Contact Performance, Breach, & Remedies

Drain Equipment Inc. contracts to sell its assets to Excavation Corporation. 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. specific performance.

a. a mutual agreement to rescind.

Ochre holds one ton of perishable fruit in storage for Produce Corporation. If Produce does not pay for the storage, under the doctrine of mitigation of damages, Ochre is held to a duty to a. continue to store the fruit until Produce pays. b. do whatever is reasonable to minimize the damages. c. dispose of the fruit immediately. d. set an example to deter similar misconduct in the future.

b. do whatever is reasonable to minimize the damages.

Megan contracts to sell Nonny her horse for $4,000. This contract will be fully discharged when Megan and Nonny a. execute a bill of sale. b. exchange the horse for the money. c. sign a receipt. d. agree that the deal is fair.

b. exchange the horse for the money.

Jet enters into a contract to buy a certain warehouse from Kim. At the closing, Kim refuses to transfer title. In a suit for breach, Jet should seek specific performance to a. return the parties to the positions they occupied before the contract. b. obtain the exact bargain promised in the contract. c. reform the contract to reflect the parties' true intentions. d. make the terms reasonable and enforce the contract as reformed.

b. obtain the exact bargain promised in the contract.

Food Court Inc. leases space to Gourmet Café. Gourmet abandons the premises when the amount of the rent due on the lease is $5,000. Food finds a new tenant, Hasty Bowls, which agrees to pay $3,500 for the space over the remainder of Gourmet's term. Food's measure of damages is a. $5,000. b. $1,500, minus any expenses reduced by mitigating the damages. c. $1,500, plus any additional expenses to find the new tenant. d. $6,500.

c. $1,500, plus any additional expenses to find the new tenant.

Erma enters into a contract to buy a tract of riverfront property from Forest Acres to build and sell a residential development. Forest Acres fails to close the sale. Erma's remedy is most likely a. the amount that Erma invested in the project to the date of the closing. b. nothing—Forest Acres still owns the land. c. the difference between the contract and market prices of the land. d. specific performance.

d. specific performance.

Len contracts to work for Media Corporation during May for $4,500. On April 30, Media cancels the contract. Len declines a similar job with New Ads Inc., which would have paid $3,500. Len files a suit against Media. As compensatory damages, Len can recover a. $4,500. b. $3,500. c. $1,000. d. $0.

c. $1,000.

Dom enters into a contract to buy Ezra's office building for a certain price subject to an appraiser's evaluation of the structure's condition. If the appraiser deems the condition to be substandard, the parties' obligations will be a. discharged. b. breached. c. altered. d. performed.

a. discharged.

Home Furnishing Store's contract for a sale of its appliances provides that the only remedy for breach is replacement, repair, or refund of the purchase price. With respect to this provision, on a customer's suit for breach, a court is most likely to a. enforce it. b. reform it. c. refuse to enforce it. d. reallocate the risk expressed in it.

a. enforce it.

Fess convinces Gwyn to enter into a contract for the purchase of a Falafel Waffle Food Cart by knowingly misrepresenting a number of material features about the facility and the business. Most likely, Gwyn can rescind the contract on the basis of a. fraudulent misrepresentation. b. undue influence. c. duress. d. none of the choices.

a. fraudulent misrepresentation.

Open Range agrees to sell Pinewood Ranch a remote parcel of land for $15,000. Both parties believe the land to be worthless, but beneath it is shale rock containing oil. A court would a. not rescind the contract. b. rescind the contract on the basis of a mistake of quality. c. rescind the contract on the basis of a mistake of value. d. rescind the contract on the basis of a mistake of opinion.

a. not rescind the contract.

Rene contracts with Scot to pay him $5,000 for repairs to Rene's lake cabin. After Scot performs, Rene tells him that she cannot pay him in full immediately. They sign an agreement in which Rene promises to pay $2,500 now instead of $5,000 later. This is a. a mutual agreement to rescind. b. an accord and satisfaction. c. a novation. d. specific performance.

b. an accord and satisfaction.

Jamal and Keri enter into a contract for Jamal to renovate Keri's house by a certain date. Jamal never performs. After the applicable limitations period has passed, Keri decides to bring a suit against Jamal for breach. This suit a. must be filed within ten to twenty years, depending on state law. b. can no longer be brought. c. can be filed within four years of notice to Jamal that Keri decided to sue. d. must be filed between four and five years after Keri decides to sue.

b. can no longer be brought.

Beryl enters into a contract with Clay for a guided tour of Deep Canyon. Clay represents that he is an experienced, knowledgeable guide, when in reality he has never been in the canyon. Most likely, Beryl a. could exert duress to obtain a new guide. b. can rescind the deal based on fraudulent misrepresentation. c. might recover damages for the mistake. d. must comply with the contract because the representation is an opinion.

b. can rescind the deal based on fraudulent misrepresentation.

East Bay Café orders seafood from Fresh Catch Company. Fresh places the goods at East's disposal. Fresh's performance under the contract is a. conditional. b. complete. c. material. d. substantial.

b. complete.

Midtown Holdings Inc. contracts to sell a commercial parking garage to Nuevo Property LLC. The contract provides that if Midtown does not close the deal by a certain date, it must pay the buyer one-half of the value of the property. This provision is not enforceable if it is a. meant to pay for additional work in the event of damage. b. a reasonable estimate of the loss on the breach. c. designed to penalize Midtown. d. intended to quickly provide cash to Nuevo.

c. designed to penalize Midtown.

Luc, a vehicle dealer, offers to sell Mel a truck and trailer, which Luc claims can haul a certain weight. He knows nothing about the capability of the truck, but it is not as he asserts. Mel buys the truck. On learning the truth, Mel confronts Luc, who says he was not trying to fool Mel—he was only trying to make a sale. This is a. a mistake of value. b. a valid defense to a charge of fraud. c. fraudulent misrepresentation. d. puffery.

c. fraudulent misrepresentation.

To induce the sale of an auto parts business, Carmel fraudulently represents the worth of the inventory to Drew, who offers an inflated price. They enter into a contract to close the deal. On closer inspection, the buyer learns the true value of the goods. Drew can a. impose a penalty on the seller. b. force the seller to accept a more reasonable price. c. rescind the contract. d. none of the choices.

c. rescind the contract.

Restoration Inc. enters into a contract to refurbish an old bus depot for Quality Diners LLC. If Restoration completes most of the work promised in the contract, its performance will be a. conditional. b. complete. c. material. d. substantial.

d. substantial.

Ewa is induced by her guardian Filo to sign a contract to invest funds in Gold Inc. through Filo's investment firm. Unknown to Ewa, Filo realizes a commission from the investment. Most likely, Ewa can rescind the contract on the basis of a. duress. b. fraud. c. mistake. d. undue influence.

d. undue influence.