Business Law Ch. 19

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:

$25

Through which of the following circumstances may a contract be discharged?

All of the above

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

Concurrent Conditions

A __________ is a condition that must occur before a party to a contract has an obligation to perform under a contract.

Condition Precedent

A condition subsequent can alter but not terminate a contract.

False

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

False

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

False

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.

False

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

False

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

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

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

False

An offer to perform is known as a(n) __________.

Tender

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?

The contract was discharged by impossibility of performance.

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

True

A contract provision requiring that suit be brought within one (1) year does not violate public policy, although the statute of limitations would allow two (2) years in the absence of such a contract limitation.

True

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

True

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

True

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

True

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

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

In a case of the sale of property, time is not regarded as of the essence when there has not been any appreciable change in the market value or condition of the property and when the person who delayed does not appear to have done so for the purpose of speculating on a change in market price.

True

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

True

Payment by check is a conditional payment.

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

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

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

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

To establish impossibility a party must show (1) the unexpected occurrence of an intervening act; (2) that the risk of the unexpected occurrence was not allocated by agreement or custom; and (3) that the occurrence made performance impossible.

True

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

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

If no time period for performance is specified in a contract:

a reasonable time for performance will be implied.

In which case will performance on the exact date specified in the contract most likely be deemed essential?

a sale of goods that fluctuate rapidly in value.

When a debtor makes a payment to a creditor specifying how it should be applied, the creditor must apply the payment:

as directed by the debtor.

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:

commercial impracticability

Which of the following events excuses a promisor from performing his or her contractual obligations?

destruction of the subject matter through no fault of either party

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.

force majeure

Sales of goods transactions are subject to a statute of limitations period of:

four (4) years

If the parties to a contract agree to undo the agreement and return any consideration involved, the contract is discharged by:

mutual rescission.

Bankruptcy results in a discharge of contractual obligations by __________.

operation of law

The phrase "time is of the essence" means that

performance under the contract at the times specified in the contract is vital or essential.

The death or disability of a party to a contract discharges the contract when:

personal services requiring peculiar skill are involved.

A change of law discharges a contract if the new law:

prohibits the act called for by the contract.

The frustration of purpose doctrine:

requires that both parties were aware of the purpose.

Which of the following is not an element of an accord and satisfaction?

reservation of rights under the federal Consumer Credit Protection Act

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 __________.

substitution

Ordinarily, a temporary impossibility __________ the duty to perform.

suspends

A contract to build a house is deemed performed when:

there has been substantial performance of the contract.

A homeowner who refinances her home mortgage may cancel the transaction:

within three business days