Business Law Ch 18

A valid tender of payment consists of an unconditional offer of the exact amount due on the date when due.

True

Impossibility of performance applies when the debtor does not have sufficient funds to pay a debt.

True

In most bilateral contracts, the performances of the parties are concurrent conditions.

True

In the absence of an agreement to the contrary, weather conditions constitute a risk that is assumed by a contracting party.

True

Payment by check is a conditional payment.

True

The parties may agree that the adequacy of performance under a contract is to be determined by a third party.

True

The death or disability of a party to a contract discharges the contract when: a. personal services requiring peculiar skill are involved. b. the payment of money is involved. c. a house is to be painted. d. all of these.

a. personal services requiring peculiar skill are involved.

A contract may be discharged under the frustration of purpose doctrine if the event which frustrated the purpose was foreseeable.

False

In a mutual rescission, both parties, acting in good faith, renew their commitment to perform all obligations set forth in their original agreement.

False

An agreement that does not specify the time for performance is not binding because it is too indefinite.

False

When a building contractor has substantially performed a contract to construct a building, the contractor is entitled to recover the full contract price.

False

When performance is impeded due to the occurrence of an event whose nonoccurrence was a basic assumption of the contract, the contract may be discharged on the grounds of: a. commercial impracticability. b. commercial impossibility. c. economic frustration. d. economic stability.

a. commercial impracticability.

A discharge by agreement can occur in any of the following situations except: a. death of the obligor. b. accord and satisfaction. c. release. d. mutual rescision.

a. death of the obligor.

Which of the following is not an element of an accord and satisfaction? a. a bona fide dispute b. a proposal to settle the dispute c. performance of the agreement to settle the dispute d. reservation of rights under the federal Consumer Credit Protection Act

d. reservation of rights under the federal Consumer Credit Protection Act

A condition precedent must occur before a party to a contract has an obligation to perform.

True

A seller's inability to obtain from any supplier the goods called for by the contract generally discharges the contract for impossibility of performance.

True

All courts hold that when an agreement requires satisfaction of the other party regarding the acceptance of an act, a reasonable person standard is used.

True

By operation of law, a party can be discharged in bankruptcy from debts.

True

For the parties to enter into an accord and satisfaction that discharges the original obligation, there must be a bona fide dispute.

True

The time for performance is typically essential in a contract for the sale of perishable property.

True

There is no exact standard or test by which to determine whether contractual performance is substantial.

True

Unless a contract so provides, time is ordinarily not of the essence, and performance within a reasonable time is sufficient.

True

A condition subsequent can alter but not terminate a contract.

False

A person who substantially performs a contract is liable for damages to the other party.

True

In most bilateral contracts, the performances of the parties are __________.

b. conditions subsequent

A contract may be discharge in all of the following scenarios except: a. death or disability b. destruction of subject matter c. commercial impracticability d. weather conditions

d. weather conditions

Commercial impracticability discharges a party's contractual obligations when the contract becomes more expensive to perform due to drastic and severe economic downturns.

False

. The federal Consumer Credit Protection Act gives the debtor the right to rescind a credit transaction within three (3) business days when the transaction would impose a lien on the debtor's home

True

In which case will performance on the exact date specified in the contract most likely be deemed essential? a. a sale of goods that fluctuate rapidly in value. b. a sale of goods that remain stable in value. c. a sale of real estate. d. a sale of goods where no harm results from a delay in performance.

a. a sale of goods that fluctuate rapidly in value.

A discharge by operation of law occurs in all of the following situations except: a. accord and satisfaction. b. material changes by a party. c. bankruptcy. d. statute of limitations.

a. accord and satisfaction.

When a debtor makes a payment to a creditor specifying how it should be applied, the creditor must apply the payment: a. as directed by the debtor. b. to the oldest outstanding debt. c. to the most recent outstanding debt. d. to the largest outstanding debt.

a. as directed by the debtor.

V3 was a successful singing group that contracted to perform at the "Metalsubstance" rock concert. V3 was aware that the promoter would sustain a substantial loss if the group failed to perform. The members of the group were stricken with a virus that confined them to their beds. The promoter sued for breach of contract. What is the probable result? a. V3 is liable for damages for breach of contract. b. The contract was discharged by impossibility of performance. c. In order to avoid liability for breach of contract, V3 must arrange for another group of comparable quality and reputation to perform on the scheduled date. d. V3 will be deemed to have substantially performed the contract.

b. The contract was discharged by impossibility of performance.

