Ch 19: Discharge of Contracts

Question 1

List three ways a contract may be terminated.

Answer 1

Performance
Infeasibility
Mutual Agreement
Revocation
Operation of Law
Assignment and Delegation
Breach of Contract – Default

Question 2

What is revocation?

Answer 2

Revocation is cancellation of the contract by one party without the consent of the other. While all parties have the power to revoke, they may not have a defensible right. In the absence of justifiable grounds, a revocation may not relieve the revoking party of contract obligations.

Question 3

Describe assignment.

Answer 3

A real estate contract that is not a personal contract for services can be assigned to another party unless the terms of the agreement specifically prohibit assignment. Sales contracts are assignable because they involve the purchase of real property rather than a personal service.

Question 4

Define breach of contract.

Answer 4

A breach of contract is a failure to perform according to the terms of the agreement. Also called default, a breach of contract gives the damaged party the right to take legal action.

Question 5

Explain renunciation.

Answer 5

Renunciation occurs where a party refuses to perform his obligations under the contract. It may be either express or implied.

Question 6

List the four breach of contract remedies a damaged party can seek.

Answer 6

Recession
Forfeiture
Suit for damages
Suit for specific performance

Question 7

Define liquidated damages.

Answer 7

Liquidated damages are a predetermined amount of money stipulated in the contract to be the total amount of compensation the non-defaulting party should receive upon breach by the other party.

Question 8

In regard to special damages, what is the foreseeability test?

Answer 8

In the context of special damages due to a breach of contract, foreseeability means such damages were within the contemplation of the contract when it was made.

Question 9

Infeasibility that is due to the inability of an individual promisor to perform, such as illness or death is called:

Answer 9

subjective infeasibility.

Question 9

What is an attempt to force the defaulting party to comply with the terms of the contract?

Answer 9

A suit for specific performance

Question 10

Contract obligations may be absolute or:

Answer 10

conditional.

Question 11

The standard measure of loss of bargain damages, for a total breach, would encompass the difference between the agreed contract price and the market value of the property on the date:

Answer 11

of breach.

Question 12

Any fundamental breach permits a party to terminate the performance of a contract. This also entitles a party to:

Answer 12

sue for damages.

Question 13

Most real estate contracts have expiration dates and closing dates. An expiration date usually applies to the final date by which the other party:

Answer 13

accepts the offer.

Question 14

What occurs if a court determines a party has sufficiently performed a contract, even though not to the full extent of every provision?

Answer 14

Sufficient performance

Question 15

What is cancellation of a contract by one party without the consent of the other called?

Answer 15

Revocation

Question 16

Sales contracts are assignable because they involve the purchase of:

Answer 16

real property.

Question 17

Sometimes a contract does not accurately reflect the intentions of the parties because of some mechanical or clerical error in the document. When this happens what legal action is necessary to correct or modify the contract?

Answer 17

Reformation