Performance and Discharge

Question 1

True/False: Alice signs a contract with Bob to buy Bob’s house for $150,000 “if I am able to obtain a mortgage loan for $125,000, at no more than 7% interest, payable over 15 years.” Assume that Alice tries but is unable to obtain the described loan, and therefore refuses to proceed with the purchase. Alice is in breach of the contract.

Answer 1

False

Question 2

True/False: The statement, “You will have a job with Snelling & Snelling as long as you complete your degree in business administration this May” does not create a condition because it does not include the phrase “provided that.”

Answer 2

False

Question 3

True/False: Most contracts are discharged by mutual agreement.

Answer 3

False

Question 4

True/False: Irving is shopping at the local Computers R Us store and agrees to buy a powerful computer for his home “on the condition of personal satisfaction.” If Irving takes the computer back to the store for no reason other than that he doesn’t like the computer, then the seller will have no choice but to accept the computer and terminate the contract.

Answer 4

False

Question 5

True/False: Assume that Jessie and Lester have formed a contract whereby Jessie agrees to deliver 10,000 dozen “Grade A Large Eggs” to be shipped in recycled paper cartons. A shortage of paper makes paper cartons much more expensive, so Jessie uses styrofoam cartons and ships the eggs. Lester is entitled to cancel the contract based on this deviation of terms in the contract.

Answer 5

False

Question 6

True/False: A wholesaler of coffee notifies a retailer that it cannot fulfill its contractual obligation to deliver 1,000 pounds of coffee at the agreed upon price of $2.00 per pound next month because of recent price increases in coffee. The retailer may treat the wholesaler as having breached the contract and sue for damages even though the wholesaler’s performance is not due until next month.

Answer 6

True

Question 7

True/False: The legal right to sue for a breach of contract is subject to a statute of limitations.

Answer 7

True

Question 8

True/False: A court may, at times, discharge a party who has not performed.

Answer 8

True

Question 9

True/False: Concurrent conditions arise when there is both a condition precedent and a condition subsequent.

Answer 9

False

Question 10

True/False: Generally, neither a “time is of the essence” clause nor a “force majeure” clause will be recognized by the courts because these types of clauses are seen as a violation of public policy.

Answer 10

False

Question 11

True/False: Monumental, Inc. contracts with Champion Builders to erect a three-story office building on a parcel of land it has purchased. Before construction begins, the local zoning board changes the zoning of the parcel and those adjoining it to residential use only. Monumental’s contract with Champion is discharged.

Answer 11

True

Question 12

True/False: In negotiating the purchase of a vehicle, the sales representative told Karla, “I guarantee that you will be personally satisfied with this car.” The guarantee was written on the contract when Karla purchased the car. If a controversy arises over Karla’s satisfaction, the court will apply a subjective standard, which means Karla’s judgment must be reasonable

Answer 12

False

Question 13

True/False: Ramon purchased 5,000 pounds of coffee from Quick Jump Coffee. The coffee was to be delivered on September 1. Since the contract included a date for performance, time is of the essence and the delivery date is strictly enforceable.

Answer 13

False

Question 14

True/False: Abdulla hired Granite Construction to build an addition onto his home. Granite Construction dug the foundation but then abandoned the project. Granite Construction is entitled to receive the full contract price minus the value of the defects.

Answer 14

False

Question 15

True/False: The UCC recognizes commercial impracticability as a ground for discharge of a contract.

Answer 15

True

Question 16

M & E contracted to sell 500 music stands to Coda, Inc. M & E shipped the stands in accordance with the agreement. Coda paid for the stands as promised. The contract between M & E and Coda is discharged by

Answer 16

FULL PERFORMANCE

Question 17

Al contracted to sell his house to Bev. Subsequently, they both changed their minds and agreed to cancel the contract. The contract between Al and Bev is discharged by:

Answer 17

RESCISSION

Question 18

In the Strategic Resources Group v. Knight-Ridder, Inc. case, the court found that Knight-Ridder:

Answer 18

INTENTIONALLY REDUCED THE SIZE OF ITS ADS BUT THAT THE SIZE REDUCTION WAS NOT EASILY DISCERNABLE

Question 19

Melody is a recent graduate of State Law School. She lands an impressive employment contract with the firm of Dewey, Cheathem, and Howe, Attorneys at Law, on the stated provision that she pass the upcoming bar exam. This provision in the employment agreement is a(n):

Answer 19

CONDITION SUBSEQUENT

Question 20

Sam, the seller, enters into a contract agreement to buy Betty Lou’s house on the condition that he is able to secure financing at or below 6% per year. This is a:

Answer 20

CONDITION PRECEDENT

Question 21

Jennifer substantially performs her service contract with Gretchen. Due to Jennifer’s failure to render complete performance, Gretchen:

Answer 21

IS REQUIRED TO PAY THE FULL PRICE, MINUS THE VALUE OF JENN’S DEFECTIVE PERFORMANCE

Question 22

Statutes of limitations:

Answer 22

LIMIT THE TIME IN WHICH AN INJURED PARTY CAN SUE

Question 23

In January 2008, Professor Noe entered into a contract with State University. She agreed to teach full time during the 2008-2009 academic year. Professor Noe died on May 31, 2008. Her estate:

