Chapter 17

Question 1

A contract contains the provision, “Walter Hamilton promises to pay Faye Weeks $1,200 for a 2003 V-6
motor provided that Phelps’ Garage approves the quality of the motor.” This provision:
a. makes the contract unenforceable since Walter’s promise is illusory.
b. creates an express condition which must be met before Walter’s duty to pay arises.
c. cannot create an express condition because it lacks the necessary words “on condition
that.”
d. cannot be valid since it makes Walter’s duty to pay dependent upon the opinion of a third
party.

Answer 1

creates an express condition which must be met before Walter’s duty to pay arises.

Question 2

William has a contract to build a new office building for Angela. The contract contains a provision requiring
William to furnish a certificate of occupancy from the building inspector before Angela 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.

Answer 2

an express condition.

Question 3

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.

Answer 3

Roger bought a VCR, but he may return the VCR within ten days and get all of his money
back.

Question 4

A(n) ____ is a substituted contract that involves an agreement among three parties to substitute a new
promisee in place of an existing promisee, or to replace an existing promisor with a new one.
a. accord
b. satisfaction
c. novation
d. mutual rescission

Answer 4

novation

Question 5

A(n) ____ is a contract between a promisee and a promisor by which the promisee agrees to accept and the
promisor agrees to render a substituted performance in satisfaction of an existing contractual duty.
a. accord
b. mutual rescission
c. material alteration
d. novation

Answer 5

accord

Question 6

Which of the following is/are 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 the above are correct.

Answer 6

A “sale or return” contract is an example of a contract with a condition subsequent.

Question 7

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(n):
a. accord.
b. novation.
c. rescission.
d. satisfaction.

Answer 7

satisfaction.

Question 8

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(n):
a. material alteration.
b. anticipatory repudiation.
c. nonmaterial breach since the statement is made before December 31.
d. accord.

Answer 8

anticipatory repudiation.

Question 9

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 limitation.
c. true, because of the law of repudiation.
d. true, because of covenants not to sue.

Answer 9

true, because of statutes of limitation.

Question 10

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 rule law.

Answer 10

perfect tender rule.

Question 11

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. subjective impossibility doctrine

Answer 11

frustration of purpose doctrine

Question 12

Meg has contracted to paint a portrait of Julio, but dies before completing the portrait. Which of the
following is correct?
a. Meg’s executor must find a capable artist to complete the work to Julio’s satisfaction.
b. Meg’s contractual duty is discharged due to objective impossibility.
c. A novation must be entered between Julio and a third person in order to discharge Meg’s
duty under the contract.
d. Meg’s contractual duty is discharged due to subjective impossibility.

Answer 12

Meg’s contractual duty is discharged due to objective impossibility.

Question 13

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 the above.

Answer 13

be treated as a repudiation, excusing the tendering party from further duty of performance
under the contract.

Question 14

Conditions may be classified:
a. by how they are imposed.
b. by when they affect a duty of performance.
c. Both (a) and (b); they are not mutually exclusive.
d. Neither (a) nor (b).

Answer 14

Both (a) and (b); they are not mutually exclusive.

Question 15

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 the above would be material breaches.
e. Only (a) and (b) above would be material breaches.

Answer 15

Only (a) and (b) above would be material breaches.

Question 16

Russell promises Marty $1,500 if he will completely landscape Russell’s yard. Which of the following would
discharge Russell’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, shrubs, or grasses.
d. Russell isn’t satisfied with Marty’s design.

Answer 16

Marty doesn’t plant any flowers, shrubs, or grasses.

Question 17

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

Answer 17

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.

Question 18

Phil, 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:
a. Marge will not have to pay Phil.
b. Marge will not have to accept the work.
c. Marge will have to pay Phil for all but the gift taxes.
d. Marge will have to pay Phil the contract price.

Answer 18

Marge will have to pay Phil for all but the gift taxes.

