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40. A(n) is a contract between a promisee and a promisor by which the promisee agrees to accept and the
promisor agrees to render a substituted performance in satisfaction of an existing contractual duty.
a. accord
b. mutual rescission
c. material alteration
d. novation
41. Which of the following is/are correct with regard to conditions subsequent?
a. Conditions subsequent are quite common in contracts.
b. A "sale or return" contract is an example of a contract with a condition subsequent.
c. A condition subsequent must occur before performance is due under a contract.
d. All of these are correct.
42. Bill recently borrowed $50 from Ricardo for a couple of weeks. Bill, still short of cash, tells Ricardo, "I will wash and
wax your car in exchange for the $50 I owe you." Ricardo tells Bill, "OK, that's great!" Ricardo's performance of his
new duty will be a(n):
a. accord. b.
novation. c.
rescission.
d. satisfaction.
43. On November 1, Paula and Roberta enter into a contract where both parties are obligated to perform on December
31. On December 1, Paula tells Roberta, "I can, in no way, perform my duties in our contract." This statement is
a(n):
a. material alteration.
b. anticipatory repudiation.
c. nonmaterial breach since the statement is made before December 31.
d. accord.
44. "The law generally restricts the time within which an action can be brought by either party to a contract." This
statement is:
a. false.
b. true, because of statutes of limitation.
c. true, because of the law of repudiation.
d. true, because of covenants not to sue.
45. The Code greatly alters the common law doctrine of material breach by adopting what is known as the:
a. perfect tender rule.
b. anticipatory repudiation rule.
c. prevention of performance rule.
d. discharge by operation of rule law.
46. Unless one of the parties contractually assumes the risk, the discharges a contract if supervening
circumstances make fulfillment of the purpose which both parties had in mind impossible.
a. bankruptcy law
b. frustration of purpose doctrine
c. perfect tender rule
d. subjective impossibility doctrine
47. Meg has contracted to paint a portrait of Julio, but dies before completing the portrait. Which of the following is
correct?
a. Meg’s executor must find a capable artist to complete the work to Julio’s satisfaction.
b. Meg’s contractual duty is discharged due to objective impossibility.
c. A novation must be entered between Julio and a third person in order to discharge Meg’s duty under the
contract.
d. Meg’s contractual duty is discharged due to subjective impossibility.
d. All of these would be material breaches.
48. Refusal of a tender of performance by one party to a bilateral contract will:
a. be treated as a repudiation, excusing the tendering party from further duty of performance under the contract.
b. not discharge either party from further duty of performance under the contract.
c. be considered a condition subsequent.
d. None of these.
49. Conditions may be classified:
a. by how they are imposed.
b. by when they affect a duty of performance.
c. Both of these; they are not mutually exclusive.
d. Neither of these.
50. Which of the following would be considered a material breach of a contract?
a. Partial performance that omits some essential part of the contract.
b. Delivery of 50 chairs in a contract that calls for 100 chairs.
c. An intentional breach of the contract.
51. Russell promises Marty $1,500 if he will completely landscape Russell's yard. Which of the following would
discharge Russell's obligations to pay under this contract?
a. Marty leaves a one-foot strip of land barren.
b. Marty doesn't begin work on the landscaping until after he finishes two other jobs.
c. Marty doesn't plant any flowers, shrubs, or grasses.
d. Russell isn't satisfied with Marty's design.
52. An express condition is usually preceded by such words as:
a. if.
b. because.
c. how.
d. All of these.
53. Phil, a tax accountant, promises to do Marge's individual federal, state, local, and gift taxes for the year. He
completes all but the gift taxes. Under the substantial performance doctrine, Marge will:
a. not have to pay Phil.
b. not have to accept the work.
c. have to pay Phil for all but the gift taxes.
d. have to pay Phil the contract price.
54. Henry hires Ace Roofing to put a new roof on his house. When Ace comes, Henry refuses to let them on the roof,
saying that he has a headache and doesn't want to listen to pounding. The next day, Henry still has a headache and
he refuses to allow them on the roof. The day after, the baby is sleeping and Henry refuses to allow them to work.
After four weeks of this, Ace:
a. may be discharged, but Henry is not.
b. may be discharged, and so would Henry.
c. can sue for damages, but must perform when Henry is ready.
d. has no choice but to keep coming back each day until Henry is ready.
55. A tailor agrees to sew a suit for Bryan, who promises in return to pay $500 for the suit if he is satisfied with it. The
tailor completes the suit, which fits Bryan perfectly. Nevertheless, he says that he is not satisfied and refuses to
accept or pay for it. Bryan is honest in his dissatisfaction, but he is unreasonable. In this case:
a. Bryan must pay for the suit even if he is dissatisfied.
b. this is an illusory contract, because only the tailor is bound.
c. Bryan's approval is an objective standard.
d. the tailor has no recourse, because he agreed to the subjective standard.
