Contracts (Advanced) Question Pack - Questions
1. A university entered into a contract with a software development company to create a custom learning management system (LMS) tailored to its unique curriculum needs. The contract stipulated a payment of $500,000, contingent on the delivery of a fully functional LMS by September 1, in time for the fall semester. The company delivered a partially functional LMS by September 1, with key features such as grade tracking and student analytics missing. The university, under pressure to launch the semester, used the LMS as delivered but supplemented it with manual processes and third-party software to fill the gaps.
By October 15, the company delivered the missing features, and the university integrated them into its system. However, the university refused to pay the full contract price, arguing that the September 1 deadline was critical and that the delay caused significant operational disruptions. The company sued for breach of contract, arguing that the university’s continued use of the LMS constituted acceptance of the late performance and a waiver of the strict deadline.
The court observed that jurisdictions differ on how waiver is established in commercial contracts. Some courts require an express statement or conduct unequivocally indicating waiver, while others infer waiver from continued use or acceptance of late performance. The university’s reliance on supplemental tools to mitigate the delay raised further questions about whether such actions undermined the company’s waiver argument or merely reflected reasonable mitigation efforts. The court also considered whether the university’s partial payment for the delivered LMS implied a modification of the original contract terms.
Which of the following best supports the company’s claim?
A) The university’s use of the LMS without objection constitutes waiver of the deadline.
B) The university’s reliance on supplemental tools negates any implied waiver.
C) Waiver of a contractual deadline requires an express statement or agreement.
D) The university’s partial payment reflects an implied modification of the contract.
2. A renewable energy company entered into a contract with a supplier to purchase 50 lithium-ion battery units at $2,000 per unit for use in its solar energy storage systems. The contract specified delivery by March 1 to meet a government-mandated project deadline. On March 3, the supplier delivered only 40 units, citing supply chain disruptions caused by a rare-earth mineral shortage. The energy company accepted the partial delivery but had to procure 10 additional units from a competitor at $2,500 per unit to meet its project obligations.
The supplier argued that the energy company’s acceptance of the 40 units waived any claim for damages. The energy company countered that the supplier breached the contract by failing to deliver the full quantity, forcing it to incur additional costs to meet its obligations. The court also considered conflicting legal authority regarding the enforceability of fixed-quantity contracts in industries affected by global supply chain volatility. Some jurisdictions allow flexibility in performance under the doctrine of commercial impracticability, while others strictly enforce contract terms regardless of external disruptions.
In addition, the court identified lapses in contractual procedure, noting that the supplier failed to provide timely notice of the anticipated shortfall, and the energy company accepted the partial delivery without objection.
What amount is the energy company most likely to recover?
A) $0.
B) $5,000.
C) $10,000.
D) $25,000.
3. A tech startup contracted with a software development firm to create a custom AI-powered recommendation engine for its e-commerce platform. The contract included a clause stating that payment would be made only upon “full and satisfactory completion of the software, as determined by the client.” After six months of development, the firm delivered the software, which passed all functionality tests and met the technical specifications outlined in the contract. However, the startup refused to pay, claiming that the recommendations generated by the AI were “uninspired” and did not align with its vision for user engagement.
The software development firm sued for breach of contract, arguing that the software met industry standards and the dissatisfaction was subjective, not based on any failure to meet the agreed-upon specifications. The startup countered that the satisfaction clause gave it sole discretion to determine whether the software was acceptable, regardless of technical compliance. The court also considered conflicting legal authority regarding the interpretation of satisfaction clauses in contracts involving complex technology. Some jurisdictions favor an objective standard, requiring performance to meet industry norms unless the contract explicitly ties satisfaction to subjective preferences. Others allow subjective interpretation if the contract grants one party broad discretion, particularly in creative or innovative projects. The court found deficiencies in process management, noting that the startup failed to articulate concrete feedback throughout development, and the firm proceeded without obtaining clarification of the performance standard embedded in the contract’s “satisfactory completion” language.
Which statement best reflects the proper legal standard?
A) Satisfaction clauses always require subjective approval.
B) The firm must meet the startup’s personal preferences under the clause.
C) Objective industry standards govern unless the contract ties payment to personal taste.
D) Courts presume satisfaction clauses are unenforceable unless defined in writing.
4. A pharmaceutical company entered into a contract with a research lab to develop a proprietary drug formulation for clinical trials. The contract included a clause stating, “No assignment of rights or delegation of duties shall occur without prior written consent of both parties.” After two years of work, the research lab assigned the contract to a biotech startup specializing in drug delivery systems, citing financial difficulties. The assignment included all rights and obligations but was made without notifying the pharmaceutical company. The startup completed the formulation and delivered the drug for trials, but the pharmaceutical company refused payment, arguing that the assignment violated the contract’s consent clause.
The startup sued for breach of contract, asserting that the pharmaceutical company accepted and used the drug formulation without objection, thereby waiving its right to enforce the consent clause. The pharmaceutical company countered that the assignment was invalid and that its use of the formulation was necessary to avoid delays in clinical trials, not an acceptance of the startup’s performance. The court also considered conflicting legal authority regarding the enforceability of anti-assignment clauses in contracts involving intellectual property. Some jurisdictions strictly enforce such clauses to protect proprietary interests, while others allow assignments if the receiving party suffers no prejudice and the work is completed satisfactorily. Additionally, the court identified breakdowns in the parties’ procedural conduct, specifically, the lab’s nondisclosure of its financial instability and the startup’s failure to issue formal notice to the pharmaceutical company.
Should the startup prevail?
A) No, because the original contract expressly prohibited assignment.
B) Yes, because the pharmaceutical company accepted and used the formulation without protest.
C) No, because performance under an invalid assignment is unenforceable.
D) Yes, because assignment of contract rights does not require notice if duties are performed.
5. A biotech startup developed a proprietary algorithm capable of predicting rare genetic disorders based on incomplete DNA sequences. The startup entered into negotiations with a major pharmaceutical company, offering exclusive rights to the algorithm for $10 million. During a video call, the startup’s CEO stated, “We’re ready to move forward — $10 million secures exclusive rights, and we’ll provide full technical support for integration.” The pharmaceutical company’s representative replied, “We accept — send over the licensing agreement, and we’ll wire the funds within 48 hours.”
Before the agreement was finalized, the startup received an unsolicited offer of $12 million from a rival pharmaceutical company and immediately accepted it. The original pharmaceutical company sued, claiming breach of contract. The startup argued that no binding agreement existed because the licensing terms were not signed, and the video call was merely preliminary.
The court faced conflicting authority on whether verbal agreements in high-tech licensing deals constitute enforceable contracts. Some jurisdictions require explicit written agreements for intellectual property transactions, citing the complexity and value of such assets. Others allow verbal agreements to be binding if the terms are definite and the parties demonstrate intent to be bound. The court also considered whether the pharmaceutical company’s reliance on the startup’s verbal commitment — including internal budget approvals and resource allocation — constituted partial performance sufficient to enforce the agreement. The court also flagged shortcomings in the negotiation record, citing the absence of a formal memorandum and the startup’s nondisclosure of a competing offer.
Did the pharmaceutical company’s response create a binding agreement?
A) No, because verbal agreements for intellectual property require written confirmation.
B) Yes, because the pharmaceutical company’s acceptance formed a valid contract.
C) No, because the startup’s offer was preliminary and invited further negotiation.
D) Yes, because reliance on the verbal agreement constitutes partial performance.
6. A freelance software developer entered into a contract with a startup to design and implement a custom blockchain-based payment system over six months. The contract included a termination clause allowing either party to cancel “with 30 days’ written notice.” After three months, the developer informed the startup via email that she had accepted a full-time position at a major tech company and would cease work immediately. The startup sued, alleging breach of contract and damages due to project delays and the cost of hiring a replacement developer.
The developer argued that her career opportunity justified immediate termination and that the startup could hire another developer without significant disruption. Evidence showed that the startup had already invested heavily in integrating the developer’s work into its platform and had to pay a premium to hire a replacement developer on short notice. The court also considered conflicting legal authority regarding the enforceability of termination clauses in freelance contracts, particularly in the tech industry. Some jurisdictions treat such clauses as binding, requiring strict compliance, while others allow flexibility based on industry norms and the nature of the work. The court observed procedural deficiencies, including the developer’s failure to provide formal written notice and the startup’s lack of mitigation efforts to minimize damages.
