Deck 11: Contract Performance, Breach, and Remedies

Question 1

A material fact is a fact that a reasonable person would consider important when determining his or her course of action.

Answer 1

True

Question 2

Any breach entitles the nonbreaching party to sue for damages.

Answer 2

True

Question 3

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

Answer 3

True

Question 4

Voluntary consent may be lacking because of misrepresentation but not because of a mistake.

Question 5

In most contracts, promises of performance are not expressly conditioned.

Question 6

Misrepresentation of a material fact can occur by words or action.

Question 7

When the dominant party in a fiduciary relationship benefits from that relationship, a presumption of undue influence arises.

Question 8

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

Question 9

A condition is a qualification in a contract based on a future event that is certain to occur.

Question 10

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

Question 11

Any party who does not receive what he or she considers a fair bargain can argue mistake.

Question 12

Intended beneficiaries can sue to enforce a contract.

Question 13

As a general rule, contract duties can be delegated.

Question 14

Duress is a defense to the enforcement of a contract, but not a ground for rescission of a contract.

Question 15

An innocent party does not need to suffer an injury to collect damages as a result of a misrepresentation.

Question 16

Most courts require a showing of injury when an action is to rescind a contract for fraud.

Question 17

When a party's performance is perfect, it is said to be complete.

Question 18

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

Question 19

Words or terms in contracts that are subject to more than one reasonable interpretation can lead to bilateral mistakes.

Question 20

A contract may not be enforceable if one party is aware that the other party made a mistake of fact.

Question 21

The standard measure of compensatory damages is the value of breaching party's promised performance.

Question 22

A party seeking to recover compensatory damages cannot also recover incidental damages.

Question 23

Specific performance will not be granted unless the party's legal remedy is inadequate.

Question 24

Consequential damages are awarded for damage caused by special circumstances beyond a contract itself.

Question 25

A contract may include a clause stating that damages will be limited to a maximum amount.

Question 26

Reformation is an equitable remedy that allows a court to rewrite a contract to suit itself.

Question 27

Byron agrees to sell to Charity, for $1,500, a remote parcel of land.They believe the land to be worthless, but beneath it is a gold mine.Byron can

A)not rescind the contract.
B)rescind the contract on the basis of fraud.
C)rescind the contract on the basis of mistake.
D)rescind the contract on the basis of undue influence.

Question 28

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

Question 29

Compensatory damages compensate a party injured by a breach of contract by punishing the party that breached the contract.

Question 30

A contract will be discharged if supervening circumstances make it impossible to attain the purpose both parties had in mind when they made the contract.

Question 31

Ordinarily, the remedy for a seller's breach of a contract for a sale of real estate is specific performance.

Question 32

Mona is induced by her guardian Newt to sign a contract to invest her student loan funds in Overseas Bank through Newt's investment firm.Unknown to Mona, Newt realizes ongoing commissions from the investment.Most likely, Mona may

A)not rescind the contract.
B)rescind the contract on the basis of undue influence.
C)rescind the contract on the basis of mistake.
D)rescind the contract on the basis of unconscionability.

Question 33

An occurrence or event that makes performance temporarily impossible operates to discharge the parties' contractual duties.

Question 34

Nora enters into a contract with Oceanic Transport, Inc., to insure and ship a painting from France to the United States for a certain price.But Oceanic makes a mistake in adding the costs, which results in a contract price that is $1,000 less than the true cost.Most likely, a court would

A)allow the parties to rescind the contract.
B)award damages to Nora for the mistake.
C)award damages to Oceanic for the mistake.
D)enforce the contract as is.

Question 35

Ordinarily, a waiver by a contracting party will not operate to waive subsequent, additional, or future breaches of contract.

Question 36

A liquidated damages provision in a contract specifies a certain amount to be paid in the event of a default or breach of contract.

Question 37

Rescission is an equitable remedy used when the parties have imperfectly expressed their agreement in writing.

Question 38

Garth owns two all-terrain vehicles (ATVs), worth $1,000 and $500, respectively.Helen agrees to buy "Garth's ATV" for $750.Garth believes, in good faith, that he is selling the $500 ATV.Helen believes, in good faith, that she is buying the $1,000 ATV.In this situation

A)Garth is entitled to $750 for the $500 ATV.
B)Helen is entitled to the $1,000 ATV for $750.
C)Helen must buy both ATVs for $1,500.
D)there is no contract.

Question 39

Kari, a real estate agent, assures Linc that a certain parcel of commercial property fronts on the most highly trafficked street in Metro City.Linc buys the property and then discovers that the street has no more traffic than any other in its vicinity.Linc is most likely a victim of

A)opinion.
B)fraud.
C)mistake.
D)nothing.

Question 40

The law allows an innocent party to be discharged when the other party has materially altered a written contract without consent.

Question 41

CrossCountry Trucking & Transport enters into a contract with Discount Outlet Stores to load, transport, deliver, and unload the cargo that Discount designates.CrossCountry's offer to perform, when the company is ready, willing, and able to do so, is

A)complete.
B)substantial.
C)tender.
D)absolute.

