Deck 16: Termination and Remedies

Question 1

In most contracts, promises of performance are conditioned.

Answer 1

False

Question 2

Objective impossibility may discharge a contract.

Answer 2

True

Question 3

A material breach excuses the nonbreaching party from performance.

Answer 3

True

Question 4

A novation requires the existence of a previous, valid obligation.

Question 5

There is no difference between complete and substantial performance.

Question 6

An accord and its satisfaction do not discharge the original contractual obligation.

Question 7

A party who in good faith performs substantially all of the terms of a contract can enforce the contract against the other party.

Question 8

For mutual rescission of a contract to take place, the parties must make another agreement.

Question 9

Contractual obligations will be discharged when the specific subject matter of the contract is destroyed.

Question 10

When the subject matter of a contract is personal, the performance need only satisfy a reasonable person.

Question 11

If performance of a contract is not substantial, there is a material breach.

Question 12

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

Question 13

A breach of contract occurs when a party fails to perform part or all of the required duties under a contract.

Question 14

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

Question 15

Most contracts need to be performed only to the satisfaction of a reasonable person unless they expressly state otherwise.

Question 16

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

Question 17

The most common way to terminate contractual duties is by performance.

Question 18

A buyer who offers to pay for goods has tendered payment but cannot yet demand delivery.

Question 19

Any contract can be discharged by agreement of the parties.

Question 20

Tender is an unconditional offer to perform by a person who is ready, willing, and able to do so.

Question 21

The most common way to terminate contractual duties is by

A) agreement.
B) breach of contract.
C) failure of a condition.
D) performance.

Question 22

S pecific performance is not granted unless the party's legal remedy is inadequate.

Question 23

When fraud, mistake, duress, or failure of consideration is present, rescission is not available.

Question 24

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

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

Question 25

The amount of compensatory damages is based on the level of wrongdoing by the breaching party.

Question 26

A liquidated damages provision specifies that a certain amount is to be paid by a breaching party when damages are difficult to determine.

Question 27

Dairy Farm enters into a contract with EZ Serve Ice Cream Company to supply milk. Later, Dairy decides that it is no longer advantageous to fulfill the contract and subsequently fails to perform as promised. EZ files a suit against Dairy. A breach of contract occurred when

A) Dairy entered into a contract with EZ.
B) Dairy decided that it was not advantageous to fulfill the contract.
C) Dairy failed to perform the acts promised in the contract.
D) EZ filed a suit against Dairy.

Question 28

Under the doctrine of mitigation of damages, the required action depends on the nature of the situation.

Question 29

Punitive damages are seldom awarded in lawsuits for breach of contract.

Question 30

Courts normally grant specific performance of personal-service contracts.

Question 31

In a contract for a sale of goods, the usual measure of compensatory damages is the difference between the contract price and the market price.

Question 32

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

Question 33

Build-well Construction LLC contracts to build a warehouse for Corporate Storage Inc. Corporate does not have to pay Build-well if the warehouse is not built. Their respective promises are

A) conditioned on the occurrence of an event.
B) conditioned on the nonoccurrence of an event.
C) conditioned on Build-well's performance.
D) not conditioned.

Question 34

A remedy is the relief provided to an innocent party when the other party has breached the contract.

Question 35

Damages that compensate the nonbreaching party for the loss of a bargain are known as consequential damages .

Question 36

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

Question 37

Verna enters into a contract to work as a lifeguard at Water Park for the summer in exchange for a weekly paycheck. The duties under this contract will be discharged when the duties are

A) avoided .
B) breached.
C) conditioned.
D) performed.

Question 38

Special damages that compensate for a loss that goes beyond the contract itself are compensatory damages .

Question 39

Restitution is a way to avoid the unjust enrichment of one party at the expense of another.

Question 40

T he measurement of compensatory damages does not vary by type of contract.

Question 41

Home Construction LLC enters into a contract with Irene to build a house. Before Home starts to work, the market price for its services increases-in effect, Home will lose money by if it fulfills its contract with Irene. Home notifies her that it will not perform. Home's obligation to perform is

A) breached.
B) discharged.
C) rescinded.
D) suspended.

