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Questions and Answers
When a party's obligations under a contract are terminated they are said to be _______.
When a party's obligations under a contract are terminated they are said to be _______.
discharged
Contractual conditions may be either ______ by law or ______ inserted into a contract by the parties in the contract.
Contractual conditions may be either ______ by law or ______ inserted into a contract by the parties in the contract.
If a condition precedent does not occur when discharging a contract, what happens?
If a condition precedent does not occur when discharging a contract, what happens?
the contracting party's duty to perform does not arise
In the context of discharging a contract, a condition ______ is a future event that terminates the obligations of the parties when it occurs.
In the context of discharging a contract, a condition ______ is a future event that terminates the obligations of the parties when it occurs.
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In the context of discharging a contract, ______ conditions occur when each party's performance is conditioned on the performance of the other.
In the context of discharging a contract, ______ conditions occur when each party's performance is conditioned on the performance of the other.
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What is the offer of performance known as?
What is the offer of performance known as?
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Contracts containing conditions affecting the performance obligations of the parties in a contract are called ______ contracts.
Contracts containing conditions affecting the performance obligations of the parties in a contract are called ______ contracts.
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What is required for complete performance?
What is required for complete performance?
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A condition ______ is a particular event that must occur for a party's duty to arise.
A condition ______ is a particular event that must occur for a party's duty to arise.
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What occurs when a party fails to perform his or her obligations under a contract?
What occurs when a party fails to perform his or her obligations under a contract?
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If John is called to serve, this is a condition ______, and his obligation to be bound by the lease is discharged.
If John is called to serve, this is a condition ______, and his obligation to be bound by the lease is discharged.
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Which of the following is not a recognized means by which parties to a contract can agree to discharge each other from their obligations?
Which of the following is not a recognized means by which parties to a contract can agree to discharge each other from their obligations?
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When each party's performance is conditioned on the performance of the other, the conditions are ______.
When each party's performance is conditioned on the performance of the other, the conditions are ______.
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In an accord and satisfaction, the promise to perform the new duty is called the ______, and the actual performance of that new duty is called the ______.
In an accord and satisfaction, the promise to perform the new duty is called the ______, and the actual performance of that new duty is called the ______.
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If a painter shows up ready to begin painting, what has he done?
If a painter shows up ready to begin painting, what has he done?
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What must be true for contract alteration by one party to discharge the innocent party?
What must be true for contract alteration by one party to discharge the innocent party?
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______ performance occurs when every aspect of the parties' duties under a contract is carried out perfectly.
______ performance occurs when every aspect of the parties' duties under a contract is carried out perfectly.
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In bankruptcy, once the bankrupt's assets have been distributed to his or her creditors, the bankrupt's debts are ______.
In bankruptcy, once the bankrupt's assets have been distributed to his or her creditors, the bankrupt's debts are ______.
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What is the legal effect of a minor breach of contract?
What is the legal effect of a minor breach of contract?
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Which of the following is not a recognized means by which parties to a contract can agree to discharge each other from their obligations?
Which of the following is not a recognized means by which parties to a contract can agree to discharge each other from their obligations?
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A(n) ______ and ______ is used when one of the parties wants to substitute a different performance for his original duty under the contract.
A(n) ______ and ______ is used when one of the parties wants to substitute a different performance for his original duty under the contract.
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If a seller, without the knowledge of the buyer, changes the price of the contract, the buyer can treat the contract as ______.
If a seller, without the knowledge of the buyer, changes the price of the contract, the buyer can treat the contract as ______.
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The ______ of the statute of limitations is the expiration of the time allowed by the statute.
The ______ of the statute of limitations is the expiration of the time allowed by the statute.
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When a party files bankruptcy, what happens next?
When a party files bankruptcy, what happens next?
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If an unforeseen event occurs that makes it physically or legally impossible for a party to carry out the terms of a contract, the parties will be discharged due to ______.
