Contracts and Sales Multistate Bar Practice Exam

What is one way a duty to perform can be discharged?

1. Through a unilateral decision to continue

2. By mutual rescission of an executory contract

3. By renegotiating the terms of the contract

4. By one party’s unilateral performance

The correct answer is: By mutual rescission of an executory contract

A mutual rescission of an executory contract is a valid means of discharging a duty to perform because it involves both parties agreeing to cancel the contract, thereby releasing each other from their obligations. In essence, the parties are consenting to undo the contract as if it never existed, which effectively discharges their respective duties to perform under that agreement. The key aspect here is that mutual rescission requires the agreement of both parties; it is not a unilateral decision. This collaborative approach distinguishes it from other options, as it upholds the parties' autonomy and mutual consent in a contract. By reaching a mutual agreement to rescind, the original duties are extinguished, thus providing a clear path for discharge. In contrast, other options might not sufficiently reflect the principles of contract law governing the discharge of duties. For example, a unilateral decision to continue would not relieve the obligation; renegotiating terms typically leads to a modification rather than discharge, and unilateral performance could fulfill a duty but doesn’t inherently discharge responsibilities unless completely performed.