1
Chapter 18
Performance and Discharge
in Traditional and E-Contracts
TRUE/FALSE QUESTIONS
B1. The most common way to discharge one’s contractual duties is by breach of
contract.
B2. If a contract condition is not satisfied, the obligations of the parties are
suspended.
B3. In most contracts, promises of performance are not expressly conditioned or
qualified.
B4. Implied conditions are not understood to be part of an agreement but are found
in the express language of the agreement.
2 TEST BANK B—UNIT THREE: CONTRACTS AND E-CONTRACTS
B5. A condition that must be fulfilled before a party’s performance can be required
is a condition subsequent.
B6. Performance can be accomplished by tender.
B7. When a party’s performance is perfect, it is said to be complete.
B8. A party who in good faith performs substantially all of the terms of a contract
can enforce the contract against the other party.
B9. Most contracts need to be performed only to the satisfaction of a reasonable
person unless they expressly state otherwise.
B10. Anything less than complete performance is a material breach of contract.
B11. Any breach discharges the nonbreaching party from the contract.
B12. Any breach allows the nonbreaching party to cancel the contract.
CHAPTER 18: PERFORMANCE AND DISCHARGE IN TRADITIONAL & E-CONTRACTS 3
B13. Any breach entitles the nonbreaching party to sue for damages.
B14. When an anticipatory repudiation occurs, it is treated as a material breach of a
contract.
B15. To rescind a contract, the parties must make a second agreement that satisfies
the legal requirements for a contract.
B16. A contractual obligation may not be discharged through novation.
B17. The law allows an innocent party to be discharged when the other party has
materially altered a written contract without consent.
B18. After a contract is made, a supervening event may make performance
impossible in an objective sense.
B19. An occurrence or event that makes performance temporarily impossible
operates to discharge the parties’ contractual duties.
4 TEST BANK B—UNIT THREE: CONTRACTS AND E-CONTRACTS
B20. A contract will be discharged if supervening circumstances make it impossible
to attain the purpose both parties had in mind when they made the contract.
MULTIPLE CHOICE QUESTIONS
B1. 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.
B2. 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.
B3. 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.
CHAPTER 18: PERFORMANCE AND DISCHARGE IN TRADITIONAL & E-CONTRACTS 5
B4. 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.
B5. 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.
B6. 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.
6 TEST BANK B—UNIT THREE: CONTRACTS AND E-CONTRACTS
B7. 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.
B8. 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.
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.
B9. 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.
CHAPTER 18: PERFORMANCE AND DISCHARGE IN TRADITIONAL & E-CONTRACTS 7
B10. 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.
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.
B11. 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.
B12. 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.
8 TEST BANK B—UNIT THREE: CONTRACTS AND E-CONTRACTS
B13. Drainage & Irrigation Equipment, Inc., contracts to sell its assets to Earth & Sky
Aquatic Corporation. Before either party has performed, rescission of this con-
tract requires
a. a mutual agreement to rescind.
b. an accord and satisfaction.
c. a novation.
d. a settlement agreement.
B14. 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.
B15. 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.
CHAPTER 18: PERFORMANCE AND DISCHARGE IN TRADITIONAL & E-CONTRACTS 9
B16. 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.
B17. 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.
B18. 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.
10 TEST BANK B—UNIT THREE: CONTRACTS AND E-CONTRACTS
B19. 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.
B20. 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.
ESSAY QUESTIONS
B1. Able Builders, Inc., contracts with Beach Assets Company to build a Cool Juice
stand near Divers’ Beach. The work is to begin on April 1 and be done by June
1, so that the stand can open for the summer. Able Builders does not finish
until June 14. The stand opens but Beach Assets loses two weeks’ early
summer sales due to the delay. Is Beach Assets’s duty to pay for the
construction of the stand discharged?
CHAPTER 18: PERFORMANCE AND DISCHARGE IN TRADITIONAL & E-CONTRACTS 11
B2. Franz, the owner and manager of Green’s Grocery Store, contracts to buy sixty
crates of fresh peaches from Holly, the owner and manager of Ideal Farms.
Suppose that Holly dies before she can harvest and deliver the peaches. How
does Holly’s death affect their contract? If Holly does not die, but does not
deliver, and Franz suffers a loss, is there any limit to the time within which
Franz can file a suit against Holly for breach of contract? If so, how might Franz
extend this time?