Chapter 11 Multiple Choice Questions

1. Which one of the following is not a method by which a contract can be discharged?

Discharge by misrepresentation

Discharge by performance

Discharge by breach

Discharge by agreement

2. Regarding the time of performance, which one of the following statements is untrue?

Where time is of the essence of a contract, a slight delay will not allow the non-breaching party to terminate the contract.

Where a contract does not provide that performance must be completed by a certain date, the parties to the contract must perform their obligations within a reasonable time.

Where the time of performance is not 'of the essence of the contract,' then a party to the contract can give notice that it has become of the essence of the contract.

Time will be of the essence where the subject matter of the contract indicates that time shall be of the essence.

3. Regarding the tendering of performance, which one of the following statements is untrue?

If a debtor attempts to tender payment, but the other party refuses, then the debtor is discharged from the obligation to pay.

A tender of payment is only valid if made in legal currency.

A refusal to accept the tender of performance (where performance amounts to an act other than the payment of money) will constitute a breach of contract

The tender of payment is invalid if the other party is required to provide change.

4. In relation to discharge by agreement, which one of the following statements is untrue?

If both parties wish to discharge a contract, they must create a written agreement stating that the contract has been discharged.

Generally, both parties will need to provide consideration for the other's agreement to discharge.

Under the common law, a contract made by deed can only be discharged via a deed.

A partial discharge of a contract that must be made in writing will usually only be valid if the agreement to discharge is made in writing.

5. What is 'renunciation?'

Renunciation occurs where one party demonstrates an intention not to perform his contractual obligations.

Renunciation occurs where one party, through his own act or default, incapacitates himself from performing his contractual obligations.

Renunciation occurs where a party fails to perform adequately his contractual obligations.

Renunciation occurs where both parties decide to abandon the contract.

6. Regarding breach of contract that arises through defective performance, which one of the following statements is true?

Where statute or case law does not classify the status of a term, the court will attempt to determine the status of the term by reference to the parties' intentions.

If one party fails to adequately perform his obligations, then the other party can always terminate the contract.

The court will always uphold the parties' classification of a term.

Breach of a warranty will allow the non-breaching party to terminate the contract and claim damages.

7. What is an innominate term?

An innominate term is a term which, if breached, allows the non-breaching party to terminate the contract providing that the breach deprived him of substantially the whole benefit of the contract.

An innominate term is a term that goes to the root of the contract and, if breached, allows the non-breaching to terminate the contract and claim damages.

An innominate term is a term which, if breached, allows the non-breaching party to claim damages, but does not permit him to terminate the contract.

An innominate term is a term allows the non-breaching party to terminate the contract, but only where the other party breached the contract knowingly.

8. If a non-breaching party validly terminates the contract, a number of consequences may follow. Which one of the following is not a valid consequence of termination?

Termination always discharges the entire contract.

If there has been a total failure of consideration, the non-breaching party can recover any monies paid.

The party that terminated the contract is released from performing any obligations that remain to be performed.

A party that exercises the right to terminate cannot subsequently change his mind and demand performance.

9. If the non-breaching party decides to affirm the breach, a number of consequences may follow. Which one of the following is not a valid consequence?

If the non-breaching party affirms the breach, the contract remains in force, but any further breaches will entitle the non-breaching party to immediately terminate the contract.

If the non-breaching party obtains an order for specific performance, this will amount to conditional affirmation only.

The contract will remain in force and will continue to bind both parties.

If the non-breaching party unequivocally affirms the breach, the right to terminate is lost and he cannot subsequently change his mind and terminate the contract.

10. What is frustration?

Frustration occurs where a party fails to perform his contractual obligations due to an event that is beyond the control of either party.

Frustration occurs where one party breaches his contractual obligations due to interference from the other party.

Frustration occurs where one party cannot perform his contractual obligations due to his own negligent act.

Frustration occurs where contractual performance becomes more difficult.

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