Deck 15: Remedies for Breach

Question 1

A genuine estimate of damages contained in a contract as a term of the contract can best be described as

A) reliance damages.
B) expectation damages.
C) consequential damages.
D) liquidated damages.
E) nominal damages.

Answer 1

D

Question 2

Consequential damages are

A) those that do not flow naturally from the breach.
B) those that a defendant will not be liable to compensate a plaintiff for.
C) extra significant damages.
D) one stage removed form the immediate effects of a breach.
E) those that are not reasonably foreseeable.

Answer 2

D

Question 3

What are the implications when damages "flow naturally from the breach"?

A) Damages would not include the expected chain of events.
B) Damages include unusual or unexpected consequence of breach.
C) Loss resulting from breach is within the foreseeable boundaries of what the parties would have expected.
D) This allows one to use the natural person reasonability test.
E) Must communicate the significance of performance at time of forming the contract.

Answer 3

C

Question 4

In a case where a party to an agreement of previously determined penalties suffers due to a breach of contract,

A) the suffering party will seek specific performance.
B) the courts will assess punitive damages.
C) the courts will award nominal damages.
D) the courts will award liquidated damages.
E) the courts will award speculative damages.

Question 5

When a breach of contract has occurred the purpose of damages is to

A) compensate the wronged party for the loss incurred.
B) make the case an example to the rest of the community that this type of behaviour will not be tolerated.
C) provide a deterrent for the breaking of moral and legal obligations.
D) punish the one who has committed the breach by making him pay compensation.
E) have the damages reflect the severity of the breach.

Question 6

Lambhair Corp. contracted with Prof. Jones for a two week series of seminars with employees in the Appliance Division. Prof. Jones put in ten days of specific preparation only to have the series cancelled at the Appliance Division and rescheduled at the Tool Division. This change required Prof. Jones to put in another five days of specific preparation. This change was a breach of the original contract. Prof. Jones is entitled to what type of damages?

A) nominal
B) reliance
C) consequential
D) general
E) expectation

Question 7

An award of damages

A) usually accompanies a rescission.
B) seldom comes out of a case for breach.
C) aims to place the injured party in the same position as if the contract had been completed.
D) is a tool used by the courts to act as a punishment to those who breach a contract.
E) is an "equitable remedy" for breach.

Question 8

Specific performance will NOT generally be available for breach of a contract for:

A) contracts requiring unique personal skill or judgment
B) sale of works of art
C) sale of goods
D) sale of antiques
E) sale of goods that have been custom- made

Question 9

General damages are

A) an award of a reasonable price for work done or services performed at the request of one party but in the absence of a specific agreement as to the compensation for the goods or services.
B) an order requiring a defendant to do a specified act, most commonly to complete a transaction.
C) damages that flow naturally from the contract.
D) anything of value awarded to a party to acknowledge a breach of contract where the loss sustained is negligible.
E) an amount awarded for losses that cannot be quantified with precision in monetary terms but which nonetheless the court believes is necessary to compensate an injured party fairly.

Question 10

Ralph ordered the installation of a satellite dish from PrimeStar Ltd. for $595. The required minimum deposit was $95, however Ralph paid $200. When Ralph cancelled the order, PrimeStar refused to return the $200 calling it liquidating damages. Actual loss for a cancelled order is estimated by the plaintiff's attorney to be $75. The expected profits on this sale was $60. How much will Ralph end up paying for this cancelled order?

A) $200
B) $135
C) $95
D) $75
E) $60

Question 11

Farmer Gibson ordered an irrigation pump from Sinclair Farm Supply where he has an open account. When they attempted to deliver, he refused to accept, claiming he could get a better deal elsewhere. Legally, Gibson could be charged for all damages that naturally flow from this breach. Assuming Sinclair made free deliveries and it had more pumps than customers, the damages would include

A) only the expected profits on this item.
B) expected profits, delivery charge, and a restocking charge.
C) transportation as well as a restocking charge.
D) the damages associated with Gibson not being able to properly irrigate his land.
E) only two way transportation to Gibson's farm.

Question 12

Speedy Courier Service had a phrase on their order form that read, "We deliver on time or our delivery is free." In legal terminology, this is

A) an advertising gambit.
B) a self imposed penalty clause.
C) liquidated damages.
D) consequential damages.
E) a promotional come- on.