Is the startup likely to prevail?
A) Yes, because the developer breached the termination clause by failing to provide notice.
B) No, because career advancement excuses obligations under freelance contracts.
C) Yes, because timing and reliance created foreseeable harm.
D) No, because the startup failed to mitigate damages.
7. A luxury yacht manufacturer entered into a contract with a supplier to deliver 100 units of a specialized titanium alloy used in the construction of high-performance hulls. The contract included a force majeure clause stating, “Performance is excused in the event of unforeseen circumstances beyond the supplier’s control, including but not limited to natural disasters, government restrictions, or supply chain disruptions.” In February, a geopolitical conflict in a key mining region caused a global shortage of titanium. On March 1, the supplier delivered only 40 units, citing the shortage and claiming that the force majeure clause excused its performance. The manufacturer refused to pay, arguing that the supplier failed to provide adequate notice and did not allocate the available units fairly among its customers.
The supplier sued for breach of contract, asserting that the force majeure clause excused its inability to deliver the full quantity and that the partial delivery represented a good-faith effort to fulfill its obligations. The manufacturer counterclaimed for damages, alleging that the supplier’s failure to deliver the remaining units forced it to delay production, resulting in lost sales and reputational harm. The court also considered conflicting legal authority regarding the interpretation of force majeure clauses in supply contracts. Some jurisdictions strictly enforce such clauses, requiring clear evidence of causation and notice, while others adopt a more flexible approach, allowing suppliers to allocate resources as they see fit during crises. The court highlighted breakdowns in contractual process, citing the supplier’s failure to provide timely notice of the shortfall and the manufacturer’s refusal to negotiate modified delivery terms prior to rejection.
Should the supplier be excused from full performance?
A) No, because the force majeure clause was too vague to excuse breach.
B) Yes, because the clause tied performance to supply chain disruptions and a shortage occurred.
C) No, because partial performance does not satisfy commercial contracts absent fair allocation and notice.
D) Yes, because supply chain disruptions are recognized under the doctrine of commercial impracticability.
8. A tech entrepreneur contracted with a cybersecurity firm to conduct a comprehensive security audit of her company’s cloud infrastructure. The contract specified that the firm would deliver a final report addressing three key areas: (1) vulnerability assessment, (2) penetration testing, and (3) compliance with international data protection standards. The contract stated that the firm would be paid $50,000 upon submission of the final report covering all three areas. The firm completed the vulnerability assessment and penetration testing but failed to deliver the compliance analysis due to a ransomware attack on its own systems. The entrepreneur used the completed portions of the report to secure a major client but refused to pay, citing the incomplete performance.
The cybersecurity firm sued for breach, arguing that the entrepreneur accepted and benefitted from the work it completed. The entrepreneur countered that the contract explicitly conditioned payment on the delivery of all three components and that partial performance was insufficient. The court also considered conflicting legal authority regarding the enforceability of payment conditions in service contracts. Some jurisdictions strictly enforce such conditions, while others allow partial recovery under quantum meruit if the recipient benefits from the work.
The record revealed process deficiencies, including the firm's failure to promptly disclose the cybersecurity incident and the entrepreneur’s failure to undertake reasonable mitigation efforts through independent compliance review.
Should the court order the entrepreneur to pay?
A) Yes, because quantum meruit allows partial recovery for accepted work.
B) No, because the contract clearly conditioned payment on full performance.
C) Yes, because the ransomware attack excuses strict performance in service contracts.
D) No, because acceptance does not override a failed condition precedent.
9. A homeowner entered into a written contract with a landscaper to install a multi-zone garden for $10,000. The agreement specified native plants in four distinct areas and required completion by June 1 to coincide with a local garden showcase event. The landscaper began work promptly, but on May 20, notified the homeowner that the cost of certain native plants had increased unexpectedly due to a regional shortage. To complete the job, he requested an additional $2,000 to cover the difference.
The homeowner refused, stating the contract was fixed-price and that price fluctuations were foreseeable in seasonal landscaping. After failed negotiations, the landscaper halted work. On May 23, the homeowner hired a new landscaper to finish the job in time for the event, at a total cost of $12,000. The original landscaper sued for breach, seeking payment for partial work and arguing that the price spike made continued performance commercially impracticable.
The homeowner countered that the landscaper was obligated to complete the job for the agreed price and that abandoning the project constituted breach.
The court must determine whether the landscaper’s mid-project request for more money was justified and whether his withdrawal from performance amounted to breach.
Was the homeowner justified in refusing to pay the additional $2,000?
A) Yes, because the contract was fixed-price and the risk of cost increases was foreseeable.
B) No, because the landscaper’s performance was commercially impracticable.
C) Yes, because the homeowner reasonably mitigated damages by hiring a replacement.
D) No, because the landscaper’s request was a reasonable response to market changes.
10. A private collector entered into a contract with a seller to purchase a rare oil painting for $100,000. The contract identified the specific painting by title and required delivery by June 1, with all risk of loss remaining with the seller until physical delivery. On May 25, a break-in occurred at the seller’s secure warehouse, and the painting was stolen along with several other valuable items. The police investigation confirmed no fault on the seller’s part; the facility had passed all recent inspections and had state-of-the-art security.
The buyer sued for breach, seeking the return of the purchase price and additional damages for lost profits from an intended exhibition featuring the painting. The seller argued that the contract was discharged due to impossibility, as the painting, a unique, identified item, was irrecoverable and destroyed the ability to perform.
The buyer countered that the seller bore the risk of loss and should have taken greater precautions given the value and rarity of the item.
The court must decide whether the seller’s performance was excused due to impossibility and whether the buyer has any remaining claim to damages.
Is the seller liable for breach?
A) Yes, because the seller bore the risk of loss until delivery.
B) No, because the contract was discharged due to impossibility.
C) Yes, because the seller failed to deliver a unique item.
D) No, because the buyer assumed the risk by contracting for an irreplaceable work.
11. A supplier entered into a contract with a retailer to deliver 2,000 units of a seasonal product for $40,000, with delivery scheduled for November 1. On October 20, the supplier informed the retailer that it could only deliver 1,500 units due to production issues. The retailer accepted the partial delivery but demanded a price reduction proportional to the missing units. The supplier refused, arguing that the contract price was fixed and that partial delivery was permissible under the UCC.
The retailer sued for breach, seeking damages for the missing units and a price adjustment. The supplier argued that the retailer’s acceptance of the partial delivery waived any claim for breach. The retailer contended that acceptance did not waive its right to damages.
The court must determine whether the supplier breached the contract and whether the retailer’s acceptance of partial delivery affected its right to recover damages.
Is the retailer entitled to damages?
A) Yes, because the supplier’s partial delivery constituted a breach.
B) No, because the retailer accepted the partial delivery.
C) Yes, because the missing units substantially impaired the value of the contract.
D) No, because partial delivery was permissible under the UCC.
12. A contractor entered into a fixed-price contract with a homeowner to build a custom glass greenhouse for $40,000. The agreement specified that the structure would use triple-pane laminated glass sourced from a particular manufacturer known for durability and aesthetic appeal. Construction was scheduled to begin on April 15 and be completed by May 1, aligning with the homeowner’s annual spring garden showcase. The contract also required that all materials be pre-approved and comply with local regulations at the time of execution.
On April 10, just days before construction was scheduled to begin, the city council enacted an emergency zoning ordinance banning the use of that specific type of laminated glass in new residential structures due to concerns over environmental runoff. The contractor immediately informed the homeowner and proposed two alternative materials that complied with the ordinance. However, both alternatives had reduced thermal performance and a shorter projected lifespan. The contractor also offered to discount the project by $2,000 to reflect the lower quality materials.
