Tippi and Alfred Entered into a Contract for the Sale

question 61

Multiple Choice

Tippi and Alfred entered into a contract for the sale of birds.Under the terms of that agreement, she was to provide him on a weekly basis with 10 lovebirds for his pet store, and he was to pay her $500 on a weekly basis.The agreement also stated that the contract would be in force for one year.For six weeks, each party performed as promised.At the beginning of the seventh week, however, Tippi telephoned Alfred and said that she wanted to bring their agreement to an immediate end.Which of the following statements is most likely to be TRUE?

• A)The parties cannot use the process of rescission to discharge the contract because they have already performed part of the agreement.
• B)The parties can use the process of rescission to discharge the contract, but only if Alfred seals his agreement to Tippi's proposal.
• C)Tippie and Alfred can provide consideration in order to bring the original contract to an end if both agree to give up their existing rights.
• D)The parties' contract will automatically be discharged through the process of novation if neither Tippi nor Alfred ever try to enforce it.
• E)The contract can be brought to an end through the process of release only if Tipi provides fresh consideration or the release is made by Tippi affixing her seal.

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Definitions:

Nonsufficient Funds

Nonsufficient funds (NSF) is a term used in banking to indicate that a demand for payment cannot be honored because there are inadequate funds in the account on which the instrument was drawn.

Accounts Receivable

Accounts receivable is the money owed to a business by its clients or customers for goods or services delivered but not yet paid for.

Electronic Funds Transfer

A system that allows the transfer of money between bank accounts without the physical exchange of cash, checks, or other negotiable instruments.

Outstanding Checks

Checks that have been issued and recorded in the payer's financial statements but have not yet been cashed or cleared by the bank.