Question 13

Mitigation in contract law is best described as

A) helping the other party cope with the breach of contract.
B) avoiding adding unnecessary damages to the innocent party.
C) reducing the other party's liability under the contract.
D) the obligation to minimise the breach.
E) taking reasonable steps to reduce or eliminate damage which flows from a breach of contract.

Question 14

Hastro Toys Mft. operates on a "just- in- time" inventory basis. When one of its suppliers missed a 2:00 PM delivery of a key component, the entire assembly line was shut down for the balance of the day. Hastro is suing its supplier for damages.

A) reliance
B) consequential
C) general
D) liquidated
E) expectation

Question 15

Construction of the shopping centre was to be completed by October 15th (late penalties were included in the contract) and tenants like FabricLand would move in by November 1st. However, the contractor for the shopping center was 43 days late in completing and now FabricLand is suing the shopping centre owner for _ damages, and the shopping center owner is suing the contractor for damages.

A) consequential; reliance
B) general; consequential
C) expectation; consequential
D) expectation; liquidated
E) general; liquidated

Question 16

Houser Inc. (steel fabricators) agreed under contract to supply the steel for a new apartment complex for $47,000. However, when it came time to deliver, Houser insisted on an additional $4000, claiming the suppliers of steel had unexpectedly raised their prices. Disgusted with the turn of events, the contractor of the apartment complex purchased what he needed from another steel fabricator for $53,000 and commenced with a suit for damages against Houser Inc. What are the expectation damages the court will award?

A) $53,000
B) $51,000
C) $6000
D) $4000
E) $2000

Question 17

Casey Construction abandoned its $23 million north county road project after spending $7 million. (One progress payment of $5 million had been made.) The county immediately contracted with Beachwood Corp. to take over and finish the project for $21 million. Expectation damages for Casey Construction would be

A) zero, since Casey did $2 million of work where no payment was received.
B) the difference between $18 and $21 million.
C) the difference between $16 and $21 million.
D) the difference between $21 and $23 million.
E) none, only consequential damages might apply.

Question 18

Carlos, an antique dealer, contracted to buy an antique dining room set at a garage sale for $700. He made a down payment and agreed to return on the weekend to pick it up. Then Carlos contacted a former customer whom he knew wanted such an item. This customer agreed to pay $850 for the set. However, when Carlos returned, on the weekend (to where the garage sale had been) he found the dining room set had been sold to someone else (for $900) and had already been hauled away. Carlos was given back his down payment check. Does Carlos have any other claim to damages?

A) Yes, $200 of consequential damages.
B) Yes, $200 of expectation damages.
C) Yes, $150 of consequential damages.
D) No, there are no further damages.
E) Yes, for mental anguish.

Question 19

Rachel had been looking forward to her two weeks of vacation in Paris, France, with a Never Late Inc. tour group. The day before the tour was to leave Toronto, Rachel was told that the entire tour had to be cancelled because of a "mix- up in hotel accommodations". She was immediately given a full refund of her money. What sort of additional damages is Rachel entitled?

A) expectation- for cost of substitute tour
B) none- since she received all her money back
C) general- since there was mental anguish
D) nominal- to recognise the breach that did occur
E) consequential- since breach was the result of negligence in making hotel reservations

Question 20

Working on a firm order, Henry tried to deliver sixteen dozen roses to the Pilfrage Corp. for their valentine party. They would not accept delivery because they "changed their minds". Henry immediately found another buyer but at half the original price. In doing this, Henry was attempting to the damages resulting from Pilfrage's breach of contract.

A) eliminate
B) recover
C) cancel
D) exasperate
E) mitigate

Question 21

An order of specific performance

A) requires one party to a contract to refrain from acting in a particular manner.
B) requires that the defendant do a certain act, usually something not specified in the contract.
C) requires that the party in breach pay a specific monetary sum to the other party.
D) would always apply to the buyer of real property (i.e. land and buildings).
E) requires that the defendant do a certain act, usually fulfill his part of the contract.

Question 22

The purpose of an award of damages is to put the plaintiff in the position it would have been in had the contract been performed.

Question 23

Which premise most likely falls under the "specific performance" of equitable remedies?

