Deck 10: The Law of Contracts and Sales—II

Question 1

Which of the following would be the legal result if the event contemplated by a condition precedent failed to take place?

A)The contract may be discharged.
B)The contract is declared void.
C)The party will be given time to cure.
D)The contract will be binding on all the parties.

Answer 1

A

Question 2

Mark and Roger entered into a contract in which Mark agreed to sell Roger a very rare painting. The contract required Mark to deliver the painting to Roger and receive payment if the appointed art expert verifies that the painting is authentic. The art expert considers the painting to be a fake. Which of the following should be cited by Roger to discharge the contract and refuse payment?

A)commercial impracticability
B)impossibility of performance
C)condition precedent
D)condition subsequent

Answer 2

C

Question 3

Bill enters into a contract with Simon to rework the flooring in Simon's house. Bill later realizes that he will be unable to fulfill the terms of the contract and communicates this to Simon. Both parties agree that George will rework the floor instead of Bill as stated in the original contract. This type of discharge of contract is described as ________.

A)accord and satisfaction
B)novation
C)substituted agreement
D)compromise agreement

Answer 3

B

Question 4

________ is a mutual agreement to rescind an original agreement and substitute a new one for it.

A)Substituted agreement
B)Condition precedent
C)Accord and satisfaction
D)Novation

Question 5

________ is a form of discharge by mutual agreement.

A)Rescission
B)Arbitration
C)Accord and satisfaction
D)Separation of powers

Question 6

A ________ is a particular event that, when it follows the execution of a contract, terminates the contract.

A)delegation
B)novation
C)condition precedent
D)condition subsequent

Question 7

Which of the following statements is true about a material breach?

A)If a breach of contract is material, the injured party is entitled only to the cost of replacement.
B)Even a minor deviation from the terms of the contract is considered a material breach of contract.
C)Courts generally allow a party to cure a material breach even if the contract's time period has lapsed.
D)The injured party can terminate the contract if the breach of contract is material.

Question 8

Which of the following is an example of a condition precedent?

A)Bill should pay Mabel $50 to purchase 10 apple pies.
B)Bill should pay Mabel $50 even if the apple pies were damaged while they were being transported.
C)Mabel should deliver 10 apple pies to Bill only if she receives three crates of apples that day.
D)Mabel should deliver 10 apple pies to Bill, which can be rejected by him if they are damaged.

Question 9

Which of the following statements is true if substantial performance is proved?

A)The plaintiff must pay the defendant as agreed to in the contract.
B)The plaintiff cannot refuse to pay the defendant.
C)The plaintiff is entitled to recover the original price that had been agreed upon before the defendant performed.
D)The plaintiff is entitled to recover the new price found by taking the median between the plaintiff's demand for recovery and the defendant's claim of the amount of recovery.

Question 10

________ is a situation in which a party cannot legally or physically perform the contract.

A)Impossibility of performance
B)Condition precedent
C)Condition subsequent
D)Novation

Question 11

Which of the following is permitted by courts today in the event of a material breach of contract?

A)obtaining specific performance if dollar damages are practicable as compensation
B)reforming the contract to help view the breach as a minor breach of contract
C)curing the material breach if the contract's time period has not lapsed
D)seeking an exception to the parole evidence rule

Question 12

Which of the following statements is true of novation?

A)Novation is a type of discharge of contract in which the original agreement is substituted with a new one.
B)Novation leads to a change in the contractual duties of the new party.
C)Novation can be carried out only if all the original parties agree to the substitution of new parties.
D)Novation refers to a particular future event that terminates the contract if it does not follow the execution of the contract.

Question 13

________ requires completion of nearly all the terms of the contract plus an honest effort to complete the rest of the terms, coupled with no willful departure from any of the terms.

A)Complete performance
B)Substantial performance
C)Material breach
D)Perfect tender rule

Question 14

A ________ is a particular event that must take place to give rise to a duty of performance of a contract.

