Deck 8: Contract Performance: Conditions, Breach, and Remedies

Question 1

When the parties perform their obligations in good faith in order to complete the contract, this completion is called _______.

Answer 1

discharge

Question 2

When one party has failed to perform his or her duties under a contract, that party is said to be in total _______.

Answer 2

breach

Question 3

A court order to refrain from performing a particular act is known as _______.

Answer 3

injunctive relief

Question 4

Damages agreed to when the contract is written and prior to any actual breach are called ________ damages.

Question 5

In some states, a statute of limitations is called a statute of _______.

Question 6

When the original parties to a contract agree to allow one of them to substitute another party to perform the contract, this is called _______.

Question 7

When a party successfully sues for an equitable remedy for a breach of contract, that party does not receive a monetary award.

Question 8

Unless a contract for services calls for unique personal services, that contract cannot be discharged by impossibility.

Question 9

Robert and Philip are the named beneficiaries under Alan's insurance policy. Robert and Philip would specifically be considered to be ________ beneficiaries.

Question 10

When a party breaches a contract, the nonbreaching party always has the option of seeking legal or equitable remedies.

Question 11

Restitution is classified as an equitable remedy.

Question 12

An assignment may be of current and/or future rights.

Question 13

A party to a contract may be discharged from performance due to operation of law if the other party unilaterally alters the contract.

Question 14

Pablo has entered into a contract to paint Linda's portrait. The next day, Pablo is called by the White House to paint the official portrait of the first family. Since it will be impossible for Pablo to do both simultaneously, Pablo calls Salvador and asks him to substitute for him and paint Linda's portrait. Because Salvador is a world-famous artist with paintings hanging in the New York Metropolitan Museum of Art and the Louvre in Paris, Salvador does not have to get Linda's permission for this novation as long as none of the contract terms and conditions are changed.

Question 15

When an accord and satisfaction is agreed to, the original obligation subject to the accord is immediately discharged.

Question 16

Language such as "provided that" or "unless" in a contract that triggers a performance obligation is called a _______.

Question 17

Nominal damages are rarely awarded in contract cases.

Question 18

Appointing another person to perform one's duties under a contract is called a _______.

Question 19

Craig is a licensed plumber and has a contract to install a replacement toilet for Mary. When Craig realizes that he has booked two appointments simultaneously, he calls Brian, another licensed plumber, and asks him to install Mary's toilet. Craig has assigned his duties to Brian.

Question 20

Compensatory damages cover a broad spectrum of losses for recovery of ________ damages suffered by the nonbreaching party.

Question 21

Lance is an avid bicyclist and sends in a $150 fee to participate in an across-the-state ride in the Midwest. A week before the ride, he breaks his leg. Unless the contract specifically provides for no refunds under any conditions, he will be able to receive a refund based on impossibility.

Question 22

Liquidated damages must be directly related to the breach of contract they are compensating the nonbreaching party for.

Question 23

Kent Corp. (KC), a general contractor building a new dorm at a university, contracted with Fine Rugs Inc. (FRI) to have a certain grade of industrial rugs installed in the dorm. The contract price was $180,000. After the rugs were installed, KC was dissatisfied with the rug quality. FRI insisted that the rugs installed were appropriate to the contract specifications and demanded full payment. KC sends FRI a check for $120,000, which KC believes is the proper value for the rugs installed, and marks the check "Paid in Full." FRI writes "Under Protest" on the check and deposits it. FRI may now, in most states, successfully sue KC for the balance of $60,000.

Question 24

A rescission of a contract may occur when either party chooses to end the agreement.

Question 25

Anticipatory repudiation may be used when a party has knowledge that either a complete or a partial breach will occur by the other party.

Question 26

Mel is under contract with a textbook publisher to write an instructor's manual to accompany a new textbook. The contract states that the instructor's manual is to be completed by August 1. On July 1, the publisher calls Mel and asks for an update. Mel states that he's working hard and making progress. He then states that the August 1 deadline is "doable but it's going to be tough." Based on Mel's statement, the textbook publisher may claim an anticipatory repudiation and find another author to complete the project.

Question 27

In an assignment or delegation, any third-party rights or duties occur after the contract is formed.

Question 28

Beth has a contract with Annie in which Annie is to deliver 1,000 hand-decorated beverage holders in 60 days. When Beth calls the Psychic Hotline for her weekly reading, the psychic informs her that she has entered into a contract and the other party will not perform all the conditions and specifications in accordance with the agreement. Beth may sue for an anticipatory repudiation.

