23S - Contracts - Discharge and Damages

True or False.  Most contracts end when they are breached by one of the parties.

• True

• False

Answer explanation

Most contracts end when they are performed by both parties.

True or False.  A "material breach" is when the parties don’t perform everything that they agreed to in the contract, but did substantially perform what they agreed to do under the contract.

• True

• False

Answer explanation

Substantial performance is not a breach.

True or False.  Where one party substantially performs their contract obligations, the other party will be required to perform their duties under the contract, but with any adjustments to compensate them for the failure to fully perform the contract.

• True

• False

True or False.  If one party to the contract commits a material breach, the other party has no obligation to perform the contract - their obligations are discharged  by the other party’s breach.

• True

• False

True or False. If one of the parties makes it clear that they will not perform the contract, the other party can declare the contract breached, and stop performing their obligations under the contract.

• True

• False

Match the followingThe parties mutually agree to end the contract

• Substantial performance

• A failure to perform is so substantial as to defeat the object of the parties in making the agreement

• Material breach

• One of the parties makes it clear that they will not perform the contract

• Anticipatory breach

• The essential purpose of the contract is accomplished and the parties have made a good-faith attempt to comply with the terms of the agreement

• Recission

• The parties mutually agree to end the contract

Match the following

• Specific Performance

• Requires the breaching party to actually perform its promise

• Liquidated Damages

• Parties agree in the contract how much they will pay if they breach the contract

• Impossibility

• A defense sometimes used when circumstances change after the contract is entered

• Force Majeure

• A provision in a contract that can free both parties from obligation

True or False.  Specific performance is the normal remedy in contract cases.

• True

• False

True or False.  Parties can declare force majeure if there  an economic downturn makes it more expensive for them to perform their contract duties.

• True

• False

True or False. If a party to a contract declares bankruptcy, they are normally released from their contract obligations.

• True

• False