Where this fits on the exam
| Official syllabus topic | Contract Performance, Breach, and Remedies |
|---|---|
| Official PSI area | Contracts |
| Published area weight | 19% of the national portion |
| Exam portion | National salesperson portion |
| Source edition | PSI Georgia Candidate Information Bulletin dated July 1, 2026 |
The Rule
PSI publishes the weight for the complete content area, not a fixed question count for this lesson. Learn the rule well enough to apply it when PSI changes names, numbers, or parties in a new scenario.
The lesson
Performance standards
Complete performance fulfills the promise. Substantial performance may allow recovery with an offset for defects, while material failure can constitute breach.
Types of breach
Actual breach occurs when performance is due. Anticipatory repudiation is a clear refusal before the due date and can trigger legal rights subject to governing law.
Damage remedies
Compensatory damages aim to place the injured party in the expected economic position. Liquidated damages use a reasonable pre-agreed amount rather than an unenforceable penalty.
Equitable remedies
Rescission unwinds the contract, usually with restitution. Specific performance orders the promised transfer or act when damages are inadequate and equitable requirements are met.
Decision rule
Georgia-specific distinction
Worked example
Scenario. A seller refuses to convey a unique parcel after all buyer conditions are met.
Reason it through. Real property is considered unique, so money may not provide an adequate substitute.
Answer. The buyer may seek specific performance, subject to contract terms, proof, defenses, and court discretion.
Common exam traps
- Calling every defect material
- Treating liquidated damages as any penalty
- Assuming specific performance is automatic
- Ignoring mitigation
Original practice questions with detailed explanations
These questions were written for instruction and mapped to the current outline. They are not copied from PSI or any live examination. Choose an answer before opening the explanation.
Question 1A seller refuses to close even though every buyer condition has been met. The buyer wants the house itself, not money. Which remedy fits that goal?
- A. Compensatory damages
- B. Rescission and restitution
- C. Liquidated damages
- D. Specific performance
Show answer and explanation →
Answer: D. Specific performance
Specific performance is a court order to carry out the promised transfer, and courts consider it because each parcel of land is unique. Compensatory damages are the wrong answer, but money is what this buyer does not want.
- A. Incorrect. Compensatory damages seek money to compensate for loss.
- B. Incorrect. Rescission unwinds the deal and restitution restores what was transferred.
- C. Incorrect. Liquidated damages provide an agreed monetary amount, not the house.
- D. Correct. Specific performance asks a court to compel the promised conveyance; it is a possible remedy, not an automatic entitlement.
Question 2At signing, a seller's likely loss from a future buyer default is difficult to calculate. The parties propose a fixed damages amount. Which feature most supports treating the clause as compensation rather than a penalty?
- A. It is a reasonable estimate of hard-to-measure loss
- B. It is larger than any loss the seller could suffer
- C. Both parties initialed it when they signed
- D. It is paid from earnest money held in trust
Show answer and explanation →
Answer: A. It is a reasonable estimate of hard-to-measure loss
Liquidated damages must be a reasonable advance estimate of a loss that is hard to measure, not a punishment. Initialing the clause is wrong because agreement alone cannot save an amount designed to punish.
- A. Correct. A reasonable advance estimate of difficult-to-measure loss supports enforceability when the clause compensates rather than punishes.
- B. Incorrect. A deliberately excessive amount suggests a penalty rather than compensation.
- C. Incorrect. Initials do not cure a clause that is substantively an unlawful penalty.
- D. Incorrect. Holding earnest money in trust does not establish that the damages clause is enforceable.
Question 3Three weeks before closing, a buyer emails the seller, "I will not be buying your house." What is this?
- A. Substantial performance
- B. Actual breach at closing
- C. Anticipatory repudiation
- D. Mutual rescission
Show answer and explanation →
Answer: C. Anticipatory repudiation
Anticipatory repudiation is a clear refusal to perform before performance is due, and it can give the other party rights right away. Mutual rescission requires agreement by both parties. Here only one party has announced a refusal to perform.
- A. Incorrect. The buyer is refusing performance, not substantially completing it.
- B. Incorrect. Closing has not arrived; the refusal occurs before performance is due.
- C. Correct. An unequivocal refusal before the due date is anticipatory repudiation.
- D. Incorrect. The seller has not agreed to cancel, so there is no mutual rescission.
Ready to move on?
You are ready for the next lesson when all of these are true.
- Explain Contract Performance, Breach, and Remedies in one clear answer without notes.
- Separate Performance standards from Types of breach using a fresh example.
- Apply the decision rule to a new fact pattern and name the fact that controls the result.
- State the Georgia-specific point or explain why the national rule applies unchanged.
- Answer every practice question and explain the rule each rejected option misapplies.
- Revisit this topic later in mixed practice without category labels.
Recommended next lesson
Continue with How Real Estate Contracts End. Breach is only one way a deal ends, and the next lesson sorts the rest: full performance, mutual rescission, release, novation, expiration and failed contingencies, including why assigning a contract does not release the original buyer.
Return to the Contracts hub to see every official branch and the complete lesson sequence for this content area.