The homeowner refused the modification, stating that the original glass choice was integral to the greenhouse’s design and purpose. He insisted the contractor either delay the project until the regulation was repealed or obtain a special exemption, which the city denied. The contractor halted work, and the homeowner hired a different contractor to build a greenhouse using one of the proposed alternative materials for $48,000. The original contractor sued for breach of contract, arguing that the zoning ordinance rendered the original performance commercially impracticable and excused nonperformance.
Did the contractor breach the contract?
A) Yes, because the contractor failed to perform as agreed.
B) No, because the zoning ordinance made performance commercially impracticable.
C) Yes, because the homeowner reasonably mitigated damages.
D) No, because the contractor offered a reasonable alternative.
13. A buyer entered into a contract with a seller to purchase 1,000 units of a custom-designed product for $50,000, with delivery scheduled for December 1. The products were intended for a holiday marketing campaign, and the contract explicitly stated that timely delivery was essential. On November 15, the seller informed the buyer that production was delayed due to a strike at the manufacturing plant. The seller offered to deliver 600 units on time and the remaining 400 units by January 15. The seller also offered a $5,000 discount to compensate for the delay.
The buyer refused the partial delivery, stating that the products were needed in full for the campaign and that a delayed shipment would render them useless. The buyer also argued that the discount did not adequately compensate for the lost opportunity to capitalize on the holiday season. The seller withheld shipment entirely, claiming that the buyer’s refusal to accept partial delivery constituted a repudiation of the contract.
The buyer sued for breach, seeking damages for lost profits from the campaign. The court must determine whether the seller’s partial delivery offer was permissible under the UCC and whether the buyer’s refusal constituted a repudiation.
Was the seller justified in withholding delivery?
A) Yes, because the UCC allows partial delivery when performance is impaired.
B) No, because the buyer’s refusal was reasonable under the circumstances.
C) Yes, because the strike constituted an unforeseeable event.
D) No, because the seller failed to deliver the full quantity as agreed.
14. A homeowner entered into a contract with a contractor to renovate a bathroom for $25,000. The contract specified the use of luxury tiles imported from Italy and a high-end shower system with advanced water-saving features. The homeowner emphasized during negotiations that these materials were essential to the project, as they aligned with the aesthetic of the rest of the home. The contract also included a clause requiring the contractor to notify the homeowner of any material substitutions.
During the renovation, the contractor discovered that the imported tiles were backordered for six months due to supply chain disruptions. Without notifying the homeowner, the contractor substituted standard tiles and installed a mid-range shower system, claiming that the changes were necessary to complete the project on time. The contractor completed the renovation and demanded the final $8,000 payment. Upon inspection, the homeowner refused to pay, arguing that the substitutions constituted a material breach of the contract.
The contractor sued for the remaining balance, asserting that the substitutions were necessary and did not affect the functionality of the bathroom. The homeowner countered that the deviations from the agreed-upon materials fundamentally altered the value of the renovation. The court must determine whether the contractor’s substitutions constituted substantial performance or a material breach that excused the homeowner’s payment obligation.
Did the contractor materially breach the contract?
A) Yes, because the contractor failed to use the specified materials.
B) No, because the homeowner received the benefit of the bargain.
C) Yes, because the deviation from the contract terms was intentional.
D) No, because the substitutions were necessary due to supply chain disruptions.
15. A robotics company entered into a contract with a software developer to create custom firmware for three autonomous delivery drones. The contract specified $5,000 per drone, for a total of $15,000, with a $3,000 advance payable up front. After completing the firmware for the first drone, the developer experienced a critical hardware failure and was unable to complete the remaining two. The robotics company hired a replacement developer for $6,000 per drone and refused to pay anything further to the original developer.
The developer sued for partial compensation based on completed work and argued that the replacement costs should not affect his recovery. The robotics company countered that hiring a more expensive replacement justified offsetting all amounts and withholding payment. The court also considered conflicting legal authority regarding the calculation of damages in contracts involving partial performance. Some jurisdictions allow recovery for completed work minus any damages incurred by the non-breaching party, while others require the breaching party to absorb all additional costs resulting from their failure to perform. Additionally, the court identified procedural shortcomings, including the robotics firm’s inaction in negotiating reduced rates with the substitute developer and the original developer’s failure to disclose the hardware malfunction.
How much is the developer likely entitled to recover?
A) $3,000.
B) $5,000.
C) $9,000.
D) $12,000.
16. A music producer entered into a contract with a tech company to license a sound library for use in a new consumer app. The agreement specified a $30,000 upfront fee plus a royalty of 5% on any subscription revenue generated using the licensed tracks. A clause stated that royalties would only apply to "audio-forward features" released after June 1. The company launched the app on June 15 with multiple sound-based features but did not pay any royalties, claiming the features fell outside the scope of the royalty clause.
The producer sent an invoice for royalties based on early subscription revenue and sued when the company refused to pay. The company argued that the royalty clause was narrowly tailored to one feature currently in development, not the general app. The producer contended that the clause applied to all audio-based functionality released after the date, including those already integrated.
The court must determine whether the tech company owes royalties on the existing app features.
Does the producer have a right to collect royalties?
A) Yes, because the app includes sound-based features released after June 1.
B) No, because the royalty clause referred only to a future, specified feature.
C) Yes, because the producer’s interpretation promotes broader revenue sharing.
D) No, because the upfront payment covered general usage rights.
17. A farmer leased 100 acres of land for a five-year term, with a clause allowing subleasing upon landlord approval, “which shall not be unreasonably withheld.” After two years, the farmer sought to sublease 50 acres to a neighboring organic produce cooperative, which had a strong reputation and financial stability. The landlord refused, stating that he preferred to avoid organic farming practices on the property due to concerns about soil depletion and potential conflicts with other tenants using conventional farming methods.
The farmer sued for breach of lease terms, seeking specific performance of the subleasing clause and damages for lost opportunity. The landlord argued that his refusal was based on legitimate concerns about long-term soil health and compatibility with existing tenants. The court also considered conflicting legal authority regarding the interpretation of “reasonableness” in agricultural leases. Some jurisdictions require landlords to demonstrate objective harm or financial risk to justify withholding approval, while others allow subjective preferences if tied to the landlord’s broader management strategy. Additionally, the court flagged procedural missteps, including the landlord’s failure to provide evidence of soil depletion risks and the farmer’s lack of communication regarding the cooperative’s farming methods.
Which of the following best describes the legal effect of the landlord’s refusal?
A) The landlord was entitled to deny subleasing based on concerns about soil health.
B) The refusal violated the lease because it lacked commercially reasonable justification.
C) The landlord was permitted to reject subleasing based on compatibility with existing tenants.
D) The lease created no enforceable obligation unless subleasing harmed the property.
18. A supplier entered into a contract with a retailer to deliver 3,000 units of a product for $90,000, with delivery scheduled for December 1. On November 15, the supplier informed the retailer that it could only deliver 2,500 units due to production issues. The retailer accepted the partial delivery but demanded a price reduction proportional to the missing units. The supplier refused, arguing that the contract price was fixed and that partial delivery was permissible under the UCC.
The retailer sued for breach, seeking damages for the missing units and a price adjustment. The supplier argued that the retailer’s acceptance of the partial delivery waived any claim for breach. The retailer contended that acceptance did not waive its right to damages.
The court must determine whether the supplier breached the contract and whether the retailer’s acceptance of partial delivery affected its right to recover damages.
Is the retailer entitled to damages?
A) Yes, because the supplier’s partial delivery constituted a breach.
B) No, because the retailer accepted the partial delivery.
C) Yes, because the missing units substantially impaired the value of the contract.
D) No, because partial delivery was permissible under the UCC.
19.A renowned sculptor entered into an agreement with a city council to create a public art installation for a new park, with the city agreeing to pay $50,000 in three installments: $20,000 upon signing, $15,000 upon delivery of the sculpture, and $15,000 upon installation. The contract allowed the sculptor to delegate fabrication to third parties with prior written notice. Midway through the project, the sculptor subcontracted the casting phase to a foundry he had worked with previously but failed to notify the city council.
The city accepted delivery of the sculpture and paid the second installment. However, during installation, structural flaws were discovered, and an investigation revealed that the subcontracted foundry had used lower-grade materials than specified in the design. The city refused to pay the final $15,000, citing breach of contract due to unauthorized delegation and defective materials.
