Deck 16: Performance and Discharge

Question 1

A wholesaler of coffee notifies a retailer that it cannot fulfill its contractual obligation to deliver 1,000 pounds of coffee at the agreed upon price of $2.00 per pound next month because of recent price increases in coffee.The retailer may treat the wholesaler as having breached the contract and sue for damages even though the wholesaler's performance is not due until next month.

Answer 1

True

Question 2

The legal right to sue for a breach of contract is subject to a statute of limitations.

Answer 2

True

Question 3

Melody is a recent graduate of State Law School.She lands an impressive employment contract with the firm of Dewey,Cheathem,and Howe,Attorneys at Law,on the stated provision that she pass the upcoming bar exam.This provision in the employment agreement is a(n):

A)condition precedent.
B)condition subsequent.
C)implied condition.
D)concurrent condition.

Answer 3

B

Question 4

In the case Strategic Resources Group v.Knight-Ridder,Inc.,the Florida appelate court held that Knight-Ridder,Inc.had breached the contract by reducing by 3.83% the size of the advertisements for Strategic Resources Group.Knight-Ridder had failed to substantially perform their obligation.

Question 5

Concurrent conditions arise when each partie's performance is the condition for the other partie's performance.

Question 6

The UCC recognizes commercial impracticability as a ground for discharge of a contract.

Question 7

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.

Question 8

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 9

A court may never discharge a party who has not performed.

Question 10

In the Strategic Resources Group v.Knight-Ridder,Inc.case,the court found that Knight-Ridder:

A)intentionally breached the contract.
B)did not substantially perform the contract, so the trial court incorrectly granted summary judgment.
C)intentionally reduced the size of its advertisements, but that the size reduction was not easily discernable.
D)properly notified its customers it was reducing the size of the advertisements.

Question 11

The statement,"You will have a job with Snelling & Snelling as long as you complete your degree in business administration this May" does not create a condition because it does not include the phrase "provided that."

Question 12

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.

Question 13

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 14

A time of the essence clause simply means that the parties included in their contract a date for performance.

Question 15

In negotiating the purchase of a vehicle,the sales representative told Karla,"I guarantee that you will be personally satisfied with this car." The guarantee was written on the contract when Karla purchased the car.If a controversy arises over Karla's satisfaction,the court will apply a subjective standard,which means Karla's judgment must be reasonable.

Question 16

Most contracts are discharged by mutual agreement.

Question 17

Ben enters into an agreement with Betsy to buy her lake cabin provided his application for a mortgage is approved.This is a:

A)concurrent condition.
B)condition subsequent.
C)condition precedent.
D)time of the essence clause.

Question 18

Generally,neither a "time is of the essence" clause nor a "force majeure" clause will be recognized by the courts because these types of clauses are seen as a violation of public policy.

Question 19

On February 15th,Mark,a farmer,contracts with Johnson's Fertilizers to have 80 gallons of a certain fertilizer delivered by March 31st.On March 15th,the Food and Drug Administration withdraws its approval of the said fertilizer because of a new study evidencing its risks.Mark's contract with Johnson is discharged.

Question 20

Alice signs a contract with Bob to buy Bob's house for $150,000 "if I am able to obtain a mortgage loan for $125,000,at no more than 7% interest,payable over 15 years." Assume that Alice tries but is unable to obtain the described loan,and therefore refuses to proceed with the purchase.Alice is in breach of the contract.

Question 21

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 canceled 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 force majeure doctrine.
D)not obligated to pay under the frustration of purpose doctrine.

Question 22

Linda agrees to buy Missy's Greyhound race dog for $2,000.Linda is to deliver the money and take possession of the dog the next morning.That night,running his best race ever,the dog runs away from Missy,never to be seen again.

A)Linda must give $2000 for the dog, but only if the dog was insured.
B)Linda must give $2000 for the dog, but only if Missy can find a replacement dog within a reasonable time.
C)Linda must give $2000 for the dog.
D)None of the above; the contract duties are discharged.

