Deck 16: Contract Discharge and Remedies

Question 1

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

Answer 1

False

Question 2

Objective impossibility discharges a contract.

Answer 2

True

Question 3

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

Answer 3

True

Question 4

Tender is a timely offer or expression of willingness to pay a debt or perform an obligation.

Question 5

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

Question 6

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

Question 7

A breach of contract occurs only when a party fails to perform all of his or her duties under a contract.

Question 8

A party is entitled to cancel a contract based on the other party's material breach.

Question 9

The only way that a party can discharge a contract is by performance.

Question 10

A contract for a portrait is an example of a personal contract.

Question 11

A party who substantially performs his or her duties under a con?tract can enforce the contract against the other party.

Question 12

Usually,a contract that involves mechanical fitness only needs to be performed to the satisfaction of a reasonable person.

Question 13

Performance that provides a party with most of the benefits of a con?tract,in spite of a deviation from the terms,is substantial performance.

Question 14

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

Question 15

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 16

If one party's performance is substantial,the other party's duty to perform remains absolute.

Question 17

A novation does NOT require the extinguishing of the old obligation.

Question 18

A contract for medical work is not a personal contract.

Question 19

Contracts that are executory on both sides can be rescinded by agreement.

Question 20

Most contracts are discharged by rescission.

Question 21

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

Question 22

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 23

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

Question 24

Lon enters into a contract to mine limestone in Mica's quarry,sell it,and share the profits on its sale with Mica.If the duties under this contract are discharged like those under most contracts,the duties will be

A)conditioned.
B)breached.
C)performed.
D)rescinded.

Question 25

A liquidated damages provision is the same thing as a penalty provision.

Question 26

A remedy is the relief provided to an innocent contracting party when the other party breaches the contract.

Question 27

Good Food Groceries,Inc.enters into a contract to sell Sarah's Corner Shop a truckload of eggs from free range chickens.Good Food Groceries then fails to deliver the eggs to Sarah's Corner Shop.Sarah

A)must still pay for the eggs or she will be in breach of contract.
B)does not have to pay for the eggs because Good Food Groceries failed to perform.
C)must still pay for the eggs,but can file suit against Good Food Groceries for breach of contract.
D)does not have to pay for the eggs,but is not allowed to file suit against Good Food Groceries for breach of contract.

Question 28

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

Question 29

Normally,when a nonbreaching party has been damaged by a breach of contract,he or she does NOT have a duty to mitigate those damages.

Question 30

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

Question 31

Compensatory damages compensate the injured party for injuries sustained due to loss of the contract and also punish the party that breached the contract.

Question 32

To rescind a contract,each party essentially advances to the position he or she would have been in if the contract had been fully executed.

Question 33

Kathleen offers to buy Richard's prize stallion for $10,000 only if a licensed veterinarian certifies that the horse is sound for breeding.After inspecting the stallion,the veterinarian concludes that the stallion is sterile and thus not fit for breeding.Kathleen

A)must still buy the stallion.
B)does not have to buy the stallion.
C)must still buy the stallion,but may pay a lower price.
D)does not have to buy the stallion,but must buy another horse of similar value from Richard.

Question 34

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

Question 35

Consequential damages are foreseeable damages that arise from a party's breach of a contract.

Question 36

Compensatory damages are stipulated in a contract in an amount that the parties believe to be a reasonable estimate of the damages that will occur on a breach.

Question 37

Safe-T Guard Services enters into a contract to secure Taylor's Business Park from vandalism and theft between 6 p.m.and 6
A)absolute.

A)m.nightly for six months.At the end of the term,if there has been no vandalism or theft in the Park,Safe-T's performance will have been
B)complete.
C)conditional.
D)substantial.

Question 38

Specific performance is an equitable remedy requiring exactly the performance that was specified in a contract.

Question 39

Expenses that are caused directly by a breach of contract-such as those in?curred to obtain performance from another source-are compensatory dam?ages.

Question 40

Punitive damages are generally available in contract disputes.

Question 41

Phil enters into a contract to hire Bob's Building Business to build a warehouse for Phil.The contract specifies that the warehouse should be built with HighQual Bricks.When construction starts,HighQual Bricks cannot provide enough bricks for the warehouse.Bob's Building Business substitutes Big Red Bricks,which are comparable in quality and price to HighQual Bricks.This deviation from the contract

A)discharges Phil from the contract.
B)has no effect on the contract.
C)increases Bob's Building Business's duties under the contract.
D)suspends Bob's Building Business's duty to perform.

Question 42

On April 1,O.K.Contractors,Inc.,contracts to build a store for Lo-Cost Jewelers at a specific location in Metro City.On May 1,Metro changes its zoning laws to prohibit the construction of a commercial building at that location.When the store is not built,Lo-Cost files a suit against O.K.In this situation

A)O.K.is in breach of contract.
B)Metro is in breach of contract.
C)the contract is discharged.
D)the contract is suspended.

Question 43

Jason owes Stephen $1,000 for yard work Stephen performed for Jason.The money is due on May 1.On April 30,Jason goes to the bank to get the money and discovers that the bank will be closed until May 2.Jason

A)will be in breach of contract when he fails to pay Stephen on May 1.
B)will not be in breach of contract when he fails to pay Stephen on May 1 due to objective impossibility.
C)is discharged from any contractual liability to Stephen.
D)will not be in breach of contract when he fails to pay Stephen on May 1 as long as he pays the $1,000 plus ten percent interest on May 2.

