Deck 17: Performance, Breach, and Discharge

Question 1

All contractual promises are absolute promises to perform.

Answer 1

False

Question 2

An unauthorized alteration of ANY of the material terms in a written contract discharges the entire contract.

Answer 2

True

Question 3

In the case of Hochster v. De La Tour the plaintiff was allowed to treat the repudiation by De La Tour as breach of contract and immediately bring suit.

Answer 3

True

Question 4

In all substituted contracts there must be an agreement among three parties where a new promise is substituted for an existing promise or a new promisor is substituted for an existing promisor.

Question 5

If there is a novation, the original promisor remains liable to the original promisee if the new promisor fails to perform.

Question 6

An anticipatory repudiation by one party to a contract precludes a discharge by performance by that same party.

Question 7

A person who has made a financially unsound contract may be relieved from performance under the doctrine of commercial impracticability.

Question 8

Robert and John entered into a bilateral contract and Robert has fully performed. Their mutual rescission of the contract is binding at common law.

Question 9

An implied-in-law condition need only be substantially performed.

Question 10

By agreement, parties to a contract may discharge each other from performance under a contract.

Question 11

Implied-in-fact conditions must fully and literally occur, and they are understood by the parties to be part of the agreement.

Question 12

A fundamental difference exists between the breach or nonperformance of a contractual promise and the failure or nonhappening of a condition.

Question 13

A condition subsequent is a much more frequent occurrence than a condition precedent.

Question 14

A breach of contract always discharges the injured party from performance under the contract.

Question 15

An accord and satisfaction discharges the original debt.

Question 16

The "perfect tender rule" provides that only substantial deviations from the promised performance in a sales contract under the Code constitute a material breach and discharge the aggrieved party from the duty of performance.

Question 17

Discharge by performance is the most frequent method of discharging a contractual duty.

Question 18

Substituted contracts immediately discharge the original contracts.

Question 19

A material breach by the seller will discharge the buyer from his obligations under a contract.

Question 20

Daniel, a cabinetmaker, contracts to make a china cabinet to Lora's satisfaction and Lora promises to pay Daniel $2,800 for the cabinet if she is satisfied with it when completed. Daniel completes the cabinet in a workmanlike manner using the wood Lora has chosen. If Lora tells Daniel that she is not satisfied with the cabinet and refuses to accept or pay for it, Daniel is entitled to recover from Lora the reasonable value of the cabinet if her dissatisfaction is unreasonable.

Question 21

The Restatement and the Code have made the traditional test of objective impossibility more stringent by requiring that the performance must be actually or literally impossible in order to excuse a party from contractual duties.

Question 22

An implied-in-law condition and constructive condition are the same.

Question 23

Marie owes Nathan $900 and the parties agree that Marie will paint Nathan's house in satisfaction of the debt. The debt is not discharged until Marie performs the substituted agreement by painting Nathan's house.

Question 24

Concurrent conditions occur when mutual duties of performance are to take place simultaneously.

Question 25

Paul, a contractor, has a contract to build a new office building for Bill. The contract contains a provision requiring Paul to furnish a certificate of occupancy from the building inspector before Bill is required to pay. This provision is:

A) an express condition.
B) an implied-in-fact condition.
C) an implied-in-law condition.
D) a condition subsequent.

Question 26

Which of the following is a contract with a condition subsequent?

A) Rhonda enters into a contract to buy a new car conditional upon her getting a loan from her bank.
B) Roger bought a VCR but he may return the VCR within ten days and get all of his money back.
C) Both (a) and (b) are examples of a condition subsequent.
D) Neither (a) nor (b) is an example of a condition subsequent.

Question 27

The Code and the Restatement have no provisions for discharge of contractual duties in cases involving commercial impracticability.

Question 28

The majority of courts hold that the running of the statute of limitations operates to discharge a contract.

Question 29

After the coronation of Edward VII was postponed and parties who had entered into contracts in anticipation of the event filed numerous suits, the doctrine of frustration of purpose evolved.

