Question 1

A contract may include a clause stating that no damages can be recovered for a certain type of breach.

Accepted Answer

A) True 
 B)False  True

Question 2

Compensatory damages compensate an injured party for damages arising from the loss of a bargain caused by a breach of contract.

Accepted Answer

A) True 
 B)False  True

Question 3

Handy Hardware Store agrees to hire Ilsa for one year at a salary of $500 per week. When Handy cancels the contract, Ilsa spends $100 to obtain a similar job that pays $450 per week for a year. Ilsa is entitled to recover

Accepted Answer

A)  the amount of the wages that Handy promised only. 
B)  the difference between the wages at the two jobs only. 
C)  the difference between the wages at the two jobs plus $100. 
D)  $100 only. 
A)  the amount of the wages that Handy promised only. 
B)  the difference between the wages at the two jobs only. 
C)  the difference between the wages at the two jobs plus $100. 
D)  $100 only. C

Question 4

Ordinarily, the remedy for a seller's breach of a contract for a sale of real estate is damages.

Accepted Answer

A) True 
 B)False

Question 5

A party seeking to recover in quasi contract must show that there was an actual contract or agreement between the parties.

Accepted Answer

A) True 
 B)False

Question 6

Grady enters into a contract to buy 440 acres from Hollis to expand Grady's ranch. Hollis breaches the contract. Grady's normal remedy is

Accepted Answer

A)  damages. 
B)  reformation. 
C)  rescission. 
D)  specific performance. 
A)  damages. 
B)  reformation. 
C)  rescission. 
D)  specific performance.

Question 7

Beachside Pools, Inc., agrees to build a swimming pool for Candy, but fails to build it according to the contract specifications. Candy hires Do-We Fix-It Company to finish the project. Candy may recover from Beachside

Accepted Answer

A)  the contract price less costs of materials and labor. 
B)  the contract price. 
C)  the costs needed to complete construction. 
D)  profits plus the costs incurred up to the time of the breach. 
A)  the contract price less costs of materials and labor. 
B)  the contract price. 
C)  the costs needed to complete construction. 
D)  profits plus the costs incurred up to the time of the breach.

Question 8

Refined Commodities, Inc., agrees to deliver ten tons of sheet metal to Select Builders Corporation. The agreement states that delivery is to be within "3" days, although the parties intend "30" days. Refined cannot convince Select to amend the contract. Refined should seek

Accepted Answer

A)  damages. 
B)  reformation. 
C)  rescission. 
D)  specific performance. 
A)  damages. 
B)  reformation. 
C)  rescission. 
D)  specific performance.

Question 9

Dobry Die & Mold, Inc., enters into a contract with Chet's Refitting Service to fix Dobry's precisely engineered molding equipment. If Chet's delays the repair for five days, knowing that Dobry will lose a certain percentage of profit for the delay, Dobry might be awarded consequential damages to

Accepted Answer

A)  establish, as a matter of principle, that Chet's acted wrongfully. 
B)  provide Dobry with funds for a foreseeable loss beyond the contract. 
C)  provide Dobry with funds for its loss of the bargain. 
D)  punish Chet's and set an example to deter others from similar acts. 
A)  establish, as a matter of principle, that Chet's acted wrongfully. 
B)  provide Dobry with funds for a foreseeable loss beyond the contract. 
C)  provide Dobry with funds for its loss of the bargain. 
D)  punish Chet's and set an example to deter others from similar acts.

Question 10

Hybrid Corporation enters into a contract with Insure Service, Inc. (ISI), to obtain health insurance for Hybrid employees. If ISI breaches the contract and Hybrid is awarded compensatory damages, the purpose would be to

Accepted Answer

A)  establish, as a matter of principle, that ISI acted wrongfully. 
B)  provide Hybrid with funds for a foreseeable loss beyond the contract. 
C)  provide Hybrid with funds for its loss of the bargain. 
D)  punish ISI and set an example to deter others from similar acts. 
A)  establish, as a matter of principle, that ISI acted wrongfully. 
B)  provide Hybrid with funds for a foreseeable loss beyond the contract. 
C)  provide Hybrid with funds for its loss of the bargain. 
D)  punish ISI and set an example to deter others from similar acts.

Question 11

A liquidated damages provision specifies that a certain amount to be paid in the event of a future default or breach of contract.

Accepted Answer

A) True 
 B)False

Question 12

The injury suffered by a nonbreaching party due to the breach of a contract may be remedied by payment of compensatory damages.

Accepted Answer

A) True 
 B)False

Question 13

The measure of damages for the breach of a contract for a sale of land depends on which party breaches and when.

Accepted Answer

A) True 
 B)False

Question 14

Special damages are awarded for damage caused by special circumstances beyond a contract.

