East Mississippi Community College

ECON 2123

Chapter 19-DISCHARGE OF CONTRACTS

TRUE/FALSE

1)Generally, contracts are discharged by the performance of the terms of the contract.

2. A contract can be discharged by the expiration of the time period specified in the contract.

3. A condition subsequent is a condition that must occur before a party to a contract has an obligation to perform under the contract.

4. In most bilateral contracts, the performances of the parties are concurrent conditions.

5. If a debtor specifies the debt to which a payment is to be applied and the creditor accepts the money, the creditor is bound to apply the money as specified; therefore, if a debtor specifies that a payment is to be made for a current purchase, the creditor may not apply the payment to an older balance.

6. Payment by check is a conditional payment.

7. An agreement that does not specify the time for performance is not binding because it is too indefinite.

8. The time for performance is typically essential in a contract for the sale of perishable property.

9. Unless a contract so provides, time is ordinarily not of the essence, and performance within a reasonable time is sufficient.

10. In a case of the sale of property, time is not regarded as of the essence when there has not been any appreciable change in the market value or condition of the property and when the person who delayed does not appear to have done so for the purpose of speculating on a change in market price.

11. A party who in good faith has provided substandard performance of a contract may sue to recover the payment specified in the contract.

12. The doctrine of substantial performance is concerned with the issue of whether an imperfect performance will be considered adequate to discharge one's responsibilities under a contract.

13. When a building contractor has substantially performed a contract to construct a building, the contractor is entitled to recover the full contract price.

14. A person who substantially performs a contract is liable for damages to the other party.

15. There is no exact standard or test by which to determine whether contractual performance is substantial.

16. All courts hold that when an agreement requires satisfaction of the other party regarding the acceptance of an act, a reasonable person standard is used.

17. A homeowner who supplies the specifications for poured cement walls can hold a contractor liable for damages when the walls that are poured in exact compliance with those specifications prove defective.

18. The parties may agree that the adequacy of performance under a contract is to be determined by a third party.

19. Contracts may be discharged by the joint action of both contracting parties or, in some cases, by the action of one party alone.

20. The federal Consumer Credit Protection Act gives the debtor the right to rescind a credit transaction within three (3) business days when the transaction would impose a lien on the debtor’s home.

21. In a mutual rescission, both parties, acting in good faith, renew their commitment to perform all obligations set forth in their original agreement.