Chapter 17
Performance and Discharge
in Traditional and E-Contracts
N.B.: TYPE indicates that a question is new, modified, or unchanged, as follows.
N A question new to this edition of the Test Bank.
+ A question modified from the previous edition of the Test Bank.
= A question included in the previous edition of the Test Bank.
TRUE/FALSE QUESTIONS
B1. The most common way to discharge a contract is by performance.
B2. If a contract condition is not satisfied, the obligations of the contracting parties are
discharged.
B3. In most contracts, promises of performance are expressly qualified.
B4. Implied conditions are found in the express language of an agreement.
B5. A condition that must be fulfilled before a party’s performance can be required is a
concurrent condition.
B6. Performance can be accomplished by tender.
B7. Complete performance occurs when conditions in a contract are fully satisfied.
B8. Performance that provides a party with most of the benefits of a contract, in spite of a
deviation from the terms, is substantial performance.
B9. Intentional failure to comply with the terms of a contract is a breach.
B10. If a contract requires performance to the personal satisfaction of a party, the party to
be satisfied must act honestly and in good faith.
B11. Anything less than complete performance is a material breach of contract.
B12. Any breach discharges the nonbreaching party from the contract.
B13. Any breach allows the nonbreaching party to cancel the contract.
B14. Anticipatory repudiation is 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. Performance of an accord discharges an original contractual obligation.
B18. After a contract is made, a supervening event may make performance impossible and
discharge the contract.
B19. A contract is discharged when its specific subject matter is destroyed.
B20. A contract is not discharged by a foreseeable circumstance no matter how difficult or
costly the performance may become.
MULTIPLE CHOICE QUESTIONS
B1. Dylan enters into a contract to manage the operations of Cash’s accounting office for
one year, renewable for subsequent one-year terms. If this contract is discharged like
most contracts, it will be
a. canceled.
b. compromised.
c. altered.
d. performed.
B2. Juana contracts to sell Ignacio her MP3 player for $30. This contract will be fully
discharged when Juana and Ignacio
a. agree to sign a bill of sale.
b. exchange the player for the $30.
c. sign a receipt.
d. shake hands and go their separate ways.
B3. Dinah contracts to repair a rip in a ventilation duct for Ernie’s Café for $100. If Dinah
does not perform, Ernie must pay
a. $100.
b. $50.
c. $10.
d. $0.
B4. McCoy enters into a contract to operate a Tasty Yogurt franchise, which Tasty agrees
to support as long as McCoy maintains his business license. Tsaty’s duty to perform is
a. absolute.
b. conditional.
c. licentious.
d. operational.
B5. Candace enters into a contract to pay Parker for a business survey and review of
Candace’s competitors, which Parker delivers on June 1. Candace’s offer, on the same
date, to pay Parker is
a. tandem.
b. tonnage.
c. tender.
d. tinder.
B6. Tia signs a lease that states any change in the zoning law that affects the lease will
cause its termination. Union City’s zoning board adopts an affecting zoning
classification. This adoption satisfies
a. no condition.
b. the condition precedent.
c. the concurrent condition.
d. the condition subsequent.
B7. Red’s Plumbing Service substantially performs its contract with Shady Grove
Condominiums, Inc. Shady Grove is entitled to
a. damages.
b. nothing more.
c. repudiation.
d. alteration.
B8. Building Restoration, Inc. (BRI), enters into a contract to refurbish an old train depot
for Casual Dining, Inc., to open as Eat Up Restaurant. If BRI completes most of the
work promised in the contract, its performance will be
a. absolute.
b. complete.
c. material.
d. substantial.
Fact Pattern 17-B1 (Questions B9–B10 apply)
Kip sells an apartment building to Lacy with a promise to repair the roof, which violates the
local housing code, within six months. One year later, Kip sends Milo, a carpenter, to fix the
roof. Lacy orders Milo to leave and refuses to make further payments to Kip, who files a suit
against Lacy.
B9. Refer to Fact Pattern 17-B1. Kip’s late attempt to fix the roof is most likely
a. a material breach.
b. complete performance.
c. excused by Lacy’s refusal to make further payments.
d. substantial, but not complete, performance.
B10. Refer to Fact Pattern 17-B1. Lacy’s refusal to make further payments is most likely
a. a material breach.
b. complete performance.
c. excused by Kip’s failure to fix the roof.
d. substantial, but not complete, performance.
Fact Pattern 17-B2 (Questions B11–B12 apply)
Bell Medical Education Service enters into a contract to employ Chris as an instructor for two
years to begin May 1. One month before the term begins, Bell is underbid by a competitor
and loses a major client, Delta Hospital Center. Bell now refuses to hire Chris.
B11. Refer to Fact Pattern 17-B2. Under the circumstances, with respect to damages, Chris
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 17-B2. Bell’s repudiation is most likely
a. a material breach.
b. a minor breach.
c. Chris’s breach.
d. no breach.
B13. Straitedge Toolmakers, Inc., contracts to sell its assets to Trulevel Hardware Corpo–
ration. 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. commercial impracticability.
B14. 3D FX, LLC, and Vivid Star CG, Inc., are parties to a contract. They subsequently agree
that Pixellated Inc. should take 3D’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. commercial impracticability.
B15. Mona and Nero 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.
B16. On April 1, KO Contractors, Inc., contracts to build a store for Lo-Cost Housewares at a
specific location in Metro City. On May 1, Metro changes its zoning law to prohibit the
construction of a commercial building at that location. Lo-Cost files a suit against KO.
In this situation
a. KO is in breach of contract.
b. Lo-Cost is in breach of contract.
c. the contract is discharged.
d. the contract is suspended.
B17. Blueberry Café signs an agreement with County Credit 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. Blueberry’s best argument for avoiding
payment to County Credit 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. Melissa agrees to work as Garry’s personal accountant for one year but dies in the
sixth month of the contract. Melissa’s estate
a. is discharged from any contractual liability.
b. must find a competent accountant to fulfill the contract.
c. must pay damages.
d. must refund any money paid to Melissa on the contract.
B19. Rachel operates a scrap metal business and contracts to provide ten tons of scrap
steel at $50 per ton to be delivered to Pure Metals, Inc., in six months. An unforeseen
shortage of scrap steel suddenly develops, making it impossible for Rachel to fulfill the
contract for less than $500 per ton. Rachel’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.
B20. Tanya contracts with Suite Condos Corporation to buy a unit in Suite’s Bayview Tower
at a premium for its view of River Bay. Unforeseeably, the town of River Bay changes
its zoning law. Resort Hotels, Inc., constructs River Bay Resort, blocking what would
have been Tanya’s view. Tanya’s best argument for a change in the Suite contract or
its price is
a. frustration of purpose.
b. objective impossibility of performance.
c. anticipatory repudiation.
d. commercial impracticability.
ESSAY QUESTIONS
B1. Estimable Builders, Inc., contracts with Beach Investment Company to build a Cool
Juice ‘n Fruit 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. Estimable does not finish until
June 14. The stand opens but Beach Investment loses two weeks’ early summer sales
due to the delay. Is Beach Investment’s duty to pay for the construction of the stand
discharged?
B2. Fred, the owner and manager of Green Grocer 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 Fred suffers a loss, is
there any limit to the time within which Fred can file a suit against Holly for breach of
contract? If so, how might Fred extend this time?