Full Test Bank Performance And Remedies Ch18

Business Law, 17e (Langvardt)

Chapter 18 Performance and Remedies

1) When a person owes an unconditional duty to another, then he/she must perform it unless the performance is excused.

2) Pat promises to install granite countertops in the home at 123 Main Street that Bruce is purchasing "provided that the escrow on the sale of 123 Main Street closes." The close of escrow on the sale of 123 Main Street is a condition precedent to Pat's promise.

3) A condition subsequent cannot be a valid reason for the discharge of a duty.

4) If Grant promises to sell his regular season football tickets to Carson on condition that Indiana University wins the Rose Bowl, Indiana's winning the Rose Bowl is an express condition of Grant's duty to sell the tickets.

5) There cannot be subjective standards of personal taste and comfort when determining a promisee's performance.

6) In a contract for Adam to sell Carrie a steam boiler, Carrie's obligation to pay is conditioned upon her personal satisfaction with the boiler. Even though the boiler meets every mechanical test imaginable, Carrie refuses to pay because she just does not like the boiler for some reason. She is not obligated to pay, because the contract said that he must be personally satisfied, and a contract is a contract.

7) The term condition means an event that may affect a party's duty to perform under a contract.

8) There is prescribed formal language that must be used to create an express condition as part of a contract.

9) When a promisor's performance is an express condition of the promisee's duty to perform, that performance must meet a strict performance standard.

10) An accountant who substantially performs her duties to her client triggers the client's duty to pay the contract price, less any damages resulting from defects in her performance.

11) The substantial performance standard is more lenient than the strict performance standard of judicial contract legal interpretation.

12) In the eyes of law, all breaches of contract are of equal seriousness.

13) Andy contracts with Yvonne to produce an advertisement for a Fourth-of-July fundraising party. Yvonne does not produce the advertisement until July 6. Here, Yvonne's breach of the contract is not a material breach unless the contract explicitly stated that time is of the essence.

14) If there is no time specified in contract by the parties, then it is presumed that performance shall be completed whenever possible.

15) Bill contracts to build a building for Harvey. A few changes in the building code that were made after the contract was signed will increase Bill's costs in performing his duties. He is excused from performance under the contract.

16) Mr. Green contracts to repair his roof with Mr. Brown. Prior to the work starting a tornado destroys Mr. Green's home. Mr. Brown fails to perform under the contract, but the court will not consider Mr. Brown to be in breach due to impossibility.

17) Ms. White is contracted by Mr. Green to make her "world famous" apple pies. Ms. White has an accident, falls into a coma and the pies are not delivered to Mr. Green by the time stated in the contract. Ms. White will be considered in breach of her contract to Mr. Green.

18) In general, an employee who has been fired and who wants to sue for breach of contract need not do anything to limit or mitigate his damages, such as looking for another job. This would unfairly benefit an employer who has wrongfully breached a contract.

19) Arthur and Brian have entered into a contract with an enforceable liquidated damages provision that states that Ben's recovery will be $10,000 in the event of Arthur's breach. Arthur breaches the contract. Ben loses $50,000 in consequential damages as a result. Ben's recovery is limited to $10,000.

20) Specific performance is almost never awarded in contracts for the sale of land.

21) A(n) ________ is a future, uncertain event that creates or extinguishes a duty of performance.

A) condition

B) promise

C) assurance

D) warranty

22) An uncertain future event, the occurrence of which is necessary for the existence of a contractual obligation is called:

A) a condition precedent

B) a condition subsequent

C) a concurrent condition

D) a constructive condition

23) Which of the following is a condition subsequent?

A) "I promise to do X if I succeed in getting a loan."

B) "I promise to do X on the condition that the Cubs win the World Series."

C) "I promise to do X unless Al Gore is elected President in 2000."

D) "I promise to do X assuming that inflation stays below 3% in 1997."

24) Which of the following is also known as an implied-in-law condition since they are imposed by law rather than by agreement of the parties?

A) Condition precedent

B) Express condition

C) Constructive condition

D) Subsequent condition

25) Roe promises to build a house for Crown for which, Crown agrees to pay him $10,000 when the house is complete. This example is related to the concept of:

A) express condition.

B) constructive condition.

C) subsequent condition.

D) implied condition.

26) What is the term for a condition that is specified in a contract?

A) Express condition

B) Implied condition

C) Corporate condition

D) Bilateral condition

27) What is the term for a condition that is not stated in the contract but is created by the nature of the transaction between parties?