Question 29

Generally, courts do enforce a strict compliance standard for contract conditions.

Question 30

Patios R Us contracts with Karl's Concrete to have 35 yards of concrete delivered to a job site it is working on. Payment is to be made 30 days after delivery. Five days after the concrete is delivered, Patios R Us files for bankruptcy and the filing is accepted by the court. Karl's cannot sue to enforce the contract and receive payment.

Question 31

Kathy and Tom have entered into a contract in which Mike has been named and included as an intended beneficiary by Kathy. Should Tom or Kathy breach the contract, Mike may sue both Tom and Kathy for breach of contract.

Question 32

Impossibility of performance is subjective, meaning that one of the parties may unilaterally decide that performance is impossible, thus discharging the contract.

Question 33

Burt has contracted with Mel to put a concrete driveway on Mel's property. If Burt delegates the duty of laying the driveway to Chuck and Chuck does an unacceptable job, Mel may sue Burt for damages.

Question 34

Assignments require the consent and agreement of all parties to the contract.

Question 35

Specific performance is almost always available when a real estate contract is involved.

Question 36

When an assignment is made, the assignee has the right to reform the contract and change the obligor's rights and duties as the assignee wishes.

Question 37

George has entered into a contract with Mark to supply raw materials to Mark's factory. The contract does not contain an antidelegation clause. George then delegates his duty to supply the raw materials to Wayne, a competitor of Mark. This is a valid delegation.

Question 38

Incidental beneficiaries are known about when the contract is entered into.

Question 39

Lisa is doing some landscaping around her house and ordered a delivery of topsoil. Her agreement says that the delivery will be made on Wednesday and payment for the soil will be due when the truck arrives at her house. This is an example of a concurrent condition.

Question 40

Substantial performance will be enforced only if the deviation from complete performance is not material to the contract.

Question 41

Clyde contracts with Seaside Resorts to rent an oceanfront room for a romantic weekend with his girlfriend Anne. In fact, Clyde intends to propose to Anne on the beach under the full moon during their stay. He made this decision after booking the room. The contract with Seaside Resorts requires a $250 deposit with the remaining $250 due upon check-in. The deposit is nonrefundable unless the reservation is canceled at least 48 hours prior to check-in. The day before they are to leave for the resort, Clyde and Anne have a huge fight and break up. Clyde calls Seaside and cancels the reservation and demands a refund of his deposit.

A) Clyde will get the refund because of impossibility; he can't propose if they are no longer speaking.
B) Clyde will get the refund because of impracticability; he can't stay at a romantic seaside room if he has no one to share it with.
C) Clyde will get the refund because of frustration of purpose; his intention was to propose and that is no longer possible.
D) Seaside is not required to provide a refund.

Question 42

Harry sees an AK-47 automatic assault rifle in a gun shop window. He inquires about the price and is told that it is $2,500. Harry signs a contract promising to pay the $2,500 on Friday, taking possession of the rifle when payment is made. On Thursday, a law is enacted making the ownership, sale, or possession of an automatic rifle illegal. This contract:

A) automatically terminates due to impossibility.
B) automatically terminates due to impracticability.
C) automatically terminates due to frustration of purpose.
D) is enforceable and not affected by the new law because it was entered into before the law took effect.

Question 43

In DiFolco v. MSNBC, a TV commentator e-mailed her supervisors indicating that she wished to have a meeting to discuss her exit from the shows and to give MSNBC ample time to replace her, but she also wrote that she wanted to be part of the MSNBC team "for a long time to come." MSNBC claimed anticipatory repudiation. The court:

A) found DiFolco did not manifest a clear and unequivocal repudiation and ruled in her favor on the issue of anticipatory repudiation.
B) found DiFolco's e-mails were unambiguous in expressing her intent to leave and ruled in MSNBC's favor on the issue of anticipatory repudiation.
C) found DiFolco's e-mails were ambiguous but her past employment issues were sufficient to indicate refusal to perform.
D) dismissed DiFolco's claim and ruled that the e-mails constituted DiFolco's anticipatory repudiation.

Question 44

Each of the following is a discharge by mutual consent except:

A) accord and satisfaction.
B) novation.
C) rescission.
D) frustration of purpose.

Question 45

Pete has been fired from his job and believes that he has been wrongfully terminated. As he decides how to fight the perceived injustice, how can he best mitigate damages?

A) file his suit as soon as possible while the evidence is available and witnesses' recollections are fresh
B) file for unemployment insurance as quickly as possible so that he doesn't sink too far into debt
C) call his former employer to determine the real reason he was fired
D) actively seek new employment as soon as possible

Question 46

A delegation will be allowed in which of the following situations?

