Question 1

A liquidated damages clause typically requires a party who breaches a contract to pay a certain amount to the nonbreaching party.

Accepted Answer

A) True 
 B)False

Question 2

Complete performance occurs when conditions in a contract are fully satisfied.

Accepted Answer

A) True 
 B)False

Question 3

Quality Contractors contracts to build a warehouse for Retail Sales Company. Quality completely performs. Retail Storage is entitled to

Accepted Answer

A)  damages. 
B)  rescission. 
C)  specific performance. 
D)  nothing more.

Question 4

Roy and Sheila are parties to a contract. They subsequently agree that Tony should take Roy's place and assume all of his rights and duties under the contract. This is

Accepted Answer

A)  a consideration. 
B)  a modification. 
C)  an accord and satisfaction. 
D)  a novation.

Question 5

The four broad categories of damages in contract law are conciliatory, consecutive, punctual, and nominative.

Accepted Answer

A) True 
 B)False

Question 6

An anticipatory repudiation is not a material breach of contract.

Accepted Answer

A) True 
 B)False

Question 7

Rory threatens physical harm to force Suki to sell her business, Toney Tours, Inc., to Rory for a below-market price. This is

Accepted Answer

A)  a legitimate business tactic. 
B)  duress. 
C)  fraud. 
D)  undue influence.

Question 8

Fashion Retail Center enters into a contract with Great Promotions, Inc., to provide Fashion with a plan to retool its merchandising strategy. If Great Promotions breaches the contract, Fashion has a duty to

Accepted Answer

A)  reduce the damages that Fashion might otherwise suffer. 
B)  reduce the loss that Great Promotions might otherwise suffer. 
C)  punish Great Promotions and deter others from similar acts. 
D)  take no action.

Question 9

A contract is substantially performed when performance creates substantially the same benefits as those promised in the contract.

Accepted Answer

A) True 
 B)False

Question 10

Rural 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. If the parties rescind the contract, Shovel's refund of the payment would be

Accepted Answer

A)  a penalty. 
B)  liquidated damages. 
C)  restitution. 
D)  specific performance.

Question 11

Any breach entitles the nonbreaching party to sue for damages.

Accepted Answer

A) True 
 B)False

Question 12

A duty to perform under a contract is never absolute.

Accepted Answer

A) True 
 B)False

Question 13

Fact Pattern 12-1 
Building Restoration, Inc. (BRI), enters into a contract to refurbish an old train depot for Casual Dining, Inc., to open as Eat Up! Restaurant. BRI completes most of the work promised in the contract.
-Refer to Fact Pattern 12-1. BRI's performance is

Accepted Answer

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

Question 14

Rally offers to sell Sophie, who is seventeen years of age, a car about which Rally intentionally misrepresents several material facts. In reliance on the misrepresentations, Sophie buys the car. To prove fraud in this transaction, Sophie would have to show that

Accepted Answer

A)  Rally intentionally deceived Sophie. 
B)  Rally made statements that were obviously exaggerated. 
C)  Sophie does not know anything about cars. 
D)  Sophie is under eighteen years of age.

Question 15

A party who substantially performs his or her duties under a contract can enforce the contract against the other party.

Accepted Answer

A) True 
 B)False

Question 16

Juli buys a new textbook for $100 and a used car for $5,000, and signs a one-year lease for an apartment for $1,000 monthly rent to start at the beginning of the next month. To be enforceable, there must be a writing that evidences

Accepted Answer

A)  the apartment lease, and the textbook and car purchases. 
B)  the apartment lease and the car purchase only. 
C)  the apartment lease only. 
D)  the textbook and car purchases only.

Question 17

Lake Port Services enters into a contract to load Max's Great Lakes barges with the cargo that Max designates. Lake Port's offer to perform, when it is ready, willing, and able to do so, is called

Accepted Answer

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

Question 18

A mistake in judgment as to value is a ground to avoid a contract.

Accepted Answer

A) True 
 B)False

Question 19

Home Delivery Corporation and Interstate Transport, Inc., 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

Accepted Answer

A)  a liquidated damages clause. 
B)  a mitigation of damages clause. 
C)  a no-damages clause. 
D)  a penalty clause.

Question 20

A contract for a sale of an apartment complex from Unique Properties, Inc., to Variety Investments Corporation contains an erroneous legal description. The most appropriate remedy for these parties is

Accepted Answer

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

Exam 12: Contract Performance, Breach, and Remedies

A liquidated damages clause typically requires a party who breaches a contract to pay a certain amount to the nonbreaching party.

Complete performance occurs when conditions in a contract are fully satisfied.

Quality Contractors contracts to build a warehouse for Retail Sales Company. Quality completely performs. Retail Storage is entitled to

Roy and Sheila are parties to a contract. They subsequently agree that Tony should take Roy's place and assume all of his rights and duties under the contract. This is

The four broad categories of damages in contract law are conciliatory, consecutive, punctual, and nominative.

An anticipatory repudiation is not a material breach of contract.

Rory threatens physical harm to force Suki to sell her business, Toney Tours, Inc., to Rory for a below-market price. This is

Fashion Retail Center enters into a contract with Great Promotions, Inc., to provide Fashion with a plan to retool its merchandising strategy. If Great Promotions breaches the contract, Fashion has a duty to

A contract is substantially performed when performance creates substantially the same benefits as those promised in the contract.

Rural 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. If the parties rescind the contract, Shovel's refund of the payment would be

Any breach entitles the nonbreaching party to sue for damages.

A duty to perform under a contract is never absolute.

Fact Pattern 12-1 Building Restoration, Inc. (BRI) , enters into a contract to refurbish an old train depot for Casual Dining, Inc., to open as Eat Up! Restaurant. BRI completes most of the work promised in the contract. -Refer to Fact Pattern 12-1. BRI's performance is

Rally offers to sell Sophie, who is seventeen years of age, a car about which Rally intentionally misrepresents several material facts. In reliance on the misrepresentations, Sophie buys the car. To prove fraud in this transaction, Sophie would have to show that

A party who substantially performs his or her duties under a contract can enforce the contract against the other party.

Juli buys a new textbook for $100 and a used car for $5,000, and signs a one-year lease for an apartment for $1,000 monthly rent to start at the beginning of the next month. To be enforceable, there must be a writing that evidences

Lake Port Services enters into a contract to load Max's Great Lakes barges with the cargo that Max designates. Lake Port's offer to perform, when it is ready, willing, and able to do so, is called

A mistake in judgment as to value is a ground to avoid a contract.

Home Delivery Corporation and Interstate Transport, Inc., 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 contract for a sale of an apartment complex from Unique Properties, Inc., to Variety Investments Corporation contains an erroneous legal description. The most appropriate remedy for these parties is