Question 42

Restoration Inc. enters into a contract to refurbish an old bus depot for Quality Café 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 43

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 44

Inez hires Josh to paint her portrait to her satisfaction for $4,000. When Josh finishes the portrait, Inez announces that she is not satisfied with it. Inez

A) must pay Josh the contract price.
B) must pay Josh half of the contract price as a compromise.
C) must pay Josh only the cost of his materials.
D) does not have to pay Josh.

Question 45

Juan and Isidro enter into a contract to buy, restore and reopen the Coastal Park Carousel. Before either party begins to perform, they agree to cancel their deal. This is

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

Question 46

Fact Pattern 16-1 Medical Accounts Collection enters into a contract to employ Natalie as a billing manager for two years. During the first year, Natalie is often absent without explanation and when present fails to adequately do her job.
Refer to Fact Pattern 16-1. Natalie's performance is most likely

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

Question 47

Jason and Kelly enter into a contract for Jason to renovate Kelly's house by a certain date. Jason never performs. After the applicable statute of limitations period has passed, Kelly decides to bring a suit against Jason 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 after Kelly decides to sue.
D) must be filed between four and five years after Kelly decides to sue.

Question 48

New Builders, Inc., enters into a contract with O'Reilly to refurbish a garage on his property as an auto repair shop. O'Reilly's neighbor Pete challenges the project as a violation of the local zoning laws. A court orders a halt to the project. O'Reilly's contract with New Builders is

A) breached.
B) discharged.
C) not affected.
D) suspended.

Question 49

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 50

Fact Pattern 16-1 Medical Accounts Collection enters into a contract to employ Natalie as a billing manager for two years. During the first year, Natalie is often absent without explanation and when present fails to adequately do her job.
Refer to Fact Pattern 16-1. Natalie's performance most likely

A) discharges Medical from the contract .
B) has no effect on Medical's performance.
C) changes Medical's duties under the contract.
D) suspends Medical's duty to perform .

Question 51

Ed's Electric Company enters into a contract with Field Crest Apartments to deliver and install an alarm system for a certain price. Both parties perform the acts they have promised. The contract is

A) conditioned.
B) ended.
C) excused.
D) suspended.

Question 52

Drainage Equipment, Inc., contracts to sell its assets to Earth Aquatic 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 53

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 54

Leah and Mason are parties to a contract for the sale of Mason's day care facility to Leah. Before the deal closes, they agree to substitute Nell for Leah as a party to the deal. This novation does not require

A) the existence of a previous, valid obligation.
B) agreement by all the parties to a new contract.
C) performance of the original contract by all of the parties.
D) a new, valid contract.

Question 55

Omar and Penn want to discharge their contract by executing a new agreement with performance different from what they originally promised. They can best accomplish this by

A) a mutual agreement to rescind.
B) an accord and satisfaction.
C) a novation.
D) an alteration of the original contract.

Question 56

Fern, who owns and operates Garden Farm, agrees to sell Harvest Grocery a minimum quantity of fresh fruits and vegetables every week for three months. If bad weather destroys Fern's crops, the obligation to deliver produce to Harvest is

A) breached.
B) discharged.
C) not affected.
D) suspended.

Question 57

Barb and Conrad are parties to a contract. They agree on a novation. The novation requires

A) the existence of a previous, valid obligation.
B) consideration greater than $5,000.
C) performance of the original contract by all of the parties.
D) an accord and satisfaction.

Question 58

Don enters into a contract to buy Ezra's commercial 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 59

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) the failure of a condition .
C) a breach of contract.
D) an operation of law.

Question 60

Sara enters into a contract to sell her vacation condo to Ted for a certain price on a specific day. On that day, Sara unconditionally offers to perform. Sara's offer

A) conditions Ted's promise to pay for the property.
B) constitutes tender of performance.
C) excuses the parties' performance under the contract.
D) suspends the parties' contractual obligations.

