Week 11 - Test 2

Question 1

release of performance

Answer 1

discharge

Question 2

lawsuit in which a whistleblower can obtain reward for exposing misconduct involving government contract

Answer 2

qui tam

Question 3

When finding discharge due to unmet condition, one should look at whether a deadline was a (1) or a (2)

Answer 3

1. promise

2. condition precedent

Question 4

4 ways a contract can be discharged by agreement

Answer 4

1. release/recision (cancellation)
2. modification of old agreement
3. accord & satisfaction
4. novation

Question 5

mutual agreement to cancel

Answer 5

recision

Question 6

new contract involving parties; cancels earlier contract

Answer 6

novation

Question 7

5 examples of ways a contract can be discharged by operation of law

Answer 7

1. death
2. incapacity of a party performing personal services
3. insolvency (bankruptcy)
4. by courts (illegality, public policy)
5. one party is preventing other’s performance and has tendered performance

Question 8

unable to pay debts

Answer 8

insolvency

Question 9

federal system of laws and courts for resolution of debts that excee the debtor’s assets or that the debtor is unable to pay when due

Answer 9

bankruptcy

Question 10

2 types of bankruptcy

Answer 10

1. liquidation/straight bankruptcy (chapter 7)

2. reorganization (chapter 11-13)

Question 11

to convert assets to cash, usually to pay debts in dissolution of a business

Answer 11

liquidation

Question 12

generally involves liquidation of assets

Answer 12

straight bankruptcy

Question 13

bankruptcy in which debtor continues in operation

Answer 13

reorganization

Question 14

2 things that happen right after bankruptcy is filed

Answer 14

1. automatic stay - creditors cannot collect, debtor cannot transfer property (some prior are invalidated)
2. Debts classified as secured/unsecured and prioritized; assets identified

Question 15

A bankruptcy trustee decides wiether to (1) or (2) executory contracts–until that time, the party is generally (3). The contract may be (4) or (5) even if the contract prohibits it. If the trustee rejects a contract, the other party’s claim becomes and (6) agaisnt the (7), payment of which will depend on whether assets are available to cover the claims.

Answer 15

1. honor (assume)
2. reject
3. required to perform
4. sold
5. assigned
6. unsecured claim
7. bankruptcy estate

Question 16

party’s indication that he is ready, willing and able to perform

Answer 16

tender performance

Question 17

When looking at breach of ccontract, look at how (1) and (2) interact to form the contractual relationship. Then whether (3) created are violated or breached.

Answer 17

1. promises
2. conditions
3. performance obligations

Question 18

event that is not certain to occur. Provision, the fulfillment of which creates or extinguishes a duty to perform under the contract. Failure of this is not a breach; there is no liability,.

Answer 18

Condition

Question 19

Promise performance is subject to a (1) if the parties agree that performance is contingent on that uncertain event.

Answer 19

condition

Question 20

undertaking to perform or refrain from performing some designated act - failure of this is a breach and gives rise to liability

Answer 20

promise

Question 21

“I promise to wash your car if it doesn’t rain.”

Answer 21

condition

Question 22

breach of a PROMISE by one or more party MAY or MAY NOT excuse the other party’s obligation to perform under the contract - is the breach material?

Answer 22

excuse of performance

Question 23

Nonfulfillment of a condition usually will excuse a (1)

Answer 23

duty to perform that was subject to that condition

Question 24

What happens to the contract if a promise is not fulfilled (as opposed to a condition?)

Answer 24

The other party must still perform but is entitled to damages. (e.g., if a car is promised to get to 125 but doesn’t, still have to buy car but can collect damages. If conditional on 125, may be discharged from buying)

Question 25

Generally, if intent cannot be determined, courts will treat a statement as a (1), not a (2)

Answer 25

1. promise | 2. condition

Question 26

Development example -- unmet future certain event -- what can a developer do who conditions purchase of 500 acres on rezoning within 60 days (and zoning doesn't happen?)

Answer 26

1. suspend action | 2. walk away (discharge)

Question 27

A mutual agreement to end a contract is (1) and (2) serves as the consideration for the agreement. (3) falls under this--discharging one party and allowing substitute of a new party. Alternative to this is (4)--promissor takes offer off table.