Answer 23

IS DISCHARGED FROM ANY FURTHER OBLIGATIONS UNDER THE CONTRACT

Question 24

Mary contracted to buy 100 table lamps. Under the terms of the agreement, Mary is to pay for the lamps upon delivery. This is an example of:

Answer 24

A CONCURRENT CONDITION

Question 25

Oxtron, Inc. substantially performed its obligations under a service contract. Oxtron is entitled to receive:

Answer 25

THE FULL CONTRACT PRICE MINUS THE VALUE OF THE DEFECTS

Question 26

Jackie hires Charles to lay new carpet in her bedroom. Charles does such a bad job, that the only way to fix the carpet is to start over and relay the carpet. Which of the following best describes this situation?

Answer 26

THIS IS A MATERIAL BREACH. JACKIE OWES NOTHING TO CHARLES

Question 27

Dana hires Paris to paint a portrait of her poodle, “Mack.” The painting is to be done to Dana’s personal satisfaction. Upon completion of the painting, which of the following will be true?

Answer 27

DANA MAY REFUSE TO ACCEPT THE PAINTING IF SHE REALLY DOES NOT LIKE IT

Question 28

The Grand Performance Hall is in the process of remodeling and is scheduled to open for business after being closed for 50 years. As part of the remodeling, it is installing a new sound system. The sound system is to be installed by Sound Systems, Inc. on or before April 10. Opening night of the hall is May 1. The contract states that “time is of the essence” because of the opening-night deadline. Sound Systems has some financial difficulties and doesn’t deliver the system until April 20. Grand Hall refuses to accept it, and Sound Systems sues. What result?

Answer 28

GRAND HALL WINS; THE CONTRACT DATE WAS STRICTLY ENFORCEABLE

Question 29

Dodger bought an insurance contract from Liberty Farm Co. The policy contained a clause stating that all claims for losses had to be reported within 45 days after the date of the loss or the claim would be barred. Time is stated to be of the essence. Dodger sustained a covered farm loss, but did not report it to Liberty Farm until 50 days later. Liberty Farm denied coverage for the claim. If Dodger sues, who wins?

Answer 29

LIBERTY FARM WINS; THERE WAS FAILURE OF A CONDITION SUBSEQUENT

Question 30

A condition:

Answer 30

IS AN EVENT THAT MUST OCCUR BEFORE A PARTY BECOMES OBLIGATED UNDER A CONTRACT

Question 31

Harry agreed to pay $100 to rent a rooftop spot in downtown Seattle to watch the New Year’s Eve festivities. The festivities were unexpectedly cancelled because of concern over a terrorist attack. Harry is:

Answer 31

NOT OBLIGATED TO PAY UNDER THE FRUSTRATION OF PURPOSE DOCTRINE

Question 32

As set forth in the Restatement Second of Contracts, which of the following duties are imposed on the parties in the performance and enforcement of a contract?

Answer 32

GOOD FAITH; FAIR DEALINGH

Question 33

Ron operates a garbage pickup business. He contracts to pick up garbage from an apartment complex for the next 52 weeks at a price of $150 per week. Unexpectedly, the landfill center where Ron takes the garbage to dispose of it, files for bankruptcy. As a result, Ron must travel an additional 100 miles to the nearest landfill center, turning Ron’s expected profit into a loss of $40 per week. Ron’s best argument in support of his petition to be discharged from the contract is:

Answer 33

COMMERCIAL IMPRACITCABILITY

Question 34

Which of the following events would probably excuse performance of a contract based on commercial impracticability?

Answer 34

AN UNFORESEEABLE TRADE EMBARGO CAUSES PRICES TO TRIPLE

Question 35

The distinction between a condition precedent and a condition subsequent:

Answer 35

DETERMINES WHO HAS THE BURDEN OF PROOF

Question 36

A court

Answer 36

MAY REFUSE TO ENFORCE AN EXPRESS CONDITION INTENDED…

Question 37

A contract between a company in the U.S. and one in China, contained a clause that stated: “If an event happens which is extraordinary and out of the control of the parties such as a strike, act of God, fire, accident, or transportation difficulties, then the affected party shall be relieved of its obligations under the contract.” This type of clause is:

Answer 37

A FORCE MAJEURE CLAUSE

Question 38

Linda agrees to buy Missy’s Greyhound race dog for $2,000. Linda is to deliver the money and take possession of the dog the next morning. That night, running his best race ever, the dog runs away from Missy, never to be seen again.

Answer 38

NONE OF THE ABOVE; THE CONTRACT DUTIES ARE DISCHARGED

Question 39

Sea Rovers, Inc. contracted to sell 1,000 pounds of shrimp to the Seafood Shack with delivery on June 1. On May 1 Sea Rovers advised the Seafood Shack that it would not be able to deliver the shrimp. The Seafood Shack:

Answer 39

CAN SUE SEA ROVERS IMMEDIATELY FOR BREACH OF CONTRACT

Question 40

If a condition does not occur:

Answer 40

ONE PARTY WILL PROBABLY BE DISCHARGED W/O PERFORMING