Question 30

Carl, a contractor, has a contract with Ron, a realtor, to construct a new condominium complex. The contract provides that Carl must furnish a certificate of occupancy and conformity with the local fire code before Ron has an obligation to pay. The furnishing of the certificate is an implied-in-fact condition subsequent to the construction of the building.

Question 31

Objective impossibility occurs if a particular contracting party is unable to perform because of financial inability or lack of competence.

Question 32

Belinda has a household insurance policy, which requires that she notify the insurance company within 30 days of any loss before she is eligible to receive payment for her loss. The notification requirement is a condition precedent to the insurance company's obligation to perform, even though the notification must occur subsequent to the loss.

Question 33

Wilmer and Grace have an executory contract for the sale of some goods. Wilmer files for bankruptcy and is then discharged by the bankruptcy court. Wilmer has no obligation to perform under the contract with Grace.

Question 34

If the contract does not state otherwise, standard goods under a contract for sale to meet the satisfaction of the buyer must:

A) meet the buyer's actual satisfaction, if honest and in good faith, even if unreasonable.
B) meet the buyer's actual satisfaction, only if reasonable.
C) meet a subjective standard.
D) satisfy a reasonable person.

Question 35

If the performance of a contract that was legal when formed becomes illegal because of a subsequently enacted law, the duty of performance is discharged.

Question 36

A novation is an agreement between two parties to have one substitute for the other in a contract.

Question 37

Tender is an offer by a party, who is ready, willing, and able, to perform his obligations under the contract.

Question 38

A contract may condition the performance of a party upon the approval of a third party.

Question 39

An express condition is usually preceded by which of the following terms?

A) While.
B) After.
C) Provided that.
D) All of these.

Question 40

A breach of contract always gives rise to a cause of action for damages by the injured party.

Question 41

A and B enter into a contract on January 1 of this year. A 's friend C tells A , "The law generally restricts the time within which an action can be brought by either party to a contract." C 's statement is:

A) false.
B) true because of statutes of limitations.
C) true because of the law of repudiation.
D) true because of covenants not to sue.

Question 42

Bob, the tax accountant, promises to do Marge's individual federal, state, local, and gift taxes for the year. He completes all but the gift taxes. Under the substantial performance doctrine, Marge will:

A) not have to pay Bob.
B) not have to accept the work.
C) have to pay Bob for all but the gift taxes.
D) have to pay Bob the contract price.

Question 43

On November 1, Paula and Roberta enter into a contract where both parties are obligated to perform on December 31. On December 1, Paula tells Roberta, "I can, in no way, perform my duties in our contract." This statement is:

A) a material alteration.
B) anticipatory repudiation.
C) a nonmaterial breach since the statement is made before December 31.
D) an accord.

Question 44

Steven owes Theresa $100 for a used computer which he bought last year at Theresa's garage sale. The two agree that the debt can be paid by Steven's shoveling Theresa's driveway from January through March. The new contract is a(n):

A) accord.
B) satisfaction.
C) novation.
D) rescission.

Question 45

Jim contracted with Kevin to serve as a guide for Kevin on his three-week fishing trip to Canada. The contract was made on April 1 with the trip to begin on June 1. On May 1, Kevin notified Jim that he had changed his mind and would be unable to make the trip. He also refused to pay Jim any compensation. In this case:

A) because the contract is executory, Jim has suffered no damages, and Kevin has no obligation to pay any compensation.
B) Kevin has anticipatorily repudiated the contract and is immediately liable to Jim for damages.
C) Jim must wait until June 1 to see if Kevin will perform his contractual duties and, if he does not, then Jim may sue Kevin for damages.
D) Jim must try to find "cover" to replace the breached contract, and if he is not able to do so before June 1, then Kevin is liable to Jim for damages.

Question 46

Paul promises Marty $1,500 if he will completely landscape Paul's yard. Which of the following would discharge Paul's obligations to pay under this contract?

A) Marty leaves a one-foot strip of land barren.
B) Marty doesn't begin work on the landscaping until after he finishes two other jobs.
C) Marty doesn't plant any flowers or grass.
D) Paul isn't satisfied with Marty's design.

