Deck 12: Breach of Contract and Termination

Question 1

Boris agrees to paint Andrew's house on the third week of April 'provided it doesn't rain'. In which of the following situations has the contract been breached?

A) Before performance, Boris is offered a more lucrative contract by Cynthia for the same period. Andrew and Boris agree to cancel their agreement.
B) Before performance, Andrew's house burns down.
C) On the third week of April, there is a torrential storm and it rains incessantly.
D) Just before the third week of April, the paint manufacturer sends Boris the wrong kind of paint and he can only start the work a week later than planned.

Answer 1

D

Question 2

Which of the following statements is false?

A) For every breach, the innocent party may claim damages for the loss resulting from the breach.
B) Breach of a condition always entitles the innocent party to terminate the contract.
C) Breach of a warranty can only lead to an award for damages for the injured party.
D) None of the options given is correct.

Answer 2

B

Question 3

Arnold plans to construct a terrace for his new home. He goes to Home Market and orders 20 planks of wood, clearly specifying that each must be nine feet by six inches. A few days before he has to pick up the wood, Arnold sees an advertisement in the paper from Lumber Emporium offering customized planks at half the price. When Arnold picks up the planks at Home Market, he notices that they are only five inches wide. Home Market offers him an additional plank free of charge to make up for the difference, but Arnold would prefer to get out of the contract altogether so that he can profit from Lumber Emporium's lower prices. Can Arnold terminate the contract for this breach?

A) Yes, the term specifying the measurements of the lumber is a condition.
B) No, the term specifying the measurements of the lumber is a warranty.
C) No, although the term is a condition, the effects of the breach are slight.
D) No, Arnold is terminating in bad faith.

Answer 3

A

Question 4

Which of the following statements is true?

A) Only the courts or statute can classify terms as conditions.
B) The parties may classify certain terms as warranties, although precedent has already classified them in similar cases as conditions.
C) Parties may not classify essential terms of the contract as warranties.
D) All of the options given are correct.

Question 5

Greg agrees with Valerie to build a garden shed and a pool shed in her garden for £750, payable on completion of both. When only the garden shed is built, Greg informs Valerie that he has been offered a more lucrative job and that he will not complete the pool shed. Valerie decides to build the pool shed herself with the materials Greg has left behind. Can Greg claim any payment for the work he has done on the garden shed?

A) Yes, he can claim half the agreed sum.
B) Yes, he can claim a reasonable remuneration for the value of the work done.
C) No, but he can recover the value of the materials left and used by Valerie to build the pool shed.
D) No, he can claim nothing.

Question 6

Which of the following statements is true?

A) An anticipatory breach (breach before the date of performance) allows the innocent party to terminate the contract immediately, but damages may only be claimed after performance is due.
B) An innocent party may only terminate for the breach of an innominate term if she has the prior consent of a court.
C) A party purporting to terminate may rely on an inadequate reason or no reason at all to terminate the contract, so long as a good reason in fact existed at the time of termination, whether known or not to the terminating party.
D) None of the options given is correct.

Question 7

Blades orders four tractors from AGRI. They agree that AGRI will deliver one tractor to Blades each month by the end of the month starting in June. Blades owns a dealership and has already sold one of these tractors on to Cauliflower Co, delivery by 15 July. On 10 June, AGRI informs Blades that because of a strike it will not be able to deliver the first tractor on time and all subsequent deliveries will be delayed. Although Blades must have the tractor before the middle of July, it decides to wait and see whether AGRI will complete the job by then. AGRI is able to get extra workers and manages to finish the first tractor by 5 July. When Blades tries it out, the engine starts to smoke. Blades decides to remedy this by adding more cooling fluid to the motor. Cauliflower comes to pick up the tractors ten days later. On 30 July, the defective tractor short-circuits and catches fire. Cauliflower successfully terminates its contract with Blades and claims damages. Blades notifies AGRI that it is terminating its contract and withholding payment for the defective tractor and the three remaining tractors. Which of the following statements is true?

A) Blades can terminate the contract for AGRI's anticipatory breach through renunciation on 10 June.
B) Blades can terminate the contract for AGRI's failure to deliver a sound tractor on 5 July.
C) Blades can terminate the contract for AGRI's failure to deliver a sound tractor on 30 July.
D) AGRI can terminate the contract and sue for his loss of profits for all four tractors for Blades' failure to pay for the defective tractor and accept delivery for the remaining tractors

Question 8

Which of the following statements is true?

A) The breach of a warranty can entitle the innocent party to terminate the contract if its consequences are sufficiently serious enough to merit such action.
B) If the innocent party elects to affirm the contract after the contract breaker has breached it, he can still claim damages afterwards for any loss suffered from the breach.
C) A contract may be partially terminated where the breach relates to only some aspects of the contract.
D) All of the options given are correct.

Question 9

Mactronics Ltd has subscribed to the Intellectual Property Network for the past four years, an internet newsletter maintained by Digital Publishing. Mactronics has two in-house counsels working mainly on patent cases. This year, the management has decided it would be more cost effective to hire an independent lawyer rather than to maintain in-house legal services. On 15 November, Digital calls their contact person at Macrotronics about renewing the subscription. She has not yet been informed of the policy change and extends the contract for a year starting on 1 January. An hour later she receives an e-mail telling her of the change of strategy and that all subscriptions to legal journals or newsletters will not be renewed. She calls Digital and tells them there has been a mistake. Mactronics does not wish to renew their subscription after all. Which of the following is false?

A) Digital can continue sending Mactronics the newsletter if it has a legitimate interest to do so.
B) Digital can bring an action for specific performance (a claim in debt) of the subscription price if it continues to send the newsletter to Mactronics for one year from 1 January.
C) Digital must terminate the contract and stop sending the newsletter in order to mitigate its losses.
D) Digital can terminate the contract for anticipatory breach.

Question 10

Which of the following statements is false?

A) Affirmation can take place not only by words, but also by deeds, for instance, where an innocent party continues to perform his obligations under the contract.
B) Affirmation of a contract is barred where the innocent party cannot complete his own performance without the cooperation of the contract breaker.
C) An innocent party can revoke her decision to affirm the contract if the contract breaker has not relied upon it to his detriment.
D) All of the options given are correct.