A) a surgeon performing brain surgery
B) an actor hired to perform in a play
C) a sculptor hired to sculpt your bust
D) a painter hired to paint your home

Question 47

Max has contracted with Lew to have his house painted. The contract specifically stated that the job was to be completed by August 25. Lew completes the job on August 26. Max has suffered no loss due to the delay. The job was otherwise done exactly to all contract requirements and specifications. If Max sues Lew for breach of contract due to the missed completion date and if the courts were to award damages, what type of damages would most likely be awarded?

A) punitive damages
B) consequential damages
C) restitution
D) nominal damages

Question 48

Alan has accepted a new job. Which of the following is not a contract condition related to that job?

A) Medical and dental benefits will start after Alan has worked for six months.
B) Alan will receive a bonus provided that he obtains six new clients within 30 days.
C) Alan's salary will be $1,000 a week.
D) Alan cannot begin work unless he passes a drug and alcohol screening.

Question 49

The Chicago Cubs major-league baseball team is in the playoffs and doing well. Behind the left-field wall there is an apartment building, and the owner advertises, "Space available on the apartment building roof with a clear view of the field for the World Series. Bring a lawn chair, your radio, and a cooler and enjoy the game. Just $50 per game." Bart, a lifelong fan, answers the ad and pays the building owner $100 to reserve space for the first two games. Unfortunately, the Cubs start playing poorly and don't make it to the World Series.

A) The building owner does not have to refund the money because Bart reserved space and the space is still there for him to use whether the games are played or not.
B) The building owner does not have to refund the money because it's not her fault that the Cubs didn't make it to the World Series.
C) Bart will get a refund because of impracticability.
D) Bart will get a refund because of frustration of purpose.

Question 50

Moe has entered into a contract with Larry. Subsequently, Moe assigns his rights in that contract to Curley. Which of the following would not prevent that assignment?

A) The contract contains an antiassignment clause.
B) The assignment would materially alter Larry's duties and cause an increased burden or risk to Larry.
C) Larry protests the assignment and demands that Moe not make the assignment.
D) The assignment would violate public policy matters.

Question 51

Sam has contracted with Dave to purchase Dave's racing bike, with payment and delivery of the bicycle to be in 10 days. Three days later Sam hears that Dave is going to sell the bike to Gene in three days at a higher price. If Sam really wants the bike, what should he do?

A) Immediately sue for specific performance.
B) Immediately seek injunctive relief.
C) Immediately sue for compensatory damages.
D) Immediately sue for consequential damages.

Question 52

In a delegation situation, the nondelegating party is called the:

A) obligee.
B) delegate.
C) delegator.
D) obligor.

Question 53

Which of the following will not allow for an anticipatory repudiation to occur?

A) Tom calls Dick and says that he can't find the raw materials to complete performance and doubts he can meet the contract's performance deadline.
B) Sally is buying Jane's car, with the money and car to be exchanged in a week; however, Sally meets Betty, who tells her she just bought Jane's car.
C) Mary Beth is scheduled for knee surgery next month with Dr. Slice but reads in the paper that Dr. Slice has lost his license to practice medicine.
D) Manny calls Moe and tells him that the sculpture he's creating for him is coming along slower than anticipated but he's pretty sure he'll be done by the contract deadline.

Question 54

You have booked a hotel room for a conference at a rate of $100 per day for five days. When you arrive to check in, you are told that the hotel is full and that it overbooked and cannot supply you with a room. You are forced to go to the only hotel in town with available rooms and pay $150 per night. If you sue for damages:

A) you are entitled to compensatory damages in the amount of $250.
B) you are entitled to consequential damages in the amount of $250.
C) you are not entitled to any damages because the additional costs were not foreseeable.
D) you are entitled to liquidated damages in the amount of $250.

Question 55

Which of the following is classified as an equitable remedy?

A) consequential damages
B) reformation
C) restitution
D) liquidated damages

Question 56

Lon has just come home from serving in the Marines and contracts with a local car dealership to purchase a car. The car must be ordered, and payment is to be made when the car arrives. The next day, Lon receives orders to return to active duty. Realizing that he doesn't need the car, he brings Tony to the dealership and asks that Tony substitute for him. Tony will take delivery and ownership of the car, and Tony will pay the dealership upon delivery. The dealership agrees to have Tony substitute for Lon. What has occurred?

A) an assignment
B) a novation
C) a delegation
D) an accord and satisfaction

Question 57

Which of the following involves a third-party substitution?

