Contracts (Advanced) Question Pack - Questions
1. A contractor entered into a written agreement with a homeowner to renovate the homeowner’s kitchen for $30,000. The contract specified that the work would be completed by June 1. On May 15, the contractor informed the homeowner that due to supply chain issues, he would not be able to complete the work until July 15. The homeowner immediately hired another contractor to complete the renovation for $35,000 and sued the original contractor for breach of contract.
The contractor argued that he had not yet breached the contract because the performance date had not yet arrived. He also claimed that the supply chain issues were unforeseeable and should excuse his delay. The homeowner responded that the contractor’s statement constituted an anticipatory repudiation, entitling her to hire a replacement and recover damages.
The court must determine whether the contractor’s statement amounted to an anticipatory repudiation and whether the homeowner acted reasonably in mitigating her damages.
Did the contractor anticipatorily repudiate the contract?
A) Yes, because the contractor clearly indicated he would not perform as agreed.
B) No, because the contractor’s performance was not yet due.
C) Yes, because the supply chain issues made performance commercially impracticable.
D) No, because the contractor did not refuse to perform, only delayed.
2. A buyer entered into a contract with a seller to purchase 1,000 units of a custom-manufactured part for $50,000. The contract required delivery by March 1. On February 20, the seller delivered 1,000 units, but 200 of them were defective. The buyer immediately rejected the entire shipment and canceled the contract. The seller offered to cure the defect by replacing the faulty units within five days.
The buyer refused the offer, claiming that the breach was material and that the production schedule could not accommodate further delay. The seller argued that he had a right to cure before the performance deadline. The buyer maintained that the right to cure did not apply because the breach substantially impaired the value of the contract.
The court must determine whether the seller had a right to cure and whether the buyer’s rejection was proper.
Did the seller have a right to cure?
A) Yes, because the seller offered to cure before the contract deadline.
B) No, because the buyer’s production schedule could not accommodate delay.
C) Yes, because the breach was not material under the circumstances.
D) No, because the buyer properly rejected the entire shipment.
3. A painter entered into a contract with a homeowner to paint the exterior of the homeowner’s house for $12,000. The contract required the use of a specific brand of eco-friendly paint. The painter completed the job using a different brand of eco-friendly paint that was nearly identical in appearance and quality. The homeowner refused to pay, claiming that the painter materially breached the contract.
The painter argued that the substitution was immaterial and that he had substantially performed. The homeowner contended that the brand specification was a condition of the contract and that any deviation constituted a breach. The painter responded that the brand was not essential and that the homeowner suffered no actual harm.
The court must determine whether the painter’s deviation from the contract terms constitutes a material breach or substantial performance.
Did the painter substantially perform?
A) Yes, because the deviation was immaterial and did not affect the outcome.
B) No, because the painter failed to use the specified brand of paint.
C) Yes, because the homeowner suffered no actual harm.
D) No, because the brand requirement was a condition of the contract.
4. A software developer entered into a contract with a startup to deliver a custom application by October 1. The contract included a clause stating that “time is of the essence.” The developer delivered the application on October 5. The startup refused to pay, citing the delay and the time-is-of-the-essence clause. The developer sued for payment, arguing that the delay was minor and did not materially affect the startup’s operations.
The startup argued that the clause made timely delivery a condition of the contract and that any delay constituted a material breach. The developer responded that the clause was boilerplate and that the startup waived strict compliance by accepting partial updates during development.
The court must determine whether the delay constituted a material breach in light of the time-is-of-the-essence clause.
Was the delay a material breach?
A) Yes, because the contract included a time-is-of-the-essence clause.
B) No, because the delay was minor and did not affect performance.
C) Yes, because the clause made timely delivery a condition.
D) No, because the startup waived strict compliance by its conduct.
5. A buyer and seller entered into a contract for the sale of a rare antique vase for $60,000. The contract was silent on risk of loss. Before delivery, the vase was destroyed in a fire at the seller’s warehouse through no fault of either party. The buyer sued for breach, seeking either delivery or damages. The seller argued that the contract was voided by impossibility and that risk of loss remained with the seller.
