Exam 9: The End of the Contractual Relationship

What is the usual impact of an exemption clause in the event of fundamental breach?

Mr. Jones rented an apartment to Ms. Smith under a one-year tenancy agreement. Ms. Smith abandoned the apartment after three months. Jones located Smith and sued her for breach of contract. Which of the following is the best statement with regard to the damages Jones can recover?

An injunction is designed to punish someone for breaching a contract.

Frustration arising when one of the parties to a contract causes or fails to prevent a frustrating event is referred to as ________.

Explain the limitations on the ability to request and receive equitable remedies in breach of contract cases.

Explain how a contract can be discharged by agreement.

Jones entered into a contract to purchase a 1957 Edsel automobile from Smith for $2000. Unknown to Smith, Jones had an opportunity to resell that car for $5000 to Brown, who wanted to use it as a prop in a movie being shot in town. Before the car was delivered and payment made, it was destroyed by fire when one of Smith's employees carelessly spilled a can of gasoline in the garage where the car was kept. If the court found that the normal market value for such a vehicle was only $3000, which of the following statements is correct with respect to the appropriate remedy that should be awarded by the court for such a breach of contract?

"Clean hands" refers to the absence of wrongdoing on the part of a person seeking an equitable remedy.

Discuss exculpatory (exemption) clauses and how the courts treat them.

A person who breaches a contract is responsible for all of the loss that flows from the breach, no matter how unforeseeable.

Discuss how and why promissory estoppel might come into play when a contract is being discharged or changed by agreement.

Sam agreed to manufacture and supply 25 specially adapted computers for Joe to use for simulated horse racing in his string of hotels throughout the province. Unfortunately, after Sam almost completed the computers, the province passed a law prohibiting the manufacture and sale of this kind of machine. Joe had paid a deposit of $5000, but Sam had incurred $30,000 of expenses in manufacturing these machines. The total purchase price agree upon between these parties was $50,000. Joe sued Sam for the return of his $5000 deposit. Sam, in turn, sued Joe for a contribution towards his loss. Discuss the legal position of the parties.

Specific performance involves a court order to do something (to perform the contract), whereas a(n) ________ usually involves an order to refrain from some offensive conduct.

Explain under what circumstances a creditor would be entitled to refuse to accept payment proffered to him on or before the payment due date.

Courts enforce exemption clauses because it is assumed that they reflect the will of the parties to the contract.

Which of the following is one of the remedies generally available for a breach of contract?

A student bought an elaborate smartphone for the stated purpose of listening to his taped notes while he went for his daily run. The contract he signed with the seller included a clause excusing the seller from liability for the breach of "any term of the contract, whether a breach of condition or warranty whether express, implied, statutory, or otherwise." After only 30 days, the smartphone failed to function at all. It was totally useless for the student's purpose, so he took it back to the seller. The seller refused to take it back and pointed out the exemption clause in the signed contract. On these facts, which of the following could be true?

When Mr. George sold his house, he rented an apartment and was forced to store some furniture until he bought another house. He attended the downtown office of Security Warehousing Ltd. and entered into a bailment contract that promised to safeguard the furniture. Four months later, his things were stolen from the warehouse, and when he asked for compensation for his loss, the company admitted it was in breach of contract, but said it was exempt from liability because of an exemption clause posted on the wall of the storage area where George had taken the furniture. The sign read "Not liable for loss due to fire or water." On these facts, which of the following would be his least successful argument to nullify the exemption clause?

When an anticipatory breach has taken place (where a person, before performance is due, states that he will not perform the contract)

Where a developer signs agreements to buy several adjacent properties, and one property owner refuses to go through with the deal, it would be appropriate to obtain a court order for