A)condition precedent
B)condition subsequent
C)substituted agreement
D)compromise agreement

Question 15

Which of the following was the standard used by the traditional common law to determine whether a contract has been breached?

A)substantial performance
B)perfect tender rule
C)complete performance
D)partial rule

Question 16

Which of the following statements is true about contracts on the sale of goods?

A)The substantial performance doctrine is applied to the international sale of goods.
B)The buyer must generally give notice to the seller of any defect in the goods and then allow the seller a reasonable time to cure the defect.
C)If the goods or tender of delivery fail to conform to the contract in any respect, the buyer cannot accept or reject any number of units he chooses to.
D)According to the United Nations Convention on the International Sale of Goods (CISG), the failure to deliver goods is sufficient to show an exception to the perfect tender rule.

Question 17

Martha and Jim enter into an agreement whereby Jim agrees to paint Martha's car. The contract states that the car is to be painted green. Martha changes her mind and wants the car to be painted blue instead. Jim agrees to paint the car blue. This type of discharge of contract is described as ________.

A)accord and satisfaction
B)novation
C)condition precedent
D)condition subsequent

Question 18

________ is a type of discharge of contract in which new parties are substituted for the original parties to the agreement.

A)Impossibility of performance
B)Accord and satisfaction
C)Novation
D)Condition subsequent

Question 19

Which of the following is a form of discharge by mutual agreement?

A)condition subsequent
B)novation
C)condition precedent
D)impossibility of performance

Question 20

Which of the following occurs during a novation?

A)All parties agree to substitute new parties for the original parties to the agreement.
B)One of the parties to the contract names a third party as the beneficiary.
C)One of the parties to the contract assigns his contract rights to a third party without obtaining the other parties' consent.
D)All parties agree to lower the contract price.

Question 21

Which of the following statements refers to nominal damages?

A)They are damages in excess of compensatory damages that the court awards for the sole purpose of deterring the defendant and others from doing the same act again.
B)They are damages awarded to the party that is injured by a breach of contract but cannot establish actual damages.
C)They are damages for nonperformance that are stipulated in a clause in the contract.
D)They are damages designed to place the nonbreaching party in the position that party would have enjoyed had the terms of the contract been performed.

Question 22

Pattaern Inc. enters into a contract to deliver 10,000 units of raw materials to Phobas Inc. Pattaern delivers the raw materials two days after the delivery date. Pattaern offers to pay damages based on a clause in the contract. What type of damages is being paid by Pattaern?

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

Question 23

When a contractual agreement is formed between two parties, but if one party cannot perform because a previously unforeseeable circumstance makes performance impossible, which party is relieved of its duties?

A)only the party that was offering to perform
B)only the party that was receiving the performance
C)both parties, since the contractual agreement would be discharged
D)both parties, but only if the court finds substantial performance

Question 24

Emerold Inc. enters into a contract to purchase 3,000 chipsets from Atlaes Inc. It agrees to pay $10 for each chipset. Atlaes manages to deliver only 2,700 chipsets on the stipulated day, leading to a loss in profit for Emerold. The contract did not include a clause about the damages to be paid. If a court decides that Atlaes must pay monetary damages, which of the following types of damages will be awarded by the court?

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

Question 25

Bob signed a contract to donate to a charity every month. He included a clause that the contract would be terminated if the charity did not function properly. What restriction has Bob established in this contract?

A)commercial impracticability
B)condition precedent
C)condition subsequent
D)novation

Question 26

Blue Scaeles Inc. entered into a contract to purchase 20,000 units of raw materials from Scorpeo Inc. If Scorpeo fails to deliver on its obligations, which of the following statements is true?

A)Scorpeo will have to pay the amount it has already received from Blue Scaeles.
B)Scorpeo will have to pay the profits lost by Blue Scaeles.
C)Scorpeo will have to pay whatever sum Blue Scaeles speculates as damages.
D)Scorpeo will have to pay Blue Scaeles the price difference in purchasing from another supplier plus court costs.

Question 27

Compensatory damages are awarded ________.

