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Exam 19: Discharge of Contracts

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Question 1

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When a building contractor has substantially performed a contract to construct a building,the contractor is entitled to recover the full contract price.

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Question 2

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The frustration of purpose doctrine:

A) is based on common law.
B) requires that both parties were aware of the purpose.
C) temporarily suspends contract performance.
D) all of the above.

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Question 3

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In a case of the sale of property,time is not regarded as of the essence when there has not been any appreciable change in the market value or condition of the property and when the person who delayed does not appear to have done so for the purpose of speculating on a change in market price.

For the parties to enter into an accord and satisfaction that discharges the original obligation,there must be a bona fide dispute.

An art collector commissioned an artist to create a sculpture for the collector.The artist wanted a substantial amount of money for the sculpture.This caused the collector some worry regarding possible dissatisfaction with the artwork once it was completed.To ensure that payment would be made only if the collector was satisfied with the sculpture,a condition was written into the commission contract.It required that the collector would have to be satisfied with the artwork,relying on the collector's taste and judgment,before an obligation of payment would be created. The artist never imagined that a collector could possibly refuse a creation of his and allowed the condition to be placed within the contract.At the completion of the sculpture,the collector claimed that she did not care for the artwork and therefore refused to pay.Can the artist force payment in this situation? Would it help if the artist could establish that the collector actually approves of the sculpture but has temporarily run short on funds,and that this is the true motivating factor in refusing to accept the sculpture?

If the parties to a contract agree to undo the agreement and return any consideration involved,the contract is discharged by:

By operation of law,a party can be discharged in bankruptcy from debts.

The time for performance is typically essential in a contract for the sale of perishable property.

A seller's inability to obtain from any supplier the goods called for by the contract generally discharges the contract for impossibility of performance.

A homeowner who refinances her home mortgage may cancel the transaction:

In most bilateral contracts,the performances of the parties are __________.

If a debtor with multiple debts specifies the debt to which a payment is to be applied and the creditor accepts the money,the creditor is bound to apply the money as specified.

A homeowner who supplies the specifications for poured cement walls can hold a contractor liable for damages when the walls that are poured in exact compliance with those specifications prove defective.

A condition precedent must occur before a party to a contract has an obligation to perform.

A typical situation where the doctrine of economic frustration applies is when the party suffers a loss when a gain was expected.

The federal Consumer Credit Protection Act gives the debtor the right to rescind a credit transaction within three (3)business days when the transaction would impose a lien on the debtor's home.

To avoid litigation over impossibility and impracticability issues,modern contracting parties often contract around the doctrine of impossibility,specifying the failures that will excuse performance in their contracts.The clauses in which they do this are called __________ clauses,and they are generally enforced by courts as written.

All courts hold that when an agreement requires satisfaction of the other party regarding the acceptance of an act,a reasonable person standard is used.

A change of law discharges a contract if the new law:

When parties contract expressly for a particular subject matter,the contract is discharged if the subject matter is destroyed through no fault of either party.