Bar Exam (Uniform) Quiz: Conditions And Promises

20 questions · exam conditions

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Conditions And PromisesQuestion 1 of 20

A start-up company entered into a one-year employment agreement with a new CEO. The agreement set a base salary and provided for a substantial stock option grant with the following clause: "This grant of stock options shall vest if, and only if, the company secures a round of venture capital funding of at least $10 million within the first six months of the CEO's employment." The CEO worked diligently, but despite her best efforts, the company was only able to secure $8 million in funding within the six-month period. The company refused to grant the stock options.

If the CEO sues to compel the grant of the stock options, what is the company's strongest defense? Select one.

The vesting of the stock options was subject to an express condition precedent that was not strictly satisfied.

The doctrine of substantial performance requires that the stock options be granted, prorated to the amount of funding received.

The CEO's failure to secure $10 million in funding was a material breach of her employment duties.

The stock option grant was an illusory promise because it was conditioned on an event outside the CEO's control.

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Bar Exam (Uniform) Quiz

Bar Exam (Uniform) Quiz: Conditions And Promises

Practice Conditions And Promises in Bar Exam (Uniform) with focused quiz questions that help you check what you know, review explanations, and build confidence with test-style prompts.

What this quiz covers

This quiz focuses on Conditions And Promises, giving you a quick way to practice the rules, question types, and explanations that matter most for Bar Exam (Uniform).

How to use this quiz

Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

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Question 1

If the CEO sues to compel the grant of the stock options, what is the company's strongest defense? Select one.

The vesting of the stock options was subject to an express condition precedent that was not strictly satisfied. (correct answer)
The doctrine of substantial performance requires that the stock options be granted, prorated to the amount of funding received.
The CEO's failure to secure $10 million in funding was a material breach of her employment duties.
The stock option grant was an illusory promise because it was conditioned on an event outside the CEO's control.

Explanation: This question tests your understanding of conditions in contract law, specifically the distinction between conditions precedent and other contractual concepts. When you see precise conditional language like "if, and only if," focus on whether the condition was strictly met. The company's strongest defense is that the vesting was subject to an express condition precedent that wasn't satisfied. The contract clearly stated the options would vest "if, and only if" the company secured "at least $10 million" in funding. Since only $8 million was raised, this condition wasn't met. Conditions precedent are interpreted strictly—substantial compliance typically isn't enough. The CEO has no legal right to the stock options because the triggering event never occurred. Let's examine why the other answers fail. Option B incorrectly applies substantial performance doctrine, which generally applies to performance of contractual duties, not satisfaction of conditions precedent. The $8 million vs. $10 million shortfall is also significant (20%), making substantial performance arguments weaker. Option C mischaracterizes the CEO's role—securing funding likely wasn't a guaranteed duty but rather a conditional trigger for additional compensation. The CEO fulfilled her employment obligations by working diligently. Option D wrongly suggests the promise was illusory. While the funding condition was outside the CEO's direct control, this doesn't make the promise illusory—it makes it conditional. The company gave valid consideration through the base salary and genuine commitment to grant options if the condition was met. Remember: When contracts use precise conditional language with specific thresholds, courts typically require strict compliance. "Close enough" rarely works with express conditions precedent.

Question 2

A university's written employment contract with a new professor for the upcoming academic year included the following clause: "The professor promises to secure housing in the university's city by August 1." The professor, due to unforeseen difficulties in the housing market, was unable to secure housing until August 15, two weeks before classes started. The university, which had found another candidate it preferred, notified the professor on August 2 that her contract was terminated due to her failure to secure housing by the specified date.

In a breach of contract action by the professor against the university, which of the following is the university's weakest argument? Select one.

The professor's failure to secure housing by August 1 was a material breach of the contract.
Securing housing by August 1 was an express condition precedent to the university's duty to employ the professor. (correct answer)
The professor's communication implied an anticipatory repudiation of her employment duties.
The university's duty to perform was discharged by the professor's breach of a contractual promise.

Explanation: The correct answer is (B). Courts interpret contract language to avoid forfeiture and will not construe a term as a condition unless the language is clear and unambiguous. The phrase "professor promises to secure housing" is the language of a promise, not a condition. Language like "on condition that" or "if" would be needed to create an express condition. Therefore, arguing it was an express condition is the university's weakest position. (A) and (D) are related and more plausible arguments, though likely to fail; the university would argue the promise was breached and that the breach was material, discharging its duties. This requires a factual determination of materiality, which is arguable. (C) is also a weak argument but more plausible than (B), as the university might try to frame the professor's difficulties as an indication she would not be able to perform her teaching duties, although this is a stretch based on the facts.

