BLT&E-7e: Practice Quiz

Chapter 16:

Contract Discharge and Remedies

1.If Lou agrees to purchase your ten-acre tract of land so that he can expand his shopping center and if, further, he provides the money you want and you transfer the deed to him, this is known as:

  1. discharge by breach.
  2. discharge by lapse of time.
  3. discharge by performance.
  4. discharge by concurrence.

Answers:

  1. Incorrect. The contract terms have been fulfilled, not breached, in this case.
  2. Incorrect. The contract has been performed, not discharged by the passage of time.
  3. Correct. You and Lou have fulfilled your contractual obligations and so have discharged the contract by performance.
  4. Incorrect. There is no such thing as a discharge by concurrence.

2.Tender may be defined as:

  1. kind feelings for others.
  2. the revision of a contract by substituting one contract party for another.
  3. an unconditional offer to perform by one who is ready, willing, and able to do so.
  4. a significantly conditioned offer to perform by one party who may be capable of so doing.

Answers:

  1. Incorrect. You may have tender feelings for people, but in contract law, this is not the definition of tender.
  2. Incorrect. This refers to novation
  3. Correct. An unconditional offer to perform is a tender.
  4. Incorrect. If an offer to perform is conditional, it is not a tender.

3.What are two basic types of performance?

  1. Remote and local performance.
  2. Future and past performance.
  3. Established and disestablished performance.
  4. Complete and substantial performance.

Answers:

  1. Incorrect. Although performance may take place locally or in a remote location, these are not the two basic types of performance.
  2. Incorrect. Again, although performance may have taken place in the past or be scheduled to take place in the future, these are not the two basic types of performance.
  3. Incorrect. These are not the two basic types of performance.
  4. Correct. Complete performance and substantial performance are the two basic types of performance in contract law.

4.Suppose that Jon agrees to build a house for Beth. John substantially performs the contract in good faith. If Beth refuses to pay him, Jon may be able to recover payment from Beth if:

a.his failure to completely perform the contract was willful.

  1. his failure to completely perform the contract was not willful.
  2. his failure to completely perform the contract was a condition precedent.
  3. his failure to completely perform the contract was done out of malice.

Answers:

  1. Incorrect. If his failure to perform was willful, Jon will not have demonstrated good faith, and so may not enforce the contract.
  2. Correct. If Jon acted in good faith and his failure was not willful, he may enforce the contract against Beth.
  3. Incorrect. There is no requirement that the failure to perform be a condition precedent.
  4. Incorrect. If Jon’s failure to perform was done out of malice, he did not demonstrate good faith.

5.Janine contracts with Dr. Mark Angelo to change the shape of her nose, to meet her satisfaction. If, after the surgery, Janine is not at all satisfied, her proper recourse is to:

  1. not pay, because the physician did not live up to his duties under the contract.
  2. pay only one-half the contract price.
  3. pay the full sum due under the contract and then sue for assault.
  4. perform her part of the contract.

Answers:

  1. Correct. This contract requires that one party perform to the satisfaction of the other. If the party with that obligation fails to perform according to the satisfaction of the other party, the other party does not need to pay. The only requirement is that Janine act honestly and in good faith when concluding that the work was not performed to her satisfaction.
  2. Incorrect. Janine is not satisfied and does not need to pay at all.
  3. Incorrect. Janine does not need to pay in this case.
  4. Incorrect. Janine’s performance under the contract is to pay for the surgery, and she does not have to pay in this case.

6.William and Laverne enter into a contract for William to paint Laverne’s house. After two weeks, William and Laverne both decide that their contract does not meet their needs. They decide to cancel the agreement. This is known as:

  1. performance.
  2. novation.
  3. restitution.
  4. rescission.

Answers:

  1. Incorrect. The parties to the contract have not performed.
  2. Incorrect. The parties have not agreed to substitute another party.
  3. Incorrect. This is not a restitution.
  4. Correct. The parties are rescinding, or canceling, their contract.

7.When a party to a contract breaches the contract, the other party is legally entitled to:

  1. an apology.
  2. nothing, because breaches are legally permissible and have no consequences.
  3. sue for money damages.
  4. prosecute the breaching party for a criminal violation.

Answers:

  1. Incorrect. Morality may require an apology in this situation, but the law does not.
  2. Incorrect. The nonbreaching party is entitled to sue for money damages.
  3. Correct. The nonbreaching party is entitled to sue for money damages.
  4. Incorrect. Breach of contract is a civil violation, not a criminal violation.

8.Consequential damages are:

  1. damages in a very small amount, usually $1, to show that the defendant acted wrongfully.
  2. special, foreseeable damages that are caused by circumstances beyond the contract itself but that arise as a consequence of the contract’s breach.
  3. damages that compensate a party for actual losses directly resulting from the breach of contract.
  4. damages that punish a breaching party.

Answers:

  1. Incorrect. These are nominal, not consequential, damages.
  2. Correct. Such special damages are called consequential damages.
  3. Incorrect. These are compensatory damages.
  4. Incorrect. These are punitive damages.

9.As a general rule, punitive damages:

  1. are not awarded for a breach of contract.
  2. are often awarded in construction cases.
  3. are always available to plaintiffs who are minors.
  4. are available to award an innocent party when a technical injury with no actual damages occurs.

Answers:

  1. Correct. Because the purpose of punitive damages is to punish a wrongdoer, they are typically not available in contract cases.
  2. Incorrect. This form of damages is generally NOT available in contract cases.
  3. Incorrect. Even for minors, this form of damages is generally not available.
  4. Incorrect. This describes nominal, not punitive, damages.

10.Liquidated damages may be defined as:

  1. damages to compensate a small technical harm.
  2. an unspecified dollar amount to be paid in the event of a future default or breach of contract.
  3. a punishment for a default on a contractual term.
  4. a specified dollar amount to be paid in the event of a future default or breach of contract.

ANS:

a.Incorrect. This would be nominal damages.

b.Incorrect. Liquidated damages involve a specific dollar amount.

c.Incorrect. This kind of punishment is a penalty, not liquidated damages.

d.Correct. Liquidated damages involve a specific dollar amount to be paid in the event of a future default or breach.