The buyer contended that the seller bore the risk of loss because the goods had not yet been delivered. The seller responded that the contract was for a unique, identified good and that destruction of the item discharged performance.
The court must determine whether the seller is liable for breach or whether the contract was discharged.
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 the vase.
D) No, because the buyer assumed the risk by contracting for a unique item.
6. A manufacturer entered into a contract with a distributor to supply 5,000 units of a product for $100,000, with delivery scheduled for April 1. On March 15, the manufacturer informed the distributor that it would only be able to deliver 3,000 units due to a shortage of raw materials. The distributor immediately canceled the contract and sued for breach, seeking damages for lost profits.
The manufacturer argued that the shortage was unforeseeable and that partial delivery was permissible under the UCC. The distributor contended that the manufacturer’s inability to deliver the full quantity constituted a material breach and that cancellation was justified.
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) Yes, because the manufacturer’s inability to deliver the full quantity was a material breach.
B) No, because the manufacturer’s shortage was unforeseeable and excused performance.
C) Yes, because the distributor’s lost profits were substantial.
D) No, because partial delivery was permissible under the UCC.
7. A contractor entered into a contract with a property owner to build a swimming pool for $50,000. The contract required completion by August 1. On July 15, the contractor discovered that the soil conditions at the site were unsuitable for construction and would require additional excavation, increasing costs by $10,000. The contractor informed the owner and requested a modification to the contract price.
The owner refused, stating that the contract was fixed-price and that the contractor should have anticipated the soil conditions. The contractor completed the pool and sued for the additional $10,000, arguing that the unforeseen conditions made performance commercially impracticable.
The court must determine whether the contractor is entitled to recover the additional costs.
Is the contractor entitled to recover the additional $10,000?
A) No, because the contract was fixed-price and the risk was foreseeable.
B) Yes, because the soil conditions made performance commercially impracticable.
C) No, because the contractor completed the pool without a modification.
D) Yes, because the owner’s refusal to modify the contract was unreasonable.
8. A buyer entered into a contract with a seller to purchase 500 units of a product for $25,000, with delivery scheduled for May 1. On April 20, the seller informed the buyer that the goods were ready for shipment but requested payment in advance due to concerns about the buyer’s solvency. The buyer refused, stating that payment was due upon delivery.
The seller withheld shipment and the buyer sued for breach, arguing that the seller had no right to demand advance payment. 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 advance payment was reasonable and whether the buyer’s refusal constituted a repudiation.
Was the seller justified in withholding delivery?
A) Yes, because the UCC allows a party to demand adequate assurance of performance.
B) No, because the buyer never repudiated the contract.
C) Yes, because the seller had reasonable grounds for insecurity.
D) No, because demanding advance payment exceeded the scope of adequate assurance.
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 seller entered into a contract with a buyer to sell a rare vintage watch for $100,000. The contract required delivery by September 1, with risk of loss remaining with the seller until delivery. The watch was a one-of-a-kind item, and the buyer intended to resell it at an exclusive auction on September 15. The contract explicitly stated that time was of the essence, as the buyer’s ability to profit depended on timely delivery.
On August 25, the seller informed the buyer that the watch had been stolen during a break-in at the seller’s secure storage facility. The seller provided a police report documenting the theft and argued that the contract was discharged due to impossibility, as the watch was a unique, identified good that was destroyed without fault. The buyer sued for breach, seeking damages for the loss of the watch and for lost profits from the planned auction.
The court must determine whether the seller’s performance was excused and whether the buyer is entitled 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 the watch.
D) No, because the buyer assumed the risk by contracting for a unique item.
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 nonprofit environmental group entered into a grant agreement with a federal agency to build a public education center. The agreement awarded $500,000 but stated that funds must be spent on qualifying construction costs incurred by December 31. The nonprofit began construction in September but faced several delays due to weather and contractor availability. By the deadline, only 60% of the funds had been used, and invoices for the remaining work were dated in January.