A)to a party based on the amount stipulated in a clause in the contract
B)to place the injured party in the position it would have been in had the terms of the contract been performed
C)to deter the defendant and others from doing the same act again
D)to help a party recover court costs if it is injured by a breach of contract but cannot show real damages

Question 28

Joe and Lucas enter into a contractual agreement in which Lucas promises to deliver a unique antique artifact to Joe in the next ten days, but the artifact is stolen before Lucas could fulfill his promise. Which of the following statements is true about this scenario?

A)Lucas must pay compensatory damages to Joe.
B)Lucas must pay punitive damages to Joe.
C)The contract is discharged by impossibility of performance.
D)The contract can be terminated only if both parties agree.

Question 29

Which of the following statements refers to punitive damages?

A)They are damages in excess of compensatory damages that the court awards for the sole purpose of deterring the defendant and others from doing the same act again.
B)They are damages awarded to the party that is injured by a breach of contract but cannot establish actual damages.
C)They are damages for nonperformance that are stipulated in a clause in the contract.
D)They are damages designed to place the nonbreaching party in the position that party would have enjoyed had the terms of the contract been performed.

Question 30

Which of the following is true of rescission?

A)It is a court order compelling a party to perform in such a way as to meet the terms of the contract.
B)It is sought by plaintiffs who wish to be in the position they were in before entering into the contract.
C)It refers to the correction of terms in an agreement so that they reflect the true understanding of the parties.
D)It is a temporary or permanent order of the court preventing a party to a contract from doing something.

Question 31

Which of the following correctly expresses an important difference between a condition precedent and a condition subsequent?

A)The occurrence of a condition precedent keeps a contract alive, whereas the occurrence of a condition subsequent terminates the contract.
B)The contract is discharged if the condition precedent occurs, whereas the parties must be given time to "cure" if the condition subsequent occurs.
C)A condition precedent occurs before the parties reach an agreement, whereas a condition subsequent happens after the parties reach an agreement.
D)A condition precedent is governed by the Uniform Commercial Code (UCC), whereas a condition subsequent is governed by the Uniform Computer Information Transaction Act (UCITA).

Question 32

Which of the following refers to discharge of a contract due to a situation that makes performance of that contract unreasonably expensive, injurious, or costly to a party?

A)rescission
B)commercial impracticability
C)condition precedent
D)condition subsequent

Question 33

Tom has agreed to the terms of a contract that obligates him to paint Dorothy's house within thirty days. Before he began painting, Dorothy's house was destroyed by a tornado. Which of the following statements is true about Tom's contract obligations?

A)The contract remains valid, and Tom must paint Dorothy's next residence.
B)The contract remains valid, but Tom must wait a reasonable time to allow Dorothy to rescind.
C)The contract is voidable as its object is illegal.
D)The contract is discharged by impossibility of performance.

Question 34

Which of the following statements best describes reformation?

A)compelling a party to perform in such a way as to meet the terms of the contract
B)correcting the terms in an agreement so that they reflect the true understanding of the parties
C)replacing one party of a contract with another party
D)canceling a contract

Question 35

Which of the following statements best describes specific performance?

A)compelling a party to perform in such a way as to meet the terms of the contract
B)correcting the terms in an agreement so that they reflect the true understanding of the parties
C)replacing one party of a contract with another party
D)canceling a contract

Question 36

To obtain an injunction, the plaintiff must show the court that ________.

A)an enforceable liquidated damages clause exists in the contract
B)the defendant is engaged in the commission of a crime
C)the contract will be reviewed using an alternative dispute resolution method if the injunction is not granted
D)dollar damages are inadequate and that irreparable harm will be done if the injunction is not granted

Question 37

Which of the following statements is true about the sovereign acts doctrine?

A)It allows one Congress to bind a later Congress.
B)It does not allow the government to pass laws that discharge its preexisting contractual obligations.
C)It allows Congress to pass legislation deliberately targeting its existing contractual obligations.
D)It protects the government in a subsequent suit for breach of contract if a new law of general application indirectly affects a government contract.

