Business Law Ch. 19

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Generally, contracts are discharged by the performance of the terms of the contract.
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A party who in good faith has provided substandard performance of a contract may sue to recover the payment specified in the contract.FalseThe 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.TrueWhen a building contractor has substantially performed a contract to construct a building, the contractor is entitled to recover the full contract price.FalseA person who substantially performs a contract is liable for damages to the other party.TrueThere is no exact standard or test by which to determine whether contractual performance is substantial.TrueAll courts hold that when an agreement requires satisfaction of the other party regarding the acceptance of an act, a reasonable person standard is used.FalseA 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.FalseThe parties may agree that the adequacy of performance under a contract is to be determined by a third party.TrueContracts may be discharged by the joint action of both contracting parties or, in some cases, by the action of one party alone.TrueThe 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.TrueIn a mutual rescission, both parties, acting in good faith, renew their commitment to perform all obligations set forth in their original agreement.FalseFor the parties to enter into an accord and satisfaction that discharges the original obligation, there must be a bona fide dispute.TrueImpossibility of performance applies when the debtor does not have sufficient funds to pay a debt.FalseA seller's inability to obtain from any supplier the goods called for by the contract generally discharges the contract for impossibility of performance.FalseTo establish impossibility a party must show (1) the unexpected occurrence of an intervening act; (2) that the risk of the unexpected occurrence was not allocated by agreement or custom; and (3) that the occurrence made performance impossible.TrueWhen parties contract expressly for a particular subject matter, the contract is discharged if the subject matter is destroyed through no fault of either party.TrueA typical situation where the doctrine of economic frustration applies is when the party suffers a loss when a gain was expected.FalseA house-painting contract is discharged if continual rain makes it impossible to complete the painting by the time specified in the contract.FalseBy operation of law, a party can be discharged in bankruptcy from debts.TrueA contract provision requiring that suit be brought within one (1) year does not violate public policy, although the statute of limitations would allow two (2) years in the absence of such a contract limitation.TrueA __________ is a condition that must occur before a party to a contract has an obligation to perform under a contract.Condition PrecedentIn most bilateral contracts, the performances of the parties are __________.Concurrent ConditionsAn offer to perform is known as a(n) __________.TenderWhen a debtor makes a payment to a creditor specifying how it should be applied, the creditor must apply the payment:as directed by the debtor.If no time period for performance is specified in a contract:a reasonable time for performance will be implied.In which case will performance on the exact date specified in the contract most likely be deemed essential?a sale of goods that fluctuate rapidly in value.The phrase "time is of the essence" means thatperformance under the contract at the times specified in the contract is vital or essential.A contract to build a house is deemed performed when:there has been substantial performance of the contract.A homeowner who refinances her home mortgage may cancel the transaction:within three business daysA 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:$25Through which of the following circumstances may a contract be discharged?All of the aboveIf the parties to a contract agree to undo the agreement and return any consideration involved, the contract is discharged by:mutual rescission.The parties may decide that their contract is not the one they want. They may then replace it with another contract. If they do, the original contract is discharged by __________.substitutionWhich of the following is not an element of an accord and satisfaction?reservation of rights under the federal Consumer Credit Protection ActWhich of the following events excuses a promisor from performing his or her contractual obligations?destruction of the subject matter through no fault of either partyA change of law discharges a contract if the new law:prohibits the act called for by the contract.The death or disability of a party to a contract discharges the contract when:personal services requiring peculiar skill are involved.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?The contract was discharged by impossibility of performance.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.force majeureWhen performance is impeded due to the occurrence of an event whose nonoccurrence was a basic assumption of the contract, the contract may be discharged on the grounds of:commercial impracticabilityThe frustration of purpose doctrine:requires that both parties were aware of the purpose.Ordinarily, a temporary impossibility __________ the duty to perform.suspendsSales of goods transactions are subject to a statute of limitations period of:four (4) yearsBankruptcy results in a discharge of contractual obligations by __________.operation of law