A) A singer breaches a contract to sing because of a sore throat.
B) A home owner is forced to sell her house because of a court decision.
C) Land is sold to a realtor for an unfair price and the seller sues for loss of equity.
D) A restaurant customer refuses to pay for a meal and is made to do dishes.
E) A car is sold to a third party and the first party takes the loss.

Question 24

In which of the following situations is a court most likely to award punitive damages:

A) breach of a contract for sale of land
B) breach of a contract for sale of a business
C) breach of a construction contract.
D) breach of a contract for sale of goods
E) breach of a contract of employment

Question 25

An award of damages seeks to place the injured party in the same position as if the contract had not been completed.

Question 26

Which of the following is NOT an equitable remedy?

A) quantum meruit
B) punitive award
C) specific performance
D) injunction
E) rescission

Question 27

The remedy of rescission involves suspending the operation of a contract temporarily.

Question 28

Nominal damages are

A) assessed where a party commits a tort within the context of a contract.
B) where damages are determined by local bylaws.
C) used for allowing the case to go to a higher court.
D) awarded to serve as an acknowledgement to a breach of contract where no appreciable loss has been sustained by the promisee.
E) assessed with purely personal or passionate reasons.

Question 29

Jack's supplier fails to deliver the products Jack has ordered at the required time. Jack is expected to do what it can to reduce his losses. This is called mitigation of losses.

Question 30

A liquidated damages clause is the same as a penalty clause.

Question 31

Danny agreed to sell a large painting to Mary for $5,000. It has a sentimental value to Mary-being a painting of her house in 1938. Before delivery Danny discovered the sentimental interest of Mary and refused to sell it at the agreed upon price. Which of the following statements is correct?

A) Mary is not entitled to an equitable remedy because the subject of the contract is not real property.
B) Danny does not have to deliver the painting at the original price because of the doctrine of mistaken value.
C) Danny can demand compensation for the painting's full esthetic value.
D) Mary could claim the remedy of specific performance because the painting is so special to her.
E) Mary is entitled to damages of $5,000.

Question 32

The union's contract would not expire for five months, yet members were out in force picketing Sunnyville Paving Co. for higher pay. At two o'clock this afternoon Judge Lowbranden issued which was presented on the scene by Sheriff Quigly.

A) an official summons
B) a restraining order
C) a stop and desist order
D) a court injunction
E) an interlocutory injunction

Question 33

Chin Chang agreed to buy an antique dresser from Pedro for $2,500. He made a down payment of $750 and agreed to return and pick the item up at a later date. However, when he returned, Pedro refused to give him the furniture saying that he had found a buyer who would pay a higher price. Chin Chang may be entitled to which of the following equitable remedies:

A) injunction.
B) compensation.
C) rectification.
D) damages.
E) specific performance.

Question 34

All of the following may bar someone from obtaining an equitable remedy EXCEPT

A) if the plaintiff himself did not have "clean hands".
B) if no attempt was made by the defendant to mitigate damages.
C) if to do so would affect an innocent purchaser.
D) if there were unreasonable delays in taking the other party to court.
E) if the plaintiff is a minor and the contract couldn't be enforced against him.

Question 35

Onar Development stopped progress payments to its general contractor, Shape Construction. Upon the advice of their attorney, Shape decided to sue for rescission of the contract rather than collect damages for breach. Shape will most likely

A) file for bankruptcy.
B) get expectation damages.
C) get an injunction.
D) collect under quantum meruit.
E) ask for specific performance.

Question 36

Damages in contract are intended to punish the party that is liable for the breach.

Question 37

An injunction is available in a variety of circumstances, including where the contract does not contain a negative covenant.

Question 38

The Lockheart Community has a restrictive covenant which does not allow more than a four- foot solid fence within 15 feet of any public walkway. Ignoring the covenant, Mr. Bailey starts to build a six- foot rock wall along his front sidewalk. Mr. Bailey might be subject to

A) the community compliance marshal.
B) the building inspector.
C) a restraining order.
D) the sheriff's ordnance writ.
E) a court injunction.

Question 39

How can the judgment creditor extract money from the judgment debtor?

A) by requesting the sheriff to levy execution against the assets of the debtor
B) by relying on the plaintiff's legal council who is responsible for collecting the money awarded in the judgment
C) by obtaining a garnishee order against the creditor's wages
D) by having the court collect the money through its authorised collection agency
E) by instructing a court appointed councilor to set up a payment schedule, which if not followed, can amount to contempt of court for the debtor

Question 40

A person may recover damages even if the damages do not flow naturally from the breach.