Accepted Answer

A) True 
 B)False

Question 15

Fashion Retail Center enters into a contract with Great Promotions, Inc., to provide Fashion with a plan to retool its merchandising strategy. If Great Promotions breaches the contract, Fashion has a duty to

Accepted Answer

A)  reduce the damages that Fashion might otherwise suffer. 
B)  reduce the loss that Great Promotions might otherwise suffer. 
C)  punish Great Promotions and deter others from similar acts. 
D)  take no action. 
A)  reduce the damages that Fashion might otherwise suffer. 
B)  reduce the loss that Great Promotions might otherwise suffer. 
C)  punish Great Promotions and deter others from similar acts. 
D)  take no action.

Question 16

Lava Excavators, Inc., needs a drill to continue its operations and orders one for $3,000 from Mining Supplies Company. Lava tells Mining that it must receive the drill by Tuesday or it will lose $10,000. Mining ships the drill late. Lava can recover

Accepted Answer

A)  $13,000. 
B)  $10,000. 
C)  $3,000. 
D)  $0. 
A)  $13,000. 
B)  $10,000. 
C)  $3,000. 
D)  $0.

Question 17

Quasi contract allows a court to act as if a contract exists when there is no contract.

Accepted Answer

A) True 
 B)False

Question 18

Rural Power Utility, Inc., enters into a contract with Shovel Excavation Service to dig up, replace, and rebury Rural's cables in a certain location. Rural advances Shovel 10 percent of its cost. The parties rescind the contract. Shovel's refund of the payment is

Accepted Answer

A)  a penalty. 
B)  liquidated damages. 
C)  restitution. 
D)  a breach of contract. 
A)  a penalty. 
B)  liquidated damages. 
C)  restitution. 
D)  a breach of contract.

Question 19

Normally, when a nonbreaching party has been damaged by a breach of contract, he or she does not have a duty to mitigate those damages.

Accepted Answer

A) True 
 B)False

Question 20

Restitution involves one party's recapture of a benefit through which another party has been unjustly enriched.

Accepted Answer

A) True 
 B)False

Exam 14: Breach and Remedies

A contract may include a clause stating that no damages can be recovered for a certain type of breach.

Compensatory damages compensate an injured party for damages arising from the loss of a bargain caused by a breach of contract.

Handy Hardware Store agrees to hire Ilsa for one year at a salary of $500 per week. When Handy cancels the contract, Ilsa spends $100 to obtain a similar job that pays $450 per week for a year. Ilsa is entitled to recover

Ordinarily, the remedy for a seller's breach of a contract for a sale of real estate is damages.

A party seeking to recover in quasi contract must show that there was an actual contract or agreement between the parties.

Grady enters into a contract to buy 440 acres from Hollis to expand Grady's ranch. Hollis breaches the contract. Grady's normal remedy is

Beachside Pools, Inc., agrees to build a swimming pool for Candy, but fails to build it according to the contract specifications. Candy hires Do-We Fix-It Company to finish the project. Candy may recover from Beachside

Refined Commodities, Inc., agrees to deliver ten tons of sheet metal to Select Builders Corporation. The agreement states that delivery is to be within "3" days, although the parties intend "30" days. Refined cannot convince Select to amend the contract. Refined should seek

Dobry Die & Mold, Inc., enters into a contract with Chet's Refitting Service to fix Dobry's precisely engineered molding equipment. If Chet's delays the repair for five days, knowing that Dobry will lose a certain percentage of profit for the delay, Dobry might be awarded consequential damages to

Hybrid Corporation enters into a contract with Insure Service, Inc. (ISI), to obtain health insurance for Hybrid employees. If ISI breaches the contract and Hybrid is awarded compensatory damages, the purpose would be to

A liquidated damages provision specifies that a certain amount to be paid in the event of a future default or breach of contract.

The injury suffered by a nonbreaching party due to the breach of a contract may be remedied by payment of compensatory damages.

The measure of damages for the breach of a contract for a sale of land depends on which party breaches and when.

Special damages are awarded for damage caused by special circumstances beyond a contract.

Fashion Retail Center enters into a contract with Great Promotions, Inc., to provide Fashion with a plan to retool its merchandising strategy. If Great Promotions breaches the contract, Fashion has a duty to

Lava Excavators, Inc., needs a drill to continue its operations and orders one for $3,000 from Mining Supplies Company. Lava tells Mining that it must receive the drill by Tuesday or it will lose $10,000. Mining ships the drill late. Lava can recover

Quasi contract allows a court to act as if a contract exists when there is no contract.

Rural Power Utility, Inc., enters into a contract with Shovel Excavation Service to dig up, replace, and rebury Rural's cables in a certain location. Rural advances Shovel 10 percent of its cost. The parties rescind the contract. Shovel's refund of the payment is

Normally, when a nonbreaching party has been damaged by a breach of contract, he or she does not have a duty to mitigate those damages.

Restitution involves one party's recapture of a benefit through which another party has been unjustly enriched.

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