Question 19

Henry hires Ace Roofing to put a new roof on his house. When Ace comes, Henry refuses to let them on the
roof, saying that he has a headache and doesn’t want to listen to pounding. The next day, Henry still has a
headache and he refuses to allow them on the roof. The day after, the baby is sleeping and Henry refuses to
allow them to work. After four weeks of this, Ace:
a. may be discharged, but Henry is not.
b. may be discharged, and so would Henry.
c. can sue for damages, but must perform when Henry is ready.
d. has no choice but to keep coming back each day until Henry is ready.

Answer 19

may be discharged, but Henry is not.

Question 20

Anita, who is a tailor, 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. 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 an objective standard.
d. Anita has no recourse against Bryan, because she agreed to the subjective standard.

Answer 20

Anita has no recourse against Bryan, because she agreed to the subjective standard.

Question 21

Lynn, who is a tailor, agrees to sew a pair of drapes for Zach’s living room. Zach promises to pay Lynn $300.
Lynn completes the drapes using material selected by Zach, but Zach is not satisfied and refuses to pay for
them.
a. Whether Zach will have to pay for the drapes depends upon whether as a reasonable man
he ought to be satisfied.
b. The standard applied here is a subjective standard of satisfaction.
c. The condition of satisfaction is an implied-in-law condition.
d. The condition of satisfaction is an express condition.

Answer 21

Whether Zach will have to pay for the drapes depends upon whether as a reasonable man
he ought to be satisfied.

Question 22

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.
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 liable to Jim for damages.
c. Jim is discharged from his duty to serve as guide, and he may bring suit immediately
against Kevin.
d. Both (b) and (c) above are correct.

Answer 22

Both (b) and (c) above are correct.

Question 23

Miller has a contract to sell 1,000 bushels of wheat to a bakery. The wheat is stored in a grain elevator and
has become infested with insects. What is the consequence?
a. Miller is discharged from performance because of impossibility.
b. Miller is discharged because of frustration.
c. Miller is not discharged, but must substitute wheat or pay damages to the bakery for
breach of contract.
d. Miller is discharged if he can prove that he did not cause the damages to his wheat.

Answer 23

Miller is not discharged, but must substitute wheat or pay damages to the bakery for
breach of contract.

Question 24

Arnold and Doug make a contract for Arnold 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. The chairs are
available from other sources.
a. Arnold must supply the chairs, even if he must buy them elsewhere.
b. Arnold’s duty to deliver the chairs is discharged by the destruction of the factory.
c. Arnold has materially breached the contract if he fails to deliver the chairs.
d. Both (a) and (c).

Answer 24

Arnold’s duty to deliver the chairs is discharged by the destruction of the factory.

Question 25

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 100 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 impracticable
d. Yes, the freeze is a supervening event

Answer 25

No, the parties expected the hardship and provided for it in their contract

Question 26

Janice contracts to sell a certain tract of land to Anthony for $5,000, but the contract does not state a time for
delivery of the deed and payment of the price. In this situation:
a. the contract will be considered void for lack of essential terms.
b. the law will imply that the respective performances are independent of each other and may
occur whenever “reasonable under the circumstances.”
c. courts will treat the promises to deliver the deed and to pay the $5,000 as mutually
dependent. Anthony’s duty to pay is conditioned upon Janice’s delivery of the deed and
Janice’s duty to deliver the deed is conditioned upon Anthony’s payment or tender of
$5,000 to Janice.
d. Janice’s duty to deliver the deed and Anthony’s duty to pay the $5,000 are “implied-in-
fact” conditions.

Answer 26

courts will treat the promises to deliver the deed and to pay the $5,000 as mutually
dependent. Anthony’s duty to pay is conditioned upon Janice’s delivery of the deed and
Janice’s duty to deliver the deed is conditioned upon Anthony’s payment or tender of
$5,000 to Janice.

Question 27

Which of the following generally is not grounds for discharge of a contract by operation of law?
a. Objective impossibility
b. Subsequent illegality
c. Running of the statute of limitations
d. Bankruptcy

Answer 27

Running of the statute of limitations