Question 1

Even-Bilt Construction contracts to build a warehouse for Discount E-Sales Company.Even-Bilt completely performs.Discount E-Sales is entitled to
A)damages.
B)nothing more.
C)to be excused from performance.
D)suspend performance.

Accepted Answer

Even-Bilt has completely performed the contract, therefore Discount E-Sales is entitled to nothing more.

Question 2

Fact Pattern 18-B2 (Questions B11-B12 apply)
Business Computer Solutions Education Service enters into a contract to employ Chandra as an instructor for two years to begin June 1.One month before the term begins,Business Computer is underbid by a competitor and loses a major client,Debt Consolidation Corporation.Business Computer now refuses to hire Chandra.
-Refer to Fact Pattern 18-B2.Business Computer's repudiation of its contract to employ Chandra is most likely
A)a material breach.
B)a minor breach.
C)a condition subsequent.
D)not a breach.

Accepted Answer

Business Computer's refusal to hire Chandra before the term begins is a material breach because it goes to the heart of the contract and deprives Chandra of the benefits of the agreement. The fact that a competitor underbid Business Computer and it lost a client does not excuse the breach.

Question 3

Restoration,Inc.,contracts to repair a crack in a supporting beam for Stagecraft Theater for $10,000.If Restoration does not perform,Stagecraft must pay
A)$10,000.
B)$5,000.
C)$1,000.
D)$0.

Accepted Answer

If Restoration, Inc. does not perform the contract, Stagecraft Theater is not obligated to pay anything, as the payment is contingent upon the completion of the repair work.

Question 4

Fact Pattern 18-B2 (Questions B11-B12 apply)
Business Computer Solutions Education Service enters into a contract to employ Chandra as an instructor for two years to begin June 1.One month before the term begins,Business Computer is underbid by a competitor and loses a major client,Debt Consolidation Corporation.Business Computer now refuses to hire Chandra.
-Refer to Fact Pattern 18-B2.Under the circumstances,with respect to damages,Chandra 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

Chandra can bring an action immediately as Business Computer Solutions has breached the contract by refusing to hire her. Chandra is entitled to damages for the breach. There is no need to wait until the two-year term begins or ends.

Question 5

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

Accepted Answer

The contract between Dharma and Esther involves Dharma providing services for Esther's dental office for a specified period of time, with the option for renewal. Typically, contracts are discharged through performance, meaning both parties fulfill their obligations under the contract. Therefore, the best choice is D, performed.

Question 6

Fact Pattern 18-B1 (Questions B9-B10 apply)
Moses sells an apartment building to Noelle with a promise to install a new heating and air conditioning system before September 1.The following February 1,Moses sends Ollie,an HVAC technician,to begin the installation.Noelle orders Ollie to leave and refuses to make further payments to Moses,who files a suit against Noelle.
-Refer to Fact Pattern 18-B1.Moses's late attempt to install the ventilation system is most likely
A)a material breach.
B)complete performance.
C)excused by Noelle's refusal to make further payments.
D)substantial,but not complete,performance.

Accepted Answer

Moses's late attempt to install the ventilation system is a material breach as he did not fulfill his promise to Noelle within the agreed timeframe. This breach is significant enough to excuse Noelle's refusal to make further payments and could potentially give her a right to terminate the contract.

Question 7

Gliding Light,LLC,and Hang Gliders,Inc.,are parties to a contract.They subsequently agree that High Riders Inc.should take Gliding Light'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)a settlement agreement.

Accepted Answer

This is a novation because there is a substitution of a new party, High Riders Inc., taking the place and assuming all the rights and duties previously held by Gliding Light, LLC. This creates a new contract between the parties involved.

Question 8

Herb's Hot Dog Vending,Inc.,enters into a contract to pay Idris for a business survey and review of Herb's competitors,which Idris delivers on August 1.Herb's offer,on the same date,to pay Idris is
A)a concurrent condition.
B)a novation.
C)tender.
D)mutual rescission.

Accepted Answer

Tender refers to an unconditional offer of performance made by one party to the other. In this case, Herb's offered to pay Idris on the same date that Idris delivered the business survey and review. This offer was unconditional, and therefore, it falls under the category of tender.

