Deck 12: Performance, Discharge, and Remedies

Question 1

Most contracts are discharged by mutual agreement of the parties.

Answer 1

False

Question 2

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 2

False

Question 3

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 3

False

Question 4

Carswell, a contractor, enters into a contract with Helen, a homeowner, to remodel her bathroom. The contract provides a specific completion date. The contract provides that if Carswell does not have the job finished by the date, Helen may deduct $200 per day from the contract price until the job is finished. This is an example of liquidated damages.

Question 5

Generally, a "time is of the essence" clause will not be recognized by the courts because these types of clauses are seen as a violation of public policy.

Question 6

Liquidated damages are awarded to parties who have experienced an injury to their legal rights but have no actual loss.

Question 7

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.

Question 8

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 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 a material breach of the contract.

Question 9

Ernest operates an ice cream stand during the months of May, June, July, and August. Ernest's ice cream machine is broken and needs a new part to run. He contracts to have the part shipped to him by special carrier. Ernest emphasizes that the part needs to be delivered by April 25 and the carrier agrees, knowing that Ernest intends to open his stand May 1. If the shipper fails to deliver the part on April 25, Ernest will be able to recover consequential damages caused by the delay.

Question 10

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.

Question 11

Commercial impracticability means some event has occurred that neither party anticipated and fulfilling the contract would now be extraordinarily difficult and unfair to one party.

Question 12

Tess, a tenant, moves from her apartment in breach of the lease agreement. The landlord, Lenny, may not attempt to rent the apartment until the date of the lease expiration, and so has no recourse to minimize damages.

Question 13

Dr. Gonzalez ordered specialized surgical equipment from Physician's Supply Co., but the company informed Dr. Gonzalez that it would not be able to meet his order by the agreed date. Even if Dr. Gonzalez does nothing to secure equipment from another source, he will be able to recover damages since the contract was breached by Physician's Supply, not Gonzalez.

Question 14

Expectation interest can best be described as money spent in reliance upon the agreement.

Question 15

A court may, at times, discharge a party who has not performed.

Question 16

Injunctions are frequently used by courts to force employees to complete their contractual obligations with their employers.

Question 17

The legal right to sue for a breach of contract is subject to a statute of limitations.

Question 18

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.

Question 19

Alice signs a contract with Bob to buy Bob's house for $150,000, with the clause, "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.

Question 20

To win expectation damages, the injured party must prove the breach of contract caused damages that can be quantified with reasonable certainty.

Question 21

In which case would true impossibility NOT apply?

A)Nelson contracted with a local restaurant to supply 10,000 pounds of potatoes, but a tornado tore through his field, completely destroying it.
B)A record company contracted with Darlene to produce a CD of traditional folk ballads; unfortunately, Darlene died before recording began.
C)Reed agrees to purchase an expensive piece of jewelry for $25,000; a week later, he tells the jeweler that he simply does not have that kind of money.
D)None of these are correct.

Question 22

When one party breaches a contract, the discharged party

A)has no obligation to perform.
B)may sue the breaching party for damages.
C)has no obligation to perform, and may sue the breaching party for damages.
D)None of these are correct.

Question 23

Specific performance is available when the subject matter of the contract is unique.

Question 24

Which of the following events would have the best chance of excusing performance of a contract based on commercial impracticability?

A)The price of a raw material increases slightly so that the contract will not be as profitable.
B)An unforeseeable trade embargo causes prices to triple.
C)The promisor of personal services dies.
D)The subject matter of the contract is destroyed.

Question 25

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?

A)This is substantial performance. Jackie must still pay something to Charles.
B)This is a material breach. Jackie must still pay something to Charles.
C)This is substantial performance. Jackie owes nothing to Charles.
D)This is a material breach. Jackie owes nothing to Charles.

Question 26

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

A)the mail box rule.
B)commercial impracticability.
C)frustration of purpose.
D)true impossibility.

Question 27

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

A)full performance.
B)agreement.
C)accord and satisfaction.
D)novation.

Question 28

Under the UCC, the buyer is entitled to consequential damages if the seller could have reasonably foreseen them.

Question 29

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 canceled because of concern over a terrorist attack. Harry is

A)obligated to pay the $100.
B)not obligated to pay under the commercial impracticability doctrine.
C)not obligated to pay under the force majeure doctrine.
D)not obligated to pay under the frustration of purpose doctrine.

