Question 1

Which of the following would most likely result in the court finding the contract had been discharged by frustration?
A) Moore, a sculptor, was delivering a $15,000 work when he lost control of the car and the work was crushed. He had been drinking heavily and had not bothered to wrap or box the work.
B) McGee contracts to give a lecture at a convention on modern marketing, but the convention was cancelled because of an epidemic.
C) Cooper contracts to deliver ten bushels of ripe tomatoes to Haig's restaurant, and Cooper's tomato crop is destroyed by hail a few days before the delivery date.
D) McDonald agreed to buy Thornburn's horse, but unknown to both of them, at the time of the contract the horse was dead.
E) Binks agreed to purchase the business from Kealy, but Binks suffered such great losses in the recent stock market crash that he couldn't afford to go through with it.

Accepted Answer

The contract was frustrated because the convention was cancelled due to an unforeseen epidemic, making it impossible for McGee to perform his contractual obligation.

Question 2

Which of the following is false with regard to remedies for breach of contract?
A) Specific performance is an equitable remedy forcing a person to comply with the terms of the contract.
B) The victim of a breach cannot recover damages that he could have avoided if he had tried to mitigate his loss.
C) A person who breaches a contract is liable for all the foreseeable loss that directly and naturally flows from the breach.
D) Damages are awarded by the court to a person who has suffered loss because of a breach of an essential term of the contract, but are not awarded for a breach of an non-essential term, i.e., a warranty.
E) An exemption clause that a seller claims absolves him from liability may be of no effect if the seller has committed a "fundamental breach" of the contract.

Accepted Answer

Damages can be awarded for breaches of both essential terms (conditions) and non-essential terms (warranties), though the amount may differ.

Question 3

Which of the following statements is true with respect to the law of damages?
A) A deposit is an amount of money a party to a contract agrees to forfeit if he or she breaches the contract.
B) Damages are intended to punish the wrongdoer for breaching the contract.
C) Damages are awarded for a breach of a condition but not for a breach of warranty.
D) Damages are an order from the court for the breaching party to perform the contract as he or she agreed to do.
E) If a contract contains a liquidated damages clause, the party who has breached the contract has agreed to pay to the party wronged an amount equal to all the loss that directly and naturally flows from the breach.

Accepted Answer

A

Question 4

Which of the following is one of the remedies generally available for a breach of contract?
A) Novation
B) Anticipatory breach
C) Repudiation
D) Specific performance
E) Punitive damages

Accepted Answer

Specific performance is one of the most common remedies available for a breach of contract. This remedy requires the breaching party to perform the specific terms of the contract as originally agreed upon. This is typically used when monetary damages are not sufficient to compensate the non-breaching party for the harm caused by the breach. The other options (A, B, C, and E) are not remedies, but rather legal concepts that may be relevant to a breach of contract case.

Question 5

In which one of the following instances would the seller most likely succeed in an attempt to escape liability by the use of an exemption clause?
A) The exemption clause that covers the situation was posted in plain view and was brought to their attention at the place and time of contract.
B) There has been a breach of the fundamental obligation of the contract, and the court holds that, on its true construction, the parties did not mean it to cover a serious breach.
C) The store had posted at the entrance to the dressing rooms a large sign reading "Not responsible for stolen articles," and the customer lost articles in a fire that swept through the dressing rooms.
D) The clause says there will be no liability for breach of a condition and the breach that occurs is minor in nature.
E) The purchaser of goods, after the sale, is sent an invoice on which the exemption clause is printed in boldface type at the top of the first page.

Accepted Answer

A seller is more likely to succeed in invoking an exemption clause if it was brought to the attention of the buyer at the time of contract and was posted in plain view. This shows that the buyer had a reasonable opportunity to understand the terms of the contract and the exemption clause.

