Deck 17: Contract Discharge and Remedies

Question 1

Courts may imply conditions from the purpose of a contract or from the intent of the parties.

Answer 1

True

Question 2

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

Answer 2

True

Question 3

Most contracts need to be performed only to the satisfaction of a reasonable person unless they expressly state otherwise. 

Answer 3

True

Question 4

A contract comes to an end when both parties fulfill their respective duties by performing the acts they have promised. 

Question 5

Any breach allows the nonbreaching party to sue for damages. 

Question 6

Performance can be accomplished by tender. 

Question 7

A material breach occurs when performance is substantial,but not complete.

Question 8

Only personal contracts can be discharged by agreement of the parties.

Question 9

In most contracts,promises of performance are not expressly conditioned. 

Question 10

The most common way to discharge one's contractual duties is by breach of contract. 

Question 11

A contract will be discharged if unforeseeable circumstances make it impossible to attain the contract's purpose. 

Question 12

A condition is a qualification in a contract based on a future event that is certain to occur. 

Question 13

Subjective impossibility of performance can discharge a contract. 

Question 14

After a contract is made,a supervening event may make performance impossible and discharge the contract. 

Question 15

A novation requires the existence of a previous,valid obligation. 

Question 16

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

Question 17

A novation occurs when there is a substitution,by agreement,of a new contract for an old one,with the rights under the old one being terminated. 

Question 18

Contracts that are executory on both sides can be rescinded by agreement. 

Question 19

A contract for medical work is not a personal contract. 

Question 20

Any breach discharges the nonbreaching party from the contract. 

Question 21

Damages that compensate the nonbreaching party for the loss of a bargain are known as consequential damages. 

Question 22

A liquidated damages provision specifies that a certain amount is to be paid in the event of a future default or breach of contract. 

Question 23

Restitution involves one party's recapture of a benefit through which another party has been unjustly enriched. 

Question 24

In a contract for a sale of goods,the usual measure of compensatory damages is the difference between the contract price and the market price. 

Question 25

Stephanie enters into a contract to work as a lifeguard at Tim's Water Park for the summer in exchange for a weekly paycheck and free admission to the park's attractions.If the duties under this contract are discharged like those under most contracts,the duties will be​ 

A) ​avoided. 
B) ​breached. 
C) ​performed. 
D) ​rescinded.

Question 26

Building Restoration,Inc.(BRI),enters into a contract to refurbish an old train depot for Casual Dining,Inc.,to open as Eat Up Restaurant.If BRI completes most of the work promised in the contract,its performance will be 

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

Question 27

Kali contracts to sell Leony her car for $3,000.This contract will be fully discharged when Kali and Leony​ 

A) ​agree to sign a bill of sale. 
B) ​exchange the car for the $3,000. 
C) ​sign a receipt. 
D) ​shake hands and go their separate ways.

Question 28

The injury suffered by a nonbreaching party due to the breach of a contract may be remedied by payment of compensatory damages. 

Question 29

The most common remedies available to a nonbreaching party include damages,rescission and restitution,and specific performance. 

Question 30

A party seeking to recover in quasi contract must show that he or she has been unjustly enriched. 

Question 31

Specific performance will not be granted unless the party's legal remedy is inadequate. 

Question 32

Quasi contracts allow the courts to act as if a contract exists when there is no contract. 

Question 33

Rescission is an equitable remedy used when the parties have imperfectly expressed their agreement in writing. 

Question 34

Even-Bilt Construction contracts to build a warehouse for Discount E-Sales Company.Even-Bilt completely performs.Discount E-Sales is entitled to​ 

A) ​damages. 
B) ​nothing more. 
C) ​to be excused from performance. 
D) ​suspend performance.

Question 35

Under the doctrine of mitigation of damages,the duty owed depends on the nature of the contract. 

Question 36

Dharma enters into a contract to manage the operations of Esther's dental office for one year,renewable for subsequent one-year terms.If this contract is discharged like most contracts,it will be 

A) ​canceled. 
B) ​breached. 
C) ​altered. 
D) ​performed.

Question 37

The amount of compensatory damages is the value of breaching party's promised performance. 

Question 38

Expenses that are caused directly by a breach of contract-such as those incurred to obtain performance from another source-are compensatory damages. 

Question 39

Ed's Electric substantially performs its contract with Forest Hills Apartments,Inc.,to deliver and install an alarm system and parking lot lighting.Forest Hills is entitled to​ 

A) ​damages. 
B) ​nothing more. 
C) ​to be excused from performance. 
D) ​suspend performance.

Question 40

Punitive damages are generally available in contract disputes. 

Question 41

Nogales Ceramics pays Omar $15,000 to propose an online marketing campaign.Two days later,Omar tells Nogales that he has accepted a job in Silicon Valley and cannot plan the campaign.As compensatory damages,Nogales recover​ 

A) ​$150,000. 
B) ​$15,000. 
C) ​$1,500. 
D) ​$0.

