Deck 17: Breach and Remedies

Question 1

The failure of one party to perform under a contract entitles the other party to rescind the contract.

Answer 1

True

Question 2

When no actual damage or loss results from a breach of contract and only a technical injury is involved, the innocent party can recover no damages.

Answer 2

False

Question 3

When both an owner and a contractor breach a construction contract, a court will attempt to strike a fair balance in awarding damages.

Answer 3

True

Question 4

When a breach is material and willful, an innocent party seeking to rescind it must show that the contracting parties cannot be restored to the status quo.

Question 5

Normally, a court will not award damages unless the appropriate equitable remedy is inadequate.

Question 6

Expenses incurred because of a breach of contract to obtain performance from another source are not recoverable in a suit for breach.

Question 7

Special damages that compensate for a loss caused by circumstances beyond the contract itself are incidental damages.

Question 8

When a buyer breaches a contract for a sale of land, the seller can recover the difference between the contract price and the market price of the land.

Question 9

A seller cannot avoid the risk of liability for consequential damages by limiting the buyer's remedies in their contract.

Question 10

When a seller breaches a contract for a sale of goods, knowing the buyer plans to resell the goods, the buyer can recover the lost profits from the planned resale.

Question 11

In most situations, when a breach of contract occurs, the injured party is held to a duty to mitigate, or reduce, the damages that he or she suffers.

Question 12

There is a remedy available for nearly every breach of contract.

Question 13

The standard measure of compensatory damages is the value of the breaching party's actual performance.

Question 14

The measure of compensatory damages does not vary by type of contract.

Question 15

Sometimes, when a buyer breaches a contract for a sale of goods and the seller has not yet produced the goods, the seller can recover the lost profits.

Question 16

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

Question 17

Liquidated damages provisions normally are unenforceable.

Question 18

In most states, a person whose employment is wrongfully terminated has no duty to take a similar job if one is available.

Question 19

In contract law, damages compensate for harm suffered as a result of another's wrongful act, not for the loss of a bargain.

Question 20

The terms of a contract must be sufficiently definite for a court to determine the amount of damages to award.

Question 21

Rita contracts to work for Social Media Corporation (SMC) during April for $4,500. On March 31, SMC cancels the contract. Rita declines a similar job with Tech Talk, Inc., which would have paid $3,500. Rita files a suit against SMC. As compensatory damages, Rita can recover

A) $4,500.
B) $3,500.
C) $1,000.
D) $0.

Question 22

A restrictive covenant imposed as part of a sale of an ongoing business will be enforced even if the restrictions are unreasonable.

Question 23

City Nurses College loses its accreditation. As a consequence, City students can still obtain a state nurse's license, but their earning capacity is impaired. In a suit against the school for breach, the students are most likely to recover

A) nothing.
B) the difference between their earning capacity before and after the loss.
C) the difference between the tuition costs at City and an accredited school.
D) the cost of a City education, including tuition, and room and board.

Question 24

If a surgeon breaches a contract by refusing to perform an operation, a court will normally compel performance through an award of specific performance.

Question 25

Sabo contracts to work exclusively for Thermal Company during July for $5,000. On June 30, Thermal cancels the contract. Sabo finds a similar job for the month of July but earns only $3,000. Sabo files a suit against Thermal. As compensatory damages, Sabo can recover

A) $5,000.
B) $3,000.
C) $2,000.
D) $0.

Question 26

The breach of a contract for a sale of goods qualifies for specific performance when substantially identical goods can be bought or sold in the market.

Question 27

A court will grant specific performance as a remedy only when the legal remedy is adequate.

Question 28

Baez is employed by Credit Agency Inc. On the termination of Baez's position, Credit Agency pays Baez $10,000 to agree not to disclose the employer's confidential information. Later, Baez sells the information to Debt Records LLC for $100,000. In a suit for breach, Credit Agency is most likely to recover

A) $10,000 from Baez.
B) $110,000 from Baez.
C) $100,000 from Debt Records.
D) all future profits from Debt Records.

Question 29

The Uniform Commercial Code provides that remedies may not be limited in a contract for the sale of goods.

Question 30

On the breach of a contract for a sale of land when the seller has sold the property to someone else, an award of specific performance is unavailable.