Question 6

Which of the following statements is correct with respect to breach of contract?
A) When a contract for the purchase of goods is breached, the warranty will require that the goods be repaired by the seller.
B) When a condition is breached, the victim can treat the contract as ended.
C) When a condition is breached, a person can only sue for damages but must perform their part of the contract.
D) When a warranty is breached, the victim can treat the contract as ended.
E) When a contract is repudiated before performance is due, the victim must wait until the time of performance before taking any action.

Accepted Answer

When a condition is breached, the victim can treat the contract as ended, allowing them to terminate the contract and seek damages.

Question 7

On the February 1, Smyth contracted to buy Dupont's van. They had agreed that Smyth would pay the price of $7,000 on March 1 and take delivery and the risk on that date. Smyth then contracted to sell the van in Smithers on March 5 for $7,600. On February 22, Dupont called Smyth and said he wasn't going to sell it; he decided to keep it. On these facts, which of the following is false?
A) Smyth could refuse to acknowledge a breach, but that would result in the possibility that the contract could be breached later.
B) Smyth could acknowledge that Dupont was in breach but has to wait until after the performance date to sue him for breach of contract.
C) Dupont's call is an express repudiation of the contract and is an anticipatory breach.
D) Smyth could agree to call off the contract; neither of them had yet performed.
E) Smyth could refuse to acknowledge a breach and press Dupont to complete the contact.

Accepted Answer

Smyth does not have to wait until after the performance date to sue for breach of contract because Dupont's call constitutes an anticipatory breach, allowing Smyth to take legal action immediately.

Question 8

Which of the following is true with regard to remedies for breach of contract?
A) Damages are awarded by the court to a person who has suffered loss because of a breach of an essential term of the contract, but are not awarded for a breach of an non-essential term, i.e., a warranty.
B) If the seller has committed a "fundamental breach" of the contract, an exemption clause absolves the seller from liability.
C) A person who breaches a contract is liable for all the foreseeable loss that directly and naturally flows from the breach.
D) The victim of a breach can recover damages that he could have avoided if he had tried to mitigate his loss.
E) Non est factum is an equitable remedy forcing a person to comply with the terms of the contract.

Accepted Answer

A person who breaches a contract is liable for all the foreseeable loss that directly and naturally flows from the breach. This is a fundamental principle in contract law regarding damages.

Question 9

Gill, a wholesale fish seller, agreed to provide Blanchet's Restaurant with 1,000 pounds of fresh salmon per week throughout the months of July, August, and September. Things went as planned for July and August. However, Gill was unable to meet the requirements of the contract for the first two weeks of September because his boats simply did not catch that much, although other companies did better and the fish were available for Gill to purchase, but at a higher price than what Blanchet was paying him. Rather than sell at a loss, Gill simply did not supply during that two-week period. At the end of that period, the Federal Fisheries Department shut down the fishery altogether because of the depletion of fish. After that, no more fresh salmon were available at all. Blanchet sued Gill for breach of contract with respect to his failure to deliver any fresh salmon in September. Which one of the following statements accurately sets out the legal situation here?
A) Gill is liable for breach of contract with respect to the first two weeks of September, but the second two weeks' failure was caused by frustration for which he was not responsible.
B) Gill was under a strict obligation to supply the fish and no excuses for failure are allowed.
C) By not suing Gill as soon as he failed to deliver in the first two weeks of September, Blanchet lost the right to complain, and then the subsequent governmental closure excused his failure to deliver any fish in September.
D) The contract was frustrated for the whole month of September by Gill's inability to obtain fish in the way that he intended, and thus he is not liable at all.
E) The doctrine of frustration does not apply here because this is a sale-of-goods situation.

Accepted Answer

Gill is liable for breach of contract with respect to the first two weeks of September because he was able to purchase the required salmon from other sources, but chose not to due to his unwillingness to sell at a loss. However, the subsequent governmental closure of the fishery rendered performance of the contract impossible, and this constitutes frustration for which Gill is not liable.