Question 30

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. What will be the outcome in this case?

A)Linda must give $2,000 for the dog, but only if the dog was insured.
B)Linda must give $2,000 for the dog, but only if Missy can find a replacement dog within a reasonable time.
C)Missy must find another dog for Linda or pay her $2,000.
D)Linda does not have to pay for the dog; the contract duties are discharged.

Question 31

In January 2018, Professor Noe entered into a contract with State University. She agreed to teach full time during the 2018-2019 academic year. Professor Noe died on May 31, 2018. Her estate

A)is obligated to find another person who will agree to teach during the academic year.
B)is discharged from any further obligations under the contract.
C)will be discharged from any obligations under the contract only if it can be shown that her death was unexpected.
D)will not be discharged. If the University has to pay more in order to hire a comparable substitute professor at the last minute, then the estate will be responsible for the difference in pay.

Question 32

A contract clause which specifies the amount of damages to be paid in the event of a breach is called

A)a covenant of damages clause.
B)a reliance interest of damages clause.
C)a liquidated damages clause.
D)an incidental damages clause.

Question 33

Banner enters into a contract with Sylvia to buy her house for $150,000. Sylvia decides later not to sell because she is so emotionally attached to the house. Banner insists that he is entitled to the house. Banner can successfully sue for specific performance.

Question 34

Mohammed suffers a substantial financial loss when Olson Company breaches a contract. Under the statute of limitations, to receive damages Mohammed must file suit against Olson Company within

A)one year.
B)two years.
C)five years.
D)It depends on the state where Mohammed lives.

Question 35

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

A)full performance.
B)agreement.
C)rescission.
D)accord and satisfaction.

Question 36

The expectation interest is designed to put the injured party in the position he or she would have been in had both sides fully performed their obligations.

Question 37

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 will be the result?

A)Grand Hall wins; the contract date was strictly enforceable.
B)Sound Systems wins; the contract was substantially performed.
C)Grand Hall wins; there was commercial frustration.
D)Sound Systems wins; there was a true impossibility.

Question 38

Specific performance may be available for the breach of a contract to sell

A)an original painting.
B)20 shares of Walmart stock.
C)a Nintendo Wii video game system.
D)a 2007 Mustang in mint condition.

Question 39

Mulligan Domestics Co. breached a contract by refusing to accept its order for 60 bolts of fabric from Wellington Mills, although the fabric met the contract specifications. In this situation, Wellington Mills

A)has at least four remedies under the UCC.
B)may resell the fabric to someone else and, if it sues Mulligan, Wellington Mills will be awarded the full contract price.
C)may choose not to resell the fabric and settle for the difference between the contract price and the market value.
D)would be awarded consequential damages by most courts.

Question 40

Statutes of limitations

A)define how much money the injured party can sue for under a breach of contract claim.
B)define whether there has been substantial performance of a contract or a material breach.
C)limit the time in which an injured party may sue.
D)only apply to the sale of goods. There is no statute of limitations on a service contract.

Question 41

The concept that expectation interest is designed to put the injured party in the position he or she would have been in had both sides fully performed their obligations is found in

A)Bi-Economy Market, Inc . v. Harleysville Ins. Co. of New York.
B)Hadley v. Baxendale.
C)Hawkins v. McGee .
D)None of these are correct.

Question 42

Tina and Leroy have a contract for the sale of a vinyl record album. Tina, the seller, breaches the contract. A court will be most likely to order specific performance if there are __________ identical copies of the record album available for sale on the market.

A)2
B)2,000
C)20,000
D)200,000

Question 43

Which of the following is an example of incidental damages you might be awarded if you are wrongfully terminated from your job?

A)the costs of psychological counseling
B)the costs of mailing resumes to prospective employers
C)the costs of a new wardrobe for future interviews
D)the costs of cosmetic surgery

Question 44

In breach of the partnership agreement, Trimble, a partner in the partnership of Morris, Newt, and Oppie, Ltd. quits the partnership and goes to work for a competitor. The former partners may ask the court for

A)specific performance requiring Trimble to return to work for Morris, Newt, and Oppie, Ltd.
B)an injunction to prevent Trimble from working in competition with the former partners.
C)special damages under the rule of Hadley v. Baxendale .
D)liquidated damages as compensation for the breach.