The sculptor sued for the remaining payment, arguing that the city had accepted the sculpture and benefited from its use. The city counterclaimed for damages, asserting that the unauthorized delegation and material defects constituted a material breach. The court also considered conflicting legal authority regarding restitution in cases of partial performance. Some jurisdictions allow recovery for the value of work performed, even in breach, while others bar recovery if the breach is deemed material.
The court highlighted procedural lapses, specifically noting the city's failure to conduct a timely inspection upon delivery and the sculptor’s omission in disclosing the subcontracting arrangement.
Which of the following statements best describes the sculptor’s legal position?
A) He may recover full payment because the city accepted and used the sculpture.
B) He materially breached and cannot recover due to unauthorized delegation.
C) He may be entitled to restitution for partial performance, even if in breach.
D) He may enforce the contract only if delegation was immaterial and the city suffered no harm.
20. A vintage car collector contracted with a restoration garage to fully restore a rare 1960s convertible for $40,000. The contract specified restoration using original factory parts “wherever available” and period-authentic finishes. During restoration, the garage installed reproduction door panels and used modern chrome trim for the dashboard, citing difficulty sourcing originals. The work was completed on schedule, and the car looked pristine.
However, when appraising the vehicle post-restoration, the collector discovered its market value was lower than expected due to the use of non-original components. He refused to pay the final $15,000 installment and sued for breach, arguing that authenticity was central to the contract and that the substitutions constituted a material breach.
The garage argued that the substituted parts were indistinguishable in appearance, improved durability, and reflected industry practice. They claimed substantial performance and said the collector had received the intended benefit: a restored, show-ready vehicle.
The court must determine whether the use of reproduction parts and modern finishes constitutes substantial performance or a material breach that excuses the collector’s payment obligation. The key issue is whether authentic restoration was essential to the bargain.
Did the garage materially breach the contract?
A) No, because the substituted parts provided superior durability and visual accuracy.
B) Yes, because the garage failed to use original components where available.
C) Yes, because deviations reduced the vehicle’s market value.
D) No, because the collector received a fully functional and visually restored car.
21. A cybersecurity firm entered into a managed services agreement with a financial institution for monthly monitoring at $20,000 per month. The contract included a “benchmarking clause,” allowing the client to compare the firm’s performance against industry averages. If service levels fell below the agreed benchmarks for two consecutive months, the firm was required to apply a 10% service credit on future invoices.
In March and April, the client received reports showing longer-than-average response times to threat alerts, but the firm blamed temporary staffing shortages and argued that the service benchmarks were discretionary. When the client demanded a $4,000 credit for the two-month shortfall, the firm refused, stating that the performance was within acceptable variance and that the credit clause was not mandatory.
The financial institution sued for breach, claiming the benchmarking clause imposed a binding condition and that the firm failed to honor the agreed performance adjustment. The court must determine whether the benchmarking clause created a contractual obligation or merely provided guidance for assessing service quality.
Did the cybersecurity firm breach the contract?
A) Yes, because the benchmarking clause established a performance-related payment obligation.
B) No, because staffing shortages justified the deviation from benchmarks.
C) Yes, because the firm failed to disclose the performance variance in advance.
D) No, because benchmarking clauses are typically non-binding industry guides.
22. A professional orchestra contracted with a composer to create an original symphony for its upcoming season. The agreement set a total payment of $50,000, with $20,000 due upon signing, $15,000 upon delivery of the first draft, and $15,000 upon final submission. The orchestra paid the initial $20,000 but failed to make the second payment after receiving the first draft, citing unexpected budget constraints. The composer continued working for two weeks but then halted progress and demanded immediate payment of the missed installment.
The orchestra responded that it would secure additional funding and make the payment within two months. The composer refused to continue without payment and sued for breach, claiming that the missed payment materially undermined her ability to complete the symphony. The orchestra countered that the delay was minor and did not justify the composer’s decision to stop work.
At trial, the court examined whether the missed payment justified the composer’s decision to halt work and whether her refusal to continue amounted to breach or a valid suspension. The court also considered conflicting legal authority regarding suspension of performance in creative contracts. Some jurisdictions allow suspension for any material breach, while others require evidence that the breach caused significant harm to the non-breaching party’s ability to perform. Additionally, the court identified breakdowns in contractual communication, pointing to the orchestra’s failure to issue formal notice of its financial distress and the composer’s omission in conveying how the missed payment affected her progress.
Should the composer be found in breach for halting performance?
A) No, because the missed payment gave the composer grounds to suspend work.
B) Yes, because the composer stopped before confirming that the orchestra would not pay.
C) No, because short payment delays are common and excused in creative contracts.
D) Yes, because performance must continue unless failure to pay causes total impossibility.
23. A regional public transit authority contracted with a private bus operator to provide commuter bus services along a newly established route for $10,000 per week over a one-year term. The contract specified that the operator would run 20 round trips per day, with buses adhering to a strict schedule. After six months, the transit authority requested that the operator reduce the number of daily trips to 15 due to declining ridership and budgetary constraints. The operator agreed, and both parties continued under the new arrangement without modifying the payment terms.
At the end of the contract, the transit authority refused to pay the final two months’ invoices, arguing that the reduced number of trips meant the operator had not fully performed its obligations and had overcharged for services. The operator sued for breach of contract and enforcement of the final invoices.
At trial, the transit authority argued that the original contract required 20 trips per day and that the reduction was not formally approved in writing. The operator responded that performance matched what the transit authority requested, and no objection to payment terms was raised at the time. The court also considered conflicting legal authority regarding contract modification through conduct. Some jurisdictions require formal written amendments for material changes, while others recognize oral modifications or implied agreements based on the parties’ actions.
Should the court enforce the final invoices?
A) No, because performance differed from original terms without written modification.
B) Yes, because both parties voluntarily adjusted performance and continued under the existing rate.
C) No, because payment terms were implicitly altered by reduced service.
D) Yes, because the original contract was vague and oral discussions clarified duties.
24. A regional energy cooperative orally agreed to purchase 500 megawatt-hours (MWh) of renewable energy credits (RECs) from a solar farm developer at a fixed price of $50 per MWh, with delivery to occur over a six-month period. The agreement was made during a conference call, and no formal written contract was signed. However, both parties exchanged emails referencing the agreement, and the developer began delivering RECs on schedule, issuing invoices that the cooperative paid for the first three months.
After three months, the cooperative informed the developer that it would no longer accept deliveries, citing a downturn in energy demand and claiming that the oral agreement was unenforceable under the Statute of Frauds because it involved the sale of goods exceeding $500 and lacked a written contract. The developer sued for breach of contract, arguing that partial performance and the cooperative’s prior payments demonstrated the existence of a binding agreement.
At trial, the cooperative argued that the Statute of Frauds barred enforcement of the agreement because it was not in writing and that the emails exchanged were insufficient to constitute a written contract. The developer countered that the cooperative’s acceptance of partial performance and its payments for the initial deliveries satisfied the Statute of Frauds or, alternatively, supported enforcement under the doctrine of promissory estoppel. The court also considered conflicting legal authority regarding the application of the Statute of Frauds to renewable energy credits, with some jurisdictions treating RECs as goods subject to the Uniform Commercial Code (UCC) and others treating them as intangible property outside the UCC’s scope.
Is the developer likely to succeed?
A) Yes, because partial performance and prior payments satisfy the Statute of Frauds.
B) No, because the sale of goods exceeding $500 requires a written contract under the UCC.
C) Yes, because the emails exchanged constitute a sufficient written memorandum.
D) No, because renewable energy credits are intangible property and not subject to the UCC.
25. A professional violinist agreed to perform a solo concert for a regional symphony orchestra for $10,000. The contract included a clause requiring the performance to occur on June 1, coinciding with the orchestra’s season finale. The clause stated that “time is of the essence,” and that full payment was contingent on the concert occurring on the agreed date. On May 28, the violinist notified the orchestra that illness would prevent her from performing that day, but offered to reschedule for June 8. The orchestra declined and hired a substitute performer at greater expense.