Question 42

Carol enters into a contract to hire Joanne to paint a portrait of Carol's favorite cat.Joanne agrees to do the portrait to Carol's satisfaction for $100.When Joanne finishes the portrait,Carol announces that she is not satisfied with the portrait because it does not look like her cat.Carol​ 

A) ​must accept the portrait and pay Joanne $100. 
B) ​must accept the portrait and pay Joanne $50. 
C) ​must accept the portrait and pay Joanne $25. 
D) ​does not have to accept the portrait or pay Joanne any money.

Question 43

Omar and Penn want to discharge their contract by executing a new agreement with performance different from what they originally promised.They can best accomplish this by​ 

A) ​a mutual agreement to rescind. 
B) ​an accord and satisfaction. 
C) ​a novation. 
D) ​an alteration of the original contract.

Question 44

Fact Pattern 17-2Flora, who owns and operates Garden Fresh Organic Farms, agrees to sell Harvesters Grocery a minimum quantity of fresh fruits and vegetables every week for three months.
Refer to Fact Pattern 17-2.If Flora dies before the deliveries begin,her contract with Harvesters is​ 

A) ​breached. 
B) ​discharged. 
C) ​not affected. 
D) ​suspended.

Question 45

Sati contracts to work exclusively for Thermal Imaging Company during July for $5,000.On June 30,Thermal Imaging cancels the contract.Sati finds a similar job for the month of July but earns only $3,000.Sati files a suit against Thermal Imaging.As compensatory damages,Sati can recover​ 

A) ​$3,000. 
B) ​$2,000. 
C) ​$1,000. 
D) ​$0.

Question 46

Hybrid Corporation enters into a contract with Insure Service,Inc.(ISI),to obtain health insurance for Hybrid employees.If ISI breaches the contract and Hybrid is awarded compensatory damages,the purpose would be to​ 

A) ​establish, as a matter of principle, that ISI acted wrongfully. 
B) ​provide Hybrid with funds for a foreseeable loss beyond the contract. 
C) ​provide Hybrid with funds for its loss of the bargain. 
D) ​punish ISI and set an example to deter others from similar acts.

Question 47

Barbara and Johann are parties to a contract.They agree on a novation.The novation requires​ 

A) ​the existence of a previous, valid obligation. 
B) ​consideration greater than $5,000. 
C) ​performance of the original contract by all of the parties. 
D) ​an accord and satisfaction.

Question 48

Contractors Service,Inc.,enters into a contract to build a restaurant for Dierdre's Soup Spoons Bistro with Dierdre's payment due on August 1.On August 1,her bank is closed,and for this reason,she claims that she cannot pay on time.In this situation​ 

A) ​Dierdre's bank is liable to Contractors Service. 
B) ​Dierdre is in breach of contract. 
C) ​the contract is discharged. 
D) ​the contract is suspended.

Question 49

Fact Pattern 17-1Mutual 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 17-1.Neil's performance is most likely​ 

A) ​a material breach. 
B) ​a minor breach. 
C) ​Mutual's breach. 
D) ​no breach.

Question 50

Fact Pattern 17-2Flora, who owns and operates Garden Fresh Organic Farms, agrees to sell Harvesters Grocery a minimum quantity of fresh fruits and vegetables every week for three months.
Refer to Fact Pattern 17-2.If a strike delays delivery of the produce beyond the time for performance,Flora's contract with Harvesters is​ 

A) ​breached. 
B) ​discharged. 
C) ​not affected. 
D) ​suspended.

Question 51

Oxley contracts to buy a pizza oven from Restaurant Supplies Warehouse (RSW)for $2,500,but RSW fails to deliver.Oxley buys the appliance else-where for $3,500.Oxley's measure of damages is​ 

A) ​$1,000. 
B) ​$1,000 plus incidental damages. 
C) ​incidental damages only. 
D) ​$0.

Question 52

Ben and Andrew are parties to a contract.They agree on a novation.The novation does NOT require​ 

A) ​the existence of a previous, valid obligation. 
B) ​agreement by all the parties to a new contract. 
C) ​performance of the original contract by all of the parties. 
D) ​a new, valid contract.

Question 53

Renee contracts with Scott to pay him $25,000 for his work on Renee's new album "Hip Pop." After Scott performs,they sign an accord,in which Renee promises to pay him $21,000 within thirty days instead of $25,000 later.But she does not pay.Scott can sue Renee on​ 

A) ​neither the accord nor the original obligation. 
B) ​the accord only. 
C) ​the accord or the original obligation. 
D) ​the original obligation only.

Question 54

Fact Pattern 17-2Flora, who owns and operates Garden Fresh Organic Farms, agrees to sell Harvesters Grocery a minimum quantity of fresh fruits and vegetables every week for three months.
Refer to Fact Pattern 17-2.If bad weather destroys Flora's crops,the obligation to deliver produce to Harvesters is​ 

A) ​breached. 
B) ​discharged. 
C) ​not affected. 
D) ​suspended.