Question 10

Which of the following is true with regard to ending a contract by performance, agreement, or breach?
A) A person has legally tendered performance if he pays a $500 debt in 25-cent coins.
B) If one party to the contract has paid for a service, but now the other doesn't want to perform, the contract is ended by agreement as long as they both agree to call it off.
C) A contract ends by agreement when the parties include in the contract a "condition subsequent," i.e., a clause that says the contract will end upon the happening of a specified future event that then takes place.
D) If a person properly tenders performance of a service that is rejected by the other party, he is required to try again and again.
E) A contract can be ended by breach if there was a either a breach of condition or a breach of warranty.

Accepted Answer

The answer of Which of the following is true with...

Question 11

Ellis agreed to paint Lee's house for a price of $1,500. A month before the performance was due, Lee called and told Ellis that she had changed her mind and was going to have her house restuccoed instead. Ellis insisted that they had a contract and that he was going to paint the house anyway. Lee repeated that she was not going to go through with it, but Ellis insisted the contract was still on. Before further steps could be taken by either party, Lee's house was destroyed by a freak airplane accident. Which one of the following statements describes the law applicable to these facts?
A) Lee could have accepted Ellis's conduct as an anticipatory breach.
B) Ellis's conduct amounted to repudiation, and Lee could have sued for breach of contract immediately after the phone call.
C) The contract has been discharged by frustration.
D) Lee's conduct did not amount to a breach since she told him a month before performance was due that she didn't want the house painted.
E) Ellis will be able to successfully claim as damages the amount that he would have made if the contract had been performed.

Accepted Answer

The destruction of Lee's house by a freak airplane accident would be considered a supervening event that has frustrated the purpose of the contract. The contract cannot be performed due to an unforeseeable event that occurred after the agreement was made. Therefore, the contract has been discharged by frustration. Neither party can be held liable for non-performance.

Question 12

Which of the following is true with regard to ending a contract by performance, agreement, frustration, or breach?
A) If a person owing money has tendered payment in a reasonable way, at a reasonable time, and it has been refused, he is free from any further obligation to pay.
B) The victim of a breach can recover damages even for the loss he could have avoided if he had tried to.
C) If the court holds that a contract has been ended by frustration, the damages awarded by the court will be the same as if the contract was ended by a breach.
D) An exemption clause that a seller claims absolves him from liability may be of no effect if the seller has committed a "fundamental breach" of the contract.
E) A person who breaches a contract is liable for all the loss that directly and naturally flows from the breach, no matter how unforeseeable.

Accepted Answer

An exemption clause may be deemed ineffective if the seller has committed a fundamental breach of the contract, which means a breach that goes to the heart of the contract and deprives the innocent party of substantially the whole benefit of the contract.

Question 13

When an anticipatory breach has taken place (where a person, before performance is due, states that he will not perform the contract)
A) the victim must wait to see if the contract is performed, but damages are calculated from the time of the refusal.
B) the victim may not be able to recover damages that occur after the anticipatory breach.
C) such a statement made before performance is due has no effect on the contractual obligations of the parties.
D) the victim may sue immediately and not wait to see if the contract is performed or not.
E) the victim can get someone else to do the job but then cannot sue the original party to the contract if it costs more.

Accepted Answer

In case of an anticipatory breach, the victim does not have to wait to see if the contract will be performed or not. The victim can sue immediately for the breach of contract.

