Deck 15: Discharge of Contracts

Question 1

A party who announces the intention to break a contract is said to have created an anticipatory breach.

Answer 1

True

Question 2

All of the following requirements must be met for a tender of money or performance to be valid EXCEPT:

A) the tender must be made as specified in the contract.
B) payment must be made by check if money is mentioned in the contract.
C) when tender of payment is made, it must be for the exact amount.
D) if the contract calls for the delivery of specific goods, only the tender of these particular goods will satisfy the contract.

Answer 2

B

Question 3

In a case of impossibility of performance, the contract is considered void and the parties are discharged.

Answer 3

True

Question 4

Laws and regulations that increase the cost of performing a contract absolve the parties from their contractual obligations.

Question 5

All of the following are ways of terminating a contract EXCEPT:

A) performance.
B) agreement.
C) impossibility of performance.
D) ratification

Question 6

If a contract calls for the delivery of specific goods, the contract will be satisfied with the tender of:

A) those particular goods.
B) substitute goods of the same value.
C) alternate goods of less value.
D) substitute goods of greater value.

Question 7

A breach of contract results when a party to a contract refuses to perform as required by the contract or performs in an unsatisfactory manner.

Question 8

When a party breaches a contract, the injured party has the duty to mitigate the amount of damages.

Question 9

A restraining order or injunction is a court order that directs a party to perform as he/she agreed to do.

Question 10

A contract termination should be provided when a contract is fulfilled.

Question 11

A court order of specific performance prohibits a party from performing a certain act.

Question 12

A tender of performance is an offer to perform and is considered evidence of willingness to fulfill the terms of a contract.

Question 13

The legal term used in a case where a contract has largely been completed, and only small details remain unfinished, is:

A) substantially performed.
B) mostly performed.
C) performed by tender.
D) performed by mutual agreement.

Question 14

If a tender of goods or the performance of an act is refused, the person making the offer:

A) is subject to suit.
B) is relieved of the obligation to perform.
C) must repeat the offer before witnesses.
D) must petition a court for compensation.

Question 15

A contract may provide for its termination after a certain period of time.

Question 16

The federal Credit Consumer Protection Act gives a consumer the right to cancel a credit transaction within three days when contract requires that the consumer pledge his or her home as a security deposit.

Question 17

A deliberate change of an important element in a written contract that affects the obligations of the parties is known as a material alteration.

Question 18

If a tender of payment is refused by the creditor:

A) the debt is irrecoverable.
B) penalties can be charged beyond the date on which the offer of payment was made.
C) the debt is not canceled.
D) interest can be charged beyond the date the offer of payment was made.

Question 19

Contracts may be terminated by alteration.

Question 20

A personal-service contract that does not call for a special skill possessed by the deceased does not excuse performance.

Question 21

The federal Consumer Credit Protection Act:

A) regulates the collection, dissemination, and use of consumer credit information.
B) gives consumers a "cooling-off" period of five days and the right to cancel contracts for goods/services made in the consumer's home and to receive a full refund.
C) allows consumers to request and obtain a free credit report once every 12 months from each of the three nationwide consumer credit reporting companies.
D) gives consumers the right to cancel a credit transaction within three days when the contract requires that the consumer pledge his/her home as a security deposit.

Question 22

If a law or regulation makes the performance of a contract illegal, the contract is:

A) unenforceable.
B) terminated by alteration.
C) void from the beginning.
D) terminated by operation of law.

Question 23

A court order prohibiting the performance of a certain act is termed a(n):

A) gag order.
B) transaction.
C) injunction.
D) restraining order.

Question 24

If a party has completely failed to perform contractual obligations within the time specified:

A) the nonbreaching party is not required to pay under any circumstances.
B) the nonbreaching party may be required to pay for the work that has already been completed.
C) the contract is terminated.
D) the contract may be terminated only under certain conditions.

Question 25

Death or the disabling illness of a party to a contract terminates the obligation of the party to perform if it can be shown that the contract:

A) is unreasonable.
B) calls for special skills or talents.
C) is for an amount greater than $500.
D) cannot be performed within one year.