Question 55

Fact Pattern 17-1Mutual 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 17-1.With respect to Mutual's duties,Neil's performance most likely​ 

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 56

Planners & Builders,Inc.,enters into a contract with O'Reilly to refurbish a garage on his property as an auto repair shop.O'Reilly's neighbor Nora challenges the project as a violation of the local zoning laws.A court orders a halt to the project.O'Reilly's contract with Planners & Builders is​ 

A) ​breached. 
B) ​discharged. 
C) ​not affected. 
D) ​suspended.

Question 57

Gliding Light,LLC,and Hang Gliders,Inc.,are parties to a contract.They subsequently agree that High Riders Inc.should take Gliding Light's place and assume all of its rights and duties under the contract.This is​ 

A) a mutual agreement to rescind.​ 
B) ​an accord and satisfaction. 
C) ​a novation. 
D) ​a settlement agreement.

Question 58

Juan and Isidro enter into a contract to buy,restore and reopen the Coastal Park Carousel.Before either party begins to perform,they agree to cancel their deal.This is​ 

A) ​specific performance. 
B) ​mutual rescission. 
C) ​accord and satisfaction. 
D) ​novation.

Question 59

Fact Pattern 17-2Flora, who owns and operates Garden Fresh Organic Farms, agrees to sell Harvesters Grocery a minimum quantity of fresh fruits and vegetables every week for three months.
Refer to Fact Pattern 17-2.If the market price for organic produce exceeds the price in the contract with Harvesters,and Flora decides not to deliver the order.her contract with the grocery is​ 

A) ​breached. 
B) ​discharged. 
C) ​not affected. 
D) ​suspended.

Question 60

Drainage & Irrigation Equipment,Inc.,contracts to sell its assets to Earth & Sky Aquatic Corporation.Before either party has performed,rescission of this contract requires​ 

A) ​a mutual agreement to rescind. 
B) ​an accord and satisfaction. 
C) ​a novation. 
D) ​a settlement agreement.

Question 61

Earl holds 1,000 pounds of perishable fruit in storage for Fresh Food Corporation.Fresh Food does not pay for the storage.Earl sells the fruit to Green Grocers,Inc.This sale represents​ 

A) ​a breach of contract. 
B) ​a mitigation of damages. 
C) ​rescission and restitution. 
D) ​specific performance.

Question 62

Isabel orally agrees to buy a unique collection of nineteenth-century cowboy memorabilia for $10,000 from Jessie and sends $2,500 as a down payment.When Isabel pays the rest of the price,Jessie refuses to ship the collection.Isabel should seek​ 

A) ​damages. 
B) ​restitution. 
C) ​rescission. 
D) ​specific performance.

Question 63

Floors n' More,Inc.,hires Gordon to renovate Floors n' Mores showroom.Gordon submits plans that Floors n' More approves.Gordon completes the major reconstruction,paints the interior,and buys the fixtures and furnishings.Floors n' More rejects some of these items because they do not match the plans,and subsequently refuses to allow Gordon to finish the work or to collect payment.Could Gordon sue successfully for payment for the entire contract?​

Question 64

Dino hires Eve to perform at Dino's Club,but Eve later breaches the agreement to accept a higher-paying job at First Star Arena.Dino files a suit against Eve.The court will most likely​ 

A) ​award damages to Dino. 
B) ​cancel Dino and Eve's contract. 
C) ​order Eve to perform the contract. 
D) ​rewrite Dino and Eve's contract.

Question 65

Cowtown Creamery,Inc.,needs a certain part for its pasteurizing equipment to continue its operations and orders one for $3,000 from Dairy Supplies Company.Cowtown tells Dairy Supplies that it must receive the part by Tuesday or it will lose $10,000.Dairy Supplies ships the part late.Cowtown can recover​ 

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

Question 66

Rough Hewn Lumber Company orally contracts with Joe for the purchase of five acres of Joe's timberland.Joe makes the transfer but Rough Hewn does not pay the price.The lack of a written contract could bar enforcement of this deal.If so,Joe could most likely recover on a theory of​ 

A) ​rescission. 
B) ​restitution. 
C) ​liquidated damages. 
D) ​quasi contract.

Question 67

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) ​a liquidated damages clause. 
B) ​a mitigation of damages clause. 
C) ​a nominal damages clause. 
D) ​a penalty clause.

Question 68

Quest Resources,Inc.,contracts with Ring Communications Corporation (RCC)for RCC to design and build an all-weather communications system for Quest's field operations.RCC builds the system,but it functions effectively only in good weather.Is this a breach of the contract? If so,what remedies does Quest have?​

Question 69

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​ 

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

Question 70

Guido and Hal want to rescind their contract under which Guido sold Hal a mountain bike for $100.To rescind the contract​ 

A) ​Guido must return the $100 and Hal must return the bike. 
B) ​Guido must return the $100 only. 
C) ​Hal must return the bike only. 
D) ​the parties can keep the "benefits" of their bargain.

Question 71

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) ​do nothing. 
B) ​reduce the damages that Scott might otherwise suffer. 
C) ​rescind the contract with Rig. 
D) ​punish Rig and set an example to deter others from similar acts.