The agency refused to reimburse the final invoices, citing the deadline clause. The nonprofit argued that the project was active and that reimbursing January costs would reflect the agreement’s intent to support completion. The agency countered that it had no discretion to extend reimbursement beyond the stated period.
The court must determine whether the nonprofit can recover additional payments.
Is the agency obligated to reimburse the January invoices?
A) No, because the agreement required costs to be incurred by December 31.
B) Yes, because the delay was due to unforeseen conditions.
C) No, because the nonprofit failed to complete the project within the grant window.
D) Yes, because the reimbursement supports the project’s public purpose.
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 fashion brand hired a celebrity stylist to consult on its fall campaign under a signed non-disclosure agreement (NDA) that prohibited sharing details before the official launch. The NDA included no clause addressing accidental disclosures. During a podcast interview, the stylist mentioned key elements of the campaign without realizing they were still confidential. The brand terminated the agreement and withheld final payment, citing breach of contract.
The stylist argued that the disclosure was unintentional and did not harm the brand, which had started its promotional rollout online. The brand maintained that any premature disclosure violated the NDA, regardless of intent, and that the stylist’s contract permitted termination in case of breach.
The court must determine whether the stylist’s accidental disclosure constitutes a material breach.
Did the stylist materially breach the NDA?
A) Yes, because the disclosure violated the terms, regardless of intent.
B) No, because the disclosure caused no measurable harm.
C) Yes, because the stylist failed to confirm what was confidential.
D) No, because the NDA did not address accidental or negligent breach.
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 graphic novelist hired an illustrator to contribute character sketches for an upcoming title. The contract labeled the illustrator as an “independent contractor,” and was silent on ownership. After the project was completed, the novelist claimed the artwork was a work-for-hire and registered the illustrations under her own name.
The illustrator objected, citing copyright law and the lack of a work-for-hire clause, then sued for infringement. The novelist defended by arguing that payment and integration into the final book demonstrated intent to transfer rights.
The court must determine whether the illustrator retained copyright ownership.
Who owns the sketches created by the illustrator?
A) The novelist, because the sketches were integrated into the final work.
B) The illustrator, because no work-for-hire clause existed.
C) The novelist, because compensation implies transfer of rights.
D) The illustrator, because independent contractors retain ownership absent express transfer.
23. A catering company signed a 12-month contract to provide meals for a corporate retreat venue. The agreement contained a liquidated damages clause requiring the client to pay $20,000 if the contract was terminated early without cause. After five months, the venue shut down due to declining business and canceled the contract.
The caterer demanded the $20,000 fee. The client refused, arguing that liquidated damages were unreasonable and unenforceable, claiming that the caterer had other clients and wouldn't suffer actual loss.
The court must determine whether the liquidated damages clause is enforceable.
Is the catering company entitled to liquidated damages?
A) Yes, because the clause was triggered by early termination.
B) No, because the caterer had other income streams.
C) Yes, because the $20,000 was a reasonable forecast of loss.
D) No, because the liquidated damages amount was punitive.
24. An art buyer received a gallery’s written offer to sell an original sculpture for $25,000, stating that the offer would remain open until Friday at 5 p.m. The next morning, the buyer responded via email: “I accept the offer and will arrange pickup.” The gallery’s sales director later claimed the offer required phone confirmation and refused to honor the price, stating the sculpture had sold to someone else.
The buyer sued, arguing that email was a valid mode of acceptance and that the gallery breached a firm offer. The gallery responded that the mode of acceptance was not specified and email did not constitute a binding agreement.
The court must determine whether the buyer’s email constituted a valid acceptance.
Was the buyer’s email a valid acceptance of the offer?
A) No, because phone confirmation was the customary method.
B) Yes, because the buyer accepted within the stated time.
C) No, because the gallery sold the sculpture before confirming.
D) Yes, because email was a reasonable method of communication.
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 manufacturer entered into a contract with a distributor to supply 10,000 units of a specialized product for $500,000, with delivery scheduled for June 1. The contract included a clause stating that time was of the essence and that late delivery would constitute a material breach. On May 15, the manufacturer informed the distributor that it would only be able to deliver 8,000 units by June 1 due to a shortage of raw materials. The distributor immediately canceled the contract and sued for breach, seeking damages for lost profits and the cost of securing an alternative supplier.
