Business Law Test 3 Review

A condition that must be fulfilled before a party's performance can be required is a condition subsequent. T or F?

False, Precedent is before. Subsequent is after.

Any breach discharges the non-breaching party from the contract. T or F?

False, Substantial performance is still considered substantial performance.

As long as a contract is personal in nature, all rights under the contract can be assigned. T or F?

False, if a contract is personal in nature, may not be able to assign your rights.

Is it legally necessary to notify the obligor of any assignment of rights to a third party. T or False?

False, no legal requirement.

A valid delegation of duties relieves the delegator of obligations under the contract. T or F?

False, the original delegator is not off the hook if the delegatee does not perform.

In most situations, when a breach of contract occurs, the non- breaching must mitigate his or her damages. T or F?

True, the non breaching party has a duty to mitigate their damages

Ed's Electric substantially performs its contract with Forest Hills Apartments Inc to deliver and install an alarm system and parking lot lighting. Forest Hills is entitled to a) Damages b) Nothing more c) To be excused from performance

A

Gliding Light, LLC and Hang Gliders are parties to a contract. They subsequently agree that High Riders should take Gliding Light's place and assume all of its rights and duties under the contract. This is a) A mutual agreement to rescind b) An accord and satisfaction c) A novation

C The court by awarding nominal damages tells the party, we realize a breach has occurred, but you have not suffered any damages.

Restoration inc contracts to repair a crack in the supporting beam for Stagecraft Theater for $10,000. If restoration does not perform, Stagecraft must pay a) 10,000 b) 5,000 c) 1,000 d) 0

D, Substantial breach of contract.

A transfer of contract duties to a third party is an assignment. T or F?

False, Delegation

Amy and Victor enter into a contract by which Amy promises to deliver business cards, advertising banners, and other marketing materials to Victor. Amy later transfers her duty under the contract to Wren. Amy is a. a delegator and an obligor. b. a delegate and an obligee. c. an assignor and an assignee. d. none of the choices.

A, Amy delegated her duties to Wren, Delegator. Amy also had the obligation to perform a duty so she's the obligor also.

Bobbie enters into a contract with Claire, who agrees to paint Bobbie's studio apartment for $500. Claire is the a. obligor. b. obligee. c. assignee. d. assignor.

A, Obligor. Claire has the duty to perform an action.

Polly agrees to buy Quinn's Cycle World store on the express condition that Ridgeline Credit Union approved the financing. This approval is a) Not a condition b) A condition precedent c) A concurrent condition d) A condition subsequent

B

Jane has the right under a contract with Runway Retail, Inc., to buy the retailer's clothing overstock. Jane's sale of this right to Style House, Inc. is a. a delegation. b. an assignment. c. prohibited. d. a third-party beneficiary contract.

B, An assignment. She assigned her right to buy the overstock to Style House.

Merry Music Inc. and Ned enter into a contract for Ned to write six songs for which Merry Music agrees to pay him. Ned transfers his right to payment under the contract to Tom. In the transfer of rights, Ned is a. a delegator. b. an assignor. c. an obligor. d. an alien.

B, Ned assigns his rights to payment to Tom.

Julia, a world-famous chef, signs a contract to give lessons in French cooking to Kyle. Julia wants to transfer her duties under the contract to Lee, a short-order cook at Waffle House. The transfer is a. valid because the performance required is of a nonpersonal nature. b. valid if Lee is a highly regarded short-order cook. c. not valid because performance depends on Julia's personal skills. d. not valid if Kyle does not hold Lee in high regard.

C, Kyle contracted with Julia not Lee.

Bernadette enters into a contract to operate a Caramel Coffee franchise, which Caramal Coffee agrees to support as long as Bernadette maintains her business license. Caramel Coffee's duty to perform is a) Not a condition b) A condition precedent c) A concurrent condition d) A condition subsequent

D) a condition subsequent, terminates a party's obligation to perform.

Leon contracts to install automatic watering troughs in Kendall's dairy barn. Leon then becomes seriously ill and contracts with Jake to install the troughs. Jake is unreliable and never shows up to install the troughs. Kendall can sue a. no one. b. Jake only. c. Leon only. d. Jake or Leon.

D, The original party is not off the hook if Jake does not perform the task.

In an assignment, the party receiving the rights is the assignee. T or F?

True

A party who in good faith who performs substantially all of the terms of a contract can enforce the contract against the other party. T or F?

True, the other party still has to perform but they are entitled to damages.

A liquidated damages provision specifies that a certain amount is to be paid in the event of a future default or breach of contract. T or F?

True, the parties agreed in advance that if a breach occurred it would cost x amount.x

any breach entitles the non-breaching party to sue for damages. T or F?

True.

Performance can be accomplished by a tender. T or F?

True. When you have tendered your goods then you are done performing.

Dawson owns Evergreen, a condo complex under construction that will include commercial and residential suites, as well as a parking garage. Dawson allows First Call Construction, Inc., the contractor, to complete a stage of construction late. This waives Dawson's right to sue for a. this delay only. b. any subsequent breaches by First Call. c. any future breaches by First Call or any subcontractor. d. none of the choices.

a) this delay only.

Cowtown Creamery, Inc., needs a certain part for its pasteurizing equipment to continue its operations and orders one for $3,000 from Dairy Supplies Company. Cowtown tells Dairy Supplies that it must receive the part by Tuesday or it will lose $10,000. Dairy Supplies ships the part late. Cowtown can recover a. $13,000. b. $10,000. c. $3,000. d. $0.

b. $10,000. Consequential Damages, they gave them a notice ahead of time.

Sally contracts to work exclusively for Thermal Imaging Company during July for $5,000. On June 30, Thermal Imaging cancels the contract. Sally finds a similar job for the month of July but earns only $3,000. Sally files a suit against Thermal Imaging. As compensatory damages, Sally can recover a. $3,000. b. $2,000. c. $1,000. d. $0.

b. $2,000. Because she signed a contract for $5000, they cancelled the contract so she had to go out and cover and could only find a job that paid $3000. For compensatory damages Sally would get $2000.

A contract for a sale of land from Bayside Properties, Inc. to City Development Corporation contains an erroneous legal description. The most appropriate remedy for these parties is a. restitution. b. reformation. c. rescission. d. specific performance.

b. reformation. Ask the court to rewrite the contract to state what the parties originally intended.

Dry Farms hires Elliot to repair its irrigation system on site on a certain date for $2,500, but Elliot does not show up as agreed. Dry Farms hires Tom to do the job for $2,000. Dry Farms may recover from Elliot a. nothing. b. compensatory damages. c. consequential damages. d. nominal damages.

d. nominal damages. No damages have occurred, but can still prove a breach of contract.

Ambrose enters into a contract to buy 350 acres from Belle Vista Farms to cultivate grapes and open a winery. If Belle Vista breaches the contract, Ambrose's remedy would most likely be a. a certain ratio of the amount that Ambrose expected to invest in the project. b. a percentage of Belle Vista's unrealized profit. c. the difference between the land's contract and market prices. d. specific performance

d. specific performance, if the seller breaches on a land deal, the court will order specific performance.