56. Lynn, a tailor, agrees to sew a pair of drapes for Zach's living room. Zach promises to pay Lynn $300. Lynn
completes the drapes using material selected by Zach, but Zach is not satisfied and refuses to pay for them. In this
case:
a. whether Zach will have to pay for the drapes depends upon whether as a reasonable man he ought to be
satisfied.
b. the standard applied here is a subjective standard of satisfaction.
c. the doctrine of frustration of purpose applies.
d. the condition of satisfaction is an express condition.
57. Jim contracted with Kevin to serve as a guide for Kevin on his three-week fishing trip to Canada. The contract was
made on April 1 with the trip to begin on June 1. On May 1, Kevin notified Jim that he had changed his mind and
would be unable to make the trip. He also refused to pay Jim any compensation. In this case:
a. because the contract is executory, Jim has suffered no damages, and Kevin has no obligation to pay any
compensation.
b. Kevin has anticipatorily repudiated the contract and is liable to Jim for damages.
c. Jim is discharged from his duty to serve as guide, but he must wait until after June 1 to bring suit against
Kevin.
d. All of these.
58. Miller has a contract to sell 1,000 bushels of wheat to a bakery. The wheat is stored in a grain elevator and has
become infested with insects. Miller is:
a. discharged from performance because of impossibility if he doesn't have other wheat to substitute.
b. discharged because of frustration.
c. not discharged, but must substitute wheat or pay damages to the bakery for breach of contract.
d. discharged if he can prove that he did not cause the damages to his wheat.
59. Arnold and Doug make a contract for Arnold to manufacture five leather chairs of a specified design. Prior to their
manufacture, the factory is destroyed in an accidental fire that is no one's fault. The chairs are available from other
sources. Arnold:
a. must supply the chairs, even if he must buy them elsewhere.
b. is discharged from his duty to deliver the chairs by the destruction of the factory.
c. has materially breached the contract if he fails to deliver the chairs.
d. must return any money paid by Doug.
60. Louis agreed to provide all the apples that Cindy's Cider Mill will need at $3 per bushel unless weather conditions
require additional labor to be hired. The rate would then be $3.50 per bushel. A freeze warning required Louis to hire
100 additional overtime workers, raising the cost per bushel to $4.75. Louis wants to get out of his contract. Can he?
a. No, the parties expected the hardship and provided for it in their contract
b. No, there is no hardship
c. Yes, the contract is impracticable
d. Yes, the freeze is a supervening event
61. Janice contracts to sell a certain tract of land to Anthony for $5,000, but the contract does not state a time for
delivery of the deed and payment of the price. In this situation:
a. the contract will be considered void for lack of essential terms.
b. the law will imply that the respective performances are independent of each other and may occur whenever
“reasonable under the circumstances.”
c. courts will treat the promises to deliver the deed and to pay the $5,000 as mutually dependent. Anthony’s duty
to pay is conditioned upon Janice’s delivery of the deed and Janice’s duty to deliver the deed is conditioned
upon Anthony’s payment or tender of $5,000 to Janice.
d. Janice’s duty to deliver the deed and Anthony’s duty to pay the $5,000 are “impliedinfact” conditions.
62. Which of the following generally is not grounds for discharge of a contract by operation of law?
a. Objective impossibility
b. Subsequent illegality
c. Running of the statute of limitations
d. Bankruptcy
63.
a. Earl and Bev enter into a contract. What are the ways in which only one party (for example,
Earl) can be discharged from performance?
b. What are the ways in which both parties can be discharged from performance?
Earl is discharged if: he fully performs; Bev materially breaches; there is an
a. anticipatory repudiation by Bev; Bev materially alters the contract; Earl and Bev
64. What is a condition? Give an example of each of the following: condition precedent, condition concurrent, and
condition subsequent.
65. Professor Glass is hired by Towers University to teach business law at a salary of $3,000 per month. After school
has been in session for two months, the Business Administration Building is destroyed by fire. The University refuses
to pay him any further salary, claiming they are discharged from their obligation of performance. Is the University
discharged from its obligation of performance? Is Professor Glass discharged from his obligation of performance?
Explain, citing the legal principles involved.
66. Explain what may constitute a material breach and list the relevant factors in determining if a material breach exists.
67.
a. What is a discharge by agreement of the parties? List and summarize the situations where a
contract is discharged by such an agreement.
b. What is a discharge by operation of law? Name situations where a contract is discharged by
operation of law.
68. What is the difference between implied-in-fact and express conditions?
