EXAM 2: CONTRACT LAW MCQ PRACTICE QUESTIONS

Sierra offers to sell Alyssa a Scottish terrier puppy for $800. Alyssa and Sierra do not discuss the dog's ancestry, but Alyssa believes that the dog came from champion lines and agrees to the price. Alyssa later discovers that the puppy is worth only $200. Can Alyssa rescind the contract based on her mistake? a. Yes, because Alyssa had a duty to investigate, which she failed to perform. b. Probably not, because Alyssa made a mistake about the dog's value, not a mistake about a material fact. c. Yes, because the dog was clearly not worth $800. d. Probably so, because Alyssa made a mistake about a material fact. - ANS~ b Brian wants to buy a mare that he can breed to help develop a horse operation. Larson offers to sell Brian a horse that Larson believes is healthy and should make a good broodmare when a little older. After two years, the horse still has not foaled. The veterinarian tells Brian that the horse is incapable of breeding. If Brian sues to rescind the contract with Larson, it is a. unlikely that a court will allow rescission, because Brian made a mistake about market value. b. unlikely that a court will allow rescission based on a mistake of fact. c. likely that a court will allow the rescission based on a mistake of fact. d. likely that a court will allow the rescission based on a unilateral mistake. - ANS~ c AJ agrees to buy Harry's pickup truck so he can pull his trailer. Both AJ and Harry believe that the truck is big enough to do the job. After they complete the deal, AJ finds that the truck is not strong enough to handle the trailer. The contract between AJ and Harry can be rescinded because of a. a beveled mistake. b. a unilateral mistake. c. a mutual mistake. d. an allowable mistake. - ANS~ c Sophie buys a tropical bird from Henry's bird store. Henry says, "It is extremely rare." Sophie asks if the bird is on the endangered species list. Henry knows it is on the list, but he tells her it is not. Government officials later tell Sophie that she purchased a bird that individuals may not own, the bird is confiscated, and she is fined for possessing it. To recover the price of the bird and the cost of fines, Sophie can sue Henry for a. fraudulent misrepresentation. b. undue influence. c. negligence. d. mistake, which allows the contract to be rescinded. - ANS~ a Samantha, a famous artist, has a contract with Alec to paint his portrait for $6,000. Samantha is very busy and went to delegate her duty to do the painting to Patty, her top student and a very talented artist. If Alec objects, a court likely will a. not honor the delegation because, as a general rule, delegations are not allowed. b. honor the delegation only if the delegation was in writing. c. honor the delegation because, as a general rule, delegations are allowed. d. not honor the delegation because the contract is based on personal skill. - ANS~ d Antonio owns property on which a gasoline station once stood. Josh agrees to buy the land so that he can build an office on it. They include language in the contract making the purchase contingent on a determination that there are no environmental problems with the property. The contingency represents a. a condition subsequent. b. an implied condition. c. a condition precedent. d. a concurrent condition. - ANS~ c Rick agrees to buy 20 acres of land from Tina. Three weeks before the deal is to close, Rick calls Tina and says, "The deal is off!" In this situation, Rick's actions constitute a. a discharge of the contract by novation. b. a reformation of the contract. c. substantial performance of the contract. d. anticipatory repudiation of the contract. - ANS~ d Johanna agrees to purchase Jessie's land so that she can build a golf course. They write a contract, and Johanna transfers the deed to Jessie. Jessie pays Johanna the entire purchase price. Johanna and Jessie have discharged their contract by a. concurrence. b. lapse of time. c. breach. d. performance. - ANS~ d Jim contracted with United Technologies to install 5,000 feet of Rocketfish Cat-5e network cable in his new office building. United installed 5,000 feet of Dynex Cat-5e network cable instead. When Jim sued for breach of contract, and a court found that United's actions constituted a. complete performance. b. substantial performance. c. material breach. d. incomplete performance. - ANS~ b Nico and Oscar form a contract under which Oscar is to perform gardening services for Nico for one year. For six months, Oscar performs the services, and Nico pays him. Nico's mother, Madison, becomes ill and is unable to care for her garden. The three agree that Oscar will no longer care for Nico's garden but instead will care for Madison's garden for the remainder of the year. The new contract a. is a reformation. b. is not valid. c. has been substantially performed. d. is a novation. - ANS~ d If a person who has signed a contract to provide a service dies before the service can be performed, the a. estate (or successor) of the service provider may sue for the profits that would have been earned had the contract been fulfilled. b. buyer can sue the estate of the deceased to recover the cost of obtaining a replacement or for other particular costs incurred. c. buyer is out of luck, because the contract is discharged by objective impossibility. d. estate (or successor) of the service provider must make a good faith effort to provide a timely replacement. - ANS~ c David has a contact with Leland to build his house at a fixed price, but an unexpected hurricane causes a lumber shortage throughout the U.S. and Leland is unable to build the house. A court may excuse Leland from performing the contract based on the doctrine of a. repudiation. b. the statute of limitations. c. a novation. d. commercial impracticability. - ANS~ d Marc agrees to sell Diana 500 copies of a book for $3.50 per book. Marc breaches the contract by not delivering the books. At the time of the breach, the books are available from the publisher for $4.50 each. Diana's damages are a. $2,250 b. $0 c. $1,750 d. $500 - ANS~ d Allison contracts with Jackson to have him remodel the kitchen