Question 47

Which of the following would be considered a material breach of a contract?

A) Partial performance that omits some essential part of the contract.
B) Delivery of 50 chairs in a contract that calls for 100 chairs.
C) An intentional breach of the contract.
D) All of these would be material breaches.
E) Only (a) and (b) would be material breaches.

Question 48

Refusal of a tender of performance by one party to a bilateral contract will:

A) be treated as a repudiation, excusing the tendering party from further duty of performance under the contract.
B) not discharge either party from further duty of performance under the contract.
C) be considered a condition subsequent.
D) None of these.

Question 49

Which of the following is correct with regard to conditions subsequent?

A) Conditions subsequent are quite common in contracts.
B) A "sale or return" contract is an example of a contract with a condition subsequent.
C) A condition subsequent must occur before performance is due under a contract.
D) All of these are correct.

Question 50

The Code greatly alters the common law doctrine of material breach by adopting what is known as the:

A) perfect tender rule.
B) anticipatory repudiation rule.
C) prevention of performance rule.
D) discharge by operation of law rule.

Question 51

Bill recently borrowed $50 from Ricardo for a couple of weeks. Bill, still short of cash, tells Ricardo, "I will wash and wax your car in exchange for the $50 I owe you." Ricardo tells Bill, "OK, that's great!" Ricardo's performance of his new duty will be:

A) an accord.
B) a novation.
C) a rescission.
D) a satisfaction.

Question 52

Ashley contracted to perform on her horse, Coronation, in the opening ceremonies of the World Equestrian Games. If, before the event, Coronation pulls a tendon in its leg and Ashley has to cancel her appearance, this is a case of:

A) subjective impossibility, which does not excuse Ashley from liability for breach of contract.
B) objective impossibility, which discharges Ashley's contractual duty.
C) frustation of purpose, which does not discharge Ashley's contractual duty.
D) commercial impracticability, which excuses nonperformance.

Question 53

The definition of "discharge by breach" is:

A) performance that is incomplete but that does not defeat the purpose of the contract but entitles the injured party to damages.
B) wrongful failure to perform the terms of a contract that gives rise to a right to damages by the injured party.
C) a breach that prevents performance by either party.
D) None of these.

Question 54

Anita, who is a seamstress, agrees to sew a suit for Bryan, who promises in return to pay Anita $500 for the suit if he is satisfied with it. Anita completes the suit, which fits Bryan perfectly. Nevertheless, he says that he is not satisfied and refuses to accept or pay for it. If Bryan is honest in his dissatisfaction, but he is unreasonable:

A) Bryan must pay for the suit even if he is dissatisfied.
B) this is an illusory contract, because only Anita is bound.
C) Bryan's approval is to be judged by an objective standard.
D) Anita has no recourse against Bryan, because she agreed to the subjective standard.

Question 55

Rebecca sees a pair of beautiful silver shoes in a store window. She goes in and tells the shopkeeper, "If I am asked to the prom, I will buy those shoes. Please hold them for me." If the shopkeeper signs a note that says, "Will hold for Rebecca silver shoes, style 1028, size 8," will he have to honor that promise?

A) Yes, and there is a condition precedent to the contract of sale.
B) Yes, there is a contract with a condition subsequent.
C) No, there is no contract but simply an illusory promise.
D) No, a contract is formed after Rebecca is asked to the prom.

Question 56

Which of the following is true with respect to substantial performance?

A) It does not apply to the construction industry.
B) Substantial performance does not defeat the purpose of the contract.
C) When one party to a contract has substantially performed, the other party cannot recover damages for the imperfect performance.
D) All of these.

Question 57

In the case of Michael Silvestri v. Optus Software, Inc., the court held:

A) an objective standard is typically applied to satisfaction clauses in employment contracts.
B) an objective standard must be used in determining what is satisfactory performance in any "satisfaction" contracts.
C) idiosyncratic judgments as to what constitutes satisfactory employee performance are inherently unfair and should not be allowed.
D) in judging a high-level manager's satisfactory performance, a subjective test is appropriate.

