Exam 18: Discharge of Contracts

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 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.

In a mutual rescission, both parties, acting in good faith, renew their commitment to perform all obligations set forth in their original agreement.

A contract may be discharged under the frustration of purpose doctrine if the event which frustrated the purpose was foreseeable.

Commercial impracticability discharges a party's contractual obligations when the contract becomes more expensive to perform due to drastic and severe economic downturns.

V3 was a successful singing group that contracted to perform at the "Metalsubstance" rock concert. V3 was aware that the promoter would sustain a substantial loss if the group failed to perform. The members of the group were stricken with a virus that confined them to their beds. The promoter sued for breach of contract. What is the probable result?

Payment by check is a conditional payment.

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

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.

The parties may agree that the adequacy of performance under a contract is to be determined by a third party.

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?

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

Impossibility of performance applies when the debtor does not have sufficient funds to pay a debt.

The doctrine of substantial performance is concerned with the issue of whether an imperfect performance will be considered adequate to discharge one's responsibilities under a contract.

A Federal Trade Commission regulation gives a buyer three (3) business days in which to cancel a home-solicited sale of goods or services costing more than:

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

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

Which of the following events excuses a promisor from performing his or her contractual obligations?

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.

Bankruptcy results in a discharge of contractual obligations by __________.