If an unforeseen event occurs that makes it physically or legally impossible for a party to carry out the terms of a contract, the parties will be discharged due to ______.
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In the context of impossibility of performance, ______ impossibility means it is in fact not possible to lawfully carry out one's contractual obligations.
In the context of impossibility of performance, ______ impossibility means it is in fact not possible to lawfully carry out one's contractual obligations.
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In the context of impossibility of performance, ______ impossibility means it would be very difficult to carry out a contract.
In the context of impossibility of performance, ______ impossibility means it would be very difficult to carry out a contract.
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Destruction of a contract's subject matter due to no fault of the parties constitutes ______ impossibility.
Destruction of a contract's subject matter due to no fault of the parties constitutes ______ impossibility.
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What is the legal effect of the tolling of the statute of limitations and contract enforcement?
What is the legal effect of the tolling of the statute of limitations and contract enforcement?
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What is the legal effect of the death or incapacity of a party whose personal services are necessary to fulfill the terms of the contract?
What is the legal effect of the death or incapacity of a party whose personal services are necessary to fulfill the terms of the contract?
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What is the legal effect of a subsequent illegality involving a contract?
What is the legal effect of a subsequent illegality involving a contract?
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Which of the following is an accurate statement regarding objective impossibility?
Which of the following is an accurate statement regarding objective impossibility?
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Commercial ______ is used when performance is still objectively possible but would be extraordinarily injurious or expensive to one party.
Commercial ______ is used when performance is still objectively possible but would be extraordinarily injurious or expensive to one party.
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In the context of the discharge of a contract by law, which of the following is an accurate statement regarding subjective impossibility of performance?
In the context of the discharge of a contract by law, which of the following is an accurate statement regarding subjective impossibility of performance?
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Which of the following is an accurate statement regarding legal remedies and equitable remedies for a breach of contract?
Which of the following is an accurate statement regarding legal remedies and equitable remedies for a breach of contract?
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What is the legal effect of the destruction of a contract's subject matter due to no fault of the parties?
What is the legal effect of the destruction of a contract's subject matter due to no fault of the parties?
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Which of the following is not a category of monetary damages for a breach of contract?
Which of the following is not a category of monetary damages for a breach of contract?
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The death or incapacity of a party whose personal services are necessary to fulfill the terms of the contract constitutes ______ impossibility.
The death or incapacity of a party whose personal services are necessary to fulfill the terms of the contract constitutes ______ impossibility.
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The most frequently awarded damages are ______ damages.
The most frequently awarded damages are ______ damages.
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A subsequent illegality involving a contract results in ______ impossibility.
A subsequent illegality involving a contract results in ______ impossibility.
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Suppose Jeremy was illegally terminated by his employer before his employment contract term was complete. If Jeremy has to spend money to find another job, such expenditures would be considered ______ damages.
Suppose Jeremy was illegally terminated by his employer before his employment contract term was complete. If Jeremy has to spend money to find another job, such expenditures would be considered ______ damages.
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Commercial ______ arises when, because of an unforeseeable event, one party would incur unreasonable expense, injury, or loss if that party were forced to carry out the terms of the agreement.
Commercial ______ arises when, because of an unforeseeable event, one party would incur unreasonable expense, injury, or loss if that party were forced to carry out the terms of the agreement.
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Consequential damages are ______ damages that result from special facts and circumstances arising outside the contract itself.
Consequential damages are ______ damages that result from special facts and circumstances arising outside the contract itself.
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Which of the following is an incorrect statement regarding legal remedies and equitable remedies for a breach of contract?
Which of the following is an incorrect statement regarding legal remedies and equitable remedies for a breach of contract?
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Which of the following is not a relevant factor in determining the appropriate amount of punitive damages?
Which of the following is not a relevant factor in determining the appropriate amount of punitive damages?
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Monetary damages for a breach of contract are also known as ______ damages.
Monetary damages for a breach of contract are also known as ______ damages.
