Question 1

Juana contracts to sell Ignacio her MP3 player for $30.This contract will be fully discharged when Juana and Ignacio
A)agree to sign a bill of sale.
B)exchange the player for the $30.
C)sign a receipt.
D)shake hands and go their separate ways.

Accepted Answer

The contract requires the exchange of the MP3 player for the $30 in order to be fully discharged. A bill of sale or receipt may be helpful for record-keeping purposes, but they are not necessary for the contract to be completed. A handshake and going separate ways is not enough to fulfill the terms of the contract.

Question 2

Rig Heli-Pads,Inc. ,enters into a contract to employ Scott as an on-site project manager for two years.If Rig breaches the contract,Scott has a duty to
A)do nothing.
B)reduce the damages that Scott might otherwise suffer.
C)rescind the contract with Rig.
D)sue Rig to deter others from similar acts.

Accepted Answer

If Rig breaches the contract, Scott has a duty to mitigate or reduce the damages that he might otherwise suffer. This means that he must make an effort to find similar employment or income to reduce the losses he incurs as a result of the breach. He cannot just sit idle and wait for the damages to accumulate. This duty is imposed on him by law, and failure to mitigate may reduce the amount of damages that he can recover from Rig in a lawsuit.

Question 3

A contract for a sale of land from Evergreen Properties,Inc. ,to Longlife Investment Corporation contains an erroneous legal description.The most appropriate remedy for these parties is
A)damages.
B)reformation.
C)rescission.
D)specific performance.

Accepted Answer

Reformation is the most appropriate remedy for an erroneous legal description in a contract for the sale of land. Reformation involves the correction of a mistake in a legal document to reflect the true intent of the parties. In this case, the legal description can be corrected to accurately describe the property being sold. Damages, rescission, and specific performance are not appropriate remedies for this type of mistake.

Question 4

Ralph contracts to sell his Double-R Ranch to Samantha on May 1.On April 20,Ralph tells Samantha that he will not go through with the deal.Samantha can recover
A)the cost of any property that Samantha would find suitable.
B)the cost of a similar,nearby ranch.
C)the Double-R Ranch.
D)nothing.

Accepted Answer

The answer of Ralph contracts to sell his Double-R Ranch...

Question 5

Lava Excavators,Inc. ,needs a drill to continue its operations and orders one for $3,000 from Mining Supplies Company.Lava tells Mining that it must receive the drill by Tuesday or it will lose $10,000.Mining ships the drill late.Lava can recover
A)$13,000.
B)$10,000.
C)$3,000.
D)$0.

Accepted Answer

Lava Excavators, Inc. stated that it would lose $10,000 if the drill was not received by Tuesday. Therefore, Lava can recover the $3,000 they paid for the drill as well as the $10,000 they lost due to Mining Supplies Company's late shipment, amounting to a total recovery of $13,000.

Question 6

3D FX,LLC,and Vivid Star CG,Inc. ,are parties to a contract.They subsequently agree that Pixellated Inc.should take 3D's place and assume all of its rights and duties under the contract.This is
A)a mutual agreement to rescind.
B)an accord and satisfaction.
C)a novation.
D)commercial impracticability.

Accepted Answer

The scenario described is that of a novation, which occurs when a new party takes over the rights and obligations of an existing party under a contract, effectively replacing the latter. This requires the consent of all parties involved and releases the original party from any liability or responsibility related to the contract.

Question 7

Straitedge Toolmakers,Inc. ,contracts to sell its assets to Trulevel Hardware Corporation.Before either party has performed,rescission of this contract requires
A)a mutual agreement to rescind.
B)an accord and satisfaction.
C)a novation.
D)commercial impracticability.

Accepted Answer

Rescission of a contract before performance requires a mutual agreement to rescind. Neither party has performed yet, so there is no need for the other options listed.

Question 8

On April 1,KO Contractors,Inc. ,contracts to build a store for Lo-Cost Housewares at a specific location in Metro City.On May 1,Metro changes its zoning law to prohibit the construction of a commercial building at that location.Lo-Cost files a suit against KO.In this situation
A)KO is in breach of contract.
B)Lo-Cost is in breach of contract.
C)the contract is discharged.
D)the contract is suspended.

Accepted Answer

The contract is discharged because the performance of the contract has become impossible due to a change in the law. The situation is not due to either party breaching the contract, nor is the contract suspended.

Question 9

Candace enters into a contract to pay Parker for a business survey and review of Candace's competitors,which Parker delivers on June 1.Candace's offer,on the same date,to pay Parker is
A)tandem.
B)tonnage.
C)tender.
D)tinder.

Accepted Answer

Candace's offer to pay Parker is referred to as a tender, which is an offer of payment for goods or services that is made in good faith. A tandem contract refers to two separate contracts that are related to each other, while tonnage refers to the weight of goods being shipped. Tinder is a dating app and not related to this scenario.