Question 45

In a construction contract, there is a $1,000 per day estimate of damages for each day that the contract runs over the completion date. The contractor is 30 days late when the job is completed, resulting in a prospective damage award of $30,000. What is this type of clause, and when will it be enforced?

Question 46

Farmer Elvin is holding 200 pounds of potatoes in storage for Chef Noble but Chef Noble has breached the contract by failing to pay for the potatoes. If Farmer Elvin sells the potatoes to a local diner to make potato soup and salad, then this action would be considered a(n)

A)reasonable mitigation of damages.
B)attempt to maximize damages.
C)attempt to realize an unwarranted profit.
D)attempt at reformation.

Question 47

​Which of the following statements concerning liquidated damages is NOT TRUE?

A)​A liquidated damages clause will be enforced, if, when the contract was made, it was difficult to estimate actual damages.
B)​The amount of liquidated damages must be a reasonable estimation of the actual harm resulting from a breach.
C)​Nominal damages are not the same thing as liquidated damages.
D)​Liquidated damages are enforceable even if the amount is considered to be a penalty on the breaching party.

Question 48

Larry wanted to buy a 1957 Cadillac once owned by Reggie Jackson. Larry entered into a contract with the owner agreeing to pay $102,000. The owner subsequently changed his mind. If Larry sues, what remedies are potentially available?

Question 49

The goal of expectation interest is to

A)serve as a penalty for breaching a contract.
B)award damages under the UCC when the sale of goods is the subject of the contract.
C)put the non-breaching party in the position it would have been in had the contract never been formed.
D)put the non-breaching party in the position it would have been in if the contract hadn't been breached.

Question 50

Identify and describe the principal contract interests a court may seek to protect.

Question 51

Buddy was hired to play drums for a rock group scheduled to tour the Midwest. Part way through the tour, Buddy was tragically killed in a plane crash. The tour had to be discontinued until a new drummer could be found. The band lost money on the tour. Is Buddy's estate or agent responsible for the loss to the band?

Question 52

All Seasons, Inc. ordered $5,000 worth of Christmas decorations from Santa, Inc. The shipment of decorations was to arrive no later than October 1, but did not arrive until December 1. All Seasons was able to purchase some of the unfulfilled order through other suppliers, but had to pay 15% more than the price under contract with Santa, Inc. As a result of the delay, All Seasons' sales were down 25%. All Seasons can recover

A)punitive damages.
B)nominal damages.
C)compensatory damages and consequential damages.
D)compensatory damages, consequential damages, and punitive damages.

Question 53

Ralph is a professional football player. He signs a valid contract with the Jets. Later, the Giants offer him more money, so he signs a contract with them. If the Jets sue Ralph, what would the most likely result be?

A)The court will order Ralph to play with the Jets.
B)The court will order Ralph to play with the Jets, but Ralph is entitled to be paid the amount he negotiated under the Giants contract.
C)The court will issue a preliminary injunction barring Ralph from playing with any team other than the Jets during the course of the lawsuit.
D)The court will order Ralph to pay compensatory damages in the amount of the difference between the two contracts.

Question 54

Carlos is hired to paint a house for $700. Before he starts, the woman who hired Carlos tells him she does not want the job done after all. Carlos finds another house-painting job that afternoon, but it pays only $500. If Carlos sues the woman for damages and is awarded $200, that amount is an example of

A)direct damages.
B)nominal damages.
C)consequential damages.
D)incidental damages.

Question 55

Specific performance is always available in

A)agreements involving farm goods.
B)agreements involving vehicles.
C)real estate contracts.
D)employment contracts.

Question 56

What does the term "substantial performance" mean? What factors are generally considered when determining whether one of the parties has substantially performed?

Question 57

Identify the factors courts consider in deciding the validity of commercial impracticability and frustration of purpose claims.

Question 58

Discuss the purpose of an injunction and how the two types of injunctions covered in the textbook are used.

Question 59

Which type of interest is designed to return to the injured party a benefit that he or she has conferred on the other party, which would be unjust to leave with that person?

A)reliance interest
B)expectation interest
C)restitution interest
D)None of these are correct.