance under the contract is

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

Question 58

Ewa is induced by her guardian Filo to sign a contract to invest funds in Gold Inc. through Filo's investment firm. Unknown to Ewa, Filo realizes a commission from the investment. Most likely, Ewa can rescind the contract on the basis of

A) duress.
B) fraud.
C) mistake.
D) undue influence.

Question 59

Erma enters into a contract to buy a tract of riverfront property from Forest Acres to build and sell a residential development. Forest Acres fails to close the sale. Erma's remedy is most likely

A) the amount that Erma invested in the project to the date of the closing.
B) nothing-Forest Acres still owns the land.
C) the difference between the contract and market prices of the land.
D) specific performance.

Question 60

Megan contracts to sell Nonny her horse for $4,000. This contract will be fully discharged when Megan and Nonny

A) execute a bill of sale.
B) exchange the horse for the money.
C) sign a receipt.
D) agree that the deal is fair.

Question 61

Dory enters into a contract with Eton for the construction of a Fast Food franchise, according to a certain schedule. The parties perform some preparatory steps, but Eton materially and willfully fails to begin work on the specified date. To rescind the contract, Dory must show that the parties can

A) be restored to the status quo.
B) realize at least some of the benefit of their bargain.
C) obtain a reasonable exchange of values for the preparatory steps.
D) profit from the partial performance.

Question 62

Renew Inc. contracts to resurface the pools at Swim Park by June 1. Renew knows that if performance is not timely, Swim Park will have to delay its seasonal opening. Renew finishes the job June 15. In a suit for breach, Swim Park can recover

A) the cost of new pools.
B) the difference between the contract and market prices for the work.
C) the loss of profit from the delayed opening.
D) nothing-the work is done.

Question 63

Lunch Truck Inc. contracts to deliver and serve Meal Catering Service's products to its clients for $5,000 per event, payable in advance. Meal pays the money, but Lunch fails to perform. Can Meal rescind the contract? Can Meal also obtain restitution? What does it mean to "rescind" a contract? How is a contract rescinded? What is restitution? How is restitution accomplished? Explain.

Question 64

Midtown Holdings Inc. contracts to sell a commercial parking garage to Nuevo Property LLC. The contract provides that if Midtown does not close the deal by a certain date, it must pay the buyer one-half of the value of the property. This provision is not enforceable if it is

A) meant to pay for additional work in the event of damage.
B) a reasonable estimate of the loss on the breach.
C) designed to penalize Midtown.
D) intended to quickly provide cash to Nuevo.

Question 65

Jet enters into a contract to buy a certain warehouse from Kim. At the closing, Kim refuses to transfer title. In a suit for breach, Jet should seek specific performance to

A) return the parties to the positions they occupied before the contract.
B) obtain the exact bargain promised in the contract.
C) reform the contract to reflect the parties' true intentions.
D) make the terms reasonable and enforce the contract as reformed.

Question 66

Home Furnishing Store's contract for a sale of its appliances provides that the only remedy for breach is replacement, repair, or refund of the purchase price. With respect to this provision, on a customer's suit for breach, a court is most likely to

A) enforce it.
B) reform it.
C) refuse to enforce it.
D) reallocate the risk expressed in it.

Question 67

Reese contracts to sell a Spicy Pizza restaurant to Titian. As part of the deal, Reese agrees not to open a competing business within a hundred-mile radius for ten years. Reese later sues Titian, alleging that the agreement is illegal. To enforce the covenant not to compete, the court will most likely

A) award damages for Reese's complete compliance with the terms.
B) reform the contract to make the distance and time limits reasonable.
C) rescind the contract and require restitution.
D) order specific performance.

Question 68

Ochre holds one ton of perishable fruit in storage for Produce Corporation. If Produce does not pay for the storage, under the doctrine of mitigation of damages, Ochre is held to a duty to

A) continue to store the fruit until Produce pays.
B) do whatever is reasonable to minimize the damages.
C) dispose of the fruit immediately.
D) set an example to deter similar misconduct in the future.

Question 69

Dwelling Inc. enters into a contract with Estate Management to manage and maintain Dwelling's apartment complex. Their contract contains a clause that limits Estate's liability except in cases of gross negligence or willful misconduct. With respect to this clause, a court would most likely

A) enforce it.
B) reform it.
C) refuse to enforce it.
D) reallocate the risk expressed in it.

Question 70

Health Source Inc. offers to buy Medico Supplies Corporation. On June 1, Medico gives Health Source copies of Medico's financial statements for the previous year. The statements show an inventory of $10 million. On June 15, Medico discovers that the previous year's inventory is overstated by $500,000, but does not inform Health Source. On July 1, Health Source, relying on the financial statements, buys Medico. On July 10, Health Source discovers the inventory overstatement. Can Health Source succeed in a suit against Medico? Explain.

Question 71

To induce the sale of an auto parts business, Carmel fraudulently represents the worth of the inventory to Drew, who offers an inflated price. They enter into a contract to close the deal. On closer inspection, the buyer learns the true value of the goods. Drew can

A) impose a penalty on the seller.
B) force the seller to accept a more reasonable price.
C) rescind the contract.
D) none of the choices.

Question 72

Steel Mill Inc. agrees to deliver a certain quantity of steel to T-Bar Framing Corporation. The agreement states that delivery is to be within "9" days, although the parties intend "90" days. The seller cannot convince the buyer to amend the contract. The most appropriate remedy is most likely

A) a quasi contract.
B) reformation.
C) rescission.
D) specific performance.