Exam 9: The End of the Contractual Relationship

Which one of the following statements accurately describes the effect of a liquidated damages clause on a plaintiff's claim in a breach of contract action?

Discuss the equitable remedies that were developed in contract law and why they were necessary.

Sam entered into a contract for the purchase of a used dump truck from Joe's Heavy Duty Trucks. The written contract clearly specified, among other things, that "it shall be a warranty to this contract that the truck has the capacity of carrying and properly dumping loads of up to 4000 kg of gravel." In fact, when Sam loaded the truck with 4000 kg of gravel, he discovered that the hoist on the truck was not capable of dumping it. Only if the load was reduced to 3000 kg could the gravel be dumped. Sam obtained an estimate stating that it would cost $8000 to reinforce the hoist mechanism of the truck so that it could handle dumping 4000 kg of gravel. When Sam approached Joe demanding satisfaction, Sam pointed out another term of the agreement that stated that in the event of a breach of contract the "maximum damages payable to the purchaser are limited to $5000." Sam sued. Which of the following statements is correct with respect to the legal position of the parties?

What is the result of a breach of a minor contractual term?

When one party is responsible for an act that frustrates a contract, it is treated as a breach.

Ibolya entered into an employment contract with a Toronto advertising firm, VertaNet Ltd. The agreement included a non-competition clause that prevented her from participating in the advertising field in Toronto for five years after termination of her employment. In the event of a breach, the contract provided that Ibolya would have to pay VertaNet the sum of $500,000 as liquidated damages. Ibolya worked for VertaNet for a period of time, then took another job in Vancouver where she worked for four and half years. Six months before the expiry of the five-year period in her VertaNet contract, Ibolya returned to Toronto to take a part-time position at a small advertising firm. Although VertaNet did not suffer any damage, VertaNet sued Ibolya claiming $500,000. What is the likely outcome?

Explain what is meant by quantum meruit.

Which one of the following statements accurately describes the operation of a condition precedent?

Which of the following is False with regard to remedies for breach of contract?

A breaching party is responsible for all lost profits flowing from a breach of contract.

Lack of financial ability, if proven, will establish frustration.

Mike contracted to buy Rita's house in a written contract that provided for a deposit of $10,000 to be forfeited in the event of Mike's failing to go through with the deal. This deposit was an honest estimate of the damages Rita would suffer. On these facts, which of the following is true?

In all but one of the following situations, the contract is frustrated. Identify the exception.

Which of the following is False with regard to ending a contract by performance, agreement, or breach?

The principle of substantial performance can best be described as when

Joe agreed to buy a car from Sam at Sam's Used Car Lot for $10,000 with a $100 deposit. The next day, before he took delivery, he changed his mind and refused to go through with the deal. Sam kept the deposit and sued Joe for breach of contract. Indicate what kind of remedy he would be entitled to.

Damages are an example of an equitable remedy.

Under what circumstances will a court order a mandatory injunction? Illustrate with a real-world example.

When a person informs you before performance is due that he is not going to perform the contract, you don't have to wait to see if he does perform. You can make other arrangements and sue right away.

________ occurs when the court orders the defaulting party to live up to the terms of the contract.