The violinist sued for breach, arguing that she substantially performed by offering to reschedule and that her reputation and prior promotional value benefited the orchestra regardless of the change in date. The orchestra countered that the concert date was essential to its season programming, and that the delay defeated the contract’s core purpose.
The court must decide whether the missed performance date constitutes a material breach or if the violinist’s offer to reschedule salvaged substantial performance.
Did the violinist materially breach the contract?
A) No, because rescheduling preserved the performance commitment.
B) Yes, because the delay violated an express “time is of the essence” clause.
C) No, because her promotional value supported the orchestra’s event.
D) Yes, because the orchestra had to incur additional costs due to the breach.
26. A municipal government contracted with a construction company to build a public library for $5 million, with completion required by December 1 to coincide with the city’s annual holiday festival. The contract explicitly stated, “Time is of the essence, and full completion by the deadline is mandatory.” On November 30, the construction company delivered the building with 90% of the work completed, citing supply chain delays for the remaining materials. The company assured the city that the remaining work could be finished within two weeks. The city refused to accept the incomplete building and terminated the contract.
The construction company sued, arguing that the city should have accepted the substantially completed building and permitted reasonable delay for the remainder. The city countered that the strict deadline was essential to its planning and promotional efforts for the festival, and that the incomplete building was unusable for its intended purpose.
At trial, the court examined whether the city’s refusal and termination constituted breach or proper rejection under contract law principles. The court also considered conflicting legal authority regarding substantial performance in construction contracts. Some jurisdictions allow rejection for any deviation from strict deadlines when “time is of the essence,” while others require acceptance of substantial performance if the deviation is minor and does not cause significant harm. Additionally, the court identified deficiencies in procedural conduct, namely, the city's failure to issue formal notice of termination and the construction company's inadequate documentation of supply chain disruptions.
Which statement best describes the city’s rights?
A) The city breached by rejecting otherwise reasonable performance.
B) The city was required to accept the substantially completed building and demand cure.
C) The city properly rejected the incomplete building under the “time is of the essence” clause.
D) The city cannot terminate unless damages are proven.
27. A contractor entered into a contract with a property owner to build a custom greenhouse for $75,000. The contract required completion by September 1 and included a clause stating that the contractor would bear all risks associated with unforeseen site conditions. On August 15, the contractor discovered that the soil conditions at the site were unsuitable for construction and would require additional excavation, increasing costs by $20,000. The contractor informed the owner and requested a modification to the contract price.
The owner refused, citing the risk allocation clause and stating that the contractor should have anticipated the soil conditions. The contractor completed the greenhouse and sued for the additional $20,000, arguing that the unforeseen conditions made performance commercially impracticable despite the risk allocation clause.
The court must determine whether the contractor is entitled to recover the additional costs.
Is the contractor entitled to recover the additional $20,000?
A) No, because the risk allocation clause precluded recovery for unforeseen conditions.
B) Yes, because the soil conditions made performance commercially impracticable.
C) No, because the contractor completed the greenhouse without a modification.
D) Yes, because the owner’s refusal to modify the contract was unreasonable.
28. A software developer agreed to create a custom application for a startup in exchange for $15,000, payable upon delivery of the final product. The agreement specified that the startup would provide detailed specifications by March 1, and the developer would deliver the completed application by March 31. The startup provided specifications on March 5, and the developer delivered the application on April 2. The startup launched the application on its website and used it to onboard customers but refused to pay, citing late delivery.
The developer sued for breach of contract, arguing that the delay was minor and did not affect the startup’s ability to use the application. The startup countered that the late delivery violated the agreement and justified nonpayment. Evidence showed that the startup never communicated dissatisfaction and actively promoted the application as part of its marketing campaign.
At trial, the startup maintained that strict adherence to the original deadline was required under the agreement. The developer presented emails showing the startup praised the application’s functionality and expressed satisfaction with its performance. The court also considered conflicting legal authority regarding the enforceability of deadlines in service contracts. Some jurisdictions strictly enforce deadlines as material terms, while others allow minor deviations if the delay does not cause harm. The court also observed procedural shortcomings, such as the startup’s failure to formally communicate its intent to withhold payment and the developer’s limited recordkeeping regarding how the delayed specifications affected the timeline.
Should the court find that the developer is owed payment?
A) No, because the application was delivered late and violated the agreement.
B) Yes, because the startup accepted and used the application without objection.
C) No, because failure to meet a deadline voids consideration.
D) Yes, because slight delay does not negate commercial performance obligations.
29. A multinational pharmaceutical company entered into a licensing agreement with a university research lab to develop and commercialize a groundbreaking cancer treatment. The agreement stipulated that the university would refrain from licensing the treatment to any other entity for a period of two years, in exchange for $10 million in funding and royalties from future sales. The university complied, declining offers from other companies and halting its own independent commercialization efforts. At the end of the two-year period, the pharmaceutical company refused to pay, arguing that the university’s forbearance did not constitute valid consideration because it did not involve an affirmative act or confer a direct benefit to the company.
The university sued for breach of contract, presenting evidence of the offers it declined and the financial losses incurred by halting its commercialization efforts. The pharmaceutical company countered that the university’s inaction did not constitute valid consideration and that the agreement was unenforceable because it lacked mutual benefit. The court also considered conflicting legal authority regarding the enforceability of promises based on forbearance. Some jurisdictions recognize forbearance from exercising a legal right as valid consideration, while others require a demonstrable benefit to the promisor. Additionally, the court noted procedural irregularities, including the absence of a formal written agreement and the pharmaceutical company’s failure to clarify the terms of payment.
Is the agreement enforceable?
A) Yes, because refraining from exercising a legal right is valid consideration.
B) No, because the university’s inaction did not confer a tangible benefit to the pharmaceutical company.
C) Yes, because the university’s reliance on the promise makes it binding.
D) No, because the absence of a written agreement precludes enforcement.
30. A museum entered into a contract with an art logistics firm to transport a newly acquired sculpture to its downtown gallery. The contract specified white-glove, climate-controlled transport and required the use of specialized packaging compliant with international preservation standards. The firm completed the delivery on time, but used standard packaging and a regular freight truck that lacked climate control. The sculpture arrived intact, but condensation was discovered inside the container, raising concern over latent damage to the piece.
Upon inspection, the museum’s curator noted that although no immediate structural damage was visible, the sculpture’s materials were moisture-sensitive and long-term degradation was a known risk. The museum refused to pay the final $25,000 installment and demanded compensation for risk exposure and breach of contract.
The logistics firm argued that the sculpture was delivered safely, suffered no actual damage, and that the museum had received the benefit of its bargain. The museum contended that compliance with preservation protocols was a material term, and that deviation placed irreplaceable artwork at long-term risk, constituting a material breach.
The court must decide whether the firm’s deviation from the contract specifications amounted to a material breach or substantial performance.
Did the logistics firm materially breach the contract?
A) No, because the sculpture was delivered on time and without visible damage.
B) Yes, because the firm knowingly disregarded climate-control and packaging requirements.
C) No, because the museum received the benefit of the bargain despite the deviation.
D) Yes, because the preservation standards were essential to protecting the artwork’s integrity.
31. A technology company entered into a contract with a software developer to create a custom application for $250,000, with delivery scheduled for December 1. The contract included a clause stating that the application must meet specific performance benchmarks, including processing 10,000 transactions per minute. On November 15, the developer delivered the application, but testing revealed that it could only process 8,000 transactions per minute. The company rejected the application and demanded a refund, claiming that the developer’s failure to meet the benchmarks constituted a material breach.
The developer argued that the application was substantially functional and that the company’s rejection was unreasonable. The company contended that the performance benchmarks were essential to the contract and that the failure to meet them justified rejection and cancellation.
The court must determine whether the developer’s failure to meet the benchmarks constituted a breach and whether the company’s rejection was proper.
Was the company justified in rejecting the application?
A) No, because the application was substantially functional.
B) Yes, because the failure to meet the benchmarks constituted a material breach.
C) No, because the company’s rejection was unreasonable.
D) Yes, because the benchmarks were essential terms of the contract.