A) Express condition

B) Implied-in-fact condition

C) Corporate condition

D) Bilateral condition

28) For which of the following contracts, is a party's subjective dissatisfaction sufficient to excuse his performance under a "personal satisfaction" clause in a contract?

A) A contract to construct an intercontinental ballistic missile

B) A contract to paint someone's portrait

C) A contract to build a steam boiler

D) A contract to rebuild an automobile engine

29) When a person whose duty is conditional leads the other party to rely on his noninsistence on the condition, the condition will be excused because of  ________.

A) waiver

B) estoppel

C) rescission

D) liability

30) Which of the following promises is subject to the "strict performance" standard? Assume that performance of the promise is not an express condition of the promisee's duty to perform.

A) A promise to build a road

B) A promise to paint a house

C) A promise to destroy a building

D) A promise to deliver a deed

31) What is the law's main purpose in imposing the implied covenant of good faith and fair dealing?

A) Providing adequate remedial measures to injured parties

B) Punishing the breaching parties in a contract

C) Encouraging litigation regarding breach of contracts

D) Encouraging ethical behavior in contracts

32) Which of the following is subject to the "substantial performance" standard in the absence of an express condition?

A) A promise to pay money

B) A promise to deliver a deed

C) A promise to build a house

D) A promise to deliver some goods

33) Mr. Green contracts with Mr. Brown to repair his roof. Mr. Brown is about 75% done when the deadline of the contract occurs. Which legal standard would prevent Mr. Brown from being considered to be in breach of his agreement with Mr. Green?

A) Substantial performance standard

B) Strict performance standard

C) Reasonable person standard

D) Egg shell person standard

34) Nina breached a contract between Milo and her, but not so materially. This means that Milo can:

A) sue only for damages caused by the breach

B) sue for damages for a total breach of the contract

C) cancel the contract

D) withhold his performance, even if the breach is remedied

35) Which of the following is true of the materiality of breach?

A) Courts generally adopt strict standards to determine materiality.

B) The magnitude of the breach is of relatively less importance.

C) There is no concern about compensating the nonbreaching party.

D) The timing of the breach is generally taken into consideration.

36) Justin agrees to start a life-size portrait of Julia beginning November 2. On October 28 he writes to Julia that due to unforeseeable circumstances, he would not be able to perform his promise. Justin has used the doctrine of:

A) accord and satisfaction.

B) anticipatory repudiation.

C) specific performance.

D) quasi-contract.

37) Performance under a contract must be within a reasonable time when:

A) the value of the contract is high.

B) one of the parties is a government agency.

C) a specific time is implied in the contract.

D) no time for performance is expressly stated in the contract.

38) Kyle promised to mow Heidi's lawn for $20 and clean her gutters for $50, but only mowed the lawn. Which of the following is true of Kyle?

A) He is the nonbreaching party and can, therefore, sue Heidi.

B) Heidi cannot sue him because he has performed one of the promises.

C) He can recover the contract price for the activity he performed.

D) He will be directed by the court to complete the entire contract for free.

39) Which of the following allows a party who has materially breached a contract to recover the reasonable value of any benefits he has conferred on the promisee?

A) Quasi-contract

B) Anticipatory repudiation

C) Specific performance

D) Accord and satisfaction

40) Which of the following is a remedy for a party that is in material breach of a contract but has incurred economic harm by already performing substantially for the contract?

A) Liquidated damages

B) Quasi-contract

C) Bilateral contract

D) Incorporation

41) When is a person's duty to perform discharged on grounds of impossibility?

A) When a substitute is available

B) When there is a delay in the delivery of goods

C) In the presence of supervening illegality

D) A promisee's dissatisfaction with the performance

42) Adrienne contracted to convey real estate to Rich. However Adrienne died before the conveyance is completed. What is the status of the parties?

A) Adrienne is excused for nonperformance.

B) Rich will be directed by the court to end the contract.

C) Adrienne's performance was impossible.

D) Rich can enforce the contract against Adrienne's estate.

43) Which of the following instances is a sufficient reason to cause commercial impracticability?

A) Increased cost

B) War

C) Collapse of market

D) Shortage of good

44) When a promisee who has an existing claim agrees with the promisor that he will accept some performance different from that which was originally agreed on, both parties can use the remedy of:

A) specific performance.

B) accord and satisfaction.

C) waiver.

D) rescissions.

45) The relinquishment of rights by a party in a contract is called a(n) ________.

A) waiver

B) rescission

C) impossibility

D) reliance interest

46) Which of the following circumstances is a valid reason for the delay of a lawsuit once the statutory period is over?