Question 41

Troy Feldmon agreed to purchase a house from Jenny King for $60,000. Jenny King had previously agreed to sell the house to another individual but that transaction had not been completed due to the purchaser's default. Jenny was very concerned that steps be taken to ensure Troy was serious about completing the purchase so she demanded a deposit of $20,000 and that the contract state "in the event that the purchaser does not complete the transaction the entire deposit would be forfeited as liquidated damages". As it so happened, Troy was unable to complete the purchase due to an unexpected financial setback. Jenny King then declared the deposit forfeited. Will Troy be able to recover all or part of his deposit?

Question 42

Explain the circumstances under which a claim of quantum meruit would be successful.

Question 43

Name two equitable remedies. Describe three ways in which a party will lose its right to claim an equitable remedy.

Question 44

Give an example of damages that flow naturally from the breach of a contract.

Question 45

Distinguish an injunction order from an order for specific performance.

Question 46

Damages are a common law remedy. What is the purpose of damages and how do they achieve their purpose?

Question 47

What is the purpose of an award of nominal damages?

Question 48

Should you win a money judgment in the Court, how would you collect the money?

Question 49

Prompt Delivery Ltd. operates a delivery service between Toronto and Hamilton. On November 28th, Wellfield Oil Corp. contracted with Prompt Delivery to deliver a package from Wellfield's Toronto Office to its Hamilton Office. Dan Dickson is a driver for Prompt Delivery. He picked up the parcel from Wellfield's Toronto Office at 2:30 PM on November 28th-having had no clue as to its importance.
a. Using the Prompt Delivery van, Dan stopped at the local pub prior to leaving for Hamilton. He got into a fight with a patron and caused extensive damage to the furnishings. Can the pub owner sue Prompt Delivery? Can the patron sue Prompt Delivery?
b. Suppose Dan took three days to deliver the parcel instead of the normal one day, and as a result of not receiving the package in one day Wellfield had to shutdown its operation for two days, losing $2,500 per day. Who could Wellfield sue for their losses and what if anything could they recover?

Question 50

Why would courts be willing to give specific performance routinely in the purchase of real property, both for the seller as well as the buyer?

Question 51

On April 10, Mel entered into a contract to sell his house to Nan at a price of $300,000. Title was to transfer May
31. Nan paid Mel a deposit of $20,000. A clause in the contract between them said: "If the buyer does not complete as specified, the seller can elect to keep the deposit as liquidated damages." On April 30, Nan told Mel she could not complete the contract because she could not sell her own house. Mel immediately entered into a contract to sell his house to Paul for $320,000. Nan insists that Mel return her deposit because he has suffered no damages. Will a court order Mel to return her deposit?

Question 52

B.C. Metal Works agreed to purchase steel rod from Vancouver Smelters Ltd. Delivery was to take place on April 1st. On March 24th, Vancouver Smelters advised Metal Works that the steel rod could not be delivered because of production problems. Metal Works accepted the anticipatory breach of Vancouver Smelters and reserved their right to sue for damages. On April 1st, Metal Works commenced looking for an alternate supply of steel rod and located a supply in Seattle, Washington. The rods could not be delivered for seven days causing Metal Works to shutdown their operations for three days. Metal Works sued Vancouver Smelter for breach of contract. What legal obligation did Metal Works have and what remedy would they be entitled to?

Question 53

Are there any limitations placed on the damages that can be awarded for breach of contract under common law?

Question 54

Give an example of a business mitigating the affects of breach of contract by the other party.

Question 55

In an action to enforce a covenant in restraint of trade in an employment contract, the court may grant an injunction.

Question 56

Where a creditor serves an employer with an order that requires the employer to retain a portion of the debtor's wages each payday, the employer has been served with an execution order.

Question 57

It is sometimes difficult to measure damages. Explain that statement in the context of an award of general damages.

Question 58

Alice Munroe entered into a contract with Joe Green for the sale of Alice's car to Joe. Joe's plan was to use the car for parts. After the sale had been completed and the car was partially dismantled Joe discovered that the transmission had been cannibalised. In other words, some of the transmission parts had been removed. Joe wished to get his money back from Alice. Discuss whether or not he is entitled to his money back.