Question 10

Tristan hires Stefani to perform at Tristan's Club,but she breaches the agreement to accept a higher-paying job at Rock Star Arena.Tristan files a suit against her.The court will most likely
A)award damages to Tristan.
B)cancel Stefani and Rock Star's contract.
C)order Stefani to perform the contract.
D)reform Tristan and Stefani's contract.

Accepted Answer

Stefani breached the contract with Tristan by accepting a higher-paying job elsewhere. As a result, Tristan can seek damages from Stefani for breaking the agreement. Canceling or reforming the contract is not likely to be the appropriate remedy in this situation, as Stefani has already broken the terms of the original agreement. Ordering Stefani to perform the contract would also be inappropriate, as the contract is no longer valid due to Stefani's breach. Therefore, the most likely outcome is that Tristan will be awarded damages for Stefani's breach of contract.

Question 11

Red's Plumbing Service substantially performs its contract with Shady Grove Condominiums,Inc.Shady Grove is entitled to
A)damages.
B)nothing more.
C)repudiation.
D)alteration.

Accepted Answer

The answer of Red's Plumbing Service substantially performs its contract...

Question 12

Fact Pattern 
Bell Medical Education Service enters into a contract to employ Chris as an instructor for two years to begin May 1.One month before the term begins,Bell is underbid by a competitor and loses a major client,Delta Hospital Center.Bell now refuses to hire Chris.
-Refer to Fact Pattern 10-B2.Bell's repudiation is most likely
A)a material breach.
B)a minor breach.
C)Chris's breach.
D)no breach.

Accepted Answer

Bell's refusal to hire Chris one month before the term begins constitutes a material breach of their contract. By repudiating the contract, Bell is indicating that they are unable or unwilling to perform their obligations under the agreement. This type of breach goes to the heart of the contract and excuses the non-breaching party, Chris, from his obligations under the contract.

Question 13

Handy Hardware Store agrees to hire Ilsa for one year at a salary of $500 per week.When Handy cancels the contract,Ilsa spends $100 to obtain a similar job that pays $450 per week for a year.Ilsa is entitled to recover
A)the amount of the wages that Handy promised only.
B)the difference between the wages at the two jobs only.
C)the difference between the wages at the two jobs plus $100.
D)$100 only.

Accepted Answer

Ilsa is entitled to recover the difference between the wages at the two jobs because she had to spend an extra $100 to obtain a similar job that pays less. Therefore, she should be compensated for the loss she suffered due to the breach of contract by Handy. So, the difference between the wages at the two jobs plus $100 would be a fair compensation for Ilsa.

Question 14

Building Restoration,Inc.(BRI),enters into a contract to refurbish an old train depot for Casual Dining,Inc. ,to open as Eat Up Restaurant.If BRI completes most of the work promised in the contract,its performance will be
A)absolute.
B)complete.
C)material.
D)substantial.

Accepted Answer

Substantial performance means that the work is incomplete, but not to the point where the purpose of the contract is defeated. In this case, if BRI completes most of the work promised in the contract, it would be considered to have substantially performed.

Question 15

Drew contracts to sell a house to Evan.The contract provides that if Drew does not close the deal by February 10,he must pay Evan one-half of the contract price.This provision is not enforceable because it is
A)a liquidated damages clause.
B)a material breach.
C)a mitigation of damages.
D)a penalty clause.

Accepted Answer

The provision is not enforceable because it is a penalty clause. Penalty clauses, unlike liquidated damages clauses, are not intended to compensate for actual damages but rather to punish the breaching party. In this case, the provision requiring Drew to pay one-half of the contract price if he does not close the deal by a certain date is a penalty and not a good-faith estimate of actual damages that might result from a delay.

Question 16

Dylan enters into a contract to manage the operations of Cash's accounting office for one year,renewable for subsequent one-year terms.If this contract is discharged like most contracts,it will be
A)canceled.
B)compromised.
C)altered.
D)performed.

Accepted Answer

The statement "renewable for subsequent one-year terms" indicates that the contract is meant to be performed repeatedly for multiple years. Therefore, if the contract is discharged, it would likely be due to completion of the agreed-upon term or termination by one or both parties, rather than being canceled, compromised, or altered.

Question 17

A contract between E-Debits,Inc. ,and First Credit Corporation includes a provision excluding liability as a result of fraud.This provision is
A)enforceable because the parties are protected from liability.
B)enforceable because the parties consented to it.
C)enforceable if the parties have equal bargaining power.
D)not enforceable.

Accepted Answer

The answer of A contract between E-Debits,Inc. ,and First Credit...

Question 18

Erte holds 1,000 pounds of perishable fruit in storage for Fresh Stuff Corporation.Fresh Stuff does not pay for the storage.Erte sells the fruit to Green Grocers,Inc.This sale represents
A)a breach of contract.
B)a mitigation of damages.
C)rescission and restitution.
D)specific performance.