Question 3

A consulting firm entered into a contract to provide services to a client. The contract stated: "The client will pay the firm a performance bonus of $50,000 provided that the client's quarterly profits increase by at least 15% over the previous year's quarterly average, as determined by the client's audited financial statements." The firm provided excellent services that were widely acknowledged as contributing to the client's success. However, due to an unexpected downturn in the market, the client's profits only increased by 12%. The client refused to pay the bonus.

If the firm sues for the bonus, what is the likely result? Select one.

The firm will win because it substantially performed its consulting duties under the contract.
The firm will win because its services were the but-for cause of the profit increase that did occur.
The firm will lose because its failure to achieve the 15% increase was a material breach of a promise.
The firm will lose because the 15% profit increase was an express condition for the bonus that did not occur. (correct answer)

Explanation: This question tests your understanding of the crucial distinction between conditions and promises in contract law. When you see specific performance metrics tied to payment, analyze whether they're conditions that must be met or promises that can be substantially performed. The contract language "provided that the client's quarterly profits increase by at least 15%" creates an express condition precedent to the firm's right to receive the bonus. This isn't a promise the firm made—it's a specific requirement that must be satisfied before any bonus obligation arises. Since profits only increased 12%, the condition failed, and no bonus is owed. Answer D correctly identifies this as an unmet express condition. A is wrong because substantial performance applies to promises, not conditions. While the firm performed its consulting duties well, the 15% increase wasn't part of those duties—it was a condition for bonus payment. B incorrectly focuses on causation. Even if the firm's services caused the 12% increase, that's irrelevant when the contract requires 15%. Conditions must be strictly satisfied, regardless of causation. C mischaracterizes the situation as a breach. The firm didn't promise to achieve 15% growth; that would be impossible since many factors beyond consulting affect profits. The 15% figure is a condition, not a breached promise. Study tip: Watch for "provided that," "if," "when," or "unless" language—these typically signal conditions rather than promises. Conditions require strict compliance, while promises may be substantially performed. This distinction frequently appears on contract law questions.

Question 4

A playwright and a theater company entered into an agreement. The agreement stated that the theater would produce the playwright's new play and pay her a royalty, "provided that the play is approved by the theater's artistic director." Before the artistic director had a chance to read the play, the theater's board of directors, due to a change in artistic vision, ordered him not to read or consider the play. The theater then informed the playwright that it would not be producing her play because the condition of the director's approval was not met.

If the playwright sues the theater for breach of contract, is she likely to succeed? Select one.

Yes, because the theater's actions prevented the occurrence of the condition, thereby excusing it. (correct answer)
No, because the artistic director has subjective discretion to approve or disapprove of the play.
No, because the artistic director's approval was an express condition precedent that did not occur.
Yes, because the theater's duty to produce the play was a promise independent of the director's approval.

Explanation: This question tests the doctrine of prevention of conditions in contract law. When a contract contains a condition precedent, one party cannot prevent that condition from occurring and then claim the condition wasn't met to avoid their obligations. The correct answer is A because the theater actively prevented the artistic director from reading and evaluating the play. By ordering the director not to consider the play due to their change in artistic vision, the theater prevented the very condition they later claimed wasn't satisfied. Under contract law, when a party prevents a condition from occurring, that condition is legally excused, and the contract becomes enforceable as if the condition were met. Answer B is wrong because while the director may have subjective discretion, the theater never allowed him to exercise that discretion. The issue isn't the nature of his approval power, but that he was prevented from using it at all. Answer C misses the key legal principle. Although the director's approval was indeed an express condition precedent that didn't technically occur, the theater's prevention of this condition excuses it under the prevention doctrine. Answer D incorrectly characterizes the contract structure. The agreement clearly made the theater's duty to produce the play conditional on the director's approval—it wasn't an independent promise. Remember this pattern: whenever you see a fact pattern where one party blocks a condition from being tested or fulfilled, look for prevention of condition as the likely legal theory. The prevented party can't benefit from their own interference.

