National curriculum lesson 84 · Contracts

Contract Performance, Breach, and Remedies

Performance discharges contractual duties when completed as promised or as the law recognizes. A material breach excuses or changes the other party's duties and supports remedies. Remedies can include compensatory or liquidated damages, rescission and restitution, specific performance, or other relief, depending on the contract and law. The nonbreaching party generally must mitigate avoidable loss.

Facts checked against the current PSI Candidate Information Bulletin and GREC sources. Last reviewed August 2, 2026. Editorial standards.

What is the exam-ready answer?

Official syllabus mapping for Contract Performance, Breach, and Remedies
Roadmap lesson	84 of 500
Official syllabus topic	Contract Performance, Breach, and Remedies
Official PSI area	Contracts
Published area weight	19% of the 100-question national portion
Exam portion	National salesperson portion
Source edition	PSI Georgia Candidate Information Bulletin dated July 1, 2026
Last verified	August 2, 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.

Complete lesson

Read each concept as part of one decision system. The exam often gives one accurate statement and three statements that belong to a nearby concept.

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

Identify the duty, whether the failure is material, the contract's remedy clause, and whether money can adequately address the loss.

Georgia-specific distinction

Georgia contracts and forms determine available remedies and earnest-money procedures. A licensee should not decide unilaterally who breached, release disputed trust funds without authority, or promise specific performance.

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 1

Which remedy seeks to compel the promised real estate transfer?

A. Specific performance
B. Novation
C. Assignment
D. Reformation only

Show answer and explanation →

Answer: A. Specific performance

Specific performance is an equitable order requiring performance when its standards are satisfied.

Question 2

What does rescission seek to do?

A. Increase price
B. Unwind the contract
C. Record a lien
D. Change zoning

Show answer and explanation →

Answer: B. Unwind the contract

Rescission cancels or unwinds the agreement, commonly with restitution.

Question 3

Why can a penalty clause fail?

A. It reasonably estimates difficult loss
B. It punishes rather than estimates compensation
C. It is written
D. It concerns land

Show answer and explanation →

Answer: B. It punishes rather than estimates compensation

Liquidated damages should reasonably estimate loss, not impose punishment.

Mastery tracking

Mark this lesson mastered only when every statement is true.

State the direct answer and decision rule without notes.
Explain every core concept in plain English.
Solve the worked example after changing one important fact.
Identify the Georgia distinction before reading answer choices.
Answer all three questions correctly and reject every distractor.
Repeat the topic in mixed practice on a later day.

Recommended next lesson

Continue with How Real Estate Contracts End. Continue to roadmap lesson 85 and build on this decision rule.

Return to the Contracts hub to see every official branch and the complete lesson sequence for this content area.

Contract Performance, Breach, and Remedies questions

Facts checked against the current PSI Candidate Information Bulletin and GREC sources. Last reviewed August 2, 2026. Editorial standards.

Is Contract Performance, Breach, and Remedies on the Georgia real estate exam?

Yes. It belongs to PSI's Contracts content area, which is 19% of the 100-question national portion. PSI publishes content-area weights, not a guaranteed question count for this individual lesson.

What is the main rule for Contract Performance, Breach, and Remedies?

Identify the duty, whether the failure is material, the contract's remedy clause, and whether money can adequately address the loss.

What Georgia-specific distinction should I remember?

How do I know I have mastered this lesson?

Explain the rule without notes, solve the worked example again with changed facts, answer all original questions correctly, explain every distractor, and repeat mixed practice on a later day.