A) novation
B) accord and satisfaction
C) substitute agreement/modification
D) rescission

Question 58

Sally has just purchased a home and wants to have an in-ground pool installed. She calls Cool Pools, the company that put in her neighbors' pools. When the company rep comes to her property, he does some soil tests that are standard for the industry and gets the same results as he got when the other pools were put in, so the company gives her a price quote of $16,000. When Cool Pools begin excavating, it discovers solid rock 4 feet below ground level. The neighbors had no such rock. Cool Pools stops work and informs Sally that it will have to use explosives to remove the rock and the cost of the pool will now be $32,000.

A) Sally is under contract and will have to pay the new price.
B) Sally can have the contract discharged based on impracticability.
C) Sally can have the contract discharged based on impossibility.
D) Sally can have the contract discharged based on frustration of purpose.

Question 59

Toy Tech (TT) has ordered 50,000 aluminum widgets from the Acme Widget Corporation (AWC) with delivery to be made on November 1. These widgets will be used in TT products to create toys for the holiday season. Under which circumstance may TT claim an anticipatory repudiation?

A) The cost of aluminum has risen, lowering AWC's profit margin, yet AWC insists that it will honor the contract.
B) The demand for widgets has suddenly decreased, and TT isn't sure it can sell the 50,000 widgets it ordered.
C) AWC's sole manufacturing plant burned down on October 1, yet AWC insists that it will rebuild and honor the contract.
D) TT has found another manufacturer that can provide less expensive widgets of the same quality as AWC's widgets.

Question 60

Sharon has contracted with Craig to buy Craig's car. She will pay $5,000 in cash, and he will provide the title and registration. They agree to meet at 10 a.m. on Wednesday to exchange their consideration. Unfortunately, Craig dies Tuesday evening.

A) The contract automatically terminates due to impossibility caused by Craig's death.
B) The contract automatically terminates due to impracticability caused by Craig's death.
C) The contract is still valid and Craig's heirs must go through with it based on the agreed terms.
D) The contract is still enforceable; however, Craig's heirs may renegotiate the terms because they are now the owners of the car.

Question 61

Amos owns a piece of land along a country dirt road. Very few cars use the road, and the land is pretty secluded. One day Amos hears that the county is planning to build a major highway that will go right along the border of his property. He checks the newspaper and sees that, indeed, plans are being made to build the road and funds are being arranged. Amos then drains his modest bank account and borrows money from his family and friends to erect a diner on his property to attract the highway drivers. Just as he finishes construction of the diner, the county changes its plans and decides to build the highway along another route, miles from Amos's property. Amos now has a shiny new diner, miles from any traffic and essentially in the middle of nowhere. What legal options does Amos have, if any?

Question 62

How do compensatory damages and consequential damages differ?

Question 63

When examining and enforcing conditions precedent and conditions subsequent, courts:

A) give stricter enforcement to conditions precedent and find conditions subsequent rarely enforceable.
B) give stricter enforcement to conditions subsequent and find conditions precedent rarely enforceable.
C) maintain that procedurally, with respect to who bears the burden of proof, conditions subsequent and conditions precedent differ.
D) hold that, under modern law, both conditions subsequent and conditions precedent should only rarely be enforced.

Question 64

When you were a senior in high school, your college announced plans to build a new and modern athletic complex with pools, spas, weight rooms, and exercise rooms for general student use. You chose to enroll largely based on these plans as announced. You are now a senior and the building is just being started. What rights, if any, do you have because you never had the opportunity to use the facility?

Question 65

You are taking a course with an adjunct professor who is teaching under a one-course contract. With six weeks to go in the course, she is offered a tenure track position at another school that requires her to start within a week. When she approaches the administration, what options are available, if any, regarding the adjunct contract and her desire to leave early?

Question 66

What is an anticipatory repudiation, and what must be shown for it to be enforced?

Question 67

How does an assignment differ from a delegation? When are they permitted, and when are they not permitted?

Question 68

Punishment damages are called:

A) nominal damages.
B) consequential damages.
C) punitive damages.
D) compensatory damages.

Question 69

Oscar is speeding and driving inattentively when he runs into Felix, who is driving very cautiously. As a result of the accident, Felix's car needs $2,500 worth of repairs and Felix loses a week's salary because he has to take off from work to recover from injuries sustained during the crash.

A) Both the repairs and the lost wages are compensatory damages.
B) The repairs are compensatory damages, and the lost wages are consequential damages.
C) The repairs are consequential damages, and the lost wages are compensatory damages.
D) Both the repairs and the lost wages are consequential damages.