Question 38

Jennifer enters into a contract to purchase one of Richard's sculptures. Richard is known for his own unique style of sculpting. Due to time constraints, Richard refuses to create a sculpture for Jennifer. If Richard breaches the contract, which of the following equitable remedies is the court likely to order?

A)reformation
B)specific performance
C)injunction
D)rescission

Question 39

Which of the following statements refers to liquidated damages?

A)They are damages in excess of compensatory damages that the court awards for the sole purpose of deterring the defendant and others from doing the same act again.
B)They are damages awarded to the party that is injured by a breach of contract but cannot establish actual damages.
C)They are damages for nonperformance that are stipulated in a clause in the contract.
D)They are damages designed to place the nonbreaching party in the position that party would have enjoyed had the terms of the contract been performed.

Question 40

A court is likely to order specific performance when ________.

A)it rules that the plaintiff should be in the same position as it was in before entering into the contract
B)the plaintiff seeks a correction in the terms of the agreement
C)the dollar damages are insufficient compensation for the breach of contract
D)it wishes to prevent a person from performing a particular action

Question 41

Complete performance is the standard used by courts today to determine if a contract has been breached.

Question 42

Which of the following statements is true about e-signatures?

A)Laws governing e-signatures are uniform throughout the country.
B)E-signatures are not binding for contracts involving bank loans and brokerage accounts.
C)The Electronic Signatures in Global and National Commerce Act (E-SIGN)specifies that a digital signature requires password authentication.
D)The E-SIGN law makes e-signatures binding and allows consumers and businesses to sign contracts online.

Question 43

The Uniform Computer Information Transaction Act (UCITA) was developed to ________.

A)provide a standard form for licensing copyrighted information contained in books and magazines to operators of Web sites
B)provide guidelines for the enforcement of electronic contracts and the licensing of information
C)provide guidelines only for the purchase and sale of computers worth more than $5,000
D)provide guidelines for the shipment of computer hardware by truck or rail

Question 44

A party can be discharged through novation even if all parties in the contract do not provide consent.

Question 45

The Uniform Commercial Code (UCC) allows a buyer to accept any number of units of the goods and reject the rest if the goods fail to conform to the contract in any respect.

Question 46

Which of the following is a minimum provision that should be included in an e-contract?

A)a statement of how the goods are to be paid for by the buyer
B)a statement of how and when the goods will be delivered
C)a statement of who is the person authorized to take delivery
D)a statement of the seller's permit to produce and sell goods

Question 47

A failure to deliver goods is sufficient to be considered as an exception to the perfect tender rule according to the United Nations Convention on the International Sale of Goods (CISG).

Question 48

Which of the following is a difference between the Uniform Computer Information Transaction Act (UCITA) and Uniform Commercial Code (UCC)?

A)A contract that requires a fee of less than $250 is enforceable under the UCITA only if the contract has been authenticated, whereas all contracts are enforceable under the UCC.
B)A contract that requires a fee of less than $250 is enforceable under the UCC only if the contract has been authenticated, whereas all contracts are enforceable under the UCITA.
C)The UCITA allows the licensor to control the licensee's right of use, but the UCC does not.
D)The UCC allows the licensor to control the licensee's right of use, but the UCITA does not.

Question 49

Under the Uniform Commercial Code (UCC), one of the remedies for the seller resulting from the buyer's breach includes ________.

A)the right to recover the purchase price if the seller is unable to sell or dispose of goods
B)the right to revoke an acceptance of goods under certain circumstances
C)the right to recover damages after cancellation of the contract
D)the right to obtain specific performance when the goods are unique or remedy at law is inadequate

Question 50

Which of the following statements is true of the Convention on Contracts for the International Sale of Goods (CISG)?

A)Parties to a contract can choose to adhere to all or part of the CISG, or they may select other laws to govern their transactions.
B)Traditional contracts on sale of goods are not covered by the CISG.
C)The CISG is superseded by the Uniform Commercial Code (UCC)in most states.
D)The CISG requires a written contract for a sale of goods of $500 or more.

