Chapter 17 Performance and Discharge in Traditional and E-Contracts. All Answers

N.B.: TYPE indicates that a question is new, modified, or unchanged, as follows. N A question new to this edition of the Test Bank. + A question modified from the previous edition of the Test Bank. = A question inc ...

N.B.: TYPE indicates that a question is new, modified, or unchanged, as follows. N A question new to this edition of the Test Bank. + A question modified from the previous edition of the Test Bank. = A question included in the previous edition of the Test Bank. A1. In most contracts, promises of performance are not expressly conditioned. T PAGE: 319 TYPE: N NAT: AACSB Analytic AICPA Legal A2. An event must be certain to occur to constitute a contractual condition. F PAGE: 319 TYPE: = NAT: AACSB Analytic AICPA Critical Thinking A3. Tender is an unconditional offer to perform. T PAGE: 320 TYPE: N NAT: AACSB Analytic AICPA Legal A4. Express conditions are provided for by the parties’ agreement. T PAGE: 320 TYPE: N NAT: AACSB Analytic AICPA Legal A5. When a condition operates to terminate a party’s promise to per¬for¬m, it is a condition subsequent. T PAGE: 320 TYPE: + NAT: AACSB Analytic AICPA Legal A6. A contract comes to an end when both parties fulfill their respective duties by performing the acts they have promised. T PAGE: 320 TYPE: N NAT: AACSB Analytic AICPA Critical Thinking A7. A party who substantially performs his or her duties under a con¬tract can enforce the contract against the other party. T PAGE: 321 TYPE: = NAT: AACSB Analytic AICPA Legal A8. A contract is substantially performed when performance creates sub¬stan-tially the same benefits as those promised in the contract. T PAGE: 321 TYPE: = NAT: AACSB Analytic AICPA Legal A9. Most contracts need to be performed to per¬sonally satisfy the party to whom per¬formance is owed. F PAGE: 323 TYPE: + NAT: AACSB Reflective AICPA Critical Thinking A10. Any breach excuses the nonbreaching party’s duty to perform. F PAGE: 324 TYPE: = NAT: AACSB Analytic AICPA Legal A11. Any breach allows the nonbreaching party to sue for damages. T PAGE: 324 TYPE: = NAT: AACSB Analytic AICPA Legal A12. Anticipatory repudiation discharges a contract. F PAGE: 324 TYPE: = NAT: AACSB Analytic AICPA Legal A13. A breach of contract occurs only when a party fails to perform all of his or her duties under a contract. F PAGE: 324 TYPE: = NAT: AACSB Analytic AICPA Legal A14. If no time for performance is stated in a contract, any time is acceptable. F PAGE: 325 TYPE: N NAT: AACSB Analytic AICPA Legal A15. A compromise that arises out of a dispute over the obligations under a contract may be substituted for the original contract. T PAGE: 326 TYPE: + NAT: AACSB Reflective AICPA Legal A16. When a contract party alters a written contract, the other party must adapt his or her performance accordingly. F PAGE: 326 TYPE: = NAT: AACSB Analytic AICPA Legal A17. A contract is discharged when a change in the law renders the performance illegal. T PAGE: 327 TYPE: N NAT: AACSB Analytic AICPA Legal A18. A contract will be discharged if foreseeable circumstances make it impossible to attain the contract’s purpose. F PAGE: 327 TYPE: = NAT: AACSB Analytic AICPA Legal A19. A discharge in bankruptcy will ordinarily bar enforcement of most of a debtor’s contracts by creditors. T PAGE: 328 TYPE: N NAT: AACSB Analytic AICPA Legal A20. A party’s obligations under a contract may be excused if, due to an unforeseen circumstance, the party’s benefit will be reduced. F PAGE: 328 TYPE: N NAT: AACSB Reflective AICPA Legal MULTIPLE CHOICE QUESTIONS A1. Lark enters into a contract to mine limestone in Milena’s quarry, sell it, and share the profits on its sale with Milena. If the duties under this contract are discharged like those under most contracts, the duties will be a. repudiated. b. breached. c. performed. d. rescinded. C PAGE: 319 TYPE: = NAT: AACSB Reflective AICPA