Question 70

The Sportsman's Club is planning its annual banquet and fund-raiser and has decided to feature a speaker who will attract a huge crowd. The club contracts with Hall of Fame football announcer John Madden to be the keynote speaker. A week before the event, John calls and says that he would like to give his brother Fred the opportunity to speak-John would sit in the audience rather than speak. What options does the Sportsman's Club have?

Question 71

Beth has just signed a contract to work for a bank. A clause in the contract says that before she begins work, she must pass a drug test and should drug use be discovered, the contract becomes void. This clause would be a:

A) condition precedent.
B) condition subsequent.
C) concurrent condition.
D) nothing of consequence since Beth has already signed the contract.

Question 72

Which of the following is rarely awarded in contract cases?

A) consequential damages
B) compensatory damages
C) punitive damages
D) liquidated damages

Question 73

Fred's Flooring (FF) contracted with Harry homeowner to install wood flooring throughout Harry's home. Harry was to purchase the flooring, and the contract was solely for installation. Payment was to be 20 percent at the time that the work commenced and 80 percent once the flooring was installed. Harry purchased the flooring materials and paid the 20 percent, so FF began work. When FF's work was halfway completed, Harry realized that he didn't have the money to pay FF on completion, so he bolted the doors and refused access. If FF wants to rescind the contract and be paid for work completed, FF would sue for:

A) compensatory damages.
B) consequential damages.
C) restitution.
D) liquidated damages.

Question 74

You are an accounting major at your school. Your goal is to go to graduate school to obtain further education and the appropriate credits necessary to become a certified public accountant. Your goals are well known to your faculty and administration, and it is also well known that your parents and grandparents are CPAs, as well as your older brothers and sisters. As you enter your junior year, after paying your tuition and room and board fees in full, your school loses its regional accreditation, making any degree issued by the school essentially worthless. A worthless degree will not be recognized by graduate schools and will not be recognized by state accounting boards. When you demand a refund, the school refuses, claiming that it will still provide classes and knowledge. Do you have grounds to have the contract terminated and receive a refund?

Question 75

In which of the following situations is a court most likely to find substantial performance?

A) KM Corporation orders 500 boxes of copy paper from MK supply, but MK can deliver only 450 boxes.
B) Young orders a set of four specially made chrome rims for her car, but the supplier can deliver only three.
C) Olivia orders 3 gallons of paint for the exterior of her house, based on square footage covered and needed, but the paint supplier can deliver only 2 gallons.
D) April orders a fully equipped car from a dealer, but although perfect in every way, the car delivered has an automatic transmission rather than the manual transmission that she ordered.

Question 76

In what way do legal remedies and equitable remedies differ?

Question 77

Which of the following is not classified as an equitable remedy?

A) specific performance
B) damages
C) reformation
D) injunctive relief

Question 78

Harry entered into a contract with Sally in which she was to pay $50,000 for Harry's hunting cabin. All negotiations, witnessed by various third parties, stated the $50,000 figure as the sales price. When the contract was written, a typographic error was made indicating a price of $5,000. At settlement, Sally tendered $5,000 and demanded the deed in accordance with the written contract. Must Harry sell the cabin for $5,000?

Question 79

In Hadley v. Baxendale, when Hadley sued because Baxendale took unnecessary time to get a crankshaft repaired, causing Hadley's mill to close for an extended time, the court found:

A) Baxendale owed Hadley compensatory damages because the mill was shut down for an extended time directly as a result of Baxendale's delayed delivery.
B) Baxendale owed Hadley consequential damages because the mill was shut down for an extended time as a result of Baxendale's delayed delivery and the shutdown was a foreseeable indirect result of Baxendale's delay.
C) Baxendale did not owe Hadley consequential damages because the extended closing time was not foreseeable despite Baxendale's delay in delivery.
D) Baxendale did not owe Hadley either compensatory or consequential damages but did owe punitive damages due to the unreasonable delay in delivery.

Question 80

In which of the following scenarios would enforcement of specific performance be appropriate?

A) Your bookstore agrees to order a textbook for you but breaches its contract with you by canceling the order the next day.
B) You order 3 gallons of white ceiling paint from a local store, and the store breaches by not delivering or making available to you the 3 gallons.
C) You order a current-model name-brand television from a department store, and a few days later the store breaches by not ordering it from the manufacturer.
D) You own the pistol used by Hamilton and contract to buy the pistol used by Burr in the Hamilton-Burr duel to complete your set, but despite the contract the Burr pistol owner refuses to sell at the last minute.