Deck 11: Conclusion to Contracts

Question 1

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

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

Answer 1

B

Question 2

Ramon purchased 5,000 pounds of coffee from Quick Jump Coffee.The coffee was to be delivered on September 1.Since the contract included a date for performance,time is of the essence.

Answer 2

False

Question 3

M & E contracted to sell 500 music stands to Coda,Inc.M & E shipped the stands in accordance with the agreement.Coda paid for the stands as promised.The contract between M & E and Coda is discharged by:

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

Answer 3

A

Question 4

A statute of limitations,which limits the time in which a lawsuit may be brought,may be different for oral and written contracts.

Question 5

Most contracts are discharged by full performance.

Question 6

Injunctions are commonly used by courts to force people to complete their contractual obligations.

Question 7

Dr.Gonzalez ordered specialized surgical equipment from Physician's Supply Co.,but her order was not delivered by the agreed date.Dr.Gonzalez is under no obligation to minimize damages since the contract was breached by Physician's Supply,not Dr.Gonzalez.

Question 8

Virginia,a CPA,fails to complete an audit by the March 30 deadline in her "time of the essence" contract with Waymuth Corp.The corporation is legally obligated to allow Virginia a reasonable extension.

Question 9

To determine whether a party's performance is substantial,courts:

A) perform a two-part test.
B) have no precise test, but look to factors such as how much benefit the promisee received, whether the promisor acted in good faith, whether the promisee can be compensated with money damages, and if a construction contract is involved whether the owner can use the object of the contract for its intended purpose.
C) use a precise test involving what percentage of performance has been completed.
D) look strictly to the parties' contract and follow the intent evidenced in that document.

Question 10

The Restatement (Second)of Contracts and the UCC establish different requirements regarding the obligation of good faith.

Question 11

A statute of limitations begins to run at the time of the injury,and failure to file suit within the time limit set by state statute acts as a discharge for the breaching party.

Question 12

Expectation interest,the most common remedy,is designed to put the injured party in the position he would have been in if both parties had fully performed their contractual obligations.

Question 13

If the purpose of a contract becomes illegal,that discharges the contract because of impossibility.

Question 14

Assume that Jessie and Lester have formed a contract whereby Jessie agrees to deliver 10,000 dozen "Grade A Large Eggs" to be shipped in recycled paper cartons.A shortage of paper makes paper cartons much more expensive,so Jessie uses styrofoam cartons and ships the eggs.Lester is entitled to cancel the contract based on this deviation of terms in the contract.

Question 15

Liquidated damages are awarded to parties who have experienced an injury to their legal rights but have no actual loss.

Question 16

Courts use a two-part test to determine if a party has substantially performed its contractual duties.

Question 17

Under Section 205 of the Restatement (Second)of Contracts:

A) every contract imposes upon each party a duty of good faith and fair dealing in both performance and enforcement.
B) sales contracts impose a duty of good faith and fair dealing in performance, but enforcement is not mentioned.
C) the duty of good faith of parties to contracts is modified and made stricter than the duty imposed under the UCC.
D) the duty of good faith of parties to contracts is made more lenient than the duty imposed under the UCC.

Question 18

If one party materially breaches a contract,the other party is not only discharged from its performance but may also sue for damages.

Question 19

Jennifer substantially performs her service contract with Gretchen.Due to Jennifer's failure to render complete performance,Gretchen:

A) is discharged from any further contractual obligations.
B) is required to pay the full contract price, minus the value of Jennifer's defective performance.
C) is required to pay the full contract price.
D) may declare a material breach and pay only for the value received.

Question 20

Abdulla hired Granite Construction to build an addition onto his home.Granite Construction dug the foundation but then abandoned the project.Granite Construction is entitled to receive the full contract price minus the value of the defects.

Question 21

Statutes of limitations:

A) begin to run at the time a plaintiff discovers an injury.
B) may vary widely from state to state and for type of injury.
C) limit the time for filing suit on oral contracts to three years and for written contracts to four years.
D) provide limitations on the amount of damages recoverable in contract cases.

Question 22

Delana materially breaches a contract she made with Garnett.As a result:

A) Garnett may sue for damages, but only after he performs his duties under the contract.
B) Garnett is discharged from his obligation to perform his duties under the contract, and he may sue for damages.
C) the contract will be declared void because of frustration of purpose.
D) the contract will be declared void because of commercial impracticability.

Question 23

In cases of quasi-contract,courts award:

A) specific performance.
B) an injunction.
C) restitution.
D) compensatory damages.

Question 24

The first step a court takes in choosing a remedy is to determine:

A) what interest it is trying to protect.
B) if the damages can be quantified with reasonable certainty.
C) if punitive damages should be awarded.
D) whether the injured party mitigated its damages.

Question 25

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 result?