Question 5

A homeowner entered into a written contract with a contractor to build an addition to her house for $50,000. The contract contained a clause stating, "Final payment of $10,000 is conditioned upon the homeowner's architect issuing a certificate of satisfactory completion." The contractor finished the project, but the architect, who was known for being exceptionally demanding, refused to issue the certificate due to a minor aesthetic flaw in the paint finish that would cost $200 to correct. The homeowner, relying on the architect's decision, refused to make the final payment.

If the contractor sues the homeowner for the final payment, what is the most likely outcome? Select one.

The contractor will recover nothing because the issuance of the certificate was an express condition precedent that was not satisfied.
The contractor will recover the full $10,000 because the contractor substantially performed its obligations under the contract.
The contractor will recover $9,800 because the condition will be excused to avoid a disproportionate forfeiture, offset by the cost to cure the defect. (correct answer)
The contractor will recover the full $10,000 because the architect's refusal to issue the certificate was unreasonable.

Explanation: The correct answer is (C). The clause creates an express condition of personal satisfaction involving a third party (the architect). While express conditions must generally be strictly satisfied, courts may excuse the condition to avoid a disproportionate forfeiture if the failure is minor. Here, withholding a $10,000 payment for a

200 defect would be a disproportionate forfeiture. Therefore, a court is likely to excuse the condition and award the contractor the payment, less the amount required to correct the defect (

10,000 - $200 = $9,800). (A) is incorrect because courts can excuse express conditions to avoid forfeiture. (B) is incorrect because substantial performance is the standard for constructive conditions, not express conditions, and it would not account for the minor defect. (D) is incorrect because while the architect's satisfaction is the condition, the key legal doctrine is the avoidance of disproportionate forfeiture, and the homeowner is entitled to an offset for the defect.

Question 6

You are representing a client who runs a boutique hotel. The client entered into a contract with a technology firm to install a new, high-speed internet system. The contract states, "The hotel will pay the final installment of $20,000 within 10 days after the firm provides a certified report from an independent auditor confirming that the system achieves 99.9% uptime over a 30-day test period." The firm completed the installation and the system has worked flawlessly, but the firm has been unable to schedule the specified independent auditor for several weeks and has not provided the report. The final payment is now 60 days overdue.

The technology firm has threatened to sue for the final payment. What is your client's strongest legal position for withholding payment? Select one.

The firm breached a promise to provide the auditor's report, entitling the hotel to damages.
The firm's failure to provide the report constitutes a material breach that discharges the hotel's duty to pay.
The provision of the certified report is an express condition precedent to the hotel's duty to make the final payment. (correct answer)
The contract is voidable due to the firm's failure to satisfy the condition within a reasonable time.

Explanation: The correct answer is (C). The contract language "within 10 days after the firm provides a certified report" clearly makes the provision of the report an event that must occur before the hotel's duty to pay arises. This is the classic structure of an express condition precedent. The hotel's duty to pay has not yet been triggered. (A) is incorrect because the clause is phrased as a condition to payment, not a promise by the firm to provide a report by a certain date. The firm's duty is to install the system; the report is the trigger for payment. (B) is incorrect because the failure of a condition is not a breach. The firm has not breached; rather, it has failed to satisfy the condition for payment. (D) is incorrect because the failure of a condition does not make the contract voidable; it simply suspends or excuses the conditioned performance.

Question 7

A corporation hired a marketing firm to design a new logo. The contract provided that the corporation would pay the firm $15,000 "if the final logo design is satisfactory to the corporation's CEO." The firm submitted several designs, all of which were professionally executed and met industry standards. However, the CEO, acting in good faith, simply did not like any of them from a subjective aesthetic standpoint and refused to approve any design. The corporation subsequently refused to pay.

If the marketing firm sues the corporation for payment, is the firm likely to prevail? Select one.

Yes, because a reasonable person would have found the logo designs satisfactory, so the condition is met.
Yes, because the firm substantially performed its obligations by creating professionally executed designs.
No, because the CEO's rejection of the logos constituted a material breach by the corporation.
No, because the contract created a condition of personal satisfaction involving aesthetics, which was not met. (correct answer)

