Chapter 17-19

Question 1

T or F: Privity of Contract means that contracts are private agreements and the parties therefore have an expectation of privacy concerning their contract

Answer 1

False

Question 2

T or F: A contracting party’s transfer of the contract rights or duties to another person is an exception to the rule of privity of contract.

Answer 2

True

Question 3

T or F: You may not delegate duties which are personal in nature

Answer 3

True

Question 4

a condition that must be fulfilled before a party’s performance can be required
Ex: Jennifer told bubba she will paint his bike for $1,000 and deliver it to him. She must paint it and deliver and he must pay $1,000.

Answer 4

precedent condition

Question 5

a future event that terminates the obligations of the parties when it occurs
ex: pharmaceutical students graduating in December with their degree, but they haven’t passed boards. People are hiring them and paying them, but have to pass their boards very soon, so they are able to do the job as a pharmacist.
ex: law student getting terminated because she didn’t pass her bar exam.

Answer 5

subsequent condition

Question 6

What are the 3 types of discharge by performance?

Answer 6

complete, substantial, inferior

Question 7

Occurs when one party fulfills enough of its contract obligations to warrant payment
ex: a house being built and the builder saying it’s almost done, but not completed they are missing the chandelier. They pay the buyer and close the deal for the full amount. They kept calling the contractor and the lawyer sent him a letter and he finally came and installed it.

Answer 7

substantial performance

Question 8

All terms have been carried out properly and completely.

Answer 8

complete performance

Question 9

It’s the same as no performance at all

Answer 9

inferior performance

Question 10

When your contractor has did $950,000 of work on your million dollar home, but the last $50,000 is no doors, and no bathroom or kitchen fixtures, so this is ________ performance because the house can’t be used.

Answer 10

inferior

Question 11

Occurs when performance is not substantial. Non-breaching party is excused from performance and entitled to damages.

Answer 11

Material Breach of Contract (important or critical)
{inferior performance}

Question 12

Duty to perform is not excused and the non-breaching party must resume performance of the contractual obligations undertaken.

Answer 12

Non-Material Breach of Contract
{substantial performance}

Question 13

both parties agree to substitute a new third party for one of the original parties

Answer 13

Discharge by Novation

Question 14

innocent party is discharged after ______ alteration

Answer 14

material

Question 15

What are the Most common remedies for breach of contract

Answer 15

Damages and specific performance

Question 16

Punitive damages in contracts are

Answer 16

extremely rare

Question 17

Is a breach of contract a “crime”

Answer 17

NO, unless there is some sort of underlying criminal activity. Breach of contract is an economic decision.

Question 18

When breach of contract occurs, the innocent injured party is held to a duty to reduce the damages that he or she suffered

Answer 18

Mitigation of Damages

Question 19

Is a breach of contract a “wrong”

Answer 19

NO, you have not HARMED the other party even though they may have suffered damages. Contracts are economic and meant to be sorted out through economics.