Question 58

Unless one of the parties contractually assumes the risk, the __________ discharges a contract if supervening circumstances make fulfillment of the purpose which both parties had in mind impossible.

A) bankruptcy law
B) frustration of purpose doctrine
C) perfect tender rule
D) impossibility of performance doctrine

Question 59

The principle illustrated in the Christy v. Pilkinton case is:

A) a breach of contract is material if it is an intentional breach.
B) subjective impossibility does not discharge the contractual duty of the party.
C) objective impossibility generally discharges the contractual duty of the party.
D) commercial impracticability occurs when performance can only be accomplished under unforeseen and unjust hardship.

Question 60

Fred contracts to sell a certain tract of land to Mary for $20,000, but the contract is silent as to the time of delivery of the deed and payment of the price. In this case:

A) the payment of the $20,000 and the delivery of the deed are independent of each other.
B) the delivery of the deed is a condition subsequent to the payment of the $20,000.
C) the payment of the $20,000 and the delivery of the deed are mutually dependent and, in the absence of an agreement to the contrary, are concurrent conditions.
D) the payment of the $20,000 is a condition precedent to the delivery of the deed.

Question 61

Russell contracts to install for Nina her choice of living room carpeting. Classify as an express, implied-in-fact, or implied-in law condition Nina's notification to Russell of her choice of type and color of carpeting. Compare and contrast this condition with the other two types of contractual conditions.

Question 62

Sid contracts to put new kitchen cabinets in Ned's house. Sid repeatedly tries to install the cabinets, but Ned does not grant him access to the house. In this case:

A) Ned is discharged from his duties under the contract because of material breach.
B) the frustration of purpose doctrine applies to discharge the contract.
C) Sid is discharged from his duties under the contract because Ned's prevention of Sid's performance constitutes a material breach.
D) Both Sid and Ned are discharged from their duties because of impossibility of performance.

Question 63

a. List and summarize the situations where a contract is discharged by agreement of the parties.
b. List and summarize the situations where a contract is discharged by operation of law.

Question 64

Russell and Joe make a contract for Russell to manufacture five leather chairs of a specified design. Prior to their manufacture, the factory is destroyed in an accidental fire that is no one's fault. If the chairs are available from other sources:

A) Russell must supply the chairs, even if he must buy them elsewhere.
B) Russell's duty to deliver the chairs is discharged by the destruction of the factory.
C) Russell has materially breached the contract if he fails to deliver the chairs.
D) (a) and (c) are correct.

Question 65

Al owes Tracy $500, due June 1. Al, Tracy, and Ted mutually agree that Ted will pay Tracy instead of paying Al the money Ted owes Al. Such an agreement is an example of:

A) an accord.
B) a novation.
C) a satisfaction.
D) a rescission.

Question 66

What is a condition? Give an example of each of the following types of conditions: condition precedent, condition concurrent, conditions subsequent.

Question 67

a. Velinda and Thelma enter into a contract. What are the ways in which Velinda can be discharged?
b. What are the ways in which both parties can be discharged?

Question 68

Louis agreed to provide all the apples that Cindy's Cider Mill will need at $3 per bushel unless weather conditions require additional labor to be hired. The rate would then be $3.50 per bushel. A freeze warning required Louis to hire 10 additional overtime workers, raising the cost per bushel to $4.75. Louis wants to get out of his contract. Can he?

A) No, the parties expected the hardship and provided for it in their contract.
B) No, there is no hardship.
C) Yes, the contract is commercially impracticable.
D) Yes, the freeze is a supervening event.

Question 69

Explain what may constitute a material breach and list the several basic principles that must be applied to determine if a material breach exists in a given contract.

Question 70

Milt built a barn for the Lowreys, but unintentionally deviated from the agreed specifications. The contract price for Milt's work was $10,500. The barn is usable, but the damages for his deviation were $700. Identify the type of breach the courts would probably deem Milt's departure from the contract to be, and discuss the result of this type of breach.