32. A regional airline entered into a contract with an aircraft maintenance company to overhaul the engines of three planes for a flat fee of $1.5 million. The contract specified that the work would be completed by June 1, “subject to delays caused by supply chain disruptions.” During the overhaul, the maintenance company encountered delays in obtaining critical engine parts due to an international trade embargo. On May 15, the maintenance company requested a one-month extension, which the airline approved via email.
The maintenance company completed the work on July 1, and the airline resumed using the planes immediately. However, when the maintenance company invoiced for $1.5 million, the airline refused to pay more than $1.2 million, citing losses incurred from the delayed return of the planes and alleging that the maintenance company had failed to notify them of additional costs incurred during the delay. The maintenance company sued for the remaining $300,000.
At trial, the airline argued that the maintenance company’s delay exceeded the agreed extension and that the company’s failure to provide timely updates on costs constituted a breach of contract. The maintenance company countered that the delay was caused by factors beyond its control, that the airline had approved the extension, and that the airline’s immediate use of the planes constituted acceptance of the work. The court also considered conflicting legal authority regarding the enforceability of contracts with force majeure clauses. Some jurisdictions strictly interpret such clauses, requiring explicit notice of delays and cost overruns, while others allow for implied notice based on the circumstances. Additionally, the court noted procedural irregularities, including the lack of a formal amendment to the contract and the maintenance company’s failure to document its communications regarding the delays.
Should the court find the airline liable for the remaining $300,000?
A) Yes, because the airline’s acceptance and use of the planes constitutes a waiver of objections.
B) No, because the maintenance company failed to provide timely notice of cost overruns.
C) Yes, because the delay was caused by factors beyond the maintenance company’s control.
D) No, because the delay exceeded the agreed extension, constituting a breach of contract.
33. A renewable energy startup entered into a contract with a wind turbine manufacturer to deliver 10 custom turbines by March 1 for installation in a government-subsidized wind farm project. The contract explicitly stated, “Time is of the essence due to regulatory deadlines.” On February 25, the manufacturer informed the startup that delivery would be delayed until March 15 due to supply chain disruptions. The startup responded, “This delay jeopardizes our project timeline, we have no choice but to cancel.”
Despite the cancellation, the manufacturer delivered the turbines on March 15 and demanded payment. The startup refused, arguing that the delay constituted a material breach and that the turbines were no longer useful because the government subsidy had expired on March 10. The manufacturer sued for breach of contract, asserting that the startup suffered no actual damages because the turbines could still be installed and used for energy production.
At trial, the startup presented evidence of the lost subsidy and the financial harm caused by the delay. The manufacturer countered that the delay was caused by factors beyond its control and that the startup had an obligation to mitigate its losses by proceeding with the installation. The court also considered conflicting legal authority regarding the enforceability of “time is of the essence” clauses. Some jurisdictions strictly enforce such clauses, treating any delay as a material breach, while others allow for reasonable delays if the breach does not cause substantial harm.
Should the court require the startup to pay for the turbines?
A) No, because late delivery breached an essential term of the contract.
B) Yes, because the manufacturer ultimately performed and the turbines were usable.
C) No, because shipment after cancellation is not valid tender.
D) Yes, because the startup failed to mitigate its losses by installing the turbines.
34. A buyer entered into a contract with a seller to purchase 3,000 units of a product for $90,000, with delivery scheduled for August 1. On July 20, the seller informed the buyer that the goods were ready for shipment but requested a bank guarantee from the buyer due to concerns about the buyer’s solvency. The buyer refused, stating that payment was due upon delivery and that the seller’s demand for a bank guarantee was unreasonable.
The seller withheld shipment and the buyer sued for breach, arguing that the seller had no right to demand a bank guarantee. The seller responded that under the UCC, it was entitled to demand adequate assurance of performance and that the buyer’s refusal justified withholding delivery.
The court must determine whether the seller’s demand for a bank guarantee was reasonable and whether the buyer’s refusal constituted a repudiation.
Was the seller justified in withholding delivery?
A) No, because demanding a bank guarantee exceeded the scope of adequate assurance.
B) Yes, because the seller had reasonable grounds for insecurity.
C) Yes, because the UCC allows a party to demand adequate assurance of performance.
D) No, because the buyer never repudiated the contract.
35. A couple hired a caterer for their wedding reception under a $20,000 contract, which included a menu featuring organic, locally sourced ingredients and a premium champagne toast. On the day of the event, the caterer served a menu with mostly organic components but substituted a few conventional items due to supplier availability and served a highly rated sparkling wine in place of the specified champagne.
The event proceeded smoothly, guests complimented the food and service, and the couple expressed satisfaction on the day. However, upon later discovering the substitutions, the couple refused to pay the final $8,000 installment, claiming that the caterer breached the contract by failing to serve exclusively organic ingredients and the agreed champagne brand.
The caterer sued to recover the unpaid balance, arguing that they substantially performed the contract and that the substitutions were made in good faith to preserve the event’s quality. The couple argued that the specific ingredients and champagne were material to the agreement and that any deviation was unacceptable.
The court must determine whether the caterer’s deviations from the specified menu amounted to a material breach or whether substantial performance occurred.
Did the caterer materially breach the contract?
A) Yes, because the caterer failed to provide the specified ingredients and champagne.
B) No, because the couple received the intended benefit of the bargain despite minor substitutions.
C) Yes, because the deviation from the contract terms was intentional.
D) No, because the couple’s guests were satisfied with the food and beverages.
36. A nonprofit organization hired an event planner to coordinate its annual fundraising gala for $60,000. The contract included a clause requiring the planner to notify the client within 24 hours of any vendor cancellations or venue changes and stated that the planner would be liable for damages arising from failure to communicate material changes. One week before the event, the catering vendor canceled unexpectedly, and the planner secured a replacement without informing the nonprofit until the day of the event.
Although the substitute caterer fulfilled basic menu requirements, several donors complained about the reduced quality and presentation. The nonprofit refused to pay the final $20,000 installment and sued for breach, citing reputational damage and breach of the notification clause.
The planner argued that her actions avoided disruption, minimized losses, and still delivered a successful event. The nonprofit contended that the failure to notify was a breach of an express material term and deprived it of a chance to intervene or adjust expectations.
The court must decide whether the planner’s failure to communicate the vendor change constitutes a material breach or substantial performance.
Did the planner materially breach the contract?
A) No, because the planner delivered a successful event with minimal disruption.
B) Yes, because the planner failed to notify the client as required by the contract.
C) No, because the replacement caterer met the minimum service requirements.
D) Yes, because the quality complaints indicate reputational damage.
37. A supplier entered into a contract with a retailer to deliver 20,000 units of a product for $600,000, with delivery scheduled for January 1. The contract included a clause stating that time was of the essence and that late delivery would constitute a material breach. On December 15, the supplier informed the retailer that it would only be able to deliver 18,000 units by January 1 due to production delays. The retailer rejected the partial delivery and canceled the contract, claiming that the supplier’s inability to deliver the full quantity on time constituted a material breach.
The supplier argued that partial delivery was permissible under the UCC and that the retailer’s rejection was unreasonable. The retailer contended that the missing units substantially impaired the value of the contract and justified cancellation under the time-is-of-the-essence clause.
The court must determine whether the supplier’s partial delivery constituted a breach and whether the retailer’s cancellation was proper.
Was the retailer justified in canceling the contract?
A) Yes, because the missing units substantially impaired the value of the contract.
B) No, because partial delivery was permissible under the UCC.
C) Yes, because the time-is-of-the-essence clause made timely delivery essential.
D) No, because the shortage was unforeseeable and excused performance.
38. A boutique architecture firm entered into a contract with a real estate developer to design a luxury residential complex. The agreement stipulated a fee of $250,000, payable upon delivery of the final blueprints. The firm began work immediately, conducting site visits, preparing preliminary designs, and holding multiple meetings with the developer. Two months into the project, the developer emailed, “We’ve decided to go in a different direction and will not need your services anymore. Thanks for your efforts so far.”