Legal A2. Belle enters into a contract to subdivide and sell housing lots in Colin’s hillside field if Dell City annexes the property within the next year. Belle’s duty to perform is a. absolute. b. conditional. c. illusional. d. irresolute. B PAGE: 319 TYPE: = NAT: AACSB Reflective AICPA Legal A3. Jen agrees to buy Kev’s Dirt Bike business on the express condition that Valley Credit Union approves the financing. This approval is a. a concurrent condition. b. a condition precedent. c. a condition subsequent. d. an implied condition. B PAGE: 319 TYPE: + NAT: AACSB Reflective AICPA Legal A4. Elton and Florida sign a contract by which Elton agrees to deliver and install a utility sink on May 15 in exchange for Florida’s promise to pay the $150 price on May 15. The delivery and installation of the sink and the payment of the price are ex¬amples of a. conditions precedent. b. concurrent conditions. c. conditions subsequent. d. implied conditions. B PAGE: 320 TYPE: + NAT: AACSB Reflective AICPA Legal A5. Lake Port Services enters into a contract to load Max’s Great Lakes barges with the cargo that Max designates. Lake Port’s offer to perform, when Lake Port is ready, willing, able to do so, is a. complete. b. substantial. c. tender. d. tough. C PAGE: 320 TYPE: = NAT: AACSB Reflective AICPA Legal A6. Safe-T Guard Services enters into a contract to secure Taylor’s Business Park from vandalism and theft between 6 P.M. and 6 A.M. nightly for six months. At the end of the term, if there has been no vandalism or theft in the Park, Safe-T’s performance will have been a. absolute. b. complete. c. conditional. d. substantial. B PAGE: 321 TYPE: = NAT: AACSB Reflective AICPA Legal A7. Even-Bilt Construction contracts to build a warehouse for Discount E-Sales Company. Even-Bilt completely performs. Discount E-Sales is entitled to a. an accord. b. rescission. c. novation. d. nothing more. D PAGE: 321 TYPE: + NAT: AACSB Reflective AICPA Legal A8. Real Cheap Painters, Inc., agrees to paint Quint’s house, using a particular brand of “discount” paint. Real Cheap completes the job but uses a dif¬ferent brand of discounted paint. This is most likely a. an absolute excuse for Quint’s refusal to pay. b. a material breach. c. complete performance. d. substantial performance. D PAGE: 321 TYPE: = NAT: AACSB Reflective AICPA Legal Fact Pattern 17-A1 (Questions A9–A10 apply) Mutual Company enters into a contract to employ Neil as an investment manager for two years. During the first year, Neil is often absent without explanation and when present fails to adequately monitor and manage Mutual’s investments. A9. Refer to Fact Pattern 17-A1. With respect to Mutual’s duties, Neil’s performance most likely a. discharges Mutual from the contract. b. has no effect on Mutual’s performance. c. increases Mutual’s duties under the contract. d. suspends Mutual’s duty to perform. A PAGE: 324 TYPE: = NAT: AACSB Reflective AICPA Legal A10. Refer to Fact Pattern 17-A1. Neil’s performance is most likely a. a material breach. b. a minor breach. c. Mutual’s breach. d. no breach. A PAGE: 324 TYPE: = NAT: AACSB Reflective AICPA Legal A11. Jane and Kelly want Lucy to replace Kelly as a party to their con¬tract. They can best accomplish this by a. a mutual agreement to rescind. b. an accord and satisfaction. c. a novation. d. an alteration of the contract. C PAGE: 325 TYPE: + NAT: AACSB Reflective AICPA Legal A12. Quito contracts with Rewind Graphix, Inc., to pay $5,000 for its work on the animated film “Song.” After Rewind performs, they sign an accord, in which Quito promises to pay $4,000 within ten days instead of $5,000 later. But Quito does not pay. Rewind can sue Quito under a. neither the accord nor the original obligation. b. the accord only. c. the accord or the original obligation. d. the original obligation only. C PAGE: 326 TYPE: + NAT: AACSB Reflective AICPA Legal A13. Ruth contracts to provide Shelly with