1. A duty to perform under a contract is never absolute.
1. In most contracts, promises of performance are not expressly
conditioned.
1. Most contracts are discharged by rescission.
1. A party who substantially performs his or her duties under a contract
can enforce the contract against the other party.
1. Most contracts need to be performed to personally satisfy the party to
whom performance is owed.
1. Any breach excuses the nonbreaching party’s duty to perform.
1. If no time for performance is stated in a contract, any time is
acceptable.
1. Anticipatory repudiation discharges a contract.
1. When a contract party alters a written contract, the other party must
adapt his or her performance accordingly.
1. A contract will be discharged if foreseeable circumstances make it
impossible to attain the contract’s purpose.
1. A breach of contract entitled the nonbreaching party to sue for
monetary damages.
1. Damages are designed to punish a breaching party and deter others
from similar conduct.
1. Most parties settle their lawsuits for damages or other remedies prior to
trial.
1. Compensatory damages are foreseeable damages that arise from a
party’s breach of a contract.
1. Special damages are awarded for damage caused by special
circumstances beyond a contract.
1. The duty owed under the mitigation of damages doctrine depends on
the nature of the contract.
1. Specific performance is the remedy customarily used when one party
has breached a contract for the sale of goods.
1. The purpose of the doctrine of election of remedies is to permit a
double recovery.
1. A contract may include a clause stating that no damages can be
recovered for a certain type of breach.
1. A party who knowingly accepts defective performance of a contract
waives the breach.
1. Lark enters into a contract to mine limestone in Milena’s quarry, sell it,
and share the profits on its sale with Milena. If the duties under this
contract are discharged like those under most contracts, the duties will
be
a. repudiated.
b. breached.
c. performed.
d. rescinded.
1. Lake Port Services enters into a contract to load Max’s Great Lakes
barges with the cargo that Max designates. Lake Port’s offer to
perform, when Lake Port is ready, willing, able to do so, is
a. complete.
b. substantial.
c. tender.
d. tough.
1. Real Cheap Painters, Inc., agrees to paint Quint’s house, using a
particular brand of “discount” paint. Real Cheap completes the job but
uses a different brand of discounted paint. This is most likely
a. an absolute excuse for Quint’s refusal to pay.
b. a material breach.
c. complete performance.
d. substantial performance.
1. Safe-T Guard Services enters into a contract to secure Taylor’s
Business Park from vandalism and theft between 6 P.M. and 6 A.M.
nightly for six months. At the end of the term, if there has been no
vandalism or theft in the Park, Safe-T’s performance will have been
a. absolute.
b. complete.
c. conditional.
d. substantial.
1. Mutual Company enters into a contract to employ Neil as an
investment manager for two years. During the first year, Neil is often absent
without explanation and when present fails to adequately monitor and manage
Mutual’s investments.
Refer to Fact Pattern 10-1. Neil’s performance is most likely
a. a material breach.
b. a minor breach.
c. Mutual’s breach.
d. no breach.
1. Mutual Company enters into a contract to employ Neil as an
investment manager for two years. During the first year, Neil is often absent
without explanation and when present fails to adequately monitor and manage
Mutual’s investments.
Refer to Fact Pattern 10-1. With respect to Mutual’s duties, Neil’s
performance most likely
a. discharges Mutual from the contract.
b. has no effect on Mutual’s performance.
c. increases Mutual’s duties under the contract.
d. suspends Mutual’s duty to perform.
1. Jane and Kelly want Lucy to replace Kelly as a party to their contract.
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 contract.
1. Clyde contracts with Deephole Excavation, Inc., to dig an agricultural
pond on his farm. Deephole is to keep the excavated gravel in
payment. Clyde’s neighbor Eden challenges the dig as an illegal gravel
pit. A court orders a halt to the dig. Clyde’s contract with Deephole is
a. breached.
b. discharged.
c. not affected.
d. suspended.
1. Development Associates (DA) agrees to buy five acres of land from
Eastside Properties for $15,000. Eastside fails to go through with the
deal on the agreed date, when the market price of the land is $17,000.
DA may recover
a. $17,000.
b. $15,000.
c. $2,000.
d. $0.
1. Dondi contracts to buy a custom espresso maker from Caffee
Specialties, Inc., for $4,500, but Caffee fails to deliver. Dondi buys the
appliance elsewhere for $5,500. Dondi’s measure of damages is
a. $1,000.
b. $1,000 plus incidental damages.
c. incidental damages only.
d. $0.