Question 26

A contract is enforceable even if:

A) laws and regulations increase the cost of performance.
B) laws and regulations enacted after the contract is entered make performance illegal.
C) laws and regulations do not absolve the parties from their contractual obligations.
D) the contract calls for a special skill or talent possessed by a party to the contract that dies before timely performance can be rendered.

Question 27

Provide an example of a contract terminated by performance.

Question 28

A party who announces an intention to break a contract is said to create a(n):

A) anticipatory breach.
B) negligent breach.
C) accidental breach.
D) equitable breach.

Question 29

Under the Uniform Commercial Code, if the goods under contract are partially destroyed:

A) the contract is automatically rescinded and the parties are restored to their to their status quo ante without the possibility of seeking enforcement under the contract's original terms.
B) the contract is enforceable and may not be cancelled by either party.
C) the seller may demand the right to inspect the damaged goods in order to decide whether to deliver replacement conforming goods or alternatively require the buyer to accept them in their damaged state and provide allowance for the damages.
D) the buyer may demand the right to inspect the damaged goods in order to decide whether to reject them or to accept them in their damaged state and claim an allowance for the damages.

Question 30

An injunction is also called a(n):

A) exaction.
B) restraining order.
C) gag order.
D) anticipatory breach.

Question 31

Courts will generally enforce liquidated damages clauses:

A) if the specified damages amount to a penalty.
B) provided the damages specified are closely related to the actual damages.
C) if the damages specified amount to a forfeiture.
D) provided exemplary damages are deemed an inadequate remedy.

Question 32

A deliberate alteration made to a written contract that affects the rights of the parties results in:

A) ratification.
B) a modification.
C) a novation.
D) termination.

Question 33

According to the doctrine of frustration of purpose:

A) complete performance is not achieved because of minor deviations from the agreed-upon performance.
B) the promisor is estopped from denying the existence of a contract where the promisee has detrimentally relied on that promise.
C) where both parties know the purpose of a contract and, through no fault of either party, the reason for the contract no longer exists, the contract is terminated.
D) in a contract for the sale of goods, one or more terms may be missing but the court can find a contract, nonetheless, where the parties have intended to make a contract.

Question 34

A deliberate change of an important element in a written contract that affects the rights or obligations of the parties is known as a(n):

A) mitigation.
B) breach of contract.
C) material alteration.
D) injunction.

Question 35

If a law is passed after the parties enter into a contract that makes performance more costly, the contract is:

A) enforceable
B) void from the beginning.
C) terminated by alteration.
D) unenforceable.

Question 36

In some cases, the injured party may sue for _____, that is, a court order directing a person to perform as he/she agreed to do.

A) specific performance
B) liquidated damages
C) rescission
D) an injunction

Question 37

The Federal Trade Commission:

A) gives the consumer a "cooling-off" period of three days and the right to cancel contracts for either goods or services made in the consumer's home and to receive a full refund.
B) gives a consumer the right to cancel a credit transaction within five days when the contract requires that the consumer pledge his/her home as a security deposit.
C) allows consumers to request and obtain a free credit report once every six months from each of the three nationwide consumer credit reporting companies.
D) regulates the collection, dissemination, and use of consumer credit information.

Question 38

A person who renounces an obligation to pay on a(n)__________________ cannot be sued until after the due date of the first payment on the note.

A) destination contract
B) promissory note
C) equitable note
D) escrow agreement

Question 39

In the case of contracts that are impossible to perform, the contract is:

A) void and the parties are discharged.
B) valid and must be performed.
C) unenforceable but must be performed.
D) referred to a court for the court to order performance.

Question 40

At times, the parties to a contract include a statement right in their contract wherein damages are explicitly set in the event one of the parties breaches the agreement. Such a statement is called a(n):

A) loss payable clause.
B) exclusion clause.
C) integration clause.
D) liquidated damages clause.

Question 41

Explain a liquidated damages clause.

Question 42

What is impossibility of performance? Provide an example of a contract that would likely be deemed impossible to perform.