Deck 13: Termination of Contracts

Question 1

In which of the following cases will a court refuse to enforce the provision of liquidated damages on a party?

A)When the actual damages are difficult to determine
B)When the liquidated damages were established prior to the breach of contract
C)When the amount of liquidated damages fixed by the contract is unreasonable
D)When the parties refuse to pay the liquidated damages established in the contract

Answer 1

C

Question 2

What constitutes satisfactory performance in a contract? ​

Answer 2

What constitutes satisfactory performance is frequently a disputed question. The courts generally have adopted the rule-especially when a definite, objective measure of satisfaction exists-that if the contract is performed in a manner that would satisfy an ordinary, reasonable person, the terms of the contract have been met sufficiently to discharge it. If the performance is clearly intended to be subject to the personal taste or judgment of one of the parties, however, it may be rejected on the ground that it is not satisfactory to that particular party. ​

Question 3

AB Developers signs a contract with CL Corp., agreeing to build a $20 million office for the corporation. The construction contract was substantially performed. There were, however, a few minor breaches of the contract by AB Developers that made CL Corp. incur damages worth $10,000. Which of the following is most likely to be true in this scenario? ​

A)Since there was a breach of contract, CL Corp. may not pay any compensation to AB Developers.
B)CL Corp. needs to pay the full price under the contract since the work was substantially performed.
C)CL Corp. needs to pay the full price under the contract less the damages suffered by it.
D)AB Developers needs to pay nominal damages to CL Corp. for breach of contract.

Answer 3

C

Question 4

When a contract contains the words "time is of the essence," which of the following is true?  ​

A)Performance must be rendered within a reasonable amount of time.
B)Performance on the exact date is deemed vital.
C)Performance must occur within 24 hours of signing the contract.
D)Performance is not an essential component of the contract.

Question 5

​ The rescission of a contract releases an aggrieved party from all obligations that are yet to be performed

Question 6

Punitive damages are damages paid to the plaintiff in order to punish the defendant, not to compensate the plaintiff. ​

Question 7

If performance in a contract becomes extremely difficult after the contract is formed, it automatically discharges the contract. ​

Question 8

​ A f orce majeure clause in a contract is a contract provision that excuses performance by a party when:

A)an extraordinary event outside the party's control occurs.
B)death or physical incapacity occurs, making it impossible to perform the services of the contract.
C)the performance is made impossible by the wrongful act of the other party.
D)an act that was legal at the time of the contract, is subsequently made illegal.

Question 9

Which of the following statements is true of statutes of limitations?

A)For open accounts, accounts receivable, and ordinary loans, the statute of limitations is always one year.
B)Even if a promisor leaves the state, the statute continues to run while the promisor is beyond the jurisdiction of the court.
C)Statutes of limitations are uniform for all kinds of debts and suits.
D)In the case of running accounts, such as purchases from department stores, the statute starts from the date of the last purchase.

Question 10

A debt that has been prohibited from collection by a statute of limitations can never be revived.

Question 11

If a contract calls for personal services, the death or physical incapacity of the person to perform such services discharges the contract. ​

Question 12

​ When a court orders for specific performance, it is exercising its equity powers.

Question 13

Which of the following is an example of a contract discharged by impossibility of performance? ​

A)A new law makes the contract illegal.
B)The cost of raw materials rises slightly, making it more expensive for a business to perform under the contract.
C)An event occurs that reasonably parties should have anticipated.
D)Performance will require additional time, making it impracticable for a party to perform under the contract.

Question 14

If a debtor tells a creditor "I am ready to pay you now," a sufficient tender of payment has been made.

Question 15

​ In a written contract, Sheldon agreed to tutor the children of Mrs. Smith for a certain period of time. However, Sheldon, prior to starting classes, announced that he would not be able to tutor the children due to other commitments of his. In this case, there has been a(n):

A)anticipatory breach.
B)rescission.
C)negligent breach.
D)malpractice.

Question 16

If an act is legal at the time of entering a contract but is subsequently made illegal, the contract is discharged. ​

Question 17

​ If a party intentionally and without the consent of the other party alters a written contract, the other innocent party is discharged.

Question 18

An offer to pay money in satisfaction of a debt or claim when one has the ability to pay is a . ​

A)time of performance
B)tender of performance
C)tender of payment
D)substantial performance

Question 19

Which of the following statements best describes specific performance? ​

A)It refers to the payment of compensatory damages by a party as a remedy for breach of contract.
B)It refers to the carrying out of the specific terms of a contract.
C)It refers to carrying out of terms that were not specified in a contract in order to compensate for damages.
D)It refers to the payment of liquidated damages by a party as a remedy for breach of contract.

Question 20

A breach of contract by one of the parties bound on a contract immediately terminates the contract. ​