1. Damon contracts to repair the turf on a soccer field for Carousel Sports
Park. Damon knows that without the repair, Carousel will have to
cancel an upcoming game. Damon does not perform as promised. As
consequential damages, Carousel can recover
a. the cost of new turf.
b. the difference between Damon’s price and the actual cost of
repair.
c. the loss of profit from the canceled game.
d. nothing.
1. SFX Paintball Games, Inc., and Truck & Trailer Delivery Corporation
sign an agreement that provides for the payment of “$1,000 by
whichever party commits a material breach of the contract that creates
damages difficult to estimate but approximately $1,000.” This is
a. a liquidated damages clause.
b. a mitigation of damages clause.
c. a nominal damages clause.
d. a penalty clause.
1. Ray breaches his lease with Sunny Properties and vacates the
premises six months before the end of the term. In some states, Sunny
would have to
a. avoid reletting the premises to recover damages from Ray.
b. make reasonable efforts to relet the premises to mitigate dam-
ages.
c. relet the premises to recover damages from Ray.
d. sell the premises to recover damages from Ray.
1. Rural Power Utility, Inc., enters into a contract with Shovel Excavation
Service to dig up, replace, and rebury Rural’s cables in a certain
location. Rural advances Shovel 10 percent of its cost. The parties
rescind the contract. Shovel’s refund of the payment is
a. a penalty.
b. liquidated damages.
c. restitution.
d. a breach of contract.
1. Ira orally agrees to buy a unique collection of sports memorabilia for
$1,000 from Janet and sends her $250 as a down payment. When Ira
sends her the rest of the price, Janet refuses to ship Ira the collection.
Ira should seek
a. damages.
b. reformation.
c. rescission.
d. specific performance.
1. Lester and Myrtle want to rescind their contract under which Lester sold
an MP3 player for $40. To rescind the contract
a. Lester must return the $40 and Myrtle must return the player.
b. Lester must return the $40 only.
c. Myrtle must return the player only.
d. the parties can keep the “benefits” of their bargain.
1. Grady enters into a contract to buy 440 acres from Hollis to expand
Grady’s ranch. If Hollis breaches the contract, Grady’s normal remedy
would be
a. damages.
b. reformation.
c. rescission.
d. specific performance.
1. Refined Commodities, Inc., agrees to deliver ten tons of sheet metal to
Select Builders Corporation. The agreement states that delivery is to be
within “3” days, although the parties intend “30” days. Refined cannot
convince Select to amend the contract. Refined should seek
a. damages.
b. reformation.
c. rescission.
d. specific performance.
1. Vacation Vistas, Inc., agrees to sell certain acreage to Umiko, who
intends to develop a destination resort. Vacation Vistas repudiates the
deal. Umiko sues Vacation Vistas and recovers damages. She can now
obtain
a. a double recovery.
b. damages representing restitution.
c. specific performance of the deal.
d. nothing more.
1. Clear Creek Corporation enters into a contract with Brightside
Management Associates to manage and maintain Clear Creek’s
apartment complex. Their contract provides that neither party can
recover damages for a non-fraudulent or unintentional breach. This is
a. a limitation-of-liability clause.
b. an exculpatory clause.
c. a liquidated damages clause.
d. a penalty clause.
1. Elin contracts to buy six cases of vintage Fertile Valley wine from
Grapes & Vines Winery for $1,200. The contract states that delivery is
to be made at Elin’s residence “on or before May 1, to be used for
daughter’s wedding reception on May 2.” On May 1, Grapes & Vines’s
delivery van is involved in an accident, and no wine is delivered that
day. On the morning of May 2, Elin buys the wine from Happy Hill
Winery. That afternoon, just before the reception, Grapes & Vines
tenders delivery of the wine at Elin’s residence. Elin refuses tender.
Grapes & Vines sues Elin for breach of contract. How is the court most
likely to rule?
1. National Drilling Company ships its only pump to American Hydraulics
Corporation, the manufacturer, for repair. National hires Overland
Transport, Inc., to take the pump to American Hydraulics and to return
it to National as soon as the repair is complete. National is forced to
suspend operations without a pump, but Overland does not know this.
National expects to be without the pump for five days and to lose
profits of $5,000. When the pump is not returned by the end of the
fifth day, National rents a pump at a cost of $100 per day. Overland
delays five more days before returning the pump. National files a suit
against Overland, asking for compensatory, consequential, and punitive
damages. Will National recover?
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