A) Illegality of the contract

B) Change of mind of the nonbreaching party

C) Minority of the nonbreaching party

D) Addition of a third party

47) The legal remedy of ________ requires the defendant to pay the value of the benefits that the plaintiff has conferred on him.

A) restitution

B) waiver

C) compensatory damages

D) accord and satisfaction

48) Someone who attempts to recover for breach of contract:

A) can recover only for those losses that he can prove with reasonable certainty.

B) can recover for all consequences of the breach, whether foreseeable or not.

C) can only do so for consequential damages.

D) has no duty to mitigate (or minimize) damages.

49) Winston contracts to sell a plot of land called Blackacre to Paris for $500,000. Winston breaches the contract and Paris sues him. Blackacre's reasonable market value at the time of the breach was $525,000. Paris can recover:

A) nothing, for he hasn't really suffered any harm.

B) nothing, because specific performance is his only remedy here.

C) only $25,000.

D) the entire $500,000.

50) Which form of damages is intended to give the victim of the breach of contract the "benefit of his bargain"?

A) Compensatory

B) Punitive

C) Nominal

D) Liquidated

51) Maria and Joe entered into a contract for the sale of Maria's car. Delivery of the car and payment were to be made on March 1. Joe clarified that he needed the car so that he can commute between San Francisco and Oakland to his new job that is starting on March 2. Maria breached the contract and failed to deliver the car on March 1. Joe needed a car to commute so he rented a car at $30 per day for 20 days, which was the reasonable amount of time it took him to locate and buy another car. Joe sued Maria for his losses, including the $600 car rental. The $600 makes up the ________ damages.

A) liquidated

B) consequential

C) punitive

D) specific performance

52) A party cannot recover for losses that he could have avoided without undue risk, burden, or humiliation. This is an example of:

A) Incidental damages

B) Consequential damages

C) Liquidated damages

D) Mitigating damages

53) The equitable remedy of specific performance is most likely to be awarded by a court in which of the following circumstances?

A) Sale of a Da Vinci original where the seller refuses to deliver

B) Sale of a perfume bottle which the seller refuses to deliver

C) A promisee's failure to perform at a charity event

D) A promisee's failure to deliver a contract of employment

54) Which form of damages involves a court ordering a party to a contract to perform his/her obligations under the contract?

A) Quasi-contract

B) Specific performance

C) Rescission

D) Promissory estoppel

55) On May 2, 1972, Mix, an accountant, entered into an oral contract with Dell to provide certain accounting services to Dell. The contract was fully performed by both parties in 1974. On April 25, 1988, Dell commenced a breach of contract action against Mix claiming that Mix improperly performed the accounting services. Mix's best defense to the action would likely be:

A) Parol evidence rule

B) Statute of limitations

C) Statute of frauds

D) Lack of consideration

56) Sklar, an accountant, purchased two computers from Wiz Corp. Sklar discovered material defects in the computers 10 months after taking delivery. Three years after discovering the defects, Sklar commenced an action for breach of warranty against Wiz. Wiz raised the statute of limitations as a defense. The original contract between Wiz and Sklar contained a conspicuous clause providing that the statute of limitations for breach of warranty actions would be limited to 18 months. Under the circumstances, Sklar will:

A) win because the action was commenced within the four-year period as measured from the date of delivery.

B) win because the action was commenced within the four-year period as measured from the time he discovered the breach or should have discovered the breach.

C) lose because the clause providing that the statute of limitations would be limited to 18 months is enforceable.

D) lose because the statute of limitations is three years from the date of delivery with respect to written contracts.

57) Price signed a contract to sell Wyatt a parcel of land for $90,000. The entire sales price was payable at the closing. Price decided to keep the land. If Wyatt commences an action against Price, what relief is Wyatt most likely to receive?

A) Specific performance

B) Compensatory damages and specific performance

C) Punitive damages

D) Compensatory damages and punitive damages

58) Damages that are agreed upon at the time the contract is entered into are called ________.

A) compensatory damages

B) consequential damages

C) liquidated damages

D) mitigation of damages

59) Upon ________, each party who has been benefited by the other's performance must compensate the other for the value of the benefit conferred.

A) rescission

B) novation

C) accord and satisfaction

D) revocation

60) Which of the following characterizes the statute of limitations?

A) The time period fixed by the statute of limitations is uniform throughout the states.

B) The recording of the contract stops the running of the statute of limitations.

C) The time period fixed by the statute of limitations begins when the contract is recorded.