The architecture firm responded, “We’ve already completed significant work on this project. Please confirm how you’d like to proceed regarding payment for services rendered.” The developer did not reply. The firm ceased work and later sued for breach of contract, seeking $150,000 for the value of the work completed. The developer argued that no payment was due because the final blueprints were never delivered, as required by the contract.
At trial, the firm presented evidence of substantial work completed, including detailed site analyses, preliminary designs, and a partially completed blueprint. The developer countered that the contract explicitly conditioned payment on delivery of the final blueprints and that the firm had failed to meet this requirement. The court also considered conflicting legal authority regarding the enforceability of payment terms in contracts terminated before full performance. Some jurisdictions strictly enforce such terms, denying recovery unless the condition is met, while others allow recovery under quantum meruit for the value of services rendered.
Is the architecture firm likely to recover?
A) Yes, because the developer breached by terminating the contract without cause.
B) No, because the contract explicitly required delivery of the final blueprints for payment.
C) Yes, because part performance creates a claim for quantum meruit even absent full completion.
D) No, because the firm did not complete the work or seek clarification before ceasing efforts.
39. A public university entered into a contract with a private IT firm to develop a custom software platform for managing student records. The contract specified a total payment of $300,000, divided into three installments: $100,000 upon delivery of the initial system architecture, $100,000 upon delivery of a functional prototype, and $100,000 upon final implementation. The contract also included a clause requiring the IT firm to use its in-house team for all development work unless the university provided prior written approval for subcontracting.
After delivering the initial system architecture and receiving the first payment, the IT firm realized it lacked the expertise to complete certain advanced features required for the prototype. Without notifying the university, the firm subcontracted this portion of the work to a specialized software development company. The university approved the prototype and paid the second installment without raising any concerns. However, during the final implementation phase, the university discovered the subcontracting arrangement and refused to pay the final $100,000, citing breach of the non-subcontracting clause.
The IT firm sued for breach of contract, arguing that the university had accepted and paid for the prototype without objection and that the final implementation met all contractual requirements. The university countered that the unauthorized subcontracting constituted a material breach, releasing it from any obligation to pay the final installment. The court also considered conflicting legal authority regarding the enforceability of non-delegation clauses. Some jurisdictions strictly enforce such clauses, treating any unauthorized delegation as a material breach, while others allow recovery if the delegation caused no harm or prejudice to the non-breaching party. The court identified shortcomings in process, such as the university’s silence regarding the subcontracting and the IT firm’s lack of prompt notification.
Should the court find that the university breached the contract?
A) Yes, because the university received full performance and suffered no prejudice.
B) No, because the IT firm breached a material term by subcontracting without approval.
C) No, because the university never expressly accepted the final implementation.
D) Yes, because the university waived its right to object by approving and paying for prior work.
40. A luxury resort entered into a contract with a celebrity chef to host an exclusive culinary showcase for $75,000. The contract required the chef to provide a custom tasting menu in advance for approval, coordinate with the resort’s sommelier, and conduct a media walkthrough two days before the event. The chef arrived on the day of the showcase and delivered a successful dinner but had neither submitted the tasting menu in advance nor participated in the media walkthrough. The resort refused to pay the final $25,000 installment and sued for breach, citing reputational harm and failure to comply with critical pre-event obligations.
The chef argued that the event was flawless, guests were impressed, and the resort received the benefit of the bargain. The resort countered that the contract’s pre-event requirements were not peripheral but central to its marketing strategy and brand experience, especially since several media outlets withdrew coverage due to lack of access.
The court must determine whether the chef’s failure to fulfill the pre-event obligations constitutes a material breach or whether the dinner performance alone sufficed as substantial performance. The analysis centers on whether the resort’s promotional requirements were essential to the agreement.
Did the chef materially breach the contract?
A) No, because the event itself was delivered successfully and guests were satisfied.
B) Yes, because the chef failed to comply with pre-event terms that were contractually mandated.
C) No, because the media walkthrough was not necessary for the contract’s core purpose.
D) Yes, because reputational harm and media cancellations directly affected the resort’s value.
41. A manufacturer entered into a contract with a distributor to supply 50,000 units of a specialized product for $2,500,000, with delivery scheduled for March 1. The contract included a clause stating that time was of the essence and that late delivery would constitute a material breach. On February 15, the manufacturer informed the distributor that it would only be able to deliver 45,000 units by March 1 due to a shortage of raw materials. The distributor rejected the partial delivery and canceled the contract, claiming that the manufacturer’s inability to deliver the full quantity on time constituted a material breach.
The manufacturer argued that partial delivery was permissible under the UCC and that the distributor’s rejection was unreasonable. The distributor contended that the missing units substantially impaired the value of the contract and justified cancellation under the time-is-of-the-essence clause.
The court must determine whether the manufacturer’s partial delivery constituted a breach and whether the distributor’s cancellation was proper.
Was the distributor justified in canceling the contract?
A) No, because partial delivery was permissible under the UCC.
B) Yes, because the time-is-of-the-essence clause made timely delivery essential.
C) No, because the shortage was unforeseeable and excused performance.
D) Yes, because the missing units substantially impaired the value of the contract.
42.A regional healthcare provider entered into a contract with a medical equipment supplier to purchase 50 ventilators for $500,000, payable in two installments: $250,000 upon signing the contract and $250,000 upon delivery. The supplier began manufacturing the ventilators but later discovered that the healthcare provider was facing severe financial difficulties and had recently defaulted on payments to other vendors. Concerned about the provider’s ability to pay the second installment, the supplier paused production and demanded written assurance of payment before proceeding. The healthcare provider refused to provide assurance, arguing that the supplier was obligated to fulfill the contract regardless of payment concerns.
The supplier ultimately refused to deliver the ventilators, and the healthcare provider sued for breach of contract. At trial, the supplier argued that the provider’s financial instability and refusal to provide assurance created reasonable grounds for insecurity, justifying suspension of performance under the doctrine of anticipatory repudiation. The provider countered that no breach had occurred on its part and that the supplier’s refusal to deliver constituted a material breach of the contract.
The court also considered conflicting legal authority regarding the doctrine of insecurity. Some jurisdictions strictly require clear evidence of anticipatory repudiation before allowing suspension of performance, while others permit suspension based on reasonable grounds for insecurity, even in the absence of explicit repudiation.
Should the court find that the supplier breached the contract?
A) No, because the supplier was entitled to demand assurance after learning of financial uncertainty.
B) Yes, because the supplier refused to deliver the ventilators without clear evidence of repudiation.
C) Yes, because payment disputes do not excuse performance without formal notice.
D) No, because the provider’s refusal to provide assurance constituted anticipatory repudiation.
43. A supplier entered into a contract with a retailer to deliver 25,000 units of a product for $750,000, with delivery scheduled for April 1. On March 15, the supplier informed the retailer that it could only deliver 20,000 units due to production delays. The retailer accepted the partial delivery but demanded a price reduction proportional to the missing units. The supplier refused, arguing that the contract price was fixed and that partial delivery was permissible under the UCC.
The retailer sued for breach, seeking damages for the missing units and a price adjustment. The supplier argued that the retailer’s acceptance of the partial delivery waived any claim for breach. The retailer contended that acceptance did not waive its right to damages and that the missing units substantially impaired the value of the contract.
The court must determine whether the supplier breached the contract and whether the retailer’s acceptance of partial delivery affected its right to recover damages.
Is the retailer entitled to damages?
A) Yes, because the missing units substantially impaired the value of the contract.
B) No, because partial delivery was permissible under the UCC.
C) Yes, because the supplier’s partial delivery constituted a breach.
D) No, because the retailer accepted the partial delivery.
44. A state transportation agency entered into a contract with a civil engineering firm to design a new highway interchange. The contract stipulated payment of $1.5 million in three installments: $500,000 upon delivery of preliminary plans, $500,000 upon submission of detailed engineering drawings, and $500,000 upon final approval of construction-ready blueprints. The contract also included a clause requiring the engineering firm to personally perform all design work unless the agency provided prior written approval for subcontracting.
