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Question 1
Howard hires College Painters to paint his house. The contract states that the company will paint the house white with blue trim and Howard will pay $10,000 for the job. The contract does not say when the job should be completed nor when Howard is obligated to pay for the work. Before beginning the job, the company demands that Howard pay the $10,000 up front. When Howard refuses, the company refuses to begin working. If Howard sues for breach of contract, he will:
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Correct In a large percentage of contracts, the parties are not required to perform simultaneously. Rather, one party must perform first and then the second party must perform. Where a contract does not explicitly state who must perform first the general rule is that, if one party's performance will take some time while the other party's performance can be done in a very short time, it is implied that the performance that takes time must come first. Here, because it will take the company much longer to paint the house than it will for Howard to pay them, the company must perform first. That being the case, the company is in breach of the contract and D is the correct answer.
Incorrect! In a large percentage of contracts, the parties are not required to perform simultaneously. Rather, one party must perform first and then the second party must perform. Where a contract does not explicitly state who must perform first the general rule is that, if one party's performance will take some time while the other party's performance can be done in a very short time, it is implied that the performance that takes time must come first. Here, because it will take the company much longer to paint the house than it will for Howard to pay them, the company must perform first. That being the case, the company is in breach of the contract and D is the correct answer.
Question 2
Howard hires College Painters to paint his house. The contract states that the company will paint the house white with blue trim and Howard will pay $10,000 for the job. One week before the company is supposed to begin working, the company's house burns down, destroying all of their equipment. Within three months, the company has replaced its equipment and is back in business. The company calls Howard and tells him that they will be able to paint his house but Howard informs them that, after the fire, he hired another painter to paint his house. If the company sues Howard for breach of contract, they will win:
Correct
Incorrect!
Correct Sometimes, it becomes clear before the time for performance that one party might not be able to perform on the contract. This is known as the prospective inability to perform. In situations where one party will not be able to perform when the time comes, the other party is excused from either performing or being ready to perform. Here, the destruction of the company's equipment freed Howard of his obligation to allow the company to paint his house because it was clear that they would not be able to do it (at least for a while). Therefore, the company will not be able to recover against Howard and FALSE is the correct answer.
Incorrect! Sometimes, it becomes clear before the time for performance that one party might not be able to perform on the contract. This is known as the prospective inability to perform. In situations where one party will not be able to perform when the time comes, the other party is excused from either performing or being ready to perform. Here, the destruction of the company's equipment freed Howard of his obligation to allow the company to paint his house because it was clear that they would not be able to do it (at least for a while). Therefore, the company will not be able to recover against Howard and FALSE is the correct answer.
Question 3
Howard hires College Painters to paint his house. The contract states that the company will paint the house white with blue trim and Howard will pay $10,000 for the job. One week after the company has begun working, Howard tells them that he has filed for bankruptcy and might not be able to pay the $10,000 contract price for the job. If the company completely abandons the project, they will not be in breach of the contract:
Correct
Incorrect!
Correct Bankruptcy of one party does not qualify as prospective inability to perform. Therefore, if one party to a contract is bankrupt, the other party is not excused from performing. However, the other party can suspend performance until the first party either completely performs or gives assurances that he will complete performance. Here, the company's completely abandoning the project without seeking assurances of performance from Howard represents a breach of the contract. That being the case FALSE is the correct answer.
Incorrect! Bankruptcy of one party does not qualify as prospective inability to perform. Therefore, if one party to a contract is bankrupt, the other party is not excused from performing. However, the other party can suspend performance until the first party either completely performs or gives assurances that he will complete performance. Here, the company's completely abandoning the project without seeking assurances of performance from Howard represents a breach of the contract. That being the case FALSE is the correct answer.
Question 4
Ben and Jerry and Moo Juice enter into a contract under which Moo Juice will ship ten thousand gallons of milk to Ben and Jerry every month for two years and Ben and Jerry will pay $1 per gallon. One week before the first delivery is due, Ben and Jerry file for bankruptcy and inform Moo Juice that they will not be able to buy milk from them. Moo Juice writes to Ben and Jerry and asks them to assure Moo Juice that they will eventually perform on the contract. One month goes by and Moo Juice gets no response to its letter. If Moo Juice sues Ben and Jerry for breach, they will win:
Correct The U.C.C. allows for one party to demand assurances of performance if the other party goes bankrupt. Further, the U.C.C. says that if the bankrupt party does not give adequate assurances within thirty days of the assurances being asked for, the contract is considered to be repudiated by the bankrupt party and the other party can sue for breach. That being the case, Ben and Jerry are in breach of their contract with Moo Juice and TRUE is the correct answer.
Incorrect! The U.C.C. allows for one party to demand assurances of performance if the other party goes bankrupt. Further, the U.C.C. says that if the bankrupt party does not give adequate assurances within thirty days of the assurances being asked for, the contract is considered to be repudiated by the bankrupt party and the other party can sue for breach. That being the case, Ben and Jerry are in breach of their contract with Moo Juice and TRUE is the correct answer.