D) The time period for oral contracts is different from that of written ones.

61) Bing engaged Dill to perform personal services for $2,200 a month for a period of four months. The contract was entered into orally on July 1, 1984, and performance was to commence on September 1, 1984. On August 10, Dill anticipatorily repudiated the contract. As a result, Bing:

A) may not assign his rights to damages under the contract to a third party.

B) can obtain specific performance.

C) may not enforce the contract against Dill since the contract is oral.

D) can immediately sue for breach of contract.

62) Stacey wanted someone to paint her house. Jessica offered to do it for $300 while Nancy offered to do it for $250. A few days after Stacey entered into a contract with Nancy, Nancy increased her fee to $400. By this time, Jessica was not interested in entering into a contract with Stacey anymore. Stacey can seek to be compensated on the basis of a ________.

A) quasi-contract

B) part performance

C) reliance interest

D) compensatory damages

63) Which of the following is the starting point in calculating the compensatory damages that the plaintiff had the right to expect?

A) Loss in value of the performance

B) Loss in value of the contract

C) Time taken for the performance

D) Delay from the expected time of performance

64) Which of the following are also called special damages?

A) Nominal damages

B) Liquidated damages

C) Punitive damages

D) Consequential damages

65) What is an injunction?

A) The awarding of compensatory damages

B) A court's order requiring a person to do something or refrain from doing something

C) The cancellation of a contract regarding real estate

D) A lawsuit for damages brought by the nonbreaching party

66) Chris contracts to buy David's house on condition that Small Town Bank approves Chris's application for a mortgage loan by July 1. If Chris is not approved for the loan, then:

A) he still has a duty to buy the house.

B) he is discharged from further obligation under the contract.

C) his inability to get the loan constitutes a breach of contract.

D) he must renegotiate with David.

67) A ________ occurs when the contract calls for the parties to perform at the same time.

A) concurrent condition

B) condition subsequent

C) condition precedent

D) constructive condition

68) A ________ is a future, uncertain event that discharges the duty to perform.

A) concurrent condition

B) condition precedent

C) condition subsequent

D) constructive condition

69) Sherry and Gretchen orally agree that Sherry will begin paying Gretchen $500 per month, but if ABC Corp. dissolves, Sherry will no longer have to pay Gretchen. ABC Corp. dissolves and Sherry promptly stops making any future payments to Gretchen. Which of the following statements is true?

A) If Gretchen sues Sherry, Sherry will bear the burden of proving the occurrence of the condition.

B) This is an example of a condition precedent.

C) Gretchen cannot sue Sherry because the agreement was not in writing.

D) Gretchen's only course of redress is to bring an action against ABC Corp.

70) In Killian v. Ricchetti, the case in the text, the agreement between the parties is an example of a:

A) concurrent condition.

B) constructive condition.

C) condition subsequent.

D) condition precedent.

71) If Jack promises to unload landscaping rock from Harry's truck, the truck's arrival would be a(n) ________ of Jack's duty to unload the rock.

A) express condition

B) implied-in-fact condition

C) corporate condition

D) bilateral condition

72) Frank hires Saul to landscape his yard, but when Saul attempts to begin landscaping, Frank refuses to allow Saul to enter the land. Which of the following statements is true?

A) Frank's duty to pay is subject to a constructive condition that Saul completes the landscaping job.

B) Any claim Saul would bring would be made in bad faith.

C) Saul can only be excused from performance if the parties mutually agree to rescind the contract.

D) Saul can sue Frank for damages for breach of contract.

73) Gayle agrees to pay Pat $1,000 for painting her house "on condition that" Pat finish the job no later than October 1, 2016. Which of the following statements is false?

A) A standard of strict or complete performance would be applied to Pat's performance.

B) If Pat does not finish the job by October 1, 2016, he is not discharged from performing.

C) If Pat does not finish the job by October 1, 2016, he will have breached the contract.

D) Gayle does not have a duty to pay the contract price.

74) Which of the following is generally taken to mean neither party to a contract will do anything to prevent the other from obtaining the benefits that she has the right to expect from the parties' agreement or their contractual relationship?

A) Implied covenant of candor

B) Implied covenant of fairness

C) Implied covenant of good faith and fair dealing

D) Implied covenant of loyalty

75) Which of the following statements about courts determining the materiality of a breach is false?

A) The standard for determining materiality is a flexible one that takes into account the facts of each individual case.

B) A breach that occurs later in the parties' relationship is more likely to be viewed as material than is one that occurs early.

C) They key question is whether the breach deprives the injured party of the benefits that he reasonably expected.

