Q&A Hero

Q: Which of the following is true of the materiality of breach? A. Courts generally adopt strict standards to determine materiality. B. The magnitude of the breach is of relatively less importance. C. There is a no concern about compensating the nonbreaching party. D. The timing of the breach is generally taken into consideration.

Q: Justin agrees to start a life-size portrait of Julia beginning 2nd November. On the 28th of October he writes to Julia that due to unforeseeable circumstances he would not be able to perform his promise, Justin has used the doctrine of: A. accord and satisfaction. B. anticipatory repudiation. C. specific performance. D. quasi-contract.

Q: Performance under a contract must be within a reasonable time when: A. the value of the contract is high. B. one of the parties is a government agency. C. a specific time is implied in the contract. D. no time for performance is expressly stated in the contract.

Q: Which of the following promises is subject to a "strict performance" standard? Assume that performance of the promise is not an express condition of the promisee's duty to perform. A. A promise to build a road B. A promise to paint a house C. A promise to destroy a building D. A promise to deliver a deed

Q: What is the law's main purpose in imposing the implied covenant of good faith and fair dealing? A. Providing adequate remedial measures to injured parties B. Punishing the breaching parties in a contract C. Encouraging litigation regarding breach of contracts D. Encouraging ethical behaviour in contracts

Q: Which of the following is subject to a "substantial performance" standard in the absence of an express condition? A. A promise to pay money B. A promise to deliver a deed C. A promise to build a house D. A promise to deliver some goods

Q: What is the term for a condition that is specified in the contract? A. Express condition B. Implied condition C. Corporate condition D. Bilateral condition

Q: What is the term for a condition that is not stated in the contract but is construed by the action of the parties? A. Express condition B. Implied-in-fact condition C. Corporate condition D. Bilateral condition

Q: For which of the following contracts, is a party's subjective dissatisfaction sufficient to excuse his performance under a "personal satisfaction" clause in a contract? A. A contract to construct an intercontinental ballistic missile B. A contract to paint someone's portrait C. A contract to build a steam boiler D. A contract to rebuild an automobile engine

Q: When a person whose duty is conditional leads the other party to rely on his noninsistence on the condition, the condition will be excused because of a(n) _____. A. waiver B. estoppel C. recission D. liability

Q: Damages associated with the real harm that a plaintiff in a contract case suffered is referred to as punitive damages.

Q: An uncertain future event, the occurrence of which is necessary for the existence of a contractual obligation is called: A. a condition precedent B. a condition subsequent C. a concurrent condition D. a constructive condition

Q: Which of the following is a condition subsequent? A. "I promise to do X if I succeed in getting a loan." B. "I promise to do X on the condition that the Cubs win the World Series." C. "I promise to do X unless Al Gore is elected President in 2000." D. "I promise to do X assuming that inflation stays below 3% in 1997."

Q: Which of the following is also known as an implied-in-law condition since they are imposed by law rather than by agreement of the parties? A. Condition precedent B. Express condition C. Constructive condition D. Subsequent condition

Q: Roe promises to build a house for Crown for which, Crown agrees to pay him $10,000 when the house is complete. This example is related to the concept of: A. express condition. B. constructive condition. C. subsequent condition. D. implied condition.

Q: Ms. White is contracted by Mr. Green to make her "world famous" apple pies. Ms. White has an accident, falls into a coma and the pies are not delivered to Mr. Green by the time stated in the contract. Ms. White will be considered in breach of her contract to Mr. Green.

Q: In general, an employee who has been fired and who wants to sue for breach of contract need not do anything to limit or mitigate his damages, such as looking for another job. This would unfairly benefit an employer who has wrongfully breached a contract.

Q: Arthur and Brian have entered into a contract with an enforceable liquidated damages provision that states that Ben's recovery will be $10,000 in the event of Arthur's breach. Arthur breaches the contract. Ben loses $50,000 in consequential damages as a result. Ben's recovery is limited to $10,000.

Q: Specific performance is almost never awarded in contracts for the sale of land.

Q: In the eyes of law, breach of any contract is of equal seriousness.