After delivering the preliminary plans and receiving the first payment, the engineering firm realized it lacked the expertise to complete certain advanced geotechnical analyses required for the detailed drawings. Without notifying the agency, the firm subcontracted this portion of the work to a specialized geotechnical consulting company. The agency approved the detailed drawings and paid the second installment without raising any concerns. However, during the final review of the construction-ready blueprints, the agency discovered the subcontracting arrangement and refused to pay the final $500,000, citing breach of the non-subcontracting clause.
The engineering firm sued for breach of contract, arguing that the agency had accepted and paid for the prior work without objection and that the final blueprints met all contractual specifications. The agency countered that the unauthorized subcontracting constituted a material breach, releasing it from any obligation to pay the final installment. The court also considered conflicting legal authority regarding the enforceability of non-delegation clauses. Some jurisdictions strictly enforce such clauses, treating any unauthorized delegation as a material breach, while others allow recovery if the delegation caused no harm or prejudice to the non-breaching party.
Which statement best describes the legal effect of the delegation?
A) The engineering firm may recover for all three installments, because performance was properly completed.
B) The engineering firm breached the agreement and is entitled only to payment for the first two installments.
C) The engineering firm cannot recover at all due to material breach of a nondelegable obligation.
D) The engineering firm breached the agreement, but restitution may be available for the final installment.
45. A financial consultant entered into a contract with a private equity firm to prepare an in-depth valuation report for a potential acquisition target. The $100,000 contract required that the report include audited financial benchmarks verified by a licensed accountant, as the firm’s investment committee policy mandated such certification for all acquisition reviews. The consultant submitted the report on time, complete with projections and asset breakdowns, but included unaudited financials reviewed only internally. The committee declined to act on the recommendation and the firm withheld the final $40,000 payment.
The consultant sued for the unpaid balance, arguing that the report met the scope of work in every substantive respect, provided actionable insight, and helped guide the committee’s thinking. The firm countered that the verification clause was a material condition of the contract, and the absence of licensed audit benchmarks rendered the report noncompliant and useless under their internal policy.
The court must decide whether the consultant’s omission of audited verification constitutes a material breach or whether the completed report still qualifies as substantial performance.
Did the consultant materially breach the contract?
A) No, because the report provided meaningful valuation insights as promised.
B) Yes, because the consultant failed to provide licensed audit verification as required.
C) No, because the investment committee declined to act for reasons beyond the report.
D) Yes, because the omission prevented the committee from considering the acquisition.
46. A software company entered into a contract with a financial institution to develop a custom trading platform for $1,000,000, with delivery scheduled for June 1. The contract included a clause requiring the platform to meet specific security benchmarks, including encryption standards and real-time fraud detection. On May 15, the financial institution discovered that the platform failed to meet the encryption standards, rendering it vulnerable to cyberattacks. The institution rejected the platform and demanded a refund, claiming that the failure to meet the benchmarks constituted a material breach.
The software company argued that the platform was functional and that the institution’s rejection was unreasonable. The institution contended that the security benchmarks were essential to the contract and that the failure to meet them justified rejection and cancellation.
The court must determine whether the software company’s failure to meet the benchmarks constituted a breach and whether the institution’s rejection was proper.
Was the financial institution justified in rejecting the platform?
A) No, because the platform was functional despite the security issues.
B) Yes, because the failure to meet the benchmarks constituted a material breach.
C) No, because the institution’s rejection was unreasonable.
D) Yes, because the benchmarks were essential terms of the contract.
47. A municipal government entered into a contract with a construction company to build a public library. The contract specified that the project must be completed by December 1, with payment of $2 million due upon satisfactory completion. The contract also included a clause stating, “All modifications to this agreement must be in writing and signed by both parties.”
In October, the construction company encountered unexpected delays due to supply chain disruptions. On October 15, the company emailed the city manager requesting an extension to December 15. The city manager replied, “That’s fine, just make sure it’s done by then.” The construction company completed the library on December 14, but the city refused to pay, claiming that the late completion voided the contract. The construction company sued for breach of contract.
At trial, the city argued that the completion date was contractually binding and that the extension was invalid because it was not in a signed writing. The construction company countered that the city had waived the original deadline by agreeing to the extension via email and that the city had accepted the completed library without objection.
The court also considered conflicting legal authority regarding the enforceability of signed-writing clauses. Some jurisdictions strictly enforce such clauses, requiring formal compliance for any modification to be valid. Other jurisdictions recognize that parties may waive strict compliance with contract terms through informal agreements or conduct, particularly when one party reasonably relies on the waiver to its detriment.
Should the construction company prevail?
A) Yes, because the city waived the original deadline by agreeing to the extension.
B) No, because the modification violated the contract’s signed-writing clause.
C) No, because time was of the essence and the breach was material.
D) Yes, because substantial performance occurred and the delay was minimal.
48. A supplier entered into a contract with a retailer to deliver 30,000 units of a product for $900,000, with delivery scheduled for July 1. On June 15, the supplier informed the retailer that it could only deliver 25,000 units due to production delays. The retailer accepted the partial delivery but demanded a price reduction proportional to the missing units. The supplier refused, arguing that the contract price was fixed and that partial delivery was permissible under the UCC.
The retailer sued for breach, seeking damages for the missing units and a price adjustment. The supplier argued that the retailer’s acceptance of the partial delivery waived any claim for breach. The retailer contended that acceptance did not waive its right to damages and that the missing units substantially impaired the value of the contract.
The court must determine whether the supplier breached the contract and whether the retailer’s acceptance of partial delivery affected its right to recover damages.
Is the retailer entitled to damages?
A) No, because partial delivery was permissible under the UCC.
B) Yes, because the missing units substantially impaired the value of the contract.
C) Yes, because the supplier’s partial delivery constituted a breach.
D) No, because the retailer accepted the partial delivery.
49. A university entered into two separate agreements with a catering company. The first contract required the catering company to provide food services for a week-long academic conference, with payment of $50,000 upon completion. The second contract required the catering company to supply daily meals for the university’s student dining hall for the upcoming semester, with monthly payments of $20,000. Both contracts were negotiated simultaneously, but each contained distinct terms, scopes, and payment schedules.
The catering company successfully provided food services for the academic conference and submitted an invoice for $50,000. However, before the semester began, the catering company informed the university that it would not be able to fulfill the dining hall contract due to staffing shortages. The university refused to pay the $50,000 for the conference services, arguing that the two contracts were interdependent and that the catering company’s refusal to perform the dining hall contract constituted a material breach of the overall agreement.
At trial, the catering company argued that the two contracts were independent and that it was entitled to payment for the completed conference services. The university countered that the contracts were part of a unified agreement and that the catering company’s breach of the dining hall contract justified withholding payment for the conference services. The court also considered conflicting legal authority regarding the treatment of related contracts. Some jurisdictions presume interdependence when contracts are negotiated simultaneously and involve the same parties, while others require clear evidence of intent to integrate the agreements.
Should the court require the university to pay for the conference services?
A) No, because breach of one contract voids related obligations.
B) Yes, because performance under one contract entitles payment despite failure elsewhere.
C) No, because simultaneous negotiation creates a presumption of interdependence.
D) Yes, because the contracts had separate scopes, terms, and consideration.
50. A tech startup entered into a $100,000 contract with a software development firm to create a custom mobile app. The contract required the app to include a user authentication feature by the delivery deadline of September 1. The firm delivered the app on time, but the authentication feature used a standard third-party library instead of the specified custom-built solution. The startup refused to pay the final $50,000 installment, asserting that the intentional substitution breached a core term of the agreement.
The development firm acknowledged the change, explaining that the third-party library was widely adopted in the industry, met current security standards, and offered greater scalability than the original specification. The startup admitted the app functioned properly and served its intended purpose but maintained that the deviation was unacceptable and denied further payment.
The court must determine whether the firm's intentional substitution constitutes a material breach or substantial performance.
Did the firm materially breach the contract?
A) Yes, because the firm failed to deliver the specified custom solution.
B) No, because the substitution did not affect the app’s functionality or security.
C) No, because the deviation from the contract terms was intentional but did not deprive the buyer of the app’s value.
D) Yes, because the startup rejected the final deliverable due to noncompliance.