BL CHAP 18

Jane hires Julie to fix her car and Julie charges Jane $50. How can this agreement be characterized?

• It has a condition precedent

• It has a condition concurrent

• It has a condition subsequent

• It doesn't include conditions

You buy a new phone with a warranty. The warranty is only valid if you register the phone online within 30 days. This is an example of a:

• Express condition

• Implied condition in fact

• Both a) and b)

• Neither a) nor b)

Case: Anna, an independent graphic designer, contracted with InnovateTech to redesign their website for $20,000, payable upon completion within six months. Three months into the project, InnovateTech faced financial difficulties due to an economic downturn and proposed paying Anna $12,000 instead. Anna agreed, preferring a guaranteed payment over potential non-payment or litigation. They documented and signed the new agreement, voiding the original contract. 

Why did Anna agree to the new terms proposed by InnovateTech?

• She wanted to extend the project timeline

• She preferred a guaranteed payment over potential non-payment or litigation

• • She found a new client

• She wanted to increase the project scope

Answer explanation

Reason: Anna chose the guaranteed $12,000 to avoid the risk of non-payment or costly litigation, given InnovateTech's financial difficulties.

What is the legal term for the process by which Anna and InnovateTech voided the original contract and agreed to new terms?

• Contract termination

• Discharge by agreement

• Breach of contract

• Novation

Answer explanation

Reason: The legal term for the process by which Anna and InnovateTech voided the original contract and agreed to new terms is "discharge by agreement." This occurs when both parties mutually consent to cancel the existing contract and replace it with a new one. In this case, Anna and InnovateTech documented and signed a new agreement, thereby formally discharging the original contract through mutual consent.

Which of the following best describes the concept of mutual consent in this case?

• Anna reluctantly accepted the new terms without negotiation

• Both parties agreed to the new terms and documented them in writing

• InnovateTech forced Anna to accept the new terms

• Only InnovateTech benefited from the new agreement

Answer explanation

Reason: Mutual consent involves both parties voluntarily agreeing to the new terms of the contract. In this case, Anna and InnovateTech both agreed to the revised payment terms of $12,000 and documented this agreement in writing. This mutual agreement to the new terms ensures that both parties are legally bound by the new contract, replacing the original one.

Case Summary: Taylor v. Caldwell (1863)

Taylor and Caldwell entered into a contract where Caldwell agreed to rent out his music hall to Taylor for a series of concerts. However, before the first concert, the music hall was destroyed by fire. Taylor sued Caldwell for breach of contract.

What was the primary reason for discharging the contract in Taylor v. Caldwell?

• Caldwell breached the contract intentionally.

• The music hall was destroyed by fire, making the performance impossible.

  
  

• Taylor decided to cancel the concerts.

• Caldwell refused to perform due to financial difficulties.

  
  

Under which doctrine did the court discharge the contract in Taylor v. Caldwell?

• Statute of Limitations

• Bankruptcy

• Impossibility of Performance

• Commercial Impracticability

Answer explanation

Explanation: The court applied the doctrine of impossibility of performance, which discharges a contract when an unforeseen event makes performance objectively impossible.

In Taylor v. Caldwell, which of the following was NOT a factor in the court's decision to discharge the contract?

• The fire was an unforeseen event.

• Neither party was at fault for the destruction of the hall.

• The music hall was essential to the performance of the contract.

• Caldwell's refusal to pay damages to Taylor.

Answer explanation

Explanation: The court's decision was based on the fire being an unforeseen event, the lack of fault by either party, and the essential nature of the music hall to the contract's performance. Caldwell's refusal to pay damages was not relevant to the court's decision regarding the discharge of the contract.

In Kohel v. Wayne Mazda, the plaintiffs, Marc and Bree Kohel, purchased a used car and traded in their Nissan, unknowingly missing a VIN tag. Wayne Mazda accepted the trade but later refused to provide permanent plates or pay off the Nissan's loan, breaching the contract. The court found Wayne Mazda’s conduct unreasonable, and the Kohels’ efforts to resolve the VIN issue were obstructed. The court affirmed a judgment favoring the Kohels.

1. What is a material breach of contract? When a material breach occurs, what are the nonbreaching party’s options?

2. What is a minor breach of contract? When a minor breach occurs, is the nonbreaching party excused from performance? Explain.