Explanation: When you encounter contracts with satisfaction clauses, you need to distinguish between objective and subjective standards. Courts apply different tests depending on whether the contract involves matters of personal taste or commercial/mechanical performance. This contract creates a subjective satisfaction condition involving aesthetic judgment—the CEO's personal approval of logo designs. When contracts involve matters of taste, personal preference, or artistic judgment, courts apply a subjective standard requiring only that the party's dissatisfaction be genuine and in good faith. Since the CEO acted in good faith and simply didn't like the designs aesthetically, the condition wasn't satisfied, and the corporation has no obligation to pay. Answer A is wrong because it applies an objective "reasonable person" standard, which courts use only for commercial or mechanical satisfaction clauses, not aesthetic ones. The fact that a reasonable person might find the designs satisfactory is irrelevant when the contract specifically requires the CEO's personal approval. Answer B incorrectly relies on substantial performance doctrine. While the firm may have performed competently, substantial performance doesn't excuse the failure to meet an express condition precedent. The payment obligation never arose because the condition wasn't satisfied. Answer C mischaracterizes the legal situation. The CEO's rejection wasn't a breach—it was the non-occurrence of a condition precedent that prevented the corporation's payment obligation from arising in the first place. Remember: satisfaction clauses involving personal taste or aesthetics are judged subjectively (good faith only), while those involving commercial utility or mechanical fitness are judged objectively (reasonableness standard).

Question 8

A farmer leased a plot of land to a tenant for one year to grow corn. The lease agreement provided that the tenant would pay rent of $1,000 per month. The agreement also contained a clause stating, "The tenant's duty to pay rent shall be extinguished if, during the lease term, the county passes a law rezoning this property for non-agricultural use." For six months, the tenant farmed the land and paid rent. In the seventh month, the county rezoned the property for residential use only. The tenant stopped paying rent but continued to occupy the land for the remainder of the lease term.

If the farmer sues the tenant for the unpaid rent from the last six months of the lease, what is the tenant's best defense? Select one.

The contract was discharged under the doctrine of frustration of purpose.
The rezoning was a condition subsequent that terminated the tenant's obligation to pay rent. (correct answer)
The rezoning was the failure of a condition precedent to the tenant's duty to pay monthly rent.
The farmer breached a promise that the land would remain zoned for agricultural use.

Explanation: The correct answer is (B). The clause in the lease created a condition subsequent. A condition subsequent is an event that, if it occurs, extinguishes a duty of performance that has already arisen. Here, the tenant's duty to pay rent existed from the start of the lease, but the rezoning by the county terminated that duty. (A) is incorrect because while the facts might also support a frustration of purpose defense, the contract explicitly provides for this contingency with a condition subsequent, which is a more direct and stronger defense. (C) is incorrect because a condition precedent is an event that must occur before a duty arises. Here, the duty to pay rent already existed. (D) is incorrect because the farmer did not make such a promise; instead, the parties allocated the risk of rezoning through a condition.

Question 9

If the firm sues for the bonus, what is the likely result? Select one.

The firm will win because it substantially performed its consulting duties under the contract.
The firm will win because its services were the but-for cause of the profit increase that did occur.
The firm will lose because its failure to achieve the 15% increase was a material breach of a promise.
The firm will lose because the 15% profit increase was an express condition for the bonus that did not occur. (correct answer)

Question 10

A company hired an event planner to organize its annual conference. The contract stated: "The planner promises to secure a keynote speech from a nationally recognized industry expert." The planner secured a well-respected regional expert but was unable to book a nationally recognized one. The company allowed the conference to proceed with the regional expert but later refused to pay the planner's final invoice, citing the failure to secure a national expert.

What is the company's best argument for its refusal to pay? Select one.

The planner's failure to secure a national expert was the non-occurrence of an express condition precedent.
The planner's failure to secure a national expert was a material breach of a promise, discharging the company's duty to pay. (correct answer)
The planner anticipatorily repudiated the contract by informing the company she could not secure a national expert.
The contract is void due to a misunderstanding regarding the term "nationally recognized industry expert."

Explanation: The correct answer is (B). The clause uses the word "promises," indicating it is a promise, not a condition. The key question is whether the breach was material. The company's best argument is that securing a nationally recognized expert was a central part of the bargain, and the failure to do so was a material breach that discharged the company's duty to pay the full price. (Note: The planner would have a counterargument that the company waived the breach by proceeding with the conference, entitling the planner to a quantum meruit recovery). (A) is incorrect because the language is of promise, not condition. (C) is incorrect because there was no repudiation before performance was due; there was simply defective performance. (D) is not supported by the facts.

Question 11

If the playwright sues the theater for breach of contract, is she likely to succeed? Select one.