Q: Andy contracts with Yvonne to produce an advertisement for a Fourth-of-July fundraising party. Yvonne does not produce the advertisement until July 6. Here, Yvonne's breach of the contract is not a material breach unless the contract explicitly stated that time is of the essence.

Q: If there is no time specified in contract by the parties, then it is presumed that performance shall be completed whenever possible.

Q: Bill contracts to build a building for Harvey. A few changes in the building code that were made after the contract was signed will increase Bill's costs in performing his duties. He is excused from performance under the contract.

Q: Mr. Green contracts to repair his roof with Mr. Brown. Prior to the work starting a tornado destroys Mr. Green's home. Mr. Brown fails to perform the duty on the contract, but the court will not consider Mr. Brown in breach due to impossibility.

Q: An accountant who substantially performs her duties to her client triggers the client's duty to pay the contract price, less any damages resulting from defects in her performance.

Q: The substantial performance standard is more lenient than the strict performance standard of judicial contract legal interpretation.

Q: When a promisor's performance is an express condition of the promisee's duty to perform, that performance must meet a strict performance standard.

Q: There cannot be subjective standards of personal taste and comfort when determining a promisee's performance.

Q: In a contract for Adam to sell Carrie a steam boiler, Carrie's obligation to pay is conditioned upon her personal satisfaction with the boiler. Even though the boiler meets every mechanical test imaginable, Carrie refuses to pay because she just doesn't like the boiler for some reason. She is not obligated to pay, because the contract said that he must be personally satisfied, and a contract is a contract.

Q: The term condition means an event that may affect a party's duty to perform under a contract.

Q: There is prescribed formal language that must be used to create an express condition as part of a contract.

Q: When a person owes an unconditional duty to another, then he/she must perform it unless the performance is excused.

Q: Pat promises to install granite countertops in the home at 123 Main Street that Bruce is purchasing "provided that the escrow on the sale of 123 Main Street closes." The close of escrow on the sale of 123 Main Street is a condition precedent to Pat's promise.

Q: A condition subsequent cannot be a valid reason for the discharge of a duty.

Q: If Grant promises to sell his regular season football tickets to Carson on condition that Indiana University wins the Rose Bowl, Indiana's winning the Rose Bowl is an express condition of Grant's duty to sell the tickets.

Q: Barry and Andrew contract for the sale of 100 widgets (goods) from Barry to Andrew for $1,000. The contract contains a clause prohibiting assignment of "the contract." Nonetheless, Andrew assigns "the contract" to Smith. Is there a valid assignment of contract rights here? Is there a delegation of duties?

Q: Why is it important for an assignee to immediately notify the obligor of the assignment?

Q: Amelia contracts to have her portrait painted by Hamilton for $10,000. Hamilton assigns the contract to Drew, another artist. Has there been a valid delegation of duties here? Why or why not?

Q: The Mandarin City contracts with the Zoid Construction Company to construct a new sewer system for the city. Later, Zoid breaches the contract. George, a resident of the city, sues Zoid for its breach of contract. Can George recover? Why or why not?

Q: What is the purpose of vesting?

Q: Courts have held that a beneficiary's rights cannot be lost by modification or discharge. This is known as: A. assignment. B. dissociation. C. malfeasance. D. vesting.

Q: Mr. Green contracts with Mr. Brown for $500 to landscape the home of Roy who is Mr. Green's son. What is Roy's status in the contract with Mr. Green and Mr. Brown? A. Donee beneficiary B. Incidental beneficiary C. Corporate beneficiary D. International beneficiary

Q: Union Bank lent $200,000 to Wagner. Union required Wagner to obtain a life insurance policy naming Union as beneficiary. While the loan was outstanding, Wagner stopped paying the premiums on the policy. Union paid the premiums, adding the amounts paid to Wagner's loan. Wagner died and the insurance company refused to pay the policy proceeds to Union. Union may: A. recover the policy proceeds because it is a creditor beneficiary. B. recover the policy proceeds because it is an incidental beneficiary. C. not recover the policy proceeds because it is not in privity of contract with the insurance company. D. not recover the policy proceeds because one cannot claim insurance for oneself.