Question 31

Repair Service enters into a contract to fix washing machines in Soapy Suds Company's coin-operated laundries. Repair breaches the contract. Soapy is awarded compensatory damages. The purpose is to

A) establish, as a matter of principle, that Repair acted wrongfully.
B) provide Soapy with funds for a loss beyond the contract.
C) provide Soapy with funds for its loss of the bargain.
D) punish Repair and deter others from similar acts.

Question 32

The remedy available when a court imposes a quasi contract is the recovery of the reasonable value of a benefit conferred or detriment suffered.

Question 33

If the Statute of Frauds bars the enforcement of an oral contract, a court will not impose a quasi contract regardless of the circumstances.

Question 34

On an architect's breach of contract after payment for the work, the owner can immediately hire a new architect and obtain restitution of the payment.

Question 35

A limitation-of-liability clause in a contract limits the period of time within which an action for breach can be brought.

Question 36

A contract clause that provides the only remedy for breach is repair, replacement, or refund of the purchase price is invalid and unenforceable.

Question 37

When a contract mistakenly specifies a crane instead of a forklift, a court could reform the contract to reflect the parties' original intent as to the equipment.

Question 38

The function of a quasi contract is to impose a legal obligation on a party who purposely failed to fulfill an express promise.

Question 39

Restitution may be available in situations when damages cannot be proved or are difficult to prove.

Question 40

Between parties in equal bargaining positions, a contract provision that states no damages can be recovered for certain types of breaches may be enforced.

Question 41

Quill contracts to buy an oven from Restaurant Appliances Inc. for $5,000, but the seller fails to deliver. Quill buys a similar oven from another dealer for $6,500. Quill's measure of damages is

A) $5,000.
B) $1,500.
C) $1,500, plus any additional expense to obtain the oven.
D) $6,500.

Question 42

Metro Holdings Inc. contracts to sell a commercial parking garage to New Property LLC. The contract provides that if Metro does not close the deal by a certain date, it must pay the buyer one-half of the value of the property. This provision is not enforceable if it is

A) meant to pay for additional work in the event of damage.
B) a reasonable estimate of the loss on the breach.
C) designed to penalize Metro.
D) intended to quickly provide cash to New Property.

Question 43

Copper Circuit Inc. and Direct Electric LLC sign an agreement that provides for the payment of "$1,000 by whichever party commits a material breach of the contract that creates damages difficult to estimate but approximately $1,000." This is

A) a liquidated damages clause.
B) a mitigation of damages clause.
C) a consequential damages clause.
D) a penalty clause.

Question 44

Builders Inc. agrees to construct an office building for Commerce Center Corporation. The project proceeds according to plan, but before it is done, the buyer tells Builders to quit. In a suit for breach, Builders may recover

A) nothing.
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 45

Ivy orally agrees to buy a unique collection of sports memorabilia for $10,000 from Jess and sends $2,500 as an initial payment. When Ivy pays the rest of the price, Jess refuses to ship the collection. In a suit for breach, Ivy should seek

A) damages.
B) restitution.
C) a quasi contract.
D) specific performance.

Question 46

Sparkling Jewelers breaches its lease with Town Mall and vacates the premises six months before the end of the term. In some states, the mall would be required to

A) avoid reletting the premises for six months to recover damages.
B) use reasonable means to find a new tenant.
C) relet the premises to recover any damages.
D) sell the premises to recover any damages.

Question 47

Daisy enters into a contract with Evan for the construction of a Fast Food Café, according to a certain schedule. The parties perform some preparatory steps, but Evan materially and willfully fails to begin work on the specified date. To rescind the contract, Daisy must show that the parties can

A) be restored to the status quo.
B) realize at least some of the benefit of their bargain.
C) obtain a reasonable exchange of values for the preparatory steps.
D) profit from the partial performance.

Question 48

Renew Turf Inc. enters into a contract with Sports Park to provide surface material for Sports Park's baseball fields by a certain date. The contract specifies an amount to be paid if Renew breaches the deal. This clause is enforceable if the amount is

A) meant to pay for additional work in the event of damage.
B) a reasonable estimate of the loss on the breach.
C) designed to penalize Renew.
D) intended to quickly provide cash to Sports Park.

