Question 1

At an auction, Ben bids on a 1957 Chevy coupe, believing that it is worth more than the price asked. When the car proves to need more repairs than Ben estimated, and thus is worth less as is, Ben is

Accepted Answer

A)  still liable on the bid. 
B)  not liable on the bid because he underestimated the cost of repairs. 
C)  not liable on the bid because the auctioneer misrepresented the value. 
D)  not liable on the bid because the need for repair is not a material fact.

Question 2

Beryl enters into a contract with Clay for a guided tour of Deep Canyon. Clay represents that he is an experienced, knowledgeable guide, when in reality he has never been in the canyon. Most likely, Beryl

Accepted Answer

A)  could exert duress to obtain a new guide. 
B)  can rescind the deal based on fraudulent misrepresentation. 
C)  might recover damages for the mistake. 
D)  must comply with the contract because the representation is an opinion.

Question 3

Most contracts need to be performed to the personal satisfaction of each contracting party.

Accepted Answer

A) True 
 B)False

Question 4

Once performance has been tendered, the party making the tender has done everything possible to carry out the terms of the contract.

Accepted Answer

A) True 
 B)False

Question 5

In most situations, when a breach of contract occurs, the injured party is held to a duty to mitigate, or reduce, the damages that he or she suffers.

Accepted Answer

A) True 
 B)False

Question 6

Faiz enters into a contract to buy 350 acres from Grain Farm to cultivate hops and open a brewery. Faiz fails to make the purchase. Grain Farm's remedy is most likely

Accepted Answer

A)  the amount that Faiz expected to invest in the brewery. 
B)  a percentage of Faiz's unrealized profit. 
C)  the difference between the contract and market prices of the land. 
D)  nothing-Grain Farm still owns the land.

Question 7

Home Furnishing Store's contract for a sale of its appliances provides that the only remedy for breach is replacement, repair, or refund of the purchase price. With respect to this provision, on a customer's suit for breach, a court is most likely to

Accepted Answer

A)  enforce it. 
B)  reform it. 
C)  refuse to enforce it. 
D)  reallocate the risk expressed in it.

Question 8

Any breach of contract effectively excuses both parties from performing.

Accepted Answer

A) True 
 B)False

Question 9

Erma enters into a contract to buy a tract of riverfront property from Forest Acres to build and sell a residential development. Forest Acres fails to close the sale. Erma's remedy is most likely

Accepted Answer

A)  the amount that Erma invested in the project to the date of the closing. 
B)  nothing-Forest Acres still owns the land. 
C)  the difference between the contract and market prices of the land. 
D)  specific performance.

Question 10

Lunch Truck Inc. contracts to deliver and serve Meal Catering Service's products to its clients for $5,000 per event, payable in advance. Meal pays the money, but Lunch fails to perform. Can Meal rescind the contract? Can Meal also obtain restitution? What does it mean to "rescind" a contract? How is a contract rescinded? What is restitution? How is restitution accomplished? Explain.

Accepted Answer

The answer of Lunch Truck Inc. contracts to deliver and...

Question 11

To induce the sale of an auto parts business, Carmel fraudulently represents the worth of the inventory to Drew, who offers an inflated price. They enter into a contract to close the deal. On closer inspection, the buyer learns the true value of the goods. Drew can

Accepted Answer

A)  impose a penalty on the seller. 
B)  force the seller to accept a more reasonable price. 
C)  rescind the contract. 
D)  none of the choices.

Question 12

Luc, a vehicle dealer, offers to sell Mel a truck and trailer, which Luc claims can haul a certain weight. He knows nothing about the capability of the truck, but it is not as he asserts. Mel buys the truck. On learning the truth, Mel confronts Luc, who says he was not trying to fool Mel-he was only trying to make a sale. This is

Accepted Answer

A)  a mistake of value. 
B)  a valid defense to a charge of fraud. 
C)  fraudulent misrepresentation. 
D)  puffery.

Question 13

Bee is an employee of Credit Agency Inc. On the termination of Bee's position, Credit pays Bee $10,000 to agree not to disclose the employer's confidential information. Later, Bee sells the information to Debt Records LLC for $100,000. In a suit for breach, Credit is most likely to recover

Accepted Answer

A)  $10,000 from Bee. 
B)  $110,000 from Bee. 
C)  $100,000 from Debt. 
D)  all future profits from Debt.

Question 14

Misrepresentation of law does not ordinarily entitle a party to avoid a contract.