Q: Martha purchases a book from Just Books on credit and later sells the book to her friend, Christina. Christina in turn sells the book to David, who agrees to pay the balance to Just Books. Who is the creditor beneficiary in this exchange? A. Martha B. Christina C. David D. Just Books

Q: Stella buys a car from Marble Sales for $10,000 on credit. Joel's daughter likes the car and so Joel buys the car from Stella. Joel also agrees to pay the balance due to Marble Sales, on behalf of Stella. Joel defaults. Marble Sales can bring a suit for breach of contract against: A. Stella only. B. Joel only. C. Stella and Joel. D. Joel and his daughter.

Q: As a general rule, members of the public are held to be _____ of contracts entered into by their municipalities or other governmental units in the regular course of carrying on governmental functions. A. promisees B. incidental beneficiaries C. donee beneficiaries D. creditor beneficiaries

Q: Jada owned an insurance policy in her life, on which she paid all the premiums. Shaun was named the beneficiary. Jada died and the insurance company refused to pay the insurance proceeds to Shaun. An action by Shaun against the insurance company for the insurance proceeds will be: A. successful because Shaun is a third-party donee beneficiary. B. successful because Shaun is a proper assignee of Jada's rights. C. unsuccessful because Shaun is not the owner of the policy. D. unsuccessful because Shaun did not pay any of the premiums.

Q: Rice contracted with Locke to build an oil refinery for Locke. The contract provided that Rice was to use United Pipe Fittings. Rice did not do so. United learned of the contract and, anticipating the order, manufactured additional fittings. United sued Locke and Rice. United is: A. entitled to recover from Rice only, because Rice breached the contract. B. entitled to recover from either Locke or Rice because it detrimentally relied on the contract. C. not entitled to recover because it is a donee beneficiary. D. not entitled to recover because it is an incidental beneficiary.

Q: For a third person to have the right to enforce a contract, he/she must necessarily prove that: A. he/she was the party to the contract. B. he/she had been given a promise. C. the contract was made to benefit him. D. the contract provides him/her incidental benefit.

Q: A third party is categorized as a donee beneficiary when: A. the promisee's primary purpose in contracting is to make a gift of the agreed-on performance to the third party. B. the benefit derived by the third party was merely an unintended by-product of a contract that was created for the benefit of those who were parties to it. C. he/she is unable to establish that the contract was made with the intent to benefit him/her. D. the promisor's performance is intended to satisfy a legal duty that the promisee owes to the third party.

Q: Denise contracts with Long Life Insurance Co., agreeing to pay premiums in return for which the company agrees to pay $500,000 to Denise's husband Barn when Denise dies. Barn is a(n): A. creditor beneficiary. B. donee beneficiary. C. incidental beneficiary. D. delegatee.

Q: Mike has a three-year lease on the apartment he occupies. He has lived there one year. He now wants to leave and go to Aspen, Colorado to be a ski instructor. However, Mike's landlord will not release him from the lease, and threatens to sue him if he breaks his lease. Mike finds Paul to take over the last two years of the lease, but Mike is worried that Paul might cause damage or in other ways inflict loss and that he, Mike, might be held financially responsible. In order to assure Mike that he will be completely discharged from all obligations under his lease, Mike should attempt to bring about: A. an assignment. B. a novation. C. either an assignment or novationit will not affect Mike's future liability. D. neither an assignment nor a novationboth will not accomplish Mike's objective.

Q: Fiona owed Lutz $5,000. As the result of an unrelated transaction, Lutz owed Bing that same amount. The three parties signed an agreement that Fiona would pay Bing instead of Lutz and Lutz would be discharged from all liability. The agreement among the parties is: A. unenforceable for lack of consideration. B. voidable at Bing's option. C. an accord and satisfaction. D. a novation.

Q: What Uniform Commercial Code (UCC) section indicates that it is presumed that an assignment includes a delegation under contract law? A. 2-210 B. 1-104 C. 7-344 D. 2-114

Q: What is the term for "performs the duty under a proper delegation"? A. Obligor B. Obligee C. Delegator D. Delegatee

Q: A contract may be enforced by a third-party beneficiary if that beneficiary: A. is an incidental beneficiary. B. is a witness to the contract. C. is the intended beneficiary. D. has given some consideration.