Question 49

Shuster's lease of retail premises from Thurgood requires Shuster to pay certain fees, subject to the landlord's proof of the correct amount. Thurgood overcharges Shuster for the fees, without explanation. Most likely, the tenant can rescind the lease

A) after paying the overcharge.
B) by finding a new tenant for the premises.
C) with prompt notice.
D) under no circumstances.

Question 50

Erma enters into a contract to buy a tract of lakefront property from Forest Acres to build and sell a residential development. Forest Acres fails to close the sale. Erma's remedy is most likely

A) the amount that Erma invested in the project to the date of the closing.
B) nothing-Forest Acres still owns the land.
C) the difference between the contract and market prices of the land.
D) specific performance.

Question 51

Foundation Construction Company agrees to lay a foundation for Garth, but fails to finish the job. Garth hires Housing Projects Inc. to complete the work. In a suit for breach, Garth may recover from Foundation

A) nothing.
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 52

Dino hires Eve to perform at Dino's Club, but Eve later breaches the agreement to accept a higher-paying job at Five Star Arena. Dino files a suit against Eve. The court will most likely

A) award damages to Dino.
B) cancel Dino and Eve's contract.
C) order Eve to perform both contracts.
D) rescind Dino and Eve's contract.

Question 53

Bagels Bakery enters into a contract with Cineplex for discounted tickets for Bagels's employees. When Cineplex does not provide the tickets, Bagels enters into a contract with DigiMovies for the same service at a lower price. In a suit for breach, Bagels might be awarded nominal damages to

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

Question 54

Jill enters into a contract to buy a certain building from Kim. At the closing, Kim refuses to transfer title. In a suit for breach, Jill should seek specific performance to

A) return the parties to the positions they occupied before the contract.
B) obtain the exact bargain promised in the contract.
C) reform the contract to reflect the parties' true intentions.
D) make the terms reasonable and enforce the contract as reformed.

Question 55

Faiz enters into a contract to buy 350 acres from Grain Farm to cultivate hops and open a brewery. Faiz fails to make the purchase. Grain Farm's remedy is most likely

A) the amount that Faiz expected to invest in the brewery.
B) a percentage of Faiz's unrealized profit.
C) the difference between the contract and market prices of the land.
D) nothing-Grain Farm still owns the land.

Question 56

Ochre holds one ton of perishable fruit in storage for Produce Corporation. If Produce does not pay for the storage, under the doctrine of mitigation of damages, Ochre is held to a duty to

A) continue to store the fruit until Produce pays.
B) do whatever is reasonable to minimize the damages.
C) dispose of the fruit immediately.
D) set an example to deter similar misconduct in the future.

Question 57

Restore Inc. contracts to resurface the pools at Swim Park by June 1. Restore knows that if performance is not timely, Swim Park will have to delay its seasonal opening. Restore finishes the job June 15. In a suit for breach, Swim Park can recover

A) the cost of new pools.
B) the difference between the contract and market prices for the work.
C) the loss of profit from the delayed opening.
D) nothing-the work is done.

Question 58

To induce the sale of an auto parts business, Carmel fraudulently represents the worth of the inventory to Drew, who offers an inflated price. They enter into a contract to close the deal. On closer inspection, the buyer learns the true value of the goods. Drew can

A) impose a penalty on the seller.
B) force the seller to accept a more reasonable price.
C) rescind the contract.
D) none of the choices.

Question 59

Berry Farm hires Chun to repair its irrigation system on site by a certain date for $2,500, but Chun fails to perform. Berry Farm hires Diego to do the job for $2,000. In a suit for breach, Berry Farm may recover from Chun

A) nothing-there is only a technical injury.
B) compensatory damages.
C) punitive damages.
D) nominal damages.

Question 60

Ziplines Inc. enters into a contract to employ Scot as a manager for two years. If Ziplines breaches the contract, Scot has a duty to

A) do nothing.
B) reduce the damages that Scot might otherwise suffer.
C) rescind the contract with Ziplines.
D) act to punish Ziplines as an example to deter others from similar acts.