Question 51

Under the Uniform Commercial Code (UCC), a remedy available to the buyer if the seller breaches a contract is ________.

A)the right to recover damages before cancellation of the contract
B)the right to recover the purchase price if the seller is unable to sell or dispose of goods
C)the right to recover damages for accepted goods even if the seller is not notified of the breach of contract
D)the right to keep some goods and reject the others if the goods or tender fail to conform to the contract

Question 52

Novation changes the contractual duties of the substituted party.

Question 53

Which of the following was established by the Uniform Electronic Transcription Act (UETA)?

A)Online signatures must be followed by written signatures within 30 days of the online signatures.
B)Electronic signatures are not legally enforceable.
C)Laws governing electronic signatures must be the same in all states.
D)Signatures may not be denied legal enforceability solely because of their electronic form.

Question 54

The Convention on Contracts for the International Sale of Goods (CISG) was drafted to ________.

A)reduce the acceleration of export and free trade
B)provide uniformity in international transactions
C)cover licenses of information for traditional copyrighted materials
D)reduce imports from Asia, Latin America, and Europe

Question 55

In case of a material breach of contract, the injured party can terminate the contract and sue to recover damages.

Question 56

If the subject matter of a contract is destroyed, the contract is discharged because performance is impossible.

Question 57

A contract that requires a fee of more than $5,000 is enforceable under the Uniform Computer Information Transaction Act (UCITA) when ________.

A)the contract is authenticated
B)a condition subsequent is included in the contract
C)the seller (licensor)has satisfied the perfect tender rule
D)a physical copy of the contract has been sent to the buyer

Question 58

According to the sovereign acts doctrine, the government can be held liable for breach of contract due to legislative or executive acts.

Question 59

A material breach of contract is usually unintentional and not substantial.

Question 60

Death or illness of a promisor whose personal performance is required to fulfill the contract when no substitute is possible can be used as a defense to nonperformance.

Question 61

The Uniform Computer Information Transaction Act (UCITA) does not permit click-wrap agreements to contracts.

Question 62

Courts are reluctant to order specific performance if real estate is involved.

Question 63

What are the standards set by the courts that the plaintiff-buyer must meet in order to recoup lost profits when a seller has breached a contract?

Question 64

Rescission is defined as the canceling of a contract.

Question 65

The Convention on Contracts for the International Sale of Goods (CISG) overrides conflicting state laws dealing with contracts.

Question 66

What was the impact of the Electronic Signatures in Global and National Commerce Act (E-SIGN)? What guidelines did it provide on the possibility of forging electronic signatures?

Question 67

What are the conditions that must be met to show an exception to the perfect tender rule under the United Nations Convention on Contracts for the International Sale of Goods (CISG)?

Question 68

An injunction is awarded when parties wish to correct the terms in an agreement so that they reflect the true understanding of the parties.

Question 69

Nominal damages are awarded to enable the injured party to recover attorney's fees.

Question 70

The National Conference of Commissioners issued the Uniform Computer Information Transaction Act (UCITA).

Question 71

Who are the parties benefitting from the Uniform Computer Information Transaction Act (UCITA)? What are the consequences of allowing uniformity in click-wrap agreements?

Question 72

How has the shift toward market-oriented economies in many nations affected international trade? How did the United Nations assist international trade?

Question 73

The right to revoke an acceptance of goods under certain circumstances is a remedy available to the buyer under the Uniform Commercial Code (UCC).

Question 74

The Uniform Computer Information Transaction Act (UCITA) does not deal with information that is electronically disseminated.

Question 75

What does the sovereign acts doctrine state about contracts with the government?

Question 76

How did the Supreme Court of Nebraska interpret Section 2-607(3)(a) of the Uniform Commercial Code (UCC) in the Fitl v. Strek lawsuit?

Question 77

An oral sales contract of any amount is enforceable under the Convention on Contracts for the International Sale of Goods (CISG).