Yes, because the theater's actions prevented the occurrence of the condition, thereby excusing it. (correct answer)
No, because the artistic director has subjective discretion to approve or disapprove of the play.
No, because the artistic director's approval was an express condition precedent that did not occur.
Yes, because the theater's duty to produce the play was a promise independent of the director's approval.

Question 12

If the marketing firm sues the corporation for payment, is the firm likely to prevail? Select one.

Yes, because a reasonable person would have found the logo designs satisfactory, so the condition is met.
Yes, because the firm substantially performed its obligations by creating professionally executed designs.
No, because the CEO's rejection of the logos constituted a material breach by the corporation.
No, because the contract created a condition of personal satisfaction involving aesthetics, which was not met. (correct answer)

Question 13

A software company licensed its product to a client for one year. The license agreement required the client to submit quarterly usage reports within 15 days of the end of each quarter, and stated that this reporting requirement was a "condition of this agreement." For the first two quarters, the client submitted its reports several days late. The software company accepted the reports and the accompanying license payments without complaint. After the third quarter's report was also submitted late, the software company, which had been negotiating a more lucrative deal with a competitor, sought to terminate the license agreement, citing the client's failure to meet the reporting condition.

What is the client's best defense against the software company's attempt to terminate the agreement? Select one.

The reporting deadline was a promise, and the minor delays were not a material breach.
The software company, by its conduct, has waived its right to insist on strict compliance with the condition. (correct answer)
The reporting deadline was not a condition because it did not state that "time is of the essence."
The software company's attempt to terminate the agreement is a breach of the duty of good faith and fair dealing.

Explanation: The correct answer is (B). Even though the contract labels the reporting requirement a "condition," a party whose duty is conditional can waive the condition by accepting the other party's defective performance. By repeatedly accepting late reports without objection, the software company has likely waived the benefit of the condition of timely submission for past and, arguably, future reports unless it retracts the waiver by giving reasonable notice. (A) is incorrect because the contract explicitly calls the requirement a "condition," making it difficult to argue it was merely a promise. (C) is incorrect because while "time is of the essence" language creates a condition, its absence doesn't prevent other language from doing so. (D) is a plausible but weaker argument; waiver is the more specific and direct defense based on these facts.

Question 14

An author granted a publisher the exclusive right to publish her manuscript. The contract stated, "The publisher's duty to publish the book is conditioned on the author delivering the final, edited manuscript by December 31." In early December, the author's editor became seriously ill, and the author informed the publisher that the manuscript would be two weeks late. The publisher's CEO responded, "That's unfortunate, but don't worry about it, just get it to us when you can." Relying on this, the author submitted the manuscript on January 14. On January 15, the publisher, having suffered financial losses, informed the author it would not be publishing her book due to the late delivery.

If the author sues the publisher for breach of contract, is she likely to succeed? Select one.

No, because the delivery date was an express condition that was not met, and the CEO's oral statement was an ineffective modification.
No, because the publisher's waiver of the condition was not supported by consideration.
Yes, because the publisher's statement constituted an estoppel waiver of the condition. (correct answer)
Yes, because the two-week delay was not a material breach of the author's promise to deliver.

Explanation: The correct answer is (C). The publisher's statement, "don't worry about it," indicated an intent to disregard the condition of the December 31 deadline. The author relied on this statement by continuing her work and submitting the manuscript on January 14. This creates an estoppel waiver. A party may retract a waiver of a condition before the other party has detrimentally relied on it, but here, the author's reliance prevents the publisher from retracting the waiver and reasserting the original deadline. (A) is incorrect because a condition can be waived without a formal modification. (B) is incorrect because a waiver of a condition that is not a material part of the agreed exchange does not require consideration. Estoppel waiver specifically relies on reliance, not consideration. (D) is incorrect because the delivery date was an express condition, not merely a promise, so the concept of material breach is inapplicable to its failure.

Question 15

You are advising a general contractor who entered into a subcontract with an electrician. The subcontract contains the clause: "Final payment to the Electrician shall be made within ten days after the General Contractor receives final payment from the Owner for the Electrician's work." The project was completed, and the owner approved of the electrician's work but has become insolvent and will never make the final payment to the general contractor. The electrician is demanding final payment from your client, the general contractor.

What is the most likely legal interpretation of the payment clause? Select one.