Question 61

Steel Mill Inc. agrees to deliver a certain quantity of steel to T-Bar Framing Corporation. The agreement states that delivery is to be within "9" days, although the parties intend "90" days. The seller cannot convince the buyer to amend the contract. The most appropriate remedy is most likely

A) a quasi contract.
B) reformation.
C) rescission.
D) specific performance.

Question 62

Armand orally agrees to pay Borges to seed and harvest a quarter of Armand's farm acreage for four planting seasons. After Borges prepares the land and plants the first crop, Armand says that the deal is off. Borges can most likely recover on a theory of

A) reformation.
B) restitution.
C) specific performance.
D) quasi contract.

Question 63

Lyn orally contracts to sell five acres of timber to Mountain Mill LLC. The buyer harvests the trees but fails to remit the full price. Because of the lack of a written contract, Lyn could most likely recover on a theory of

A) none of the choices.
B) restitution.
C) specific performance.
D) quasi contract.

Question 64

A contract for a sale of land from Beachfront Properties Inc. to City Development Corporation contains an erroneous legal description. The appropriate remedy for these parties is most likely

A) damages.
B) reformation.
C) a quasi contract.
D) specific performance.

Question 65

Cow's Milk LLC needs a certain part for its pasteurizing equipment to continue its operations and orders one for $3,000 from Dairy Supplies Inc. Cow's Milk tells Dairy Supplies that it must receive the part by Tuesday or it will lose $10,000. Dairy Supplies ships the part late. Cow's Milk can recover

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

Question 66

Complete Boring Corporation ships its only pump to Drills & Bits, Inc., the manufacturer, for repair. Complete Boring hires Everywhere Shipping, Inc., to take the pump to Drills & Bits and to return it to Complete Boring as soon as the repair is complete. Complete Boring is forced to suspend operations without a pump, but Everywhere Shipping does not know this. Complete Boring expects to be without the pump for five days and to lose profits of $5,000. When the pump is not returned by the end of the fifth day, Complete Boring rents a pump at a cost of $100 per day. Everywhere Shipping delays five more days before returning the pump. Complete Boring files a suit against Everywhere Shipping, asking for compensatory, consequential, and punitive damages. Will Complete Boring recover?

Question 67

Max orally agrees to construct two outbuildings on Ned's ranch for a stated price. Max performs, but Ned does not pay. To recover on a theory of quasi contract, Max must show that if Ned were allowed to retain the benefit of their bargain, Ned would

A) be restored to the status quo.
B) be unjustly enriched.
C) obtain a reasonable exchange of values.
D) profit from Max's performance.

Question 68

Home Furnishing Store's contract for a sale of its appliances provides that the only remedy for breach is replacement, repair, or refund of the purchase price. With respect to this provision, on a customer's suit for breach, a court is most likely to

A) enforce it.
B) reform it.
C) refuse to enforce it.
D) reallocate the risk expressed in it.

Question 69

Lunch Trucks, Inc., contracts to deliver and serve Meals Catering Service's products to its clients for $5,000 per event, payable in advance. Meals Catering pays the money, but Lunch Trucks fails to perform. Can Meals Catering rescind the contract? Can Meals Catering also obtain restitution? What does it mean to "rescind" a contract? How is a contract rescinded? What is restitution? How is restitution accomplished? Explain.

Question 70

Reese contracts to sell her Saucy Pizza restaurant to Titian. As part of the deal, Reese agrees not to open a competing business within a hundred-mile radius for ten years. Reese later sues Titian, alleging that the agreement is illegal. To enforce the covenant not to compete, the court will most likely

A) award damages for Reese's complete compliance with the terms.
B) reform the contract to make the distance and time limits reasonable.
C) rescind the contract and require restitution.
D) order specific performance.

Question 71

A contract between Speculative Investment Company and Trusts & Bonds Inc. excludes liability as a result of fraud. This exclusion is enforceable

A) because the parties are protected from liability.
B) because the parties consented to it.
C) if the parties have equal bargaining power.
D) under none of the choices.

Question 72

Dwellings Inc. enters into a contract with Estates Management to manage and maintain Dwellings's apartment complex. Their contract contains a clause that limits Estates's liability except in cases of gross negligence or willful misconduct. With respect to this clause, a court would most likely

A) enforce it.
B) reform it.
C) refuse to enforce it.
D) reallocate the risk expressed in it.