Contracts: Performance and Breach - Master Business Administration

Question 1

Primary Obligation of a Contractual Party: Which of the following is a fundamental duty of a party involved in a contract?

Accepted Answer

Fulfill the agreed-upon actions

Answer

Guarantee the other party's performance

Answer

Disclose all significant facts

Answer

Avoid causing harm to the other party

Question 2

Remedy for Breach of Contract: Which legal remedy aims to restore the non-breaching party to the position they would have been in if the contract had been fulfilled?

Accepted Answer

Specific performance

Answer

Damages

Answer

Rescission

Answer

Injunction

Question 3

Essential Element of a Valid Contract: Which of the following is NOT a crucial element for the enforceability of a contract?

Accepted Answer

Intelligence

Answer

Offer

Answer

Acceptance

Answer

Consideration

Question 4

Which of the following is NOT a legal remedy for breach of contract?

Accepted Answer

Criminal prosecution

Answer

Compensatory damages

Answer

Specific performance

Answer

Injunction

Question 5

When a party to a contract fails to fulfill their obligations, without having any legal justification, it is considered a:

Accepted Answer

Breach

Answer

Performance

Answer

Termination

Answer

Rescission

Question 6

Which of the following is a type of anticipatory breach of contract, where one party communicates their intention not to perform their obligations?

Accepted Answer

Express repudiation

Answer

Implied repudiation

Answer

Material alteration of contract

Answer

Non-performance

Question 7

A clause in a contract that limits the amount of damages that can be recovered for breach of contract is known as a:

Accepted Answer

Limitation of liability clause

Answer

Excuse clause

Answer

Exculpatory clause

Answer

Waiver

Question 8

Specific performance is a legal remedy that:

Accepted Answer

Is available only when damages would be an inadequate remedy

Answer

Is only available in cases of breach of contracts for the sale of goods

Answer

Is never available as a remedy for breach of contract

Answer

Is always available as a remedy for breach of contract

Question 9

Which of the following is NOT a factor considered when determining the measure of damages for breach of contract?

Accepted Answer

The availability of insurance

Answer

The type of breach

Answer

The foreseeability of damages

Answer

The reliance interests of the parties

Question 10

In a contract for the sale of goods, the implied warranty of MERCHANTABILITY guarantees that:

Accepted Answer

The goods are fit for their intended purpose

Answer

The goods are of the highest quality

Answer

The goods are free from defects

Answer

The goods will last for a specific period of time

Question 11

Which of the following is NOT a common law remedy available for breach of contract?

Accepted Answer

Replevin

Answer

Compensatory Damages

Answer

Specific Performance

Answer

Injunction

Question 12

What is the purpose of the doctrine of substantial performance?

Accepted Answer

To excuse a party's liability for breach of contract if they have essentially fulfilled their contractual obligations.

Answer

To provide a remedy for minor breaches of contract.

Answer

To allow a party to terminate a contract for breach of a non-material term.

Answer

To prevent a party from recovering damages for breach of contract if they have substantially performed.

Question 13

What is the primary distinction between anticipatory breach and actual breach of contract?

Accepted Answer

Anticipatory breach occurs before the time for performance, while actual breach occurs after the time for performance has passed.

Answer

Actual breach occurs before the time for performance, while anticipatory breach occurs after the time for performance has passed.

Answer

There is no meaningful distinction between anticipatory breach and actual breach of contract.

Answer

Anticipatory breach is considered a more serious breach of contract than actual breach.

Question 14

What is the fundamental distinction between a condition and a warranty in contract law?

Accepted Answer

A condition is a material term of the contract, while a warranty is a non-material term.

Answer

A warranty is a material term of the contract, while a condition is a non-material term.

Answer

There is no meaningful distinction between a condition and a warranty.

Answer

A condition is a promise, while a warranty is a guarantee.

Question 15

In which situation is a court most likely to grant specific performance as a remedy for breach of contract?

Accepted Answer

When the contract involves a unique or rare item.

Answer

When the breaching party cannot pay damages.

Answer

When the non-breaching party has already partially fulfilled the contract.

Answer

When the breach was intentional and malicious.

Question 16

What is the primary purpose of consequential damages?

Accepted Answer

To compensate the non-breaching party for indirect and foreseeable losses

Answer

To punish the breaching party for their misconduct

Answer

To deter future breaches of contract

Answer

To restore the non-breaching party to the position they would have been in if the contract had been performed

Question 17

How does rescission differ from mutual rescission?

