Contracts and Sales Multistate Bar Practice Exam

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

Through a unilateral decision to continue
By mutual rescission of an executory contract
By renegotiating the terms of the contract
By one party’s unilateral performance

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

A duty to perform under a contract can be discharged by mutual rescission, which occurs when both parties agree to cancel the contract before either party has fully performed their obligations. This agreement effectively nullifies the contract and releases each party from their respective duties, allowing them to proceed as if the contract had never existed. This is particularly relevant in the case of executory contracts, where obligations remain unfulfilled by both sides at the time of rescission. In the context of the other options, a unilateral decision to continue does not discharge the duty to perform; rather, it would imply that one party intends to abide by the contract. Renegotiating the terms may result in a modified contract, but the original duty is not discharged until both parties consent to the changes. Lastly, unilateral performance by one party does not discharge the duty, as it could still leave outstanding obligations for the other party unless all conditions of the contract are fulfilled. This illustrates the importance and effectiveness of mutual consent in discharging contractual duties.