Question 23

If a condition does not occur:

A)public policy will require only substantial performance by the party for whom the condition failed.
B)the requirement of good faith will be eliminated.
C)one party will probably be discharged without performing.
D)it is considered an anticipatory breach.

Question 24

A condition:

A)is created only when the phrase "provided that" or a similar phrase introduces it.
B)is an event that must occur before a party becomes obligated under a contract.
C)must be expressly stated, although it can be created by informal language.
D)will not be enforced by the courts unless formal language is used, regardless of the intent of the parties to create a condition.

Question 25

A contract between a company in the U.S.and one in China,contained a clause that stated: "If an event happens which is extraordinary and out of the control of the parties such as a strike,act of God,fire,accident,or transportation difficulties,then the affected party shall be relieved of its obligations under the contract." This type of clause is:

A)an objective impossibility clause.
B)a force majeure clause.
C)a concurrent condition clause.
D)a condition precedent clause.

Question 26

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 $150 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 $40 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 27

Which of the following events would probably excuse performance of a contract based on commercial impracticability?

A)The price of a raw material increases slightly so that the contract will not be as profitable.
B)An unforeseeable trade embargo causes prices to triple.
C)The promisor of personal services dies.
D)The subject matter of the contract is destroyed.

Question 28

Mary contracted to buy 100 table lamps.Under the terms of the agreement,Mary is to pay for the lamps upon delivery.This is an example of:

A)a condition precedent.
B)a concurrent condition.
C)a condition subsequent.
D)a service condition.

Question 29

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 30

Martha owns a gutter cleaning business.Under a service contract with John Miller,she substantially performed her obligations.She is entitled to receive:

A)the full contract price.
B)nothing until she fully performs.
C)the full contract price minus the value of the defects.
D)nothing as she has breached the contract.

Question 31

Hank has contracted with Nancy to purchase 50 bags of wheat that she stored in her barn for $25 each.A few days before delivery,the barn is destroyed by fire.Which of the following statements is correct?

A)Nancy is obligated to compensate Hank as her nonperformance is considered material breach.
B)Nancy is discharged from any further obligations under the contract due to destruction of the subject matter.
C)Nancy will be liable for Hank's loss if he ends up paying more for the same amount of wheat purchased from another supplier.
D)Nancy is discharged if she can prove commercial impracticability.

Question 32

The distinction between a condition precedent and a condition subsequent:

A)is important because it determines whether the condition has to occur before or after the contract is made.
B)determines who has the burden of proof.
C)is important as it determines whether the conditions are concurrent.
D)is important because it determines whether the condition must be express or whether it can be implied.

Question 33

Jackie hires Charles to lay new carpet in her bedroom.Charles does such a bad job,that the only way to fix the carpet is to start over and relay the carpet.Which of the following best describes this situation?

A)This is substantial performance.Jackie must still pay something to Charles.
B)This is a material breach.Jackie must still pay something to Charles.
C)This is substantial performance.Jackie owes nothing to Charles.
D)This is a material breach.Jackie owes nothing to Charles.

Question 34

Dodger bought an insurance contract from Liberty Farm Co.The policy contained a clause stating that all claims for losses had to be reported within 45 days after the date of the loss or the claim would be barred.Time is stated to be of the essence.Dodger sustained a covered farm loss,but did not report it to Liberty Farm until 50 days later.Liberty Farm denied coverage for the claim.If Dodger sues,who wins?

A)Dodger wins; the contract was substantially performed.
B)Liberty Farm wins; there was failure of a condition subsequent.
C)Dodger wins; courts will not enforce a time-of-the-essence clause.
D)Liberty Farm wins; the impossibility doctrine applies.