It is a condition precedent to the general contractor's duty to pay, which has not been met, so no payment is due.
It is a promise by the general contractor to pay within ten days, and the reference to the owner's payment is irrelevant.
It is a provision that postpones the time for payment for a reasonable period, but it is not a condition that shifts the risk of the owner's nonpayment. (correct answer)
It is an unenforceable penalty clause because it would cause the electrician to forfeit payment for completed work.

Explanation: The correct answer is (C). Most courts interpret such "pay-when-paid" clauses not as conditions precedent that shift the risk of owner insolvency to the subcontractor, but as timing mechanisms that merely postpone the contractor's duty to pay for a reasonable time. This interpretation avoids the forfeiture that would result if the clause were read as a condition. To create a true condition precedent (a "pay-if-paid" clause), the language must be explicit and unambiguous that the subcontractor bears the risk of owner nonpayment. (A) is the interpretation contractors argue for but courts usually reject. (B) is too simplistic; the reference is not irrelevant, it sets the timing. (D) is incorrect; this is not a penalty clause.

Question 16

A landowner and a developer entered into a contract for the sale of a large parcel of land. The contract provided that the closing would occur on June 1. It also stated, "The developer's obligation to purchase is subject to the developer obtaining all necessary building permits for a 100-unit condominium project by May 15." The developer, in good faith, applied for the permits, but due to a backlog at the city planning office, the permits were not issued until May 20. The developer, wishing to back out of the deal for other reasons, informed the landowner on May 21 that the contract was terminated.

Which of the following provides the landowner with the best argument to enforce the contract? Select one.

The permitting date was a promise by the developer, not a condition.
The developer's good faith effort to obtain the permits satisfied its only obligation under the clause.
The five-day delay in permit issuance was not material, so the condition was substantially satisfied.
The permitting deadline was merely a target date, and because the condition was met before closing, the developer's duty to purchase became absolute. (correct answer)

Explanation: The correct answer is (D). While the clause is a condition precedent, courts analyze the purpose of such conditions. Here, the purpose was to ensure the developer could build its project before being obligated to close on the purchase. Since the permits were obtained before the June 1 closing date, the purpose of the condition was fulfilled. Courts will often interpret such date-specific conditions as setting a target, and as long as the condition is met within a reasonable time before the ultimate performance (closing) is due, the duty to perform is not discharged. (A) is incorrect; the language "subject to" clearly creates a condition. (B) is incorrect; while the developer had a duty of good faith, satisfying that duty does not excuse the non-occurrence of the condition itself. (C) is incorrect because substantial performance does not apply to express conditions like this one.

Question 17

A purchaser signed a contract to buy a famous racehorse from its owner for $500,000. The contract included the clause: "The purchaser's obligation to buy is contingent on the horse passing a veterinary inspection by a veterinarian of the purchaser's choice, confirming the horse is fit for racing." The purchaser selected a veterinarian who conducted an inspection and reported to the purchaser that the horse had a minor, treatable condition that would not affect its long-term racing ability. The purchaser, who had found another horse he preferred, used the report to terminate the contract.

If the owner sues the purchaser for breach of contract, what is the likely outcome? Select one.

The owner will win because the condition of a satisfactory veterinary inspection was met.
The owner will win because the purchaser had an implied duty of good faith and fair dealing in assessing the veterinarian's report. (correct answer)
The owner will lose because the condition required the veterinarian to confirm the horse was fit, and any negative finding fails the condition.
The owner will lose because the choice of veterinarian and the assessment of the report were within the purchaser's sole discretion.

Explanation: The correct answer is (B). This is a condition of satisfaction, but it is based on a third party's (the veterinarian's) report and relates to a technical matter (fitness for racing). Courts will apply an objective standard. Even if a subjective standard were applied, the purchaser has a duty of good faith in making the determination. The veterinarian's report indicated the horse was fit for racing despite a minor issue. Using this report to terminate the contract, especially when motivated by finding a preferred horse, is likely a breach of the implied duty of good faith. A court would likely find that the condition was satisfied and the purchaser's termination was a breach. (A) is a conclusion that follows from (B). (B) provides the better legal reasoning. (C) is incorrect because "fit for racing" does not mean "in perfect health," and the report confirmed fitness. (D) is incorrect because discretion is limited by the duty of good faith.