fifty hours of telepathic personal coaching. The state legisla¬ture sub¬sequently passes a law making tele¬pathic personal coaching illegal. This law will a. discharge the contract. b. fulfill the contract. c. not affect the contract. d. require immediate performance of the contract. A PAGE: 327 TYPE: = NAT: AACSB Reflective AICPA Legal A14. Commercial Construction, Inc. (CCI), contracts to build a store for Rita’s Pizza Company with Rita’s payment due on June 1. On June 1, Rita’s bank is closed, and for this reason, Rita’s claims it cannot pay on time. In this situation a. CCI is in breach of contract. b. Rita’s is in breach of contract. c. the contract is discharged. d. the contract is suspended. B PAGE: 327 TYPE: = NAT: AACSB Reflective AICPA Legal A15. Clyde contracts with Deephole Excavation, Inc., to dig an agricultural pond on his farm. Deephole is to keep the excavated gravel in payment. Clyde’s neighbor Eden challenges the dig as an illegal gravel pit. A court orders a halt to the dig. Clyde’s contract with Deephole is a. breached. b. discharged. c. not affected. d. suspended. B PAGE: 327 TYPE: N NAT: AACSB Reflective AICPA Legal Fact Pattern 17-A2 (Questions A16-A19 apply) Evelyn, who owns and operates Eve’s Farm & Garden Company, agrees to sell Hill & Dale Produce, Inc., fifty bush¬els of apples. A16. Refer to Fact Pattern 17-A2. Evelyn dies before the apples are delivered to Hill & Dale. Evelyn’s contract with Hill & Dale is a. breached. b. discharged. c. not affected. d. suspended. C PAGE: 327 TYPE: = NAT: AACSB Reflective AICPA Legal A17. Refer to Fact Pattern 17-A2. When bad weather destroys Eve’s Garden’s apple crop, the obliga¬tion to deliver apples to Hill & Dale is a. breached. b. discharged. c. not affected. d. suspended. B PAGE: 327 TYPE: N NAT: AACSB Reflective AICPA Legal A18. Refer to Fact Pattern 17-A2. A strike delays delivery of the apples by ten days. Evelyn’s contract with Hill & Dale is a. breached. b. discharged. c. not affected. d. suspended. D PAGE: 327 TYPE: = NAT: AACSB Reflective AICPA Legal A19. Refer to Fact Pattern 17-A2. When the market price for apples exceeds the price in the contract with Hill & Dale, Evelyn decides not to deliver the apples. Evelyn’s contract with Hill & Dale is a. breached. b. discharged. c. not affected. d. suspended. A PAGE: 328 TYPE: N NAT: AACSB Reflective AICPA Legal A20. Frisco agrees to lease an apart¬ment from Gina for one day to see Harry, the president of the United States, deliver a speech in the street below. The speech is can¬celed ten days before its scheduled date. The con¬tract a. is discharged. b. is not affected. c. is postponed until another event is scheduled. d. must be performed immediately. A PAGE: 330 TYPE: = NAT: AACSB Reflective AICPA Legal ESSAY QUESTIONS A1. Elin contracts to buy six cases of vintage Fertile Valley wine from Grapes & Vines Winery for $1,200. The contract states that delivery is to be made at Elin’s residence "on or before May 1, to be used for daughter's wedding reception on May 2." On May 1, Grapes & Vines’s delivery van is involved in an accident, and no wine is delivered that day. On the morning of May 2, Elin buys the wine from Happy Hill Winery. That afternoon, just before the reception, Grapes & Vines tenders delivery of the wine at Elin’s residence. Elin refuses tender. Grapes & Vines sues Elin for breach of contract. How is the court most likely to rule? A2. Investment Properties, Inc., hires Justus Construction Company to renovate the interior of Investment’s office building. Justus sub¬mits plans that Investment approves. Justus completes the major recon¬struction, paints the interior, and buys the fixtures and furnishings. Investment rejects some of the furnishings because they do not match the plans, and subsequently refuses to allow Justus to finish the work or to col¬lect payment. Could Justus sue successfully for payment for the entire contract?