Question 35

Mario,a chef,has been working for over a year to remodel an old building he purchased to start his own restaurant.The grand opening is scheduled on April 1st.A lot of guests and critics have been invited to the event.He ordered a top of the art stove from Bella Cucina,Inc.The contract states that the stove has to be delivered on or before march 20,and that "time is of the essence" because of the opening-night deadline.Bella Cucina has some logistics difficulties and doesn't deliver the stove until March 27.Mario refuses to accept it,and Bella Cucina sues.Who wins?

A)Mario wins; the contract date was strictly enforceable.
B)Bella Cucina wins; the contract was substantially performed before the opening night.
C)Mario wins because of the frustration of purpose doctrine.
D)Bella Cucina wins if it can prove that delivering the stove before March 27 was unreasonable.

Question 36

Alamo Hotel contracted with First Furniture to purchase 500 black leather chairs for the conference rooms.The chairs are to be delivered on August 15.On July 20,First Furniture advises Alamo that,because of recent issues with wood suppliers,it will not be able to deliver the chairs.What can Alamo Hotel do?

A)It can sue First Furniture immediately for breach of contract even though the deadline has not expired yet.
B)It must wait until August 15 before suing for breach of contract.
C)It cannot sue First Furniture under the doctrine of impossibility.
D)Nothing as First Furniture is discharged under the force majeure doctrine.

Question 37

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 38

A court:

A)will enforce any express conditions intended by the parties.
B)may refuse to enforce an express condition intended by the parties if the court determines it is unfair and harmful to the general public.
C)requires strict performance if a clause of the contract expressly demands it.
D)applies an objective standard whenever ruling on a personal satisfaction contract.

Question 39

Dana hires Paris to paint a portrait of her poodle,"Mack." The painting is to be done to Dana's personal satisfaction.Upon completion of the painting,which of the following will be true?

A)Dana may refuse to accept the painting if she really does not like it.
B)Dana may refuse to accept the painting only if a reasonable person would not like it.
C)Dana may refuse to accept the painting if she cannot afford to pay for it.
D)Dana may not refuse to accept the painting.

Question 40

In the O'Brien v.Ohio State University case,the court held that:

A)O'Brien materially breached the contract as the University suffered substantial damage.
B)O'Brien's violation of the NCAA rules was a material breach.
C)O'Brien did not materially breach the contract as the University did not suffer substantial harm.
D)the contract was not enforceable under the frustration of purpose doctrine.

Question 41

On March 14,Greg orders $2500 of wine from Cork It,Inc.to be delivered on April 28 for a party scheduled on May 1.On April 15,Cork It notifies Greg that it will not be able to perform the contract as agreed.How will the law characterize Cork It's actions? Does Greg have to wait until April 28 before buying wine from another supplier?

Question 42

Southern Fuels Co.and Langham-Hill Petroleum,Inc.are both in the business of buying and selling large quantities of petroleum products.In October,the parties entered into a fixed price contract wherein Southern agreed to purchase 4.2 million gallons of No.2 fuel oil at a specified price per gallon to be delivered in four monthly installments.The contract included a force majeure clause.The first three monthly shipments of oil were purchased by Southern as agreed.In January of the next year,the price of oil in the world market collapsed as a result of Saudi Arabian attempts to regain its share of the world oil market.Southern refused to purchase the last shipment under the contract.Southern informed Langham-Hill that because the drop in world oil prices was caused by Saudi Arabians who were "outside Southern's control" that it was invoking the force majeure clause.Langham-Hill sued for damages in the amount of $306,075.What is a force majeure clause? Southern's basic argument is that it can now buy oil at a substantially lower price.Will Southern succeed on this basis?

Question 43

Name and describe the types of conditions,explain how conditions are created,and discuss whether it is important to identify the type of condition in a contract.

Question 44

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

Question 45

Buddy was hired to play drums for a rock group scheduled to tour the Midwest.Part way through the tour,Buddy 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 Buddy's estate or agent responsible for the loss to the band?

Question 46

What does the term "substantial performance" mean? What factors are generally considered when determining whether one of the parties has substantially performed?