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 26

The interest designed to return to the injured party a benefit that he has conferred on the other party,which it would be unjust to leave with that person is the:

A) restitution interest.
B) reliance interest.
C) expectation interest.
D) equitable interest.

Question 27

The concept that an injured party may recover consequential damages only if the breaching party should have foreseen them was established in:

A) Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Center Associates.
B) Milicic v. Basketball Marketing Company, Inc.
C) Hadley v. Baxendale.
D) Rosenberg v. Son, Inc.

Question 28

Expectation and reliance interests create:

A) equitable remedies.
B) both equitable and legal remedies.
C) legal remedies.
D) no remedies for an injured party.

Question 29

In early January 2010,Professor Noe entered into a contract with State University.She agreed to teach full time during the 2010-2011 academic year.Professor Noe died on March 14,2010.Her estate:

A) is obligated to find another person who will agree to teach during the academic year.
B) is discharged from any further obligations under the contract.
C) will be discharged from any obligations under the contract only if it can be shown that her death was unexpected.
D) will not be discharged. If the University has to pay more in order to hire a comparable substitute professor at the later date, then the estate will be responsible for the difference in pay.

Question 30

Direct damages are also known as:

A) consequential damages.
B) compensatory damages.
C) both consequential and compensatory damages.
D) liquidated damages.

Question 31

Costs to rent a vehicle for a short period of time after an auto dealer fails to deliver a purchased vehicle would be:

A) compensatory damages.
B) incidental damages.
C) consequential damages.
D) punitive damages.

Question 32

Harry agreed to pay $100 to rent a rooftop spot in downtown Seattle to watch the New Year's Eve festivities.The festivities were unexpectedly cancelled because of concern over a terrorist attack.Harry is:

A) obligated to pay the $100.
B) not obligated to pay under the commercial impracticability doctrine.
C) not obligated to pay under the anticipatory breach doctrine.
D) not obligated to pay under the frustration of purpose doctrine.

Question 33

In promissory estoppel cases:

A) courts award compensatory and incidental damages.
B) courts generally award only reliance damages.
C) the restitution interest is primary, and courts generally award only restitution.
D) consequential and incidental damages are generally awarded.

Question 34

Specific performance may be available for the breach of a contract to sell:

A) an original painting.
B) 20 shares of AT&T stock.
C) a red "Radio Flyer" wagon, available at toy stores.
D) a 2009 Lexus in mint condition.

Question 35

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 $50 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 $15 per week.Ron's best argument in support of his petition to be discharged from the contract is:

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

Question 36

Courts typically divide the expectation damages into:

A) four parts, which are direct damages, special damages, incidental damages, and liquidated damages.
B) four parts, which are compensatory damages, incidental damages, nominal damages, and consequential damages.
C) three parts, which are compensatory damages, consequential damages, and incidental damages.
D) only two parts, which are incidental damages and consequential damages.

Question 37

The objective of a(n)____________ is to restore to the injured party the benefit he provided.

A) expectation interest.
B) reliance interest.
C) restitution interest.
D) equitable interest.

Question 38

Statutes of limitations:

A) define how much money the injured party can sue for under a breach of contract claim.
B) define whether there has been substantial performance of a contract or a material breach.
C) limit the time in which an injured party may sue.
D) only apply to the sale of goods. There is no statute of limitations on a service contract.

Question 39

Farmer Elvin is holding 200 pounds of potatoes in storage for Chef Noble but Chef Noble has breached the contract by failing to pay for the potatoes.The potatoes are beginning to rot.If Farmer Elvin sells the potatoes to a local diner to make potato soup and salad,then this action would be considered:

A) a reasonable mitigation of damages.
B) an attempt to maximize damages.
C) an attempt to realize an unwarranted profit.
D) conversion.

Question 40

Compensatory damages are typically assessed against the breaching party:

A) as a penalty for breaching the contract.
B) only under the UCC when the sale of goods is the subject of the contract.
C) to put the non-breaching party in the position it would have been in had the contract never been formed.
D) to put the non-breaching party in the position it would have been in if the contract hadn't been breached.

Question 41

Identify and describe the four principal contract interests a court may seek to protect.

Question 42

Identify four factors courts consider in deciding commercial impracticability and frustration of purpose claims.

Question 43

In a construction contract,there is a $1,000 per day estimate of damages for each day that the contract runs over the completion date.The contractor is 30 days late when the job is completed,resulting in a prospective damage award of $30,000.What is this type of clause,and when will it be enforced?

Question 44

Milt contracted with Vern to buy a ten-acre piece of land,but before the closing Vern decided not to sell.Discuss what remedy(ies)are potentially available to Milt.

Question 45

Duke was hired to play drums for a rock group scheduled to tour the country.Part of the way through the tour,Duke was tragically killed in a plane crash.The tour had to be discontinued until a new drummer could be found.The band lost money on the tour.Is Duke's estate or his agent responsible for the loss to the band?