Q: Ted Nix purchased two acres of land from Sally Pine. Nix paid 15 percent at the closing and gave his note for the balance secured by a 30-year mortgage. Five years later, Nix found it increasingly difficult to make payments on the note and finally defaulted. Pine threatened to accelerate the loan and foreclose if Nix continued in default. Pine told Nix either to get the money or obtain an acceptable third party to assume the obligation. Nix offered the land to Quick Co. for $4,000 less than the equity Nix had in the property. This was acceptable to Pine and at the closing, Quick paid the arrearage, executed a new mortgage and note, and had title transferred to its name. Pine surrendered Nix's note and mortgage to him. The transaction in question is a(n): A. third-party beneficiary contract. B. novation. C. purchase of land subject to a mortgage. D. assignment and delegation.

Q: In a novation: A. the original obligor is completely discharged from his/her obligations under the contract. B. the original obligee is completely discharged from his/her obligations under the contract. C. the original obligor remains secondarily obligated. D. both the original obligee and the original obligor remain obligated.

Q: Selena delegates her rights under a contract. The clause delegating her rights are termed: "All my rights under the contract are hereby effectively delegated to...." This language shows that the contract is of: A. delegation only. B. assignment only. C. assignment and delegation. D. a third-party beneficiary.

Q: On August 1, Neptune Fisheries contracted in writing with West Markets to deliver to West 3,000 pounds of lobsters at $4 a pound. Delivery of the lobsters was due October 1 with payment due November 1. On August 4, Neptune entered into a contract with Deep Sea Lobster Farms which provided as follows: "Neptune Fisheries assigns all the rights under the contract with West Markets dated August 1 to Deep Sea Lobster Farms." The best interpretation of the August 4 contract would be that it was: A. only an assignment of rights by Neptune. B. only a delegation of duties by Neptune. C. an assignment of rights and a delegation of duties by Neptune. D. an unenforceable third-party beneficiary contract.

Q: Which of the following is a type of substituted contract in which the obligee agrees to discharge the original obligor and to substitute a new obligor in his/her place? A. Assignment B. Delegation C. Certification D. Novation

Q: Al hires Bob to move his furniture to his new house. On the day of the move, Bob does not feel like moving furniture, so he asks his friend Chuck to move the furniture. Chuck decides to leave before completing the move in order to watch a football game on TV. Al has to delay his move and hire another mover at a higher price. Al wants to sue Bob to recover for his damages. Given these facts, Al will most likely: A. lose, because it was Chuck, not Bob, who failed to fulfill his duty to Al. B. win, because Bob's duty to Al was not delegable. C. win, because Bob is liable to Al. D. lose, because he failed to insist on Bob's performance.

Q: Edna is a leading brain surgeon in the United States. She enters into a contract to perform a complicated brain surgery on Ben. However, since Edna is very busy, she wants to assign this contract to a less experienced surgeon, Charles. This would be Charles's first operation of this type. Ben can object to this assignment and prevent it because the contract between Ben and Edna is a(n): A. contract for services to be performed in the future. B. contract involving personal skill. C. services contract. D. employment contract.

Q: Which of the following is true of delegation? A. It requires special, formal language. B. It covers all duties stated in a contract. C. It is often confused with assignment. D. It automatically places all legal responsibilities on the delegatee.

Q: In an assignment/delegation, which party remains secondarily liable on the obligation that has been delegated? A. Assignor/delegator B. Assignee/delegatee C. Third party D. Obligee

Q: Apple assigns the same contract rights to Enzo, and then to Sam. Sam immediately notifies the obligor of the assignment to him; Enzo never notifies the obligor. When Sam notified the obligor, he did not know about the earlier assignment to Enzo. Sam will have the better right under the: A. "American rule." B. "English rule." C. Restatement (Second) of Contracts. D. common law.