Accepted Answer

Rescission is only available to the non-breaching party, while mutual rescission requires the consent of both parties

Answer

Mutual rescission is only available when the parties are both in material breach, while rescission can be granted even if only one party is in breach

Answer

Rescission requires the parties to restore the status quo, while mutual rescission does not

Answer

There is no difference between rescission and mutual rescission

Question 18

When a party violates the terms of a contract, what is the primary legal remedy available to the non-breaching party?

Accepted Answer

Damages, which compensate the non-breaching party for their financial losses

Answer

Rescission of the contract, restoring both parties to their pre-contractual positions

Answer

Specific performance, compelling the breaching party to fulfill their contractual obligations

Answer

Injunction, prohibiting the breaching party from further violations

Question 19

Which type of damages aims to reimburse the non-breaching party for their actual monetary losses incurred due to the breach?

Accepted Answer

Compensatory damages

Answer

Nominal damages

Answer

Punitive damages

Answer

Liquidated damages

Question 20

Which of the following is a valid legal defense against a claim for breach of contract?

Accepted Answer

All of the above defenses are valid

Answer

Mistake (e.g., misunderstanding the terms of the contract)

Answer

Impossibility (e.g., an event beyond the parties' control that makes performance impossible)

Answer

Statute of limitations (e.g., the legal deadline to file a lawsuit has passed)

Question 21

Which legal doctrine states that substantial fulfillment of a contract's obligations will generally excuse minor deviations from the agreed-upon terms?

Accepted Answer

Doctrine of substantial performance

Answer

Doctrine of divisible contracts

Answer

Doctrine of material breach

Answer

Doctrine of equitable estoppel

Question 22

Which of the following is not a defining characteristic of a material breach of contract?

Accepted Answer

It is a minor deviation from the contract's specifications

Answer

It goes to the heart of the contract and undermines its purpose

Answer

It makes it impracticable for the non-breaching party to obtain the expected benefit of the contract

Answer

It results in significant financial harm to the non-breaching party

Question 23

What is the primary effect of rescinding a contract?

Accepted Answer

Both parties are restored to their positions before the contract was entered into

Answer

The contract is considered void from its inception

Answer

The breaching party becomes liable for damages

Answer

The non-breaching party is granted the right to demand specific performance

Question 24

Which of the following is not a requirement that must be met for specific performance to be granted as a remedy for breach of contract?

Accepted Answer

The breaching party is experiencing financial difficulties

Answer

The contract involves the sale or transfer of unique or specific goods

Answer

The non-breaching party has no other adequate legal remedy available

Answer

The court determines that specific performance is a fair and equitable solution

Question 25

What is the primary purpose of an injunction as a legal remedy in contract law?

Accepted Answer

To prohibit a party from violating a specific provision of the contract (negative covenant)

Answer

To force a party to fulfill their contractual obligations (affirmative covenant)

Answer

To compensate the non-breaching party for their losses

Answer

To punish the breaching party

Question 26

What is the primary function of the parol evidence rule?

Accepted Answer

To prevent the introduction of evidence that contradicts or modifies a written contract

Answer

To establish the intent of the parties involved in a contract

Answer

To create a new contract based on oral agreements

Answer

To terminate an existing contract

Question 27

Which of the following is NOT a potential remedy for breach of contract?

Accepted Answer

Punitive damages

Answer

Compensatory damages

Answer

Specific performance

Answer

Injunction

Question 28

Which of the following is a tort that can arise from a breach of contract?

Accepted Answer

Fraud

Answer

Negligence

Answer

Assault

Answer

Battery

Question 29

What is the legal principle known as the doctrine of election of remedies?

Accepted Answer

A party cannot pursue multiple remedies for the same breach of contract.

Answer

A party can pursue multiple remedies for the same breach of contract.

Answer

The court will always award the most severe remedy available for a breach of contract.

Answer

The court will always award the least severe remedy available for a breach of contract.

Question 30

The parol evidence rule:

Accepted Answer

Prohibits the introduction of extrinsic evidence to contradict or vary the terms of a written contract.

Answer

Allows the introduction of extrinsic evidence to contradict or vary the terms of a written contract.

Answer

Applies only to contracts that are fully integrated.

Answer

Does not apply to contracts that are partially integrated.

Question 31

The doctrine of mitigation of damages requires that:

Accepted Answer

The injured party take reasonable steps to minimize their losses after a breach of contract.

Answer

The injured party prove that they suffered actual damages as a result of the breach of contract.

Answer

The breaching party pay all of the injured party's damages, regardless of the injured party's own actions.

Answer

The court reduce the amount of damages awarded to the injured party if they failed to mitigate their losses.

