Contracts and Sales Multistate Bar Practice Exam

Which of the following best describes a divisible contract?

1. All performances must be completed simultaneously

2. Each party's performance is divided into parts

3. The contract can never be canceled

4. The contract requires a single payment upon completion

The correct answer is: Each party's performance is divided into parts

A divisible contract is characterized by its structure, where the obligations of the parties can be divided into separate, independent parts. In such a contract, each party's performance is broken down into multiple segments, allowing for partial performance and distinct performances that correspond to specific terms of the agreement. This means that if one part of the contract is fulfilled, it does not impact the obligations of the other parts. This division is significant because it allows for enforcement of the contract's terms even if all parts are not completed simultaneously or if one party defaults on one specific part. The concept is often applied in situations where services or goods are delivered in stages, further allowing for flexibility in performance and acknowledgment of work completed at various points. Other options do not capture the essence of what makes a contract divisible. For instance, stating that all performances must be completed simultaneously contradicts the notion of divisibility, where different parts can be completed at different times. The idea that a contract can never be canceled does not pertain specifically to divisible contracts, as even divisible contracts can have termination clauses or might become unenforceable under certain conditions. Finally, the statement regarding a single payment upon completion also does not reflect the divisible nature, as it can involve staged payments corresponding to the partial complet