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If no actual damages resulted from a breach of contract, the court may award the plaintiff ______ damages.
If no actual damages resulted from a breach of contract, the court may award the plaintiff ______ damages.
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______ damages are designed to put a plaintiff in the position he would have been in had the contract been fully performed.
______ damages are designed to put a plaintiff in the position he would have been in had the contract been fully performed.
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Which of the following represents termination of a contract?
Which of the following represents termination of a contract?
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In addition to losing the benefit of a bargain, what other losses may a plaintiff suffer caused directly by a breach?
In addition to losing the benefit of a bargain, what other losses may a plaintiff suffer caused directly by a breach?
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A(n) ______ is an order either forcing a person to do something or prohibiting a person from doing something.
A(n) ______ is an order either forcing a person to do something or prohibiting a person from doing something.
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______ damages are also known as special damages.
______ damages are also known as special damages.
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______ damages are designed to punish the defendant and deter him and others from engaging in similar behavior in the future.
______ damages are designed to punish the defendant and deter him and others from engaging in similar behavior in the future.
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A preliminary ______ fulfills the purpose of maintaining the status quo until a case can be finally decided.
A preliminary ______ fulfills the purpose of maintaining the status quo until a case can be finally decided.
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In the context of legal remedies, if a court awards a plaintiff $1, what does this most likely indicate?
In the context of legal remedies, if a court awards a plaintiff $1, what does this most likely indicate?
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A written document is rewritten to reflect what the parties had actually agreed on; this is known as ______.
A written document is rewritten to reflect what the parties had actually agreed on; this is known as ______.
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______ is the termination of a contract.
______ is the termination of a contract.
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Which of the following is required for a plaintiff to recover under a theory of quasi-contract?
Which of the following is required for a plaintiff to recover under a theory of quasi-contract?
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Usually, injunctions are prohibitions against ______.
Usually, injunctions are prohibitions against ______.
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A ______ injunction prohibits someone from taking any action during the course of a lawsuit that would cause irreparable harm to any of the parties to a contract.
A ______ injunction prohibits someone from taking any action during the course of a lawsuit that would cause irreparable harm to any of the parties to a contract.
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A court may order a(n) ______ of a written contract if the contract does not reflect the parties' actual agreement and needs to be rewritten.
A court may order a(n) ______ of a written contract if the contract does not reflect the parties' actual agreement and needs to be rewritten.
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Which of the following is not required for a plaintiff to recover under a theory of quasi-contract?
Which of the following is not required for a plaintiff to recover under a theory of quasi-contract?
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Equitable remedies are ______________.
Equitable remedies are ______________.
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Suppose that Jeremy agrees to pay Shelly $50 a month for 4 months to tutor him for his legal studies class. However, Jeremy breaches the contract and terminates Shelly for no reason other than the fact he wanted a more attractive tutor. How much in compensatory damages would Shelly be entitled to?
Suppose that Jeremy agrees to pay Shelly $50 a month for 4 months to tutor him for his legal studies class. However, Jeremy breaches the contract and terminates Shelly for no reason other than the fact he wanted a more attractive tutor. How much in compensatory damages would Shelly be entitled to?
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Which of the following statements is false concerning liquidated damages?
Which of the following statements is false concerning liquidated damages?
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Which of the following statements is false regarding compensatory damages?
Which of the following statements is false regarding compensatory damages?
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Suppose KJI Inc. had contracted to buy 20 shirts from XYZ Shirt Retailers at $15 each and will sell the shirts at $25 each. XYZ fails to deliver the shirts and now ABC has to buy the same shirts for $17 each. If KJI brings a case against XYZ, the probable measure of recovery will be _______.
Suppose KJI Inc. had contracted to buy 20 shirts from XYZ Shirt Retailers at $15 each and will sell the shirts at $25 each. XYZ fails to deliver the shirts and now ABC has to buy the same shirts for $17 each. If KJI brings a case against XYZ, the probable measure of recovery will be _______.
