Deck 14: The Termination of Contracts: Breach of Contract

Question 1

Money damages are intended to place the injured party in the same position he or she would have been in if the contract had been carried out.

Answer 1

True

Question 2

If a contract is rescinded, the parties may keep the consideration received.

Answer 2

False

Question 3

For fraud to exist, a false statement must be made or a material fact concealed.

Answer 3

True

Question 4

Specific performance is an equitable remedy.

Question 5

Duress and undue influence have the same meaning.

Question 6

A minor breach of contract discharges the contract.

Question 7

Mistakes about a contract may be either unilateral or mutual.

Question 8

A material breach of contract discharges the contract.

Question 9

Damages awarded for an actual loss or injury are called liquidated damages.

Question 10

Contracts are usually breached after the date set for performance.

Question 11

Mitigation of damages is intended to ensure that the damages awarded are not

A) illegal.
B) inadequate.
C) nominal.
D) excessive.

Question 12

In assessing damages for an actual loss, a court will usually grant a plaintiff

A) compensatory damages.
B) nominal damages.
C) punitive damages.
D) liquidated damages.

Question 13

Money damages awarded for a breach of contract are an example of a legal remedy.

Question 14

Money damages are the usual remedy for a breach of contract.

Question 15

Defenses are the reasons offered by a defendant that release her or him from liability or responsibility.

Question 16

Failure to perform one's duty under a contract is

A) an actual breach.
B) illegal.
C) unethical.
D) voidable.

Question 17

As soon as a breach occurs, the victim has a duty to

A) notify the court.
B) mitigate the damages.
C) sue the breaching party.
D) contact a lawyer.

Question 18

Specific performance may be granted when money damages do not fairly compensate for a loss.

Question 19

Pilati signed a contract to work as a consulting engineer for the Radtech Company beginning January 1. When Pilati reported to work on January 1, he was told that the position of consulting engineer had been abolished but that he could have a job in the marketing department. He refused. His contract with the company is discharged because of a(n)

A) anticipatory breach by the Radtech Company.
B) material breach by the Radtech Company.
C) anticipatory breach by Pilati.
D) material breach by Pilati.

Question 20

Rescission of a contract is generally a voluntary act by the parties.

Question 21

Damages to be awarded to an injured party in case of a breach of contract may be determined by the parties in advance and stated in the contract. These damages are called

A) substantial damages.
B) inconsequential damages.
C) liquidated damages.
D) equitable damages.

Question 22

Reber hurriedly signed a form that he assumed was a request for a sample copy of a set of encyclopedias, valued at $57.50. Later, it developed that he had actually signed an order for the complete set, valued at $575. When the set was delivered, Reber refused to accept it and claimed he was not bound by the agreement because of the mistake. Was Reber legally bound by the agreement?

A) Yes; any written offer and acceptance makes a binding contract.
B) Yes; a mistake due to carelessness does not discharge the contract.
C) No; a sale of goods for $500 or over is not valid when the sale was made as the result of a mutual mistake.
D) No; misrepresentation by a salesperson will make a contract voidable.

Question 23

Rodell Construction Co. contracted to build several greenhouses for Delmar Corp. The specifications in the contract called for the use of Apex glass. By mistake Rodell installed Remco glass which is of slightly lesser quality than Apex, but in all other respects met Delmar's needs. Which of the following statements is correct?

A) Rodell must install Apex glass or Delmar will not be obligated to accept the greenhouses.
B) Delmar's recovery will be limited to money damages because Rodell's breach of contract was not material.
C) Delmar will not be able to recover any damages from Rodell because the breach was inadvertent.
D) Rodell did not breach the construction contract because Remco glass was substantially as good as the Apex glass.

Question 24

Terry agreed to sell an antique lamp to her neighbor for $300. Later that day, she decided she would rather sell it to another person who offered her $400. The neighbor has sued. The court will most likely rule that Terry must sell the lamp to the

A) other person, but for only $300.
B) other person for $400.
C) neighbor for $400.
D) neighbor for $300.

Question 25

A breach of contract that occurs before the performance date is called a(n) ____________________.

Question 26

A person who wishes to bring an action against another based on fraud must first show that there has been either a false statement or a concealment of a(n) ____________________ fact.

Question 27

Equitable remedies are usually allowed by courts

A) when money damages will not adequately compensate the injured party for his or her loss.
B) only when fraud or duress is involved.
C) in place of nominal damages.
D) all of these.

Question 28

Jameson and French entered into a contract in which Jameson was required to deliver merchandise to French by January 19. On January 5, Jameson told French that he (Jameson) had no intention of delivering the merchandise required by the contract. Prior to January 19, French may successfully sue Jameson for

A) accord and satisfaction.
B) substantial performance.
C) liquidated damages.
D) anticipatory breach.

Question 29

Which of the following