Question 14

Smedlap, a trucker, and Dewdney, a farmer, entered into a contract under which Smedlap agreed to haul all of Dewdney's 2011 pumpkin crop to market in time for the Halloween sales. However, the day before Smedlap was to pick up the pumpkins, he called Dewdney and told him that, since he had received such a good offer to buy his truck, he had sold it and therefore was not able to haul Dewdney's pumpkins. There was not enough time for Smedlap to buy another truck, but he was sure that Dewdney could make other arrangements and he hoped that he hadn't unduly inconvenienced him. Unfortunately, Dewdney was not able to make arrangements in time for the Halloween market, and instead he had to sell his crop to a pie-filling canner for much less than he could reasonably have expected at the market. Furthermore, the market owners were so disappointed by Dewdney's failure to deliver that they refused to give him their usual order for Christmas turkeys, in contrast to previous years, where this had generated his major income for the year. He was forced to find another outlet for his turkeys, and again he ended up selling to commercial processors for a substantially lower price. As a result of these two events, Dewdney was unable to keep up his mortgage payments on the farm and eventually he lost it to the bank in a foreclosure action. Dewdney is now suing Smedlap to recover these losses. Identify the correct statement with respect to the question of whether Smedlap's conduct was a breach of contract.
A) Smedlap is not liable because it was not his fault that Dewdney was unable to make other suitable arrangements.
B) The contract was discharged by frustration.
C) This was a breach that consisted of self-induced frustration.
D) Smedlap simply cancelled the contract, which he was entitled to do as long as it was before performance was due.
E) This was not a breach because Smedlap did not do it maliciously, and he gave Dewdney what he honestly believed was adequate notice to make other arrangements.

Accepted Answer

Smedlap's behavior constituted what is called a "self-induced frustration" of the contract. This means that Smedlap made it impossible for him to fulfill his obligations under the contract through his own actions (selling the truck). As a result, he is liable for Dewdney's damages. The fact that Smedlap gave Dewdney notice of his inability to perform does not excuse his breach of contract.

Question 15

A contract is terminated by agreement in which of the following situations:
A) The occurrence of a condition subsequent
B) Unilateral release
C) Breach
D) A written statement by one party to cancel an accepted order
E) Frustration

Accepted Answer

The answer of A contract is terminated by agreement in...

Question 16

In all but one of the following situations, the contract is frustrated. Identify the exception.
A) Jack contracts with Bill to build a barn on his one-acre lot, but before the permit is obtained, a new law prohibits barns on less than three acres.
B) Rudolph is due to appear in a local variety theatre that has just been destroyed in a fire of unknown origin.
C) Frank has contracted to ride Emperor, a prize horse, in the Canada Day races on July 1, but on June 28 the horse breaks a leg and has to be destroyed.
D) Gregory, a trucker with whom you contracted last month to haul potatoes tomorrow, phones to tell you that his truck has broken down.
E) Jerry, a doctor, is due to perform a heart transplant operation on Mary, and the night before the surgery his arthritis becomes so painful that he cannot hold a scalpel.

Accepted Answer

In situation D, the contract is not frustrated but rather impossible to perform due to unforeseen circumstances (the truck breaking down). In the other situations, the contracts have become impossible to perform due to external events (new law prohibiting barns, theatre destroyed by fire, horse breaking a leg, doctor's physical limitation).

Question 17

Mike contracted to buy Rita's house in a written contract that provided for a deposit of $10,000 to be forfeited in the event of Mike's failing to go through with the deal. This deposit was an honest estimate of the damages Rita would suffer. On these facts, which of the following is true?
A) If Mike breaches the contract, he will have to pay Rita all the damages that directly and naturally flow from the breach.
B) If Mike breaches the contract, he would have to pay $10,000 even if Rita's actual loss was $40,000.
C) A clause in a contract that provides for the forfeiture of a deposit is called an exemption clause.
D) If Mike breaches the contract, he would not have to pay $10,000 even if Rita suffered a substantial loss.
E) If the contract price agreed upon was $150,000 and Rita, after Mike breaches the contract, sells the house in one week for $138,000, she will still be able to recoup all her losses.

Accepted Answer

The contract provides for a liquidated damages clause, which sets a fixed amount of damages to be paid in the event of a breach. In this case, the deposit of $10,000 serves as an estimate of Rita's damages. Therefore, if Mike breaches the contract, he would have to pay $10,000 even if Rita's actual loss was less than that. This is the purpose of a liquidated damages clause, to provide certainty and avoid litigation over the extent of damages.