Answer 27

1. recission 2. surrender 3. Novation 4. Rescinding

Question 28

In bankruptcy, the trustee chooses whether contracts are (1)--this is one form of (2). Death does not discharge (3) or (4). Another form of discharge by operation of law is (5) and contracts against (6)

Answer 28

1. discharged 2. discharge by operation of law 3. mortgage 4. car payments 5. illegality 6. public policy

Question 29

At common law, impossibility did not account for (1). Now it can, but the impossibility must be (2). A (3) cannot get you out of a contract!

Answer 29

1. discharge from the contract 2. objective (music hall burned down, no possible way to perform v. "I can't perform") 3. bad deal

Question 30

What was the significance of the "accidental gelding" example?

Answer 30

Contract to buy stud discharged because no remaining value to contract = commercial impracticability and frustration of purpose (not party's fault, but purpose frustrated)

Question 31

What was the significance of the example in which a man rented/cancelled rental of an overinflated-price apartment in order to watch a coronation ceremony that was cancelled?

Answer 31

earliest case of commercial impracticability/frustration of purpose. Renter was excused because no value to overinflated apartment since coronation was cancelled

Question 32

boilerplate in almost any contract--allows the option to delay/discharge a contract because of an event out of control of parties

Answer 32

force majeure clause

Question 33

3 criteria to allow discharge based on impossibility

Answer 33

1. event occurred after contract was made 2. event was not the fault of the party seeking discharge 3. language/circumstances don't dictate that discharge should be denied (e.g., allocation of risk within contract's terms)

Question 34

Impracticability can arise is the contract is too (1) or (2), even if it is not (3)

Answer 34

1. costly 2. time-consuming 3. impossible

Question 35

boilerplate - MUST be in the contract to be considered true

Answer 35

time is of the essence clause

Question 36

When looking at breach as excusing performance, look at the (1) of the breach. Was it serious? Did the contract call for (2). If only (3) was given, were the breached parts material or nonmaterial?

Answer 36

1. significance 2. strict (perfect) performance (no deviations whatsoever) 3. substantial performance (most of contract performed, with minor deviations)

Question 37

a breach whose deficiency in performance is so central to the contract that it substantially impairs its value (e.g, wrong house design)

Answer 37

material breach

Question 38

breach is not substantial, may be cured (e.g., wrong paint color)

Answer 38

nonmaterial breach

Question 39

3 things the non breaching party may do if a breach is total and material

Answer 39

1. withold performance 2. terminate the contract 3. claim full damages for the breach

Question 40

3 things the non breaching party may do if a breach is NOT total

Answer 40

1. suspend performance 2. await cure 3. claim compensation for any loss suffered

Question 41

5 things to look at when determining material/nonmaterial

Answer 41

1. deprivation of expected benefit (principal reason parties made the contract) 2. adequacy of compensation of loss (can damages be calculated?)(Will they compensate the non-breaching party?) 3. likelihood of cure (courts would rather try at this than call a material breach) 4. willfulness of breach (on purpose?) 5. delay in performance (large delay --> material breach)(time is of the essence enters in here)

Question 42

Courts do not typically allow (1) clauses to apply for buildings--they prefer an objective standard

Answer 42

1. satisfaction clauses (pay for it "if I like it") (subjective standard)

Question 43

one party has given the other party, by words or action, some sign that they intend to breach the contract

Answer 43

repudiation (similar to anticipatory breach--depends on viewpoint)

Question 44

one party believes the other is going to breach the contract (clear-cut; not based on assumption)

Answer 44

anticipatory breach (similar to repudiation--depends on viewpoint)

Question 45

2 reasons a party aggrieved by anticipatory breach/repudiation should sue now, rather than wait for the breach or the deadline.

Answer 45

1. prompt disposition while memories are fresh 2. need for certainty on the part of the non-breaching party (make arrangements to replace an employee who plans to breach, etc.)

Question 46

In the Lady Godiva example, in which she did not pay her hairdresser and farrier was not sure he would pay him, what was the conclusion?

Answer 46

Farrier cannot sue--his fear of not being paid is based on assumption. If he wants to be more sure about payment, he can ask for a deposit, or do one shoe at a time.

Question 47

to limit or reduce the amount of damages. Everyone is required to make steps to do so (get replacements, etc.)

Answer 47

mitigation

Question 48

regards whistleblowers--reward for revealing misconduct in government contracts

Answer 48

Qui tam

Question 49

The Fiesta Bowl whistleblowers did not fall under qui tam because (1)

Answer 49

the organization is a nonprofit