Q: Mr. Blue is in a contract with Mr. Brown for the repair of Mr. Blue's roof for $9,000. Mr. Blue tells Mr. Brown that Ms. White will pay him the $9,000 for the work performed. Ms. White's role in the contract is called what? A. Delegation B. Assignment C. Incorporation D. Organizing

Q: Mr. Blue is in a contract with Mr. Brown for the repair of Mr. Blue's roof for $9,000. Mr. Brown has already performed the work, but contacts Mr. Blue that he should pay his cousin Joe Jr. the amount owed. Joe Jr.'s status under the contract is called what? A. Delegation B. Assignment C. Incorporation D. Organizing

Q: The effect of a valid delegation of duties is that it: A. discharges the delegator from any further liability. B. is an automatic novation. C. discharges the obligee from any further liability. D. appoints the delegatee to perform the delegator's duty to the obligee.

Q: It is important to promptly notify the obligor that an assignment has occurred. Why? A. It is a necessary requirement for a valid assignment. B. The obligor might perform to the assignor rather than the assignee. C. The obligor's duty to perform is completely discharged. D. If the obligor neither knew nor had reason to know about the assignment, the obligor remains liable to the assignee.

Q: Jim's contract with Frank obligated Jim to pay Frank $10,000. Frank properly assigns the contract to Abel. At that time, Abel notifies Jim about the assignment. Jim, however, forgets and pays the $10,000 to Frank. By this time, Abel is screaming for his money. However, by then, Frank goes into bankruptcy. In this case: A. Jim is liable to Abel for $10,000. B. Abel is out of luck because Jim performed his obligation by paying Frank. C. Jim is liable to Abel not for the $10,000, but for his breach of the implied warranty that the assignor is solvent. D. Abel is out of luck because his notification was oral rather than written.

Q: Quick Corp. has $270,000 of outstanding accounts receivable. On March 10, 1988, Quick assigned a $30,000 account receivable due from Pine, one of Quick's customers, to Taft Bank for value. On March 30, Pine paid Quick the $30,000. On April 5, Taft notified Pine of the March 10 assignment from Quick to Taft. Who is Taft entitled to collect the $30,000 from? A. Either Quick Corp. or Pine B. Quick Corp. only C. Pine only D. Taft Bank cannot claim any money because it notified Quick Corp. too late

Q: On May 2, Kurtz Co. assigned its entire interest in a $70,000 account receivable due in 60 days from Long to City Bank for $65,000. On May 4, City notified Long of the assignment. On May 7, Long informed City that Kurtz had committed fraud in the transaction out of which the account receivable arose and that payment would not be made to City. If City commences an action against Long, and Long is able to prove that Kurtz acted fraudulently: A. Long will be able to successfully assert fraud as a defense. B. City will be entitled to collect $65,000, the amount paid for the assignment. C. City will be entitled to collect $70,000 since fraud in the inducement is a personal defense which was lost on May 2. D. City will be entitled to collect $70,000 since Long's allegation of fraud arose after notice of the assignment.

Q: Which of the following is NOT one of the implied warranties that the assignor gives to the assignee? A. That the obligor has capacity to contract. B. That the contract is not voidable for any reason known to the assignor. C. That the assignor has good title to the rights assigned. D. That the obligor is solvent.

Q: Which of the following characterizes assignability? A. An assignment is ineffective if it occurs in the present. B. Assignment is ineffective in the case of land rights. C. Assignment is ineffective when contrary to public policy. D. Assignment is mostly effective in the case of wage earners.

Q: Antiassignment clauses in contracts generally are: A. enforceable but read narrowly. B. enforceable but not covered by the UCC. C. unenforceable because they are unconscionable. D. unenforceable because they are void.

Q: Once an assignment occurs, the assignee acquires: A. greater obligations to fulfill the contract. B. greater rights than the assignor. C. same rights as the assignor had prior to assignment. D. no rights at all.

Q: An obligor: A. owes a duty to perform under a contract. B. is owed a duty. C. is one to whom a right has been transferred. D. facilitates a contract.

Q: With regard to an assignment, the person to whom the right has been transferred is called the: A. obligor. B. obligee. C. assignor. D. assignee.

Q: Which of the following transfers will generally be valid without the consent of the other parties? A. The assignment by the lessee of a lease contract where rent is a percentage of sales. B. The assignment by a purchaser of goods of the right to buy on credit without giving security. C. The assignment by an architect of a contract to design a building. D. The assignment by a patent holder of the right to receive royalties.