Question 18

A buyer and a seller entered into a contract for the sale of a commercial building for $1 million. The contract included a clause: "This sale is contingent upon the buyer obtaining a zoning variance from the city to operate a restaurant on the premises. Buyer promises to use best efforts to obtain this variance." The buyer submitted a deficient application to the zoning board, which was immediately rejected for incompleteness. The buyer did not resubmit the application and informed the seller that the contract was terminated because the condition was not met.

If the seller sues the buyer for breach of contract, what is the seller's best argument? Select one.

The buyer's failure to obtain the variance was a breach of an express promise in the contract.
The buyer's duty to purchase the property was not conditioned on obtaining the variance.
The buyer wrongfully prevented the occurrence of the condition, thereby excusing the condition. (correct answer)
The buyer waived the condition by submitting a deficient application to the zoning board.

Explanation: The correct answer is (C). This clause is a promissory condition. While obtaining the variance is a condition to the buyer's duty to close, the buyer also promised to use best efforts to bring about the condition. By submitting a deficient application and failing to pursue it further, the buyer breached the promise of best efforts. A party who wrongfully hinders or prevents a condition from occurring cannot rely on its non-occurrence as a defense. Thus, the condition is excused, and the buyer's duty to perform (i.e., purchase the property) becomes absolute. (A) is incorrect because the failure to obtain the variance itself is not the breach; the breach is the failure to use best efforts. (B) is incorrect as the contract explicitly states the sale is contingent on the variance. (D) is incorrect because submitting a deficient application is evidence of a breach of the duty of good faith, not a waiver of the condition.

Question 19

An insurance policy for a commercial building required the insured to notify the insurance company of any property loss "within 60 days of the occurrence of the loss." It further stated, "No action shall be brought on this policy unless the insured has fully complied with all of its provisions." A small fire caused damage to the building, but the building's owner, who was traveling abroad, did not learn of the fire until 70 days after it occurred. The owner immediately notified the insurance company. The insurance company denied the claim based on the failure to provide notice within 60 days, even though the delay did not prejudice its ability to investigate the claim.

In most modern jurisdictions, if the owner sues the insurance company, what is the likely outcome? Select one.

The owner will lose because the 60-day notice requirement is an express condition that must be strictly satisfied.
The owner will lose because the owner breached a promise to provide timely notice.
The owner will win because the notice condition will be excused since the insurer was not prejudiced by the delay. (correct answer)
The owner will win because the owner's late discovery of the fire rendered performance of the notice condition impossible.

Explanation: The correct answer is (C). While notice provisions in insurance contracts are generally treated as express conditions, most modern jurisdictions have adopted a rule that excuses the failure of the condition unless the insurer was prejudiced by the delay. Since the facts state the insurer was not prejudiced, a court is likely to excuse the condition and allow the claim. (A) reflects the traditional, strict rule that is less followed today, especially in the insurance context. (B) is incorrect because the provision functions as a condition to recovery, not a promise for which the insurer could sue for damages. (D) is incorrect because impossibility typically applies to the performance of promises, not the satisfaction of conditions, and a more specific legal rule applies here.

Question 20

A company contracted to purchase a custom-built machine from a manufacturer. The contract stated: "The company's duty to accept and pay for the machine is conditioned on the machine passing an independent performance test to be conducted at the company's facility upon delivery." The manufacturer built the machine and delivered it. However, the company refused to allow the performance test to be conducted, stating that it no longer needed the machine. The manufacturer sued for the full contract price.

What is the likely outcome of the manufacturer's lawsuit? Select one.

The manufacturer will lose because the condition precedent of a successful performance test was not satisfied.
The manufacturer will win because the company's refusal to allow the test excused the condition. (correct answer)
The manufacturer will lose because its damages are limited to the profit it would have made on the sale.
The manufacturer will win because the testing clause was a promise by the company, which it breached.

Explanation: The correct answer is (B). The contract contained an express condition precedent: the machine passing the test. However, a party cannot rely on the non-occurrence of a condition if that party wrongfully prevented the condition from occurring. The company had an implied duty of good faith and fair dealing to cooperate by allowing the test. By refusing to allow the test, the company prevented the condition from occurring, which excuses the condition. The company's duty to accept and pay becomes absolute, and it is in breach. (A) is incorrect because the condition is excused. (C) is a question of remedies, not liability; the manufacturer is likely entitled to the price because the custom goods are not easily resalable, but the primary reason for liability is the excuse of the condition. (D) is less accurate; the clause is a condition, but the company's duty to cooperate is implied. The breach is the repudiation and failure to pay after the condition was excused.