Question 61

Lana agrees to work as Michelle's personal assistant for one year but dies in the ninth month of the contract. Lana's death

A) discharges the contract.
B) breaches the contract.
C) requires Lana's estate to pay damages.
D) suspends performance of the contract .

Question 62

Cow's Milk LLC needs a certain part for its pasteurizing equipment to continue its operations and orders one for $3,000 from Dairy Supplies Inc. Cow's Milk tells Dairy Supplies that it must receive the part by Tuesday or it will lose $10,000. Dairy Supplies ships the part late. Cow's Milk can recover

A) $13,000.
B) $10,000.
C) $3,000.
D) $0.

Question 63

Ready Repair Service enters into a contract to fix washers and dryers in Scrub n' Dry Company's coin-operated laundries. Ready breaches the contract. Scrub n' Dry is awarded compensatory damages. The purpose is to

A) establish, as a matter of principle, that Ready acted wrongfully.
B) provide Scrub n' Dry with funds for a loss beyond the contract.
C) provide Scrub n' Dry with funds for its loss of the bargain.
D) punish Ready and deter others from similar acts .

Question 64

Copper Circuit, Inc. and Direct Electric LLC sign an agreement that provides for the payment of "$1,000 by whichever party commits a material breach of the contract that creates damages difficult to estimate but approximately $1,000." This is

A) a liquidated damages clause.
B) a mitigation of damages clause.
C) a consequential damages clause.
D) a penalty clause.

Question 65

Isabel orally agrees to buy a unique collection of nineteenth-century cowboy memorabilia for $10,000 from Jessie and sends $2,500 as a down payment. When Isabel pays the rest of the price, Jessie refuses to ship the collection. Isabel should seek

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

Question 66

Isaac holds one ton of perishable fruit in storage for Juice Smoothies Corporation. Juice Smoothies does not pay for the storage. Isaac sells the fruit to Kayo Beverage Company. This sale represents

A) a breach of contract.
B) a mitigation of damages.
C) liquidated damages.
D) specific performance.

Question 67

Floors n' More, Inc., hires Gordon to renovate Floors n' More ' s six floor showroom. Gordon submits plans that Floors n' More approves. Gordon completes the extensive reconstruction, paints the interior, and buys the fixtures and furnishings. Floors n' More rejects two fixtures because they do not match the plans, and subsequently refuses to allow Gordon to finish the work or to collect payment. Could Gordon sue successfully for payment for the entire contract?

Question 68

Sam contracts to work exclusively for Thermal Company during July for $5,000. On June 30, Thermal cancels the contract. Sam finds a similar job for the month of July but earns only $3,000. Sam files a suit against Thermal. As compensatory damages, Sati can recover

A) $3,000.
B) $2,000.
C) $1,000.
D) $0.

Question 69

Quest Resources, Inc., contracts with Ring Communications Corporation (RCC) for RCC to design and build an all-weather communications system for Quest's field operations. RCC builds the system, but it functions effectively only in good weather. Is this a breach of the contract? If so, what remedies does Quest have?

Question 70

City Delivery, Inc., enters into a contract to deliver furniture to Damien's house with payment due on July 4. On July 4, Damien's bank is closed, and for this reason, he claims that he cannot pay on time. In this situation

A) the bank is liable for breach.
B) Damien is in breach.
C) the contract is discharged.
D) the contract is suspended.

Question 71

Dino hires Eve to perform at Dino's Club, but Eve later breaches the agreement to accept a higher-paying job at Five Star Arena. Dino files a suit against Eve. The court will most likely

A) award damages to Dino.
B) cancel Dino and Eve's contract.
C) order Eve to perform the contract.
D) rescind Dino and Eve's contract.

Question 72

Guido and Hal want to rescind their contract under which Guido sold Hal a mountain bike for $250. To rescind the contract

A) Guido must return the $250 and Hal must return the bike.
B) Guido must return the $250 only.
C) Hal must return the bike only.
D) the parties can keep the "benefits" of their bargain.