Question 44

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

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 45

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 46

Roy and Sheila are parties to a contract.They subse?quently agree that Tony should take Roy's place and assume all of his rights and duties under the contract.This is

A)a novation.
B)an accord and satisfaction.
C)an assignment.
D)a modification.

Question 47

Super Toolmakers,Inc.,contracts to sell its business to True Hardware Corpo?ration.Before either party has performed,rescission of this con?tract requires

A)a mutual agreement to rescind.
B)consideration.
C)performance by all of the parties.
D)an accord and satisfaction.

Question 48

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 49

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 50

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 51

Coco agrees to work as Darcy's personal accountant for one year but dies in the sixth month of the contract.Coco's estate

A)is discharged from any contractual liability.
B)must find a competent accountant to fulfill the contract.
C)must pay liquidated damages.
D)must refund any money Darcy paid to Coco on the contract.

Question 52

Clarice pays Damien $10,000 to design an ad campaign for her Sweetwater Coffee Stand chain.The next day,Damien tells Clarice that he has accepted a job in New York and cannot design her campaign.She files a suit against Damien.As compensatory damages,she can recover

A)$100,000.
B)$10,000.
C)$1,000.
D)$0.

Question 53

Hal contracts with Credit Services,Inc.(CSI),to pay $500 for its serv?ices.After CSI performs,they sign an accord,in which Hal promises to pay $400 within ten days instead of the $500.Hal does not pay.CSI can sue Hal under

A)neither the accord nor the contract.
B)the accord only.
C)the accord or the contract.
D)the contract only.

Question 54

Wilson owes Shelby $5,000 for repairs on Wilson's Bobcat Skidsteer.Wilson has financial troubles and he and Shelby sign an accord,in which Wilson promises to pay $4,000 and give Shelby his mountain bike within thirty days instead of the $5,000.Wilson's delivery of the bike and $4,000 to Shelby is

A)an accord.
B)satisfaction.
C)substantial performance.
D)novation.

Question 55

Fact Pattern 16-1 (Questions 7-8 apply)
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 16-1.Neil's performance is most likely

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

Question 56

Lily is a farmer.When bad weather destroys her crop,her obliga?tion to deliver it un?der an outstanding contract with Macro Food Corporation is

A)discharged.
B)enforced completely.
C)enforced only to the extent of finding an alterna?tive supply.
D)enforced only to the extent of transferring to the next year's crop.

Question 57

Ruth contracts to provide Stan with fifty hours of telepathic personal coaching.The state legisla?ture sub?sequently passes a law making tele?pathic personal coaching illegal.This law will

A)discharge the contract.
B)fulfill the contract.
C)not affect the contract.
D)require immediate performance of the contract.

Question 58

Fact Pattern 16-1 (Questions 7-8 apply)
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 16-1.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 59

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 60

Mona and Nero want to discharge their contract by executing and per?forming a new agreement.They can best accomplish this by

A)accord and satisfaction.
B)novation.
C)reinvention.
D)specific performance.

Question 61

Home Delivery Corporation and Interstate Transport,Inc.,sign an agree?ment that provides for the payment of "$1,000 by whichever party commits a material breach of the contract that creates damages difficult to esti?mate 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 62

Fashion Retail Center enters into a contract with Great Promotions,Inc.,to provide Fashion with a plan to retool its merchandising strategy.If Great Promotions breaches the contract,Fashion has a duty to

A)reduce the damages that Fashion might otherwise suffer.
B)reduce the loss that Great Promotions might otherwise suffer.
C)punish Great Promotions and deter others from similar acts.
D)take no action.

Question 63

Kris contracts to work exclusively for Little Manufacturing Company during May for $5,000.On April 30,Little cancels the contract.Kris finds another job dur?ing May but earns only $3,000.Kris files a suit against Little.As compen?satory damages,Kris can recover

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

Question 64

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

Question 65

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.

Question 66

National Drilling Company ships its only pump to American Hydraulics Corporation,the manufacturer,for repair.National hires Overland Transport,Inc.,to take the pump to American Hydraulics and to return it to National as soon as the repair is complete.National is forced to sus?pend operations without a pump,but Overland does not know this.National expects to be without the pump for five days and to lose profits of $5,000.When the pump is not returned by the end of the fifth day,National rents a pump at a cost of $100 per day.Overland delays five more days before returning the pump.National files a suit against Overland,asking for compensatory,consequential,and punitive damages.Will National recover?

Question 67

Dobry Die & Mold,Inc.,enters into a contract with Chet's Refitting Service to fix Dobry's precisely engineered molding equipment.If Chet's delays the repair for five days,knowing that Dobry will lose a certain percentage of profit for the delay,Dobry might be awarded consequential damages to

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

Question 68

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 69

Sonny agrees to buy a unique collection of Olympics memorabilia for $7,000 from Jana and sends $1,500 as a down payment.When Sonny sends Jana the rest of the price,she refuses to ship the collection.Sonny should seek

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

Question 70

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 71

Karson orally agrees to pay Jaime to plant and harvest a quarter of Karson's farm acreage for four corn-planting seasons.After Jaime prepares the land and plants the first crop,Karson says that their deal is off.Jaime can most likely recover

A)in quasi contract.
B)in reformation.
C)in restitution.
D)on the parties' existing contract.

Question 72

Earl holds 1,000 pounds of perishable fruit in storage for Fresh Food Corpo?ration.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.