Accepted Answer

A) True 
 B)False

Question 15

Len contracts to work for Media Corporation during May for $4,500. On April 30, Media cancels the contract. Len declines a similar job with New Ads Inc., which would have paid $3,500. Len files a suit against Media. As compensatory damages, Len can recover

Accepted Answer

A)  $4,500. 
B)  $3,500. 
C)  $1,000. 
D)  $0.

Question 16

Anticipatory repudiation of a contract is treated as a present, material breach in order to give the non-breaching party an opportunity to seek a similar deal elsewhere.

Accepted Answer

A) True 
 B)False

Question 17

When a lapse of time and a change in circumstances make it substantially more burdensome for the parties to perform, a contract is discharged.

Accepted Answer

A) True 
 B)False

Question 18

State University provides housing on campus and in some adjacent off-campus neighborhoods. To lease a university house or apartment, a person must be a student at State. This requirement is

Accepted Answer

A)  a condition. 
B)  a novation. 
C)  a breach of contract. 
D)  an operation of law.

Question 19

Architect LLC enters into a contract with Barn & Silo Inc. to provide designs for a certain number of farm buildings. Architect provides fewer than half of the designs by the time specified in the contract because the firm is busy with other projects. Architect's performance is most likely

Accepted Answer

A)  a material breach. 
B)  a minor breach. 
C)  a reasonable breach. 
D)  no breach.

Question 20

Midtown Holdings Inc. contracts to sell a commercial parking garage to Nuevo Property LLC. The contract provides that if Midtown does not close the deal by a certain date, it must pay the buyer one-half of the value of the property. This provision is not enforceable if it is

Accepted Answer

A)  meant to pay for additional work in the event of damage. 
B)  a reasonable estimate of the loss on the breach. 
C)  designed to penalize Midtown. 
D)  intended to quickly provide cash to Nuevo.

Exam 13: Contract Performance Breachapter and Remedies

At an auction, Ben bids on a 1957 Chevy coupe, believing that it is worth more than the price asked. When the car proves to need more repairs than Ben estimated, and thus is worth less as is, Ben is

Beryl enters into a contract with Clay for a guided tour of Deep Canyon. Clay represents that he is an experienced, knowledgeable guide, when in reality he has never been in the canyon. Most likely, Beryl

Most contracts need to be performed to the personal satisfaction of each contracting party.

Once performance has been tendered, the party making the tender has done everything possible to carry out the terms of the contract.

In most situations, when a breach of contract occurs, the injured party is held to a duty to mitigate, or reduce, the damages that he or she suffers.

Faiz enters into a contract to buy 350 acres from Grain Farm to cultivate hops and open a brewery. Faiz fails to make the purchase. Grain Farm's remedy is most likely

Home Furnishing Store's contract for a sale of its appliances provides that the only remedy for breach is replacement, repair, or refund of the purchase price. With respect to this provision, on a customer's suit for breach, a court is most likely to

Any breach of contract effectively excuses both parties from performing.

Erma enters into a contract to buy a tract of riverfront property from Forest Acres to build and sell a residential development. Forest Acres fails to close the sale. Erma's remedy is most likely

To induce the sale of an auto parts business, Carmel fraudulently represents the worth of the inventory to Drew, who offers an inflated price. They enter into a contract to close the deal. On closer inspection, the buyer learns the true value of the goods. Drew can

Bee is an employee of Credit Agency Inc. On the termination of Bee's position, Credit pays Bee $10,000 to agree not to disclose the employer's confidential information. Later, Bee sells the information to Debt Records LLC for $100,000. In a suit for breach, Credit is most likely to recover

Misrepresentation of law does not ordinarily entitle a party to avoid a contract.

Len contracts to work for Media Corporation during May for $4,500. On April 30, Media cancels the contract. Len declines a similar job with New Ads Inc., which would have paid $3,500. Len files a suit against Media. As compensatory damages, Len can recover

Anticipatory repudiation of a contract is treated as a present, material breach in order to give the non-breaching party an opportunity to seek a similar deal elsewhere.

When a lapse of time and a change in circumstances make it substantially more burdensome for the parties to perform, a contract is discharged.

State University provides housing on campus and in some adjacent off-campus neighborhoods. To lease a university house or apartment, a person must be a student at State. This requirement is

Architect LLC enters into a contract with Barn & Silo Inc. to provide designs for a certain number of farm buildings. Architect provides fewer than half of the designs by the time specified in the contract because the firm is busy with other projects. Architect's performance is most likely

Midtown Holdings Inc. contracts to sell a commercial parking garage to Nuevo Property LLC. The contract provides that if Midtown does not close the deal by a certain date, it must pay the buyer one-half of the value of the property. This provision is not enforceable if it is