SD Bar Contracts 3

Question 1

Which of the following best describes a condition precedent in contract law?

Accepted Answer

An event that must occur before a party's duty to perform becomes due

Answer

A term that limits a party's liability after breach

Answer

An event that terminates an existing contractual duty

Answer

A provision requiring arbitration before litigation

Question 2

Under contract law, an agreement to accept less than the full amount owed to settle an undisputed, liquidated debt is:

Accepted Answer

Unenforceable for lack of consideration

Answer

Enforceable under the doctrine of promissory estoppel

Answer

Enforceable as long as the agreement is in writing

Answer

Enforceable when the creditor signs a release

Question 3

A novation replaces an original contract by:

Accepted Answer

Substituting a new party and discharging the original party from liability

Answer

Modifying only the price term while keeping all other terms intact

Answer

Adding an additional party as a co-obligor without releasing the original party

Answer

Extending the performance deadline with the mutual consent of the parties

Question 4

Under the doctrine of substantial performance, a contractor who substantially but imperfectly performs a construction contract is entitled to:

Accepted Answer

The contract price minus the cost to remedy the defects

Answer

Nothing, because perfect performance is required

Answer

The full contract price without any deduction

Answer

Restitution only for the reasonable value of services rendered

Question 5

Which of the following is an example of impossibility of performance that discharges a contract?

Accepted Answer

The specific subject matter of the contract is destroyed before performance without fault of either party

Answer

Performance becomes more expensive than anticipated due to market changes

Answer

A party decides that performance is no longer economically beneficial

Answer

A key employee voluntarily resigns, making performance more difficult

Question 6

A third-party beneficiary who has an enforceable right to sue on a contract is known as a(n):

Accepted Answer

Intended beneficiary

Answer

Incidental beneficiary

Answer

Assignee

Answer

Delegatee

Question 7

Under the Restatement (Second) of Contracts, which standard is used to determine whether a breach is material?

Accepted Answer

The extent to which the injured party will be deprived of the expected benefit and whether damages are adequate compensation

Answer

Whether the breaching party acted in bad faith or willfully

Answer

Whether the breach occurred before or after the performance deadline

Answer

Whether the contract contained an express material breach clause