To avoid litigation over impossibility and impracticability issues, modern contracting parties often contract around the doctrine of impossibility, specifying the failures that will excuse performance in their contracts. The clauses in which they do this are called __________ clauses, and they are generally enforced by courts as written. a. delta force b. force majeure c. magnum force d. force corporeal

b. force majeure

If the parties to a contract agree to undo the agreement and return any consideration involved, the contract is discharged by: a. mutual cancellation b. mutual rescission. c. novation d. accord and satisfaction

b. mutual rescission.

An offer to perform is known as a(n) __________. a. rendering b. offering c. tinder d. tender

b. offering

A homeowner who supplies the specifications for poured cement walls can hold a contractor liable for damages when the walls that are poured in exact compliance with those specifications prove defective.

False

A house-painting contract is discharged if continual rain makes it impossible to complete the painting by the time specified in the contract.

False

A party who in good faith has provided substandard performance of a contract may sue to recover the payment specified in the contract.

False

A typical situation where the doctrine of economic frustration applies is when the party suffers a loss when a gain was expected.

False

Contracts may be discharged by the joint action of both contracting parties or, in some cases, by the action of one party alone.

True

Generally, contracts are discharged by the performance of the terms of the contract.

True

If a debtor with multiple debts specifies the debt to which a payment is to be applied and the creditor accepts the money, the creditor is bound to apply the money as specified.

True

The doctrine of substantial performance is concerned with the issue of whether an imperfect performance will be considered adequate to discharge one's responsibilities under a contract.

True

When parties contract expressly for a particular subject matter, the contract is discharged if the subject matter is destroyed through no fault of either party.

True

A contract can be discharged by impossibility in all the following scenarios except: a. destruction of subject matter in a sales contract. b. performance under the contract becomes 25% more expensive due to currency fluctuations in construction contract. c. when the law changes. d. death of obligee in a personal services contract.

b. performance under the contract becomes 25% more expensive due to currency fluctuations in construction contract.

A homeowner who refinances her home mortgage may cancel the transaction: a. if the terms of the contract were less favorable than anticipated. b. within three business days. c. only if she was the victim of fraud. d. upon payment of a $1,000 penalty, as required by a Federal Trade Commission rule.

b. within three business days.

If no time period for performance is specified in a contract: a. the contract is unenforceable. b. time shall be of the essence. c. a reasonable time for performance will be implied. d. the time for performance will be ignored by the courts.

c. a reasonable time for performance will be implied.

The phrase "time is of the essence" means that: a. the court is in a hurry to dispose of the case. b. performance under the contract at the times specified in the contract is vital or essential. c. the contract expressly states that time is of the essence. d. the price stated in the contract is subject to change without notice.

c. the contract expressly states that time is of the essence.

Which of the following events excuses a promisor from performing his or her contractual obligations? a. a riot b. a shortage of materials necessary for production of goods and/or provision of services called for under the contract c. an unanticipated increase in the cost of performance d. destruction of the subject matter through no fault of either party

d. destruction of the subject matter through no fault of either party

Sales of goods transactions are subject to a statute of limitations period of: a. one (1) year. b. two (2) years. c. three (3) years. d. four (4) years.

d. four (4) years.

A change of law discharges a contract if the new law: a. requires a license and none was required before. b. requires the use of fireproof materials. c. requires the use of antipollution devices. d. prohibits the act called for by the contract.

d. prohibits the act called for by the contract.

The parties may decide that their contract is not the one they want. They may then replace it with another contract. If they do, the original contract is discharged by __________. a. solution b. elocution c. retribution d. substitution

d. substitution

A Federal Trade Commission regulation gives a buyer three (3) business days in which to cancel a home-solicited sale of goods or services costing more than: a. $25. b. $50. c. $100. d. $500.

a. $25.

Bankruptcy results in a discharge of contractual obligations by __________. a. default b. equity c. operation of law d. oath or affirmation

c. operation of law