Question 9

Fact Pattern 18-B1 (Questions B9-B10 apply)
Moses sells an apartment building to Noelle with a promise to install a new heating and air conditioning system before September 1.The following February 1,Moses sends Ollie,an HVAC technician,to begin the installation.Noelle orders Ollie to leave and refuses to make further payments to Moses,who files a suit against Noelle.
-Refer to Fact Pattern 18-B1.Noelle's refusal to make further payments is most likely
A)a material breach.
B)complete performance.
C)excused by Moses's failure to timely install the ventilation system.
D)substantial,but not complete,performance.

Accepted Answer

Noelle's refusal to make further payments is likely excused by Moses's failure to install the heating and air conditioning system by the agreed deadline of September 1, which constitutes a breach of contract.

Question 10

Drainage & Irrigation Equipment,Inc.,contracts to sell its assets to Earth & Sky Aquatic 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)a settlement agreement.

Accepted Answer

Rescission requires a mutual agreement by both parties to cancel the contract before either party has performed. An accord and satisfaction, novation, and settlement agreement are not applicable in this scenario.

Question 11

OnTrack Rehabilitation Center signs an agreement with Platinum Bank to borrow $40,000 at 20 percent interest.Later,the state legislature passes a law lowering the maximum permissible rate of interest to 15 percent.OnTrack's best argument for avoiding payment to Platinum Bank is that
A)performance of the contract is commercially impracticable.
B)payment of the loan would force the debtor into bankruptcy.
C)the law has rendered performance of the contract illegal.
D)the specific subject matter of the contract has been destroyed.

Accepted Answer

The best argument for OnTrack Rehabilitation Center to avoid payment to Platinum Bank is that the state legislature has passed a law lowering the maximum permissible rate of interest to 15 percent. This has rendered performance of the contract illegal. Therefore, OnTrack will not be required to pay the interest rate of 20 percent, as it would be against the law.

Question 12

Omar and Penn want to discharge their contract by executing a new agreement with performance different from what they originally promised.They can best accomplish this by
A)a mutual agreement to rescind.
B)an accord and satisfaction.
C)a novation.
D)an alteration of the original contract.

Accepted Answer

The answer of Omar and Penn want to discharge their...

Question 13

On April 1,Construction Contractors,Inc.,contracts to build a store for Discount Retail,Inc.,at a specific location in Electro City.On April 10,Electro changes its zoning law to prohibit the construction of a commercial building at that location.Discount Retail files a suit against Construction Contractors.In this situation
A)Construction Contractors is in breach of contract.
B)Discount Retail is in breach of contract.
C)the contract is discharged.
D)the contract is suspended.

Accepted Answer

The contract is discharged because the occurrence of an unforeseeable event, such as a change in zoning laws, makes it impossible to perform the contract as agreed. Both parties are released from their obligations under the contract. Therefore, neither Construction Contractors nor Discount Retail is in breach of contract.

Question 14

Adrian operates a recycled metals business and contracts to provide ten tons of scrap steel at $500 per ton to be delivered to Build-It-Rite Materials,Inc.,in seven months.An unforeseen shortage of scrap steel suddenly develops,making it impossible for Adrian to fulfill the contract for less than $5,000 per ton.Adrian's best defense against performing the contract would be that
A)performance of the contract is commercially impracticable.
B)procuring the steel would force the seller into bankruptcy.
C)the law has rendered performance of the contract illegal.
D)the specific subject matter of the contract has been destroyed.

Accepted Answer

The defense of commercial impracticability may be asserted when the performance of the contract becomes excessively difficult or expensive due to unforeseen events, making performance impractical. In this case, an unforeseen shortage of scrap steel has occurred, making it impossible for Adrian to fulfill the contract for the agreed-upon price, therefore, making it commercially impracticable for Adrian to perform the contract.

Question 15

Ed's Electric substantially performs its contract with Forest Hills Apartments,Inc.,to deliver and install an alarm system and parking lot lighting.Forest Hills is entitled to
A)damages.
B)nothing more.
C)to be excused from performance.
D)suspend performance.

Accepted Answer

When a party substantially performs their contract, the other party is entitled to damages for the part of the contract that was not fully performed. This is to compensate for the slight deviation from the agreed terms.

Question 16

Nina contracts with Office Suites Corporation to buy a suite in its Prospect Point Tower at a premium for its view of Quay Harbor.Unforeseeably,the town of Quay Harbor changes its zoning law,and Resort Hotels,Inc.,constructs Seaview Resort,blocking what would have been Nina's view.Nina's best argument for a change in the Office Suites contract or its price is
A)frustration of purpose.
B)objective impossibility of performance.
C)anticipatory repudiation.
D)commercial impracticability.