Question 18

Pat O'Grady owes Robinson $5,000 in cash, but resented Robinson talking about O'Grady's debt among mutual acquaintances. O'Grady wants to know which of the following tactics would be legal performance.
A) Not pay Robinson until Robinson came for it.
B) Pay Robinson on time but pay it all in dimes.
C) Pay him on time in $5 bills.
D) Pay him on time but with a cheque.
E) Deliver the money to his house instead of to his office at 3:00 a.m. on the due date.

Accepted Answer

O'Grady is legally obligated to pay Robinson the $5,000 debt on time. Option A is not a legal performance as it violates the terms of the contract and may result in additional penalties or legal action. Option B is also not a legal performance as Robinson has the right to require payment in a reasonable manner, such as currency bills. Option D is legal but may not be the best choice for O'Grady if he wants to avoid any potential disputes with Robinson. Option E is also not a legal performance as it may be seen as harassment or trespassing. Therefore, the best choice is to pay Robinson on time in $5 bills, which is a legal performance and also satisfies O'Grady's desire to express his resentment towards Robinson.

Question 19

Which of the following is true with regard to remedies for breach of contract?
A) The victim of a breach can recover damages that he could have avoided if he had tried to mitigate his loss.
B) An injunction is an equitable remedy forcing a person to comply with the terms of the contract.
C) The quantum (amount) of damages to be given to the victim of the breach may be limited to the amount specified in a liquidated damages clause of her contract.
D) A person who breaches a contract is liable for all the loss that directly and naturally flows from the breach, no matter how unforeseeable.
E) Specific performance is the proper remedy to stop a person from doing something that he had promised in the contract not to do, e.g., not to compete, not to disclose secrets, etc.

Accepted Answer

The answer of Which of the following is true with...

Question 20

Which of the following is true with regard to ending a contract by agreement?
A) A contract can be ended by agreement if one party has performed his obligation and agrees to take something as satisfaction from the other although that other hasn't performed according to the contract.
B) A contract can be ended by one party if he finds a better deal, e.g., by cancelling an order that has been accepted, as long as this is done before performance.
C) A contract can be ended unilaterally by one party.
D) A contract cannot be ended by agreement if neither party to the contract has performed his or her obligation.
E) A contract cannot be ended by the happening of a "condition subsequent" provided for in the contract.

Accepted Answer

A contract can be ended by agreement if one party has performed his obligation and agrees to take something as satisfaction from the other although that other hasn't performed according to the contract. This is known as "accord and satisfaction."

Quiz 9: The End of the Contractual Relationship

Which of the following would most likely result in the court finding the contract had been discharged by frustration?

Which of the following is false with regard to remedies for breach of contract?

Which of the following statements is true with respect to the law of damages?

Which of the following is one of the remedies generally available for a breach of contract?

In which one of the following instances would the seller most likely succeed in an attempt to escape liability by the use of an exemption clause?

Which of the following statements is correct with respect to breach of contract?

Which of the following is true with regard to remedies for breach of contract?

Which of the following is true with regard to ending a contract by performance, agreement, or breach?

Which of the following is true with regard to ending a contract by performance, agreement, frustration, or breach?

When an anticipatory breach has taken place (where a person, before performance is due, states that he will not perform the contract)

A contract is terminated by agreement in which of the following situations:

In all but one of the following situations, the contract is frustrated. Identify the exception.

Mike contracted to buy Rita's house in a written contract that provided for a deposit of $10,000 to be forfeited in the event of Mike's failing to go through with the deal. This deposit was an honest estimate of the damages Rita would suffer. On these facts, which of the following is true?

Pat O'Grady owes Robinson $5,000 in cash, but resented Robinson talking about O'Grady's debt among mutual acquaintances. O'Grady wants to know which of the following tactics would be legal performance.

Which of the following is true with regard to remedies for breach of contract?

Which of the following is true with regard to ending a contract by agreement?