Question 42

App Developers, Inc.(ADI), enters into a contract with Carmen, the chief executive officer of SalesCorp, to create an app for the firm.To fulfill the contract, ADI hires Max and ten other student interns.With respect to the contract between ADI and Carmen, Max is

A)an intended beneficiary.
B)an incidental beneficiary.
C)a delegate.
D)an assignee.

Question 43

Drake enters into a contract with Eve, who claims to have access to a stock-trading algorithm that will multiply an investment many times over.When the results do not match this promise, Drake learns that Eve does not have access to any unique software and files a suit against her, alleging fraud.Proof of an injury is required to

A)recover damages.
B)rescind the contract.
C)undo Eve's influence.
D)punish the defendant.

Question 44

Loren and Kendra enter into a contract for the distribution of Loren's produce to local restaurants for which he agrees to pay Kendra.Kendra transfers her right to payment under the contract to County Bank.This transfer is

A)a delegation.
B)an assignment.
C)a third party beneficiary contract.
D)prohibited.

Question 45

Dry Gulch Farms hires Elliot to repair its irrigation system on site on a certain date for $2,500, but Elliot does not show up as agreed.Dry Gulch hires Fernando to do the job for $2,000.Dry Gulch may recover from Elliot

A)nothing.
B)compensatory damages.
C)consequential damages.
D)nominal damages.

Question 46

Refer to Fact Pattern 11-1.Any contract with AgriCo-op that includes the mistake may be rescinded

A)if the mistake involves a material fact.
B)if the mistake involves any fact.
C)if the mistake is one of value or quality.
D)under no circumstances.

Question 47

Garland induces Jules to enter into a contract for the purchase of a Chef's Burger House restaurant.Garland knowingly misrepresents a number of material features about the restaurant and the business.When Jules discovers the truth, he can

A)not rescind the contract because Jules assumed the risk that the bargain would prove to be different from what he thought.
B)rescind the contract on the basis of fraud.
C)rescind the contract on the basis of mistake.
D)rescind the contract on the basis of undue influence.

Question 48

Business Computer Solutions Education Service enters into a contract to employ Chandra as an instructor for two years to begin June 1.One month before the term begins, Business Computer is underbid by a competitor and loses a major client, Debt Consolidation Corporation.Business Computer now refuses to hire Chandra.Business Computer's repudiation of its contract to employ Chandra is most likely

A)a material breach.
B)a minor breach.
C)a condition subsequent.
D)not a breach.

Question 49

Herb's Hot Dog Vending, Inc., enters into a contract to pay Idris for a business survey and review of Herb's competitors, which Idris delivers on August 1.Herb's offer, on the same date, to pay Idris is is

A)a concurrent condition.
B)a novation.
C)tender.
D)mutual rescission.

Question 50

Gliding Light, LLC, and Hang Gliders, Inc., are parties to a contract.They subsequently agree that High Riders Inc.should take Gliding Light's 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)a settlement agreement.

Question 51

Drainage & Irrigation Equipment, Inc., contracts to sell its assets to Earth & Sky Aquatic Corpo-ration.Before either party has performed, rescission of this con-tract requires

A)a mutual agreement to rescind.
B)an accord and satisfaction.
C)a novation.
D)a settlement agreement.

Question 52

Even-Bilt Construction contracts to build a warehouse for Discount E-Sales Company.Even-Bilt completely performs.Discount E-Sales is entitled to

A)damages.
B)nothing more.
C)to be excused from performance.
D)suspend performance.

Question 53

Illya owes Jenny $1,000.In a separate deal, Kasey owes Illya $1,000.Illya unconditionally assigns his rights in the deal with Kasey to Jenny.Illya's right to the $1,000 is then

A)unchanged.
B)extinguished.
C)incidental.
D)assigned to a court.

Question 54

Emil enters into a contract to buy Foley's cultivated bottomland and hill and bench acreage if County AgriCredit will lend Emil the funds to pay for the land.Emil's duty to perform is

A)absolute.
B)conditional.
C)manifest
D)irresolute

Question 55

Refer to Fact Pattern 11-1.Any contract with AgriCo-op that includes the mistake may be rescinded

A)if AgriCo-op knew or should have known of the mistake.
B)if Lewis's supervisor did not know of the mistake.
C)if Silos knew or should have known of the mistake.
D)under no circumstances.

Question 56

Water Rites, LLC, enters into a contract to site and dig a well for Rancho Verde.Water Rites completely performs.Rancho Verde is entitled to

A)a discount.
B)rescission.
C)novation.
D)nothing more.

Question 57

Seth offers to buy a house from Tia for less than Tia paid for it, stating that he would "hate to see anything bad happen to Tia or her house." Tia agrees to sell.Regarding this agreement, a court would likely

A)enforce it.
B)not enforce it.
C)reform it to reflect the true market value of the property.
D)order the parties to renegotiate the price.

Question 58

Ed's Electric substantially performs its contract with Forest Hills Apartments, Inc., to deliver and install an alarm system and parking lot lighting.Forest Hills is entitled to

A)damages.
B)nothing more.
C)to be excused from performance.
D)suspend performance.