Accepted Answer

Frustration of purpose occurs when an unforeseen event undermines the fundamental reason for entering into a contract. In this case, Nina entered into the contract to buy the suite based on the premium price for its view of Quay Harbor. However, the change in zoning law and the construction of the Seaview Resort blocked the view, frustrating the purpose of the contract. Nina may argue for a change in the contract terms, such as a reduction in price, based on frustration of purpose.

Question 17

Lana agrees to work as Michelle's personal assistant for one year but dies in the ninth month of the contract.Lana's estate
A)is discharged from any contractual liability.
B)must find a competent assistant to fulfill the contract.
C)must pay damages.
D)must refund any money paid to Lana on the contract.

Accepted Answer

Lana's death would make it impossible for her to fulfill the contract, and her estate cannot be held liable for events that are beyond their control. Therefore, they are discharged from any contractual liability.

Question 18

Polly agrees to buy Quinn's Cycle World store business on the express condition that Ridgeline Credit Union approves the financing.This approval is
A)not a condition.
B)a condition precedent.
C)a concurrent condition.
D)a condition subsequent.

Accepted Answer

The condition of Ridgeline Credit Union's approval is a condition precedent because it must be satisfied before the sale can be completed. Polly's obligation to buy Quinn's Cycle World store business is conditional on the approval of financing from Ridgeline Credit Union.

Question 19

Kali contracts to sell Leony her car for $3,000.This contract will be fully discharged when Kali and Leony
A)agree to sign a bill of sale.
B)exchange the car for the $3,000.
C)sign a receipt.
D)shake hands and go their separate ways.

Accepted Answer

The contract specifies that the car will be sold for $3,000, therefore the exchange of the car for the agreed upon amount is required to fully discharge the contract. Signing a bill of sale or receipt may be necessary for documentation purposes, but the exchange of the car and money is the most important aspect of fulfilling the agreement. Shaking hands and going their separate ways does not constitute a complete fulfillment of the contract.

Question 20

Bernadette enters into a contract to operate a Caramel Coffee franchise,which Caramel Coffee agrees to support as long as Bernadette maintains her business license.Caramel Coffee's duty to perform is
A)not a condition.
B)a condition precedent.
C)a concurrent condition.
D)a condition subsequent.

Accepted Answer

Caramel Coffee's duty to perform is a condition subsequent because their obligation to support Bernadette's franchise is contingent upon her maintaining her business license. If she fails to maintain it, their duty to perform is discharged.

Quiz 18: Performance and Discharge in Traditional E-Contracts

Even-Bilt Construction contracts to build a warehouse for Discount E-Sales Company.Even-Bilt completely performs.Discount E-Sales is entitled to

Restoration,Inc.,contracts to repair a crack in a supporting beam for Stagecraft Theater for $10,000.If Restoration does not perform,Stagecraft must pay

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

Gliding Light,LLC,and Hang Gliders,Inc.,are parties to a contract.They subsequently agree that High Riders Inc.should take Gliding Light's place and assume all of its rights and duties under the contract.This is

Herb's Hot Dog Vending,Inc.,enters into a contract to pay Idris for a business survey and review of Herb's competitors,which Idris delivers on August 1.Herb's offer,on the same date,to pay Idris is

Drainage & Irrigation Equipment,Inc.,contracts to sell its assets to Earth & Sky Aquatic Corporation.Before either party has performed,rescission of this contract requires

OnTrack Rehabilitation Center signs an agreement with Platinum Bank to borrow $40,000 at 20 percent interest.Later,the state legislature passes a law lowering the maximum permissible rate of interest to 15 percent.OnTrack's best argument for avoiding payment to Platinum Bank is that

Omar and Penn want to discharge their contract by executing a new agreement with performance different from what they originally promised.They can best accomplish this by

Ed's Electric substantially performs its contract with Forest Hills Apartments,Inc.,to deliver and install an alarm system and parking lot lighting.Forest Hills is entitled to

Lana agrees to work as Michelle's personal assistant for one year but dies in the ninth month of the contract.Lana's estate

Polly agrees to buy Quinn's Cycle World store business on the express condition that Ridgeline Credit Union approves the financing.This approval is

Kali contracts to sell Leony her car for $3,000.This contract will be fully discharged when Kali and Leony

Bernadette enters into a contract to operate a Caramel Coffee franchise,which Caramel Coffee agrees to support as long as Bernadette maintains her business license.Caramel Coffee's duty to perform is