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Contract Law Principles Flashcards

7 cards from real NYLE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Contract Law Principles flashcards as text

  1. Which remedy places the non-breaching party in the position they would have been in had the contract never been formed?

    Answer: Restitution / reliance damages

    Reliance damages restore the non-breaching party to their pre-contract position by reimbursing expenditures made in reliance on the contract.

  2. Under the Restatement (Second) of Contracts, a contract may be voidable for unilateral mistake when:

    Answer: One party was mistaken and enforcement would be unconscionable

    Restatement §153 allows avoidance for unilateral mistake when enforcement would be unconscionable or the other party knew of the mistake.

  3. An agreement between two parties to release a third party from liability under the original contract is called a:

    Answer: Novation

    A novation substitutes a new party for an original party, releasing the original party from liability with the obligee's consent.

  4. Which of the following best describes the concept of 'efficient breach'?

    Answer: A deliberate breach because the breaching party will profit even after paying damages

    Efficient breach theory holds that a party may rationally breach if their gain exceeds the cost of damages owed to the non-breaching party.

  5. In New York, a contract clause that fixes damages in the event of breach is enforceable only if:

    Answer: Actual damages would be difficult to estimate and the amount is a reasonable forecast of harm

    New York enforces liquidated damages clauses only when actual damages are difficult to ascertain and the stipulated amount is a reasonable pre-estimate of harm.

  6. Promissory estoppel requires all of the following EXCEPT:

    Answer: Consideration paid by the promisee

    Promissory estoppel (Restatement §90) substitutes for consideration; it does not require the promisee to have paid consideration.

  7. When a party to a contract dies before performance, which type of contractual duty is automatically discharged?

    Answer: A duty requiring the personal services of the deceased

    Personal services contracts are discharged by the death or incapacity of the person whose unique skills are required for performance.