Chapter 10: Contract Performance, Breach, and Remedies

Question 1

When the parties have genuinely agreed to the terms of a contract they have demonstrated…

Answer 1

Voluntary consent

Question 2

Mistake, misrepresentation, undue influence, and duress are all causes of a lack of _____

Answer 2

Voluntary consent

Question 3

A mistake made by only 1 of the parties. This mistake does not give the mistaken party any right to relief from the contract and it is still enforceable.

Answer 3

Unilateral mistake

Question 4

Only mistakes of _____, can allow a contract to be cancelled.

Answer 4

Fact

Question 5

A unilateral mistake of fact normally doesn’t allow the contract to be cancelled other than what 2 exceptions?

Answer 5

1. If the other party to the contract knows or should have known that a mistake of fact was made.
2. If mistake was due to an inadvertent mathematical mistake and without gross (extreme) negligence.

Question 6

A mutual misunderstanding concerning a basic assumption on which the contract was made. When both parties are mistaken about the same material fact, the contract can be rescinded by either party.

Answer 6

Bilateral Mistake

Question 7

A mistake that concerns the future market value or quality of an object. Generally, the contract is enforceable by either party.

Answer 7

Mistake of Value

Question 8

Can be words or actions; occurs when a party takes specific action to conceal a fact that is material to the contract.

Answer 8

Fraudulent Misrepresentation

Question 9

Arises from relationships in which one party can greatly influence another party thus overcoming that party’s free will. This renders the contract voidable by the innocent party.

Answer 9

Undue Influence

Question 10

When a party enters into a contract under fear or threat they are thought to be under _______. This renders the contract voidable.

Answer 10

Duress

Question 11

To terminate one’s contractual duties.

Answer 11

Discharge

Question 12

A qualification in a contract based on a possible future event, which will trigger the performance of a legal obligation or terminate an existing obligation under a contract.

Answer 12

Condition

Question 13

Condition that must be fulfilled before a party’s performance can be required.

Answer 13

Condition Precedent

Question 14

When both parties fulfill their respective duties by performing the acts they have promised.

Answer 14

Discharge by Performance

Question 15

An unconditional offer to perform by a person who is ready, willing, and able to do so.

Answer 15

Tender

Question 16

When parties perform exactly as agreed, or “perfect”.

Answer 16

Complete Performance

Question 17

A party who in good faith performs substantially all of the terms, and is able to enforce the contract.

Answer 17

Substantial Performance

Question 18

The 3 elements of substantial performance are…

Answer 18

1. Party acted in good faith.
2. Performance conferred most of the benefits promised.
3. Performance did not vary greatly from what was promised.

Question 19

The nonperformance of a contractual duty.

Answer 19

Breach of contract

Question 20

In the event of a _____ ______, the duty to perform is not excused and the non-breaching party must resume performance of the contractual obligations undertaken.

Answer 20

Minor breach

Question 21

Event that occurs when one party refuses to perform his or her contractual obligation before performance is due. This is treated as a material breach, and the other party has the ability to sue for damages.

Answer 21

Anticipatory Repudiation

Question 22

For a ______ _______ to occur, the parties must make another agreement that also satisfies the legal requirements for a contract (offer, acceptance, and consideration).

Answer 22

Mutual rescission

Question 23

Occurs when both of the parties to a contract agree to substitute a third party for one of the original parties.

Answer 23

Novation

Question 24

What are the requirements for a novation? (4)

Answer 24

1. A previous valid obligation.
2. An agreement by all parties to a new contract.
3. The extinguishing of the old obligation (discharge of the prior party)
4. A new contract that is valid.

Question 25

When one of the parties materially alters a written contract without consent. This allows the innocent party to be discharged.

Answer 25

Material Alteration

Question 26

When an event occurs that neither party could have reasonably foreseen at the time the contract was formed, that renders the performance of the contract impossible.

Answer 26

Impossibility of performance

Question 27

What are the (3) types of impossibility that the court will qualify as grounds for the discharge of contractual obligations.

Answer 27

1. When one of the parties to a personal contract dies or becomes incapacitated prior to performance. 2. When the specific subject matter of the contract is destroyed. 3. When a change in law renders performance illegal.

Question 28

When a contract is suspended until performance is possible.

Answer 28

Temporary impossibility

Question 29

Courts can choose not to enforce a contract when performance of a contract becomes extremely difficult or costly, and not have been known by parties when contract made.

Answer 29

Commercial Impracticability

Question 30

When an event that was no foreseeable decreases the value of what a party receives under contract and makes it impossible to attain the purpose both parties had in mind when they made the contract. The contract is then able to be discharged.

Answer 30

Frustration of Purpose

Question 31

Damages that cover direct losses and costs

Answer 31

Compensatory damages

Question 32

Damages that cover indirect and foreseeable losses.

Answer 32

Consequential damages

Question 33

Damages that punish and deter wrongdoing

Answer 33

Punitive damages

Question 34

Damages that recognize wrongdoing when no monetary loss is shown.

Answer 34

Nominal damages

Question 35

A doctrine that states, the duty owed depends on the nature of the contract.

Answer 35

Mitigation of damages

Question 36

Specifies that a certain dollar amount is to be paid in the event of a future default or breach of contract.

Answer 36

Liquidated damages

Question 37

Specifies a certain amount to be paid in the event of a default or breach of contract, but is designed to penalize the breaching party, not to make the innocent party whole.

Answer 37

Penalty

Question 38

Rescission, restitution, specific performance, and reformation are all...

Answer 38

Equitable remedies

Question 39

The act of returning goods, property, or funds previously conveyed by the parties in a contract.

Answer 39

Restitution

Question 40

The performance of the act promised in a contract.

Answer 40

Specific Performance

Question 41

Remedy whereby a contract is canceled and the parties are restored to the original positions that they occupied prior to the transactions.

Answer 41

Rescission

Question 42

Equitable remedy allowing a contract to be reformed, or rewritten, to reflect the parties' true intentions

Answer 42

Reformation

Question 43

When a non-breaching party may be willing to accept a defective performance of the contract.

Answer 43

Waiver