The manufacturer argued that the shortage was unforeseeable and that partial delivery was permissible under the UCC. The distributor contended that the manufacturer’s inability to deliver the full quantity by the specified date constituted a material breach and that cancellation was justified 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 manufacturer’s inability to deliver the full quantity by June 1 was a material breach.
C) No, because the shortage was unforeseeable and excused performance.
D) Yes, because the time-is-of-the-essence clause made timely delivery essential.
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 supplier entered into a contract with a retailer to deliver 6,000 units of a product for $180,000, with delivery scheduled for October 1. On September 15, the supplier informed the retailer that it could only deliver 5,000 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 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.
29. A buyer entered into a contract with a seller to purchase 2,000 units of a product for $60,000, with delivery scheduled for November 1. On October 20, the seller informed the buyer that the goods were ready for shipment but requested a letter of credit from the buyer’s bank 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 letter of credit was unreasonable.
The seller withheld shipment and the buyer sued for breach, arguing that the seller had no right to demand a letter of credit. 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 letter of credit was reasonable and whether the buyer’s refusal constituted a repudiation.
Was the seller justified in withholding delivery?
A) Yes, because the seller had reasonable grounds for insecurity.
B) No, because demanding a letter of credit exceeded the scope of adequate assurance.
C) Yes, because the UCC allows a party to demand adequate assurance of performance.
D) No, because the buyer never repudiated the contract.
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. The analysis hinges on the preservation provisions and whether safe arrival alone satisfied the agreement.
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 contractor entered into a contract with a property owner to renovate a historic building for $1,000,000. The contract required completion by June 1 and included a clause stating that the contractor would bear all risks associated with unforeseen conditions. On May 15, the contractor discovered structural issues that required extensive reinforcement, increasing costs by $200,000. 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 structural issues in a historic building. The contractor completed the renovation and sued for the additional $200,000, 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 $200,000?
A) Yes, because the structural issues made performance commercially impracticable.
B) No, because the contractor completed the renovation without a modification.
C) No, because the risk allocation clause precluded recovery for unforeseen conditions.
D) Yes, because the owner’s refusal to modify the contract was unreasonable.
33. A supplier entered into a contract with a retailer to deliver 12,000 units of a product for $360,000, with delivery scheduled for July 1. On June 15, the supplier informed the retailer that it could only deliver 10,000 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.
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 contractor entered into a contract with a property owner to build a custom swimming pool for $150,000. The contract required completion by May 1 and included a clause stating that the contractor would bear all risks associated with unforeseen site conditions. On April 15, the contractor discovered that the soil conditions at the site were unsuitable for construction and would require additional excavation, increasing costs by $30,000. 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 swimming pool and sued for the additional $30,000, 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 $30,000?
A) No, because the contractor completed the swimming pool without a modification.
B) Yes, because the soil conditions made performance commercially impracticable.
C) No, because the risk allocation clause precluded recovery for unforeseen conditions.
D) Yes, because the owner’s refusal to modify the contract was unreasonable.
39. A vendor sent a signed offer to a commercial buyer on January 10 to sell 5,000 units of a product for $150,000, stating that the offer would remain open until February 1. On January 25, the vendor mailed a written revocation but did not call or email the buyer. On January 28, the buyer mailed back a signed acceptance, unaware of the revocation. The revocation arrived on January 30, after the buyer had mailed the acceptance but before it was received by the vendor.
The vendor refused to honor the deal, claiming the offer had been revoked before acceptance. The buyer sued, arguing that its acceptance was effective upon mailing, and that the vendor’s revocation only became effective when received.
The court must determine whether a contract was formed and whether the mailbox rule applies to the timing of acceptance versus revocation.
Was the buyer’s acceptance effective before the revocation?
A) Yes, because the offer specified an expiration date.
B) No, because the buyer had not received the revocation.
C) Yes, because under the mailbox rule, acceptance is effective upon dispatch.
