Legal Environment of Business
Exam 2025 Questions and Answers
43. Morgan signs a contract with Shane agreeing to work with him for a movie.
Halfway through the production of the movie, Shane decides to quit as he gets another
job as a marketing executive. The printed terms in the contract state that when a breach
of contract occurs, the breaching party has to pay $20,000 to the nonbreaching party.
The contract also has additional handwritten terms that state that in the event of a party
being unable to complete the performance required due to unforeseen, unnatural
causes, the breaching party does not have to pay any money to the nonbreaching party.
Which of the following statements is true in this situation? - ✔✔Shane has to pay
$20,000 to Morgan for breach of contract.
44. Which of the following statements is true in cases where only one party drafts a
contract that contains terms that appear vague and ambiguous to the other party? -
✔✔The court will interpret the ambiguous and vague terms against the party that drafts
them.
46. An exception to the parol evidence rule allows - ✔✔evidence of oral agreement that
merely explains the meaning of written terms without changing the terms.
47. If a contract contains a condition precedent it means that - ✔✔something must take
place in the future before a contracting party has a duty to perform.
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 1
, 48. Which of the following is the key difference between conditions subsequent and
conditions precedent? - ✔✔timing of the duty to perform
49. Aaron wants to buy Laura's stereo for $500.00. He pays Laura $500.00 cash as Laura
hands over the stereo. In this situation, there is a(n) - ✔✔concurrent condition of
performance.
50. A condition subsequent in a contract - ✔✔excuses performance upon the happening
of some specified future event.
51. An employment contract denies payment of a full month's salary if an employee
does not clock in 160 hours of work. This is a(n) ______. - ✔✔condition subsequent
61. ToughBuilders Corp., a construction company, finishes the construction of a house
two days after the contract called for its completion. The delay was caused solely due to
low productivity. In this scenario, the level of performance of Tough Builders Corp. is
recognized as ______. - ✔✔substantial performance
62. If a party has not completed a full performance of a contract, but has also not
committed a breach due to nonperformance, the party has most likely completed
______. - ✔✔substantial performance
63. Jessica hires ChromaLite Builders Corp. to construct a house. The contract specifies
that grade A+ carpeting is to be installed on the entire second floor. ChromaLite
Builders accidentally installs grade A carpeting instead. Few people, except for
carpeting experts, can tell the difference. Jessica, however, refuses to pay for the
construction citing that ChromaLite Builders has breached the contract. Which of the
following statements is true in this scenario? - ✔✔The courts are likely to consider
ChromaLite Builders's performance as a substantial performance, and Jessica would be
entitled to monetary damages.
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 2
Exam 2025 Questions and Answers
43. Morgan signs a contract with Shane agreeing to work with him for a movie.
Halfway through the production of the movie, Shane decides to quit as he gets another
job as a marketing executive. The printed terms in the contract state that when a breach
of contract occurs, the breaching party has to pay $20,000 to the nonbreaching party.
The contract also has additional handwritten terms that state that in the event of a party
being unable to complete the performance required due to unforeseen, unnatural
causes, the breaching party does not have to pay any money to the nonbreaching party.
Which of the following statements is true in this situation? - ✔✔Shane has to pay
$20,000 to Morgan for breach of contract.
44. Which of the following statements is true in cases where only one party drafts a
contract that contains terms that appear vague and ambiguous to the other party? -
✔✔The court will interpret the ambiguous and vague terms against the party that drafts
them.
46. An exception to the parol evidence rule allows - ✔✔evidence of oral agreement that
merely explains the meaning of written terms without changing the terms.
47. If a contract contains a condition precedent it means that - ✔✔something must take
place in the future before a contracting party has a duty to perform.
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 1
, 48. Which of the following is the key difference between conditions subsequent and
conditions precedent? - ✔✔timing of the duty to perform
49. Aaron wants to buy Laura's stereo for $500.00. He pays Laura $500.00 cash as Laura
hands over the stereo. In this situation, there is a(n) - ✔✔concurrent condition of
performance.
50. A condition subsequent in a contract - ✔✔excuses performance upon the happening
of some specified future event.
51. An employment contract denies payment of a full month's salary if an employee
does not clock in 160 hours of work. This is a(n) ______. - ✔✔condition subsequent
61. ToughBuilders Corp., a construction company, finishes the construction of a house
two days after the contract called for its completion. The delay was caused solely due to
low productivity. In this scenario, the level of performance of Tough Builders Corp. is
recognized as ______. - ✔✔substantial performance
62. If a party has not completed a full performance of a contract, but has also not
committed a breach due to nonperformance, the party has most likely completed
______. - ✔✔substantial performance
63. Jessica hires ChromaLite Builders Corp. to construct a house. The contract specifies
that grade A+ carpeting is to be installed on the entire second floor. ChromaLite
Builders accidentally installs grade A carpeting instead. Few people, except for
carpeting experts, can tell the difference. Jessica, however, refuses to pay for the
construction citing that ChromaLite Builders has breached the contract. Which of the
following statements is true in this scenario? - ✔✔The courts are likely to consider
ChromaLite Builders's performance as a substantial performance, and Jessica would be
entitled to monetary damages.
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 2
