Question 1

Juana contracts to sell Ignacio her MP3 player for $30.This contract will be fully discharged when Juana and Ignacio

Accepted Answer

A)  agree to sign a bill of sale.
B)  exchange the player for the $30.
C)  sign a receipt.
D)  shake hands and go their separate ways. B

Question 2

Rescission advances the contracting parties to the position they would have been in if the contract had been fully performed.

Accepted Answer

A) True 
 B)False  False

Question 3

Vicky contracts with Rashad for the delivery of hospice services to benefit Sigmund.This is

Accepted Answer

A)  a delegation.
B)  an assignment.
C)  a third party beneficiary contract.
D)  not an enforceable contract. C

Question 4

Equitable remedies include rescission and restitution.

Accepted Answer

A) True 
 B)False

Question 5

Maya is a stockbroker.Nora believes that the price of OK Goods, Inc.(OKGI), a widely traded stock, is going to increase substantially.Through Maya, Nora buys 500 shares of OKGI at $10 per share, but the price soon drops to $2.Nora can successfully recover from Maya

Accepted Answer

A)  nothing.
B)  the amount of the purchase price.
C)  the amount of the purchase price plus the expected increase.
D)  the amount of the purchase price plus the unexpected decrease.

Question 6

The elements of fraud include the innocent party's justifiable reliance on a misrepresentation of a material fact.

Accepted Answer

A) True 
 B)False

Question 7

Quasi contract is a legal theory under which an obligation is imposed in the absence of an agreement.

Accepted Answer

A) True 
 B)False

Question 8

In most contracts, promises of performance are expressly conditioned.

Accepted Answer

A) True 
 B)False

Question 9

The duty owed under the mitigation of damages doctrine depends on the nature of the contract.

Accepted Answer

A) True 
 B)False

Question 10

Urban City and Thru-way Construction Company enter into a contract that includes calculations.Urban, whose engineer, Sergei, compiled the figures, discovers later that some numbers were added incorrectly, but Thru-way refuses to make changes.Urban can

Accepted Answer

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 duress.

Question 11

Handy Hardware Store agrees to hire Ilsa for one year at a salary of $500 per week.When Handy cancels the contract, Ilsa spends $100 to obtain a similar job that pays $450 per week for a year.Ilsa is entitled to recover

Accepted Answer

A)  the amount of the wages that Handy promised only.
B)  the difference between the wages at the two jobs only.
C)  the difference between the wages at the two jobs plus $100.
D)  $100 only.

Question 12

Drew contracts to sell a house to Evan.The contract provides that if Drew does not close the deal by February 10, he must pay Evan one-half of the contract price.This provision is not enforceable because it is

Accepted Answer

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

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Rig Heli-Pads, Inc., enters into a contract to employ Scott as an on-site project manager for two years.If Rig breaches the contract, Scott has a duty to

Accepted Answer

A)  do nothing.
B)  reduce the damages that Scott might otherwise suffer.
C)  rescind the contract with Rig.
D)  sue Rig to deter others from similar acts.

Question 15

A breach of contract entitles the nonbreaching party to sue for damages.

Accepted Answer

A) True 
 B)False

Question 16

Lava Excavators, Inc., needs a drill to continue its operations and orders one for $3,000 from Mining Supplies Company.Lava tells Mining that it must receive the drill by Tuesday or it will lose $10,000.Mining ships the drill late.Lava can recover

Accepted Answer

A)  $13,000.
B)  $10,000.
C)  $3,000.
D)  $0.

Question 17

Genie.com initiates an online dating service.To attract subscribers and encourage participation, Genie.com creates and posts profiles of fictitious persons and exaggerated profiles of actual users.Fooled by the false profiles, Ham buys a subscription.He is most likely a victim of

Accepted Answer

A)  undue influence.
B)  fraud.
C)  mistake.
D)  nothing.

Question 18

Fact Pattern 12-1 
Mutual Company enters into a contract to employ Neil as an investment manager for two years. During the first year, Neil is often absent without explanation and when present fails to adequately monitor and manage Mutual’s investments.

-Refer to Fact Pattern 12-1.With respect to Mutual's duties, Neil's performance most likely

Accepted Answer

A)  discharges Mutual from the contract.
B)  has no effect on Mutual's performance.
C)  increases Mutual's duties under the contract.
D)  suspends Mutual's duty to perform.

Question 19

On April 1, KO Contractors, Inc., contracts to build a store for Lo-Cost Housewares at a specific location in Metro City.On May 1, Metro changes its zoning law to prohibit the construction of a commercial building at that location.Lo-Cost files a suit against KO.In this situation

Accepted Answer

A)  KO is in breach of contract.
B)  Lo-Cost is in breach of contract.
C)  the contract is discharged.
D)  the contract is suspended.

Question 20

Beau sells a car to Cody without disclosing that the odometer, which reads 40,000 miles, was disconnected 80,000 miles ago.Beau is liable for

Accepted Answer

A)  nothing.
B)  fraud.
C)  mistake.
D)  undue influence.

Exam 15: Contract Performance, Breach, and Remedies

Juana contracts to sell Ignacio her MP3 player for $30.This contract will be fully discharged when Juana and Ignacio

Rescission advances the contracting parties to the position they would have been in if the contract had been fully performed.

Vicky contracts with Rashad for the delivery of hospice services to benefit Sigmund.This is

Equitable remedies include rescission and restitution.

Maya is a stockbroker.Nora believes that the price of OK Goods, Inc.(OKGI) , a widely traded stock, is going to increase substantially.Through Maya, Nora buys 500 shares of OKGI at $10 per share, but the price soon drops to $2.Nora can successfully recover from Maya

The elements of fraud include the innocent party's justifiable reliance on a misrepresentation of a material fact.

Quasi contract is a legal theory under which an obligation is imposed in the absence of an agreement.

In most contracts, promises of performance are expressly conditioned.

The duty owed under the mitigation of damages doctrine depends on the nature of the contract.

Urban City and Thru-way Construction Company enter into a contract that includes calculations.Urban, whose engineer, Sergei, compiled the figures, discovers later that some numbers were added incorrectly, but Thru-way refuses to make changes.Urban can

Handy Hardware Store agrees to hire Ilsa for one year at a salary of $500 per week.When Handy cancels the contract, Ilsa spends $100 to obtain a similar job that pays $450 per week for a year.Ilsa is entitled to recover

Drew contracts to sell a house to Evan.The contract provides that if Drew does not close the deal by February 10, he must pay Evan one-half of the contract price.This provision is not enforceable because it is

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

Rig Heli-Pads, Inc., enters into a contract to employ Scott as an on-site project manager for two years.If Rig breaches the contract, Scott has a duty to

A breach of contract entitles the nonbreaching party to sue for damages.

Lava Excavators, Inc., needs a drill to continue its operations and orders one for $3,000 from Mining Supplies Company.Lava tells Mining that it must receive the drill by Tuesday or it will lose $10,000.Mining ships the drill late.Lava can recover

Genie.com initiates an online dating service.To attract subscribers and encourage participation, Genie.com creates and posts profiles of fictitious persons and exaggerated profiles of actual users.Fooled by the false profiles, Ham buys a subscription.He is most likely a victim of

On April 1, KO Contractors, Inc., contracts to build a store for Lo-Cost Housewares at a specific location in Metro City.On May 1, Metro changes its zoning law to prohibit the construction of a commercial building at that location.Lo-Cost files a suit against KO.In this situation

Beau sells a car to Cody without disclosing that the odometer, which reads 40,000 miles, was disconnected 80,000 miles ago.Beau is liable for