California First-Year Law Students' Exam (Baby Bar) — MCContractsEasy
A tenant signs a two-year lease for an apartment. After six months, the tenant loses their job and can no longer afford the rent. The tenant offers to pay the landlord $1,000 immediately if the landlord agrees to release them from the remaining 18 months of the lease. The landlord accepts the $1,000 and agrees to terminate the lease. This agreement is an example of:
- AA rescission, as the original contract is being unwound due to a material breach.
- BA novation, as a new party has been introduced to the agreement.
- CAn accord and satisfaction, as the parties agreed to a new performance to discharge the old obligation.
- DA modification, as the terms of the original lease were simply changed.
Show answer & explanationAnswer & explanation
Correct answer: C. An accord and satisfaction, as the parties agreed to a new performance to discharge the old obligation.
An accord and satisfaction occurs when parties agree to accept a different performance (the $1,000 payment) in satisfaction of an existing contractual duty (the remaining rent payments), and that new performance is then rendered.
Why the other options are wrong
- A. Rescission unwinds the contract as if it never existed, usually due to mutual mistake, fraud, or material breach, which is not the primary mechanism here.
- B. A novation involves replacing one of the original parties with a new party, which did not happen here.
- D. While it changes the terms, the specific mechanism of accepting a substituted performance to discharge an existing duty is an accord and satisfaction, not merely a modification.
Accord and Satisfaction
A method of discharging a contract where the parties agree to accept a different performance (the 'accord') in place of the original contractual obligation, and that new performance is then rendered (the 'satisfaction').
- Requires new consideration for the accord.
- The original duty is not discharged until the satisfaction is performed.
- Often used to settle disputed claims.
Memory trick: How do contracts end gracefully?