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Suppose a construction company enters into a contract to build a warehouse for the hypothetical Vincent Corporation with a contract price of $700,000, and the cost of raw materials and labor is $400,000. How much could the construction company recover in lost profits if the Vincent Corporation were to breach the contract before performance had begun?
Suppose a construction company enters into a contract to build a warehouse for the hypothetical Vincent Corporation with a contract price of $700,000, and the cost of raw materials and labor is $400,000. How much could the construction company recover in lost profits if the Vincent Corporation were to breach the contract before performance had begun?
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Which of the following is not a way to discharge a contract by mutual agreement?
Which of the following is not a way to discharge a contract by mutual agreement?
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Suppose Frank owns a vintage Porsche in mint condition. He agrees to sell it to Smith, but the night before the parties are to exchange money for the title, a hurricane rips through Frank's town and collapses the roof of the garage into the Porsche. The car is no longer in mint condition or even sellable. The parties are thus discharged from their obligations under the contract. Why?
Suppose Frank owns a vintage Porsche in mint condition. He agrees to sell it to Smith, but the night before the parties are to exchange money for the title, a hurricane rips through Frank's town and collapses the roof of the garage into the Porsche. The car is no longer in mint condition or even sellable. The parties are thus discharged from their obligations under the contract. Why?
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Study Notes
Discharge of Contracts
- Obligations under a contract can be terminated, referred to as being discharged.
- Conditional contracts contain conditions that affect performance obligations.
- Implied conditions arise by law, while express conditions are directly inserted by the parties.
- In contract law, a condition precedent is an event that must occur for a party's duty to arise, whereas a condition subsequent is an event that discharges obligations upon its occurrence.
Performance and Tender
- Parties can discharge their duties by making a tender, which is an offer of performance while being ready and willing to perform.
- Perfect performance is required for complete discharge of contractual obligations.
- Concurrent conditions exist when each party's performance is dependent on the performance of the other.
Breaches and Damages
- A breach occurs when a party fails to perform their contractual duties.
- A minor breach may entitle the nonbreaching party to damages but does not discharge the contract.
- Compensatory damages aim to put the party in the position they would have been in had the contract been fully performed.
- Consequential damages are foreseeable damages that arise due to special circumstances outside the contract.
Impossibility of Performance
- Impossibility of performance can discharge parties from their obligations if it is physically or legally impossible to fulfill the contract.
- Objective impossibility means that it is not possible to perform the contractual obligations, while subjective impossibility refers to difficulty in performance.
- Destruction of the subject matter without any party's fault also constitutes objective impossibility.
Legal and Equitable Remedies
- Courts provide legal remedies (monetary damages) and equitable remedies (court-ordered actions) for breach of contracts.
- Nominal damages may be awarded when no actual damages result from a breach.
- Punitive damages are designed to punish the defendant and deter future misconduct.
Contract Alterations and Mutual Discharge
- Material alteration of the contract by one party can discharge the innocent party.
- Contracts can be discharged by mutual agreement, which may include rescission (termination of the contract).
Bankruptcy and Debt Discharge
- In bankruptcy, debts are discharged after creditors receive their allocated shares from the bankrupt's assets.
- Impossibility and subsequent illegality can also lead to automatic discharge of contracts.
Specific Examples
- If the price of a contract changes without buyer knowledge, the buyer can treat the contract as terminated.
- An accord and satisfaction involves a new duty agreed upon to replace original contractual duties.
- A preliminary injunction maintains the status quo until a case is resolved and prevents actions that could cause irreparable harm.
Miscellaneous
- Liquidated damages are predetermined amounts agreed upon in a contract for breach, and courts do not specify these amounts.
- A theory of quasi-contract allows recovery when one party is unjustly enriched without compensating the other.
Use these notes for a better understanding of contractual discharge and the associated remedies in law.
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