D) No, because the vendor sent the revocation before acceptance was received.
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 contractor entered into a contract with a property owner to renovate a historic mansion for $3,000,000. The contract required completion by October 1 and included a clause stating that the contractor would bear all risks associated with unforeseen conditions. On September 15, the contractor discovered structural issues that required extensive reinforcement, increasing costs by $500,000. 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 structural issues in a historic building. The contractor completed the renovation and sued for the additional $500,000, 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 $500,000?
A) Yes, because the structural issues made performance commercially impracticable.
B) No, because the contractor completed the renovation without a modification.
C) No, because the risk allocation clause precluded recovery for unforeseen conditions.
D) Yes, because the owner’s refusal to modify the contract was unreasonable.
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 buyer entered into a contract with a seller to purchase 10,000 units of a product for $300,000, with delivery scheduled for May 1. On April 20, the seller informed the buyer that the goods were ready for shipment but refused to release them unless the buyer agreed to a $25,000 price increase, citing volatility in material costs and concerns about delayed payment. The buyer, unable to source substitutes on short notice, agreed to the new price under protest and made the payment. After the goods arrived, the buyer sued to recover the $25,000, arguing that the modified contract was unenforceable due to economic duress and unconscionability.
The seller argued that the price increase reflected market realities and that the buyer consented voluntarily. The buyer responded that the lack of alternatives and the timing of the demand left them with no meaningful choice, making the modification voidable.
The court must determine whether the buyer's agreement to the price increase was enforceable.
Was the buyer entitled to recover the $25,000?
A) No, because the buyer voluntarily agreed to the modified price.
B) Yes, because the seller acted in bad faith by altering the deal at the last minute.
C) Yes, because the price modification was unconscionable and obtained through economic duress.
D) No, because fluctuating costs justify contract adjustments under the UCC.
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 contractor entered into a contract with a city government to organize a public festival for $2,000,000, with the event scheduled for September 1. The contract required the contractor to secure all necessary permits by August 15, with a clause stating that failure to meet this deadline would constitute a material breach. On August 10, a major storm caused significant damage to the city’s administrative offices, delaying the permit approval process. The contractor submitted all required paperwork on time but was unable to obtain the permits until August 25 due to the city’s backlog.
The city canceled the contract, refused to pay the final $500,000 installment, and sued for breach, citing reputational harm and additional costs incurred to hire a replacement organizer. The contractor argued that the storm and resulting delays were beyond their control and invoked the contract’s force majeure clause, which excused performance for events caused by natural disasters.
The court must determine whether the contractor’s failure to meet the permit deadline constitutes a material breach or whether the force majeure clause excuses the delay.
Was the contractor excused from meeting the permit deadline?
A) No, because the contractor failed to meet the specified permit deadline.
B) Yes, because the storm and resulting delays were beyond the contractor’s control.
C) No, because the contractor could have taken additional steps to expedite the process.
D) Yes, because the city’s administrative backlog caused the delay, not the contractor.
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 buyer entered into a contract with a seller to purchase 10,000 units of a product for $300,000, with delivery scheduled for May 1. On April 20, the seller informed the buyer that the goods were ready for shipment but refused to release them unless the buyer agreed to a $25,000 price increase, citing volatility in material costs and concerns about delayed payment. The buyer, unable to source substitutes on short notice, agreed to the new price under protest and made the payment. After the goods arrived, the buyer sued to recover the $25,000, arguing that the modified contract was unenforceable due to economic duress and unconscionability.
The seller argued that the price increase reflected market realities and that the buyer consented voluntarily. The buyer responded that the lack of alternatives and the timing of the demand left them with no meaningful choice, making the modification voidable.
The court must determine whether the buyer's agreement to the price increase was enforceable.
Was the buyer entitled to recover the $25,000?
A) No, because the buyer voluntarily agreed to the modified price.
B) Yes, because the seller acted in bad faith by altering the deal at the last minute.
C) Yes, because the price modification was unconscionable and obtained through economic duress.
D) No, because fluctuating costs justify contract adjustments under the UCC.
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.