Accepted Answer

Erte's action can be seen as a mitigation of damages, as they sold the fruit to recover some of the costs they incurred by storing the perishable fruit for Fresh Stuff Corporation. There is no indication that there was a contract between Erte and Fresh Stuff regarding payment for storage, so a breach of contract or rescission and restitution are not applicable. Specific performance is also not applicable as there was no agreement or contract requiring a specific action or performance by Erte.

Question 19

GroundSwell Pools,Inc. ,agrees to build a swimming pool for Francis,but fails to complete the job.Francis hires EquiAqua,Inc. ,to finish the project.Francis may recover from GroundSwell
A)the contract price less costs of materials and labor.
B)the contract price.
C)the costs needed to complete construction.
D)profits plus the costs incurred up to the time of the breach.

Accepted Answer

Francis may recover the costs needed to complete construction since GroundSwell failed to complete the job as per the contract. Francis had to hire EquiAqua to finish the project, which incurred additional costs, and GroundSwell is liable for those costs. Option A is not correct as it only allows for recovering the costs of materials and labor. Option B is not correct as GroundSwell did not complete the job, so Francis cannot pay the full contract price. Option D is not correct as Francis cannot recover profits plus costs incurred up to the time of the breach, as GroundSwell did not complete the job.

Question 20

Fact Pattern 
Bell Medical Education Service enters into a contract to employ Chris as an instructor for two years to begin May 1.One month before the term begins,Bell is underbid by a competitor and loses a major client,Delta Hospital Center.Bell now refuses to hire Chris.
-Refer to Fact Pattern 10-B2.Under the circumstances,with respect to damages,Chris can
A)bring an action immediately.
B)bring an action only after the contract's two-year term begins.
C)bring an action only after the contract's two-year term ends.
D)do nothing.

Accepted Answer

Chris can bring an action immediately because Bell Medical Education Service has breached the contract by refusing to hire him one month before the term begins. Chris does not have to wait for the contract's two-year term to begin or end to bring an action for damages.

Quiz 10: Contract Performance,breach,and Remedies

Juana contracts to sell Ignacio her MP3 player for $30.This contract will be fully discharged when Juana and Ignacio

Rig Heli-Pads,Inc. ,enters into a contract to employ Scott as an on-site project manager for two years.If Rig breaches the contract,Scott has a duty to

A contract for a sale of land from Evergreen Properties,Inc. ,to Longlife Investment Corporation contains an erroneous legal description.The most appropriate remedy for these parties is

Ralph contracts to sell his Double-R Ranch to Samantha on May 1.On April 20,Ralph tells Samantha that he will not go through with the deal.Samantha can recover

Lava Excavators,Inc. ,needs a drill to continue its operations and orders one for $3,000 from Mining Supplies Company.Lava tells Mining that it must receive the drill by Tuesday or it will lose $10,000.Mining ships the drill late.Lava can recover

3D FX,LLC,and Vivid Star CG,Inc. ,are parties to a contract.They subsequently agree that Pixellated Inc.should take 3D's place and assume all of its rights and duties under the contract.This is

Straitedge Toolmakers,Inc. ,contracts to sell its assets to Trulevel Hardware Corporation.Before either party has performed,rescission of this contract requires

On April 1,KO Contractors,Inc. ,contracts to build a store for Lo-Cost Housewares at a specific location in Metro City.On May 1,Metro changes its zoning law to prohibit the construction of a commercial building at that location.Lo-Cost files a suit against KO.In this situation

Candace enters into a contract to pay Parker for a business survey and review of Candace's competitors,which Parker delivers on June 1.Candace's offer,on the same date,to pay Parker is

Tristan hires Stefani to perform at Tristan's Club,but she breaches the agreement to accept a higher-paying job at Rock Star Arena.Tristan files a suit against her.The court will most likely

Red's Plumbing Service substantially performs its contract with Shady Grove Condominiums,Inc.Shady Grove is entitled to

Handy Hardware Store agrees to hire Ilsa for one year at a salary of $500 per week.When Handy cancels the contract,Ilsa spends $100 to obtain a similar job that pays $450 per week for a year.Ilsa is entitled to recover

Building Restoration,Inc.(BRI) ,enters into a contract to refurbish an old train depot for Casual Dining,Inc. ,to open as Eat Up Restaurant.If BRI completes most of the work promised in the contract,its performance will be

Drew contracts to sell a house to Evan.The contract provides that if Drew does not close the deal by February 10,he must pay Evan one-half of the contract price.This provision is not enforceable because it is

Dylan enters into a contract to manage the operations of Cash's accounting office for one year,renewable for subsequent one-year terms.If this contract is discharged like most contracts,it will be

A contract between E-Debits,Inc. ,and First Credit Corporation includes a provision excluding liability as a result of fraud.This provision is

Erte holds 1,000 pounds of perishable fruit in storage for Fresh Stuff Corporation.Fresh Stuff does not pay for the storage.Erte sells the fruit to Green Grocers,Inc.This sale represents

GroundSwell Pools,Inc. ,agrees to build a swimming pool for Francis,but fails to complete the job.Francis hires EquiAqua,Inc. ,to finish the project.Francis may recover from GroundSwell