in her home. Allison changes her mind and breaches the contract before Jackson can begin work. As a remedy for the breach, Jackson can seek a. nothing, because she breached the contract before Jackson began work and he suffered no loss. b. the contract price. c. the contract price plus interest. d. expected profits from the contract. - ANS~ d Lori contracts to buy coffee beans for her store from Mike. The contract price is $7.50 per pound of Costa Rican coffee. Mike breaches the contract and delivers no coffee. Lori's damages will likely be a. the amount of damages she seeks. b. the amount Mike can afford to pay. c. the compensation paid by Mike to the coffee grower who was supposed to supply the beans to Mike. d. the difference between the contract price of coffee and what Lori will have to pay to secure alternative coffee. - ANS~ d Velma contracts with Gordon, who agrees to build a stone retaining wall and French drain on her property. The wall and drain are necessary to prevent erosion of her land, which is falling into the creek on her property at a rapid rate. If Gordon breaches the contract by failing to get to work, Velma is under a legal obligation to a. absorb all of the costs associated with the property erosion caused by Gordon's breach. b. mitigate her damages. c. do nothing, because she is the innocent party and thus has no legal duties. d. wait until Gordon is prepared to build the wall and drain. - ANS~ b Brandon contracts with Starcross to buy several of Starcross's dairy cows. Starcross delivers the cows, but Brandon doesn't pay for them. Starcross may be able to have his cows returned if he seeks the remedy of a. specific performance. b. restitution. c. reformation. d. novation. - ANS~ b Ronda contracts with Darren to buy two horses. They agree that she will pay $2,000 for each horse. When they draw up the contract, the sales price is inadvertently changed to read "$40,000" rather than "$4,000." They can seek the remedy of a. reformation. b. restitution. c. recovery based on quasi-contract. d. novation. - ANS~ a Kevin buys a new Volkswagen and signs a contract with Volkswagen saying that he will never sue the company for any personal injuries he may receive as a result of a faulty car. In exchange, Volkswagen reduces the price of the automobile by $6,500. This type of contract provision is a. an exculpatory clause. b. a dormant commerce clause. c. a valid liquidated damages clause. d. a revisionary clause. - ANS~ a If a mistake concerns the future value of the object of the contract, a court will normally provide relief.​ a. true b. false - ANS~ false Normally, specific performance will not be granted unless the remedy at law is inadequate.​ a. true b. false - ANS~ true Contractors LLC agrees to build a store for Discount Retail, Inc., at a specific location. Before construction begins, the local zoning law is changed to prohibit commercial buildings at that location. In this situation​ a. ​Contractors is in breach of contract. b. ​the local zoning authority is in breach of contract. c. ​the contract is discharged. d. ​Discount must compensate Contractors for its lost profit. - ANS~ c ​When an anticipatory repudiation occurs, it is treated as a material breach of a contract. a. true b. false - ANS~ true Punitive damages are generally not awarded in an action for breach of contract.​ a. true b. false - ANS~ true Juan and Isidro enter into a contract to buy, restore and reopen the Coastal Park Carousel. Before either party begins to perform, they agree to cancel their deal. This is​ a. ​specific performance. b. ​mutual rescission. c. ​accord and satisfaction. d. novation. - ANS~ b Berry enters into a contract with Clyde for a guided tour of Deep Canyon. Clyde represents that he is an experienced, knowledgeable guide, when in reality he has never been in the canyon. Berry is most likely a victim of​ a. undue influence. b. ​fraud. c. mistake. d. unconscionability. - ANS~ b Home Construction LLC enters into a contract with Irene to build a house. Before Home starts to work, the market price for its services increases—in effect, Home will lose money if it fulfills its contract with Irene. Home notifies her that it will not perform. Home a. ​has breached the contract. b. is ​discharged from the contract. c. is entitle to ​rescind the contract. d. may ​suspended performance until the prices come down. - ANS~ a In selling 300 acres of rural land to Organic Farms, Peyton tells the buyer that the land "will be worth twice as much by next year." This is ​ a. adhesion. ​b. fraud. c. ​mistake. d. ​opinion. - ANS~ d Amy and Bob enter into a contract for Bob to perform waste management services for Amy's commercial properties. Later, Bob alters a material term-increases the price-without Amy's knowledge or consent. Amy​ a. may now alter a material term, such as the payment date, without Bob's consent. ​b. can treat the contract as discharged or continue under the original terms. c. ​must adapt his performance accordingly. ​d. must determine whether Bob's alteration is substantial performance or detrimental reliance. - ANS~ b Anything less than complete performance is a material breach of contract.​ a. true b. false - ANS~ false Moe threatens physical harm to force Norel to contract to pay him for protecting her store against vandalism and destruction. Norel may​ a. ​rescind the contract or refuse to comply with its terms. ​b. do nothing once she has agreed to pay. ​c. recover from her insurer for the cost. d. seek help from the police to get out of the contract. - ANS~ a ​Ann offers to buy Beth's land only if an appraiser estimates that its current value is more than a certain price. Later, the appraiser deems the worth of the land to be less than Beth's price. Ann and Beth's obligations a. ​must still be performed. b. ​must now be renegotiated. ​c. are on "hold." d. ​are discharged. - ANS~ d A contract will be discharged if unforeseeable circumstances make it impossible to attain the contract's purpose.​ a. true b. false - ANS~ true An innocent party can rescind a fraudulent contract and be restored to his or her original position.​ a. true b. false - ANS~ true