Question 32

Which of the following is NOT a factor considered by courts when determining the amount of damages to be awarded for breach of contract?

Accepted Answer

The intentions of the breaching party.

Answer

The nature of the breach.

Answer

The foreseeability of the damages.

Answer

The injured party's reliance on the contract.

Question 33

If a party fails to fulfill a significant obligation under a contract, what type of breach has occurred?

Accepted Answer

Material breach

Answer

Minor breach

Answer

Anticipatory breach

Answer

Fundamental breach

Question 34

What is the main purpose of the Uniform Commercial Code (UCC)?

Accepted Answer

To establish uniform rules for commercial transactions

Answer

To regulate the formation and enforcement of contracts

Answer

To protect consumers from unfair or deceptive practices

Answer

To promote economic growth and development

Question 35

Which of the following is NOT a legal duty arising from a contractual relationship?

Accepted Answer

Social Responsibility

Answer

Incidental Implication

Answer

Implied Promise

Answer

Express Promise

Question 36

A breach of contract occurs when a party:

Accepted Answer

Fails to fulfill their contractual obligation.

Answer

Requests a modification to the contract.

Answer

Enters into a new contract.

Answer

Acts in good faith.

Question 37

Which of the following is a type of consequential damage recoverable for breach of contract?

Accepted Answer

Loss of anticipated profits

Answer

Nominal damages

Answer

Actual damages

Answer

Compensatory damages

Question 38

Which of the following is a common law remedy that returns the parties to their pre-contractual positions?

Accepted Answer

Rescission

Answer

Specific performance

Answer

Damages

Answer

Injunction

Question 39

A material breach of contract entitles the non-breaching party to:

Accepted Answer

Terminate the contract and pursue remedies such as damages or specific performance.

Answer

Only seek damages but not terminate the contract.

Answer

Neither terminate the contract nor seek damages.

Answer

Terminate the contract but not seek any remedies.

Question 40

When a contract calls for the fulfillment of a unique or irreplaceable obligation, which remedy can the court mandate?

Accepted Answer

Specific performance

Answer

Injunction

Answer

Rescission

Answer

Damages

Question 41

In the event of a breach of contract, the primary purpose of awarding damages is to:

Accepted Answer

Compensate the injured party for the losses directly caused by the breach.

Answer

Enforce the terms of the contract

Answer

Punish the breaching party

Answer

Prevent future breaches

Question 42

Under the statute of frauds, which defense may be invoked to enforce an oral contract that should have been in writing?

Accepted Answer

The contract was partially performed by both parties.

Answer

The contract was for services rather than goods.

Answer

The contract was negotiated over the telephone.

Answer

The contract was fully executed but not witnessed.

Question 43

Which of the following is NOT a duty of a party to a contract?

Accepted Answer

To act in a way that hinders the other party's performance

Answer

To perform the contract as agreed

Answer

To act in good faith

Question 44

Which of the following factors is NOT considered in determining the materiality of a breach of contract?

Accepted Answer

The subjective intent of the breaching party

Answer

The foreseeability of the breach

Answer

The extent to which the breach affects the non-breaching party's ability to receive the benefit of the bargain

Answer

The cost of curing the breach

Question 45

Which of the following is a doctrine that allows a party to terminate a contract without liability if performance becomes objectively impossible due to unforeseen circumstances?

Accepted Answer

Impossibility

Answer

Mutual mistake

Answer

Frustration of purpose

Answer

Illegality

Question 46

Which of the following actions constitutes an anticipatory breach of contract?

Accepted Answer

A party unequivocally repudiates the contract before the time for performance.

Answer

A party fails to perform a minor obligation under the contract.

Answer

A party is unable to perform the contract due to unforeseen circumstances.

Question 47

Which of the following factors is NOT considered in determining whether a breach of contract is material?

Accepted Answer

The subjective intent of the parties

Answer

The extent to which the breach frustrates the purpose of the contract

Answer

The extent to which the breach causes harm to the non-breaching party

Answer

The foreseeability of the breach

Question 48

Which of the following is a condition precedent to the performance of a contractual obligation?

Accepted Answer

An event that must occur before a party's performance obligation arises.

Answer

A promise made by one party in exchange for a promise made by the other party.

Answer

A term of the contract that is essential to its purpose.

Question 49

Which of the following is NOT a type of anticipatory repudiation?

Accepted Answer

A party's mere expression of doubt about their ability to perform.

Answer

A party's sale of the subject matter of the contract to a third party.

Answer

A party's unequivocal statement that they will not perform.