D) Courts take into account the extent to which the breaching party will suffer forfeiture if the breach is held to be material.

76) In the case in the text, Harrison v. Family Home Builders, LLC, the court held that:

A) FHB failed to perform the work in a workmanlike manner.

B) FHB failed to perform the work in accordance with the plans and specifications provided by the Harrisons.

C) FHB failed to render substantial performance of the contract.

D) FHB was entitled to a reasonable time to perform the contract.

77) Which of the following occurs when the promisor indicates before the time for his performance that he is unwilling or unable to carry out the contract?

A) Anticipatory repudiation

B) Waiver

C) Estoppel

D) Accord and satisfaction

78) When an anticipatory repudiation occurs, what must the nonbreaching party show to recover damages right away for total breach of the contract?

A) He was ready, willing, and able to perform his part of the contract.

B) The anticipatory repudiation was made in bad faith.

C) The breaching party failed to notify him within a reasonable amount of time.

D) The breaching party could have performed but arbitrarily decided not to regardless.

79) A contract is ________ when each party's performance can be divided in two or more parts and each part is exchanged for some corresponding consideration from the other party.

A) whole

B) divisible

C) unenforceable

D) material

80) Which of the following is a doctrine under which a party to a contract is relieved of his duty to perform when that performance can no longer be completed because of the occurrence of an event unforeseen at the time of contracting?

A) Waiver

B) Impracticability

C) Impossibility

D) Good faith and fair dealing

81) In World of Boxing LLC v. King, the case in the text, the court held that:

A) impossibility excused King's breach because his mistaken belief was reasonable.

B) impossibility excused King's breach because he should not be punished for failing to foresee a plainly remote and unlikely event.

C) impossibility did not excuse King's breach.

D) impossibility  excused King's breach because his duty to perform was triggered by an event out of his control.

82) Which of the following statements about commercial impracticability is true?

A) A collapse of a market for particular goods is generally sufficient to excuse nonperformance.

B) A promisor must be able to establish that the event that makes performance impracticable occurred without his fault.

C) If an event causes impracticability and a seller only has limited capacity to perform, the seller can allocate production and deliveries to the highest paying customers.

D) Crop failures cannot give rise to impracticability because it is an inherent market risk.

83) Which of the following would not discharge a contract?

A) A party consents to an alteration of the contract

B) A party voluntarily waives any right he has under the contract

C) The time for bringing a lawsuit has exceeded the time prescribed in the statute of limitations

D) A party's debts are discharged by a decree of bankruptcy

84) Which of the following compensate for reasonable costs that the injured party incurs after the breach in an effort to avoid further loss?

A) Nominal damages

B) Consequential damages

C) Liquidated damages

D) Incidental damages

85) As demonstrated in the case in the text, Garden Ridge, L.P. v. Advance International, Inc., a liquidated damages clause:

A) will be enforced, regardless of whether it is reasonable or not.

B) can be claimed in addition to consequential damages.

C) must provide a reasonable calculation of its figure.

D) will not be enforced if it serves to penalize the breaching party.

86) Mike contracts with Bob to purchase Bob's boat. Mike promises to pay Bob $5,000 upon delivery of the boat to Mike's beach house. Bob arrives at Mike's beach house without the boat, and demands full payment before the boat is to be delivered. Is Mike obligated to pay Bob the money? Why or why not?

87) Richard contracts with Yuan to buy Yuan's house for $100,000 "unless my horse does not win the Kentucky Derby." This is a condition subsequent, or at least an attempted condition subsequent. Rephrase it as a condition precedent with the same effect. If you can do this, why does the law bother to distinguish conditions precedent from conditions subsequent?

88) On October 31, a Congressional candidate orders a quantity of campaign literature from a local printer. The stated time of performance is November 2. November 8 is Election Day. The literature is not delivered until November 9. Thus, the candidate refuses to pay. Is this position justified? Why or why not? Assume that nothing was said in the contract about time being of the essence.

89) Paul contracts to sell his home to Dee for $100,000. The sale, which was negotiated by a broker for two parties who never met, was set to close on September 1. On July 15, Paul discovers the identity of the buyer, and immediately writes Dee to tell him that there is no way he will ever sell his house to "some hippy." Must Dee wait until September 1 to sue Paul for breach of contract?

90) Landlord has leased the property to the tenant. Tenant has to pay $5 as a late charge for the late payment of rent. Tenant pays his rent late for five months in a row, but landlord accepts it without objection. Can landlord afterward recover the late charges?