Question 59

Refer to Fact Pattern 11-1.Any contract with AgriCo-op that includes the mistake may be rescinded

A)if the error was made inadvertently and without gross negligence.
B)if the error was made intentionally or negligently.
C)if the error was made intelligently but distractedly.
D)under no circumstances.

Question 60

Rashi contracts to work for Social Data Analysis Corporation during June for $4,500.On May 31, Social Data cancels the contract.Rashi declines a job of a different type and rank with Tech Collection, Inc., which would have paid $3500.Rashi files a suit against Social Data.As compensatory damages, Rashi can recover

A)$4,500.
B)$4,000.
C)$500.
D)$0.

Question 61

Nogales Ceramics pays Omar $15,000 to propose an online marketing campaign.Two days later, Omar tells Nogales that he has accepted a job in Silicon Valley and cannot plan the campaign.As compensatory damages, Nogales can recover

A)$150,000.
B)$15,000.
C)$1,500.
D)$0.

Question 62

Gretchen buys a tractor from Haulers Equipment Company, paying $1,000 down and agreeing to pay off the balance in thirty-six monthly payments of $200 each.The terms of the agreement call for Gretchen to make a payment on or before the first of each month, beginning March 1.During the first six months, Haulers receives a $200 payment before the first of each month.Starting in September, however, and continuing for the subsequent five months, Gretchen's payment is never made until the fifth of the month.Haulers accepts and cashes the payment check each time.Before the next payment is due, Haulers decides that it is no longer willing to accept late payments.Can Haulers sue Gretchen immediately for breach? Can Gretchen continue to make late payments without liability? Explain.

Question 63

River Vista Inc.enters into a contract with Stable Realty Management to manage and maintain River Vista's commercial real estate.Their contract provides that neither party can recover damages for a non-fraudulent or unintentional breach.This is

A)a limitation-of-liability clause.
B)an exculpatory clause.
C)a liquidated damages clause.
D)a quasi contract

Question 64

Lucy contracts to buy six cases of vintage wine from Mountainside Vineyards for $1,200.The contract states that delivery is to be made at Lucy's residence "on or before June 1, to be used for niece's wedding reception on June 2." On June 1, Mountainside's delivery vehicle is involved in an accident, and no wine is delivered to Lucy.On the morning of June 2, Lucy buys the wine from Nature's Vintner.That afternoon, just before the reception, Mountainside tenders delivery of the wine at Lucy's residence.Lucy refuses tender.Mountainside sues Lucy for breach of contract.How is the court most likely to rule?

Question 65

Rural Power Utility, Inc., enters into a contract with Shovel Excavation Service to dig up, replace, and rebury Rural's cables in a certain location.Rural advances Shovel 10 percent of its cost.The parties rescind the contract.Shovel's refund of the payment is

A)a penalty.
B)liquidated damages.
C)restitution.
D)a breach of contract.

Question 66

Dondi contracts to buy a custom espresso maker from Caffee Specialties, Inc., for $4,500, but Caffee fails to deliver.Dondi buys the appliance else-where for $5,500.Dondi's measure of damages is

A)$1,000.
B)$1,000 plus incidental damages.
C)incidental damages only.
D)$0

Question 67

Rikki agrees to sell her Sunrise Breakfast Café to Tia.As part of the deal, Rikki signs a covenant not to open a competing business within a hundred-mile radius for ten years.If this covenant is later determined to be unreasonable, the appropriate remedy is most likely

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

Question 68

Nonny agrees to buy a unique collection of Olympics memorabilia for $7,000 from Piper and sends $1,500 as a down payment.When Nonny sends Piper the rest of the price, she refuses to ship the collection.Nonny should seek

A)damages.
B)quasi-contractual recovery.
C)rescission.
D)specific performance.

Question 69

SFX Paintball Games, Inc., and Truck & Trailer Delivery Corporation sign an agree-ment that provides for the payment of "$1,000 by whichever party commits a material breach of the contract that creates damages difficult to esti-mate but approximately $1,000." This is

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

Question 70

Damon contracts to repair the turf on a soccer field for Carousel Sports Park.Damon knows that without the repair, Carousel will have to cancel an upcoming game.Damon does not perform as promised.As consequential damages, Carousel can recover

A)the cost of new turf.
B)the difference between Damon's price and the actual cost of repair.
C)the loss of profit from the canceled game.
D)nothing.

Question 71

Resourced Minerals Inc.agrees to deliver ten tons of coal to Static Energy Corporation.The agreement states that delivery is to be within "9" days, although the parties intend "90" days.Resourced Minerals cannot convince Static Energy to amend the contract.Resourced Minerals should seek

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

Question 72

Ambrose enters into a contract to buy 350 acres from Belle Vista Farms to cultivate grapes and open a winery.If Ambrose breaches the contract, Belle Vista's remedy would most likely be

A)a certain ratio of the amount that Ambrose expected to invest in the project.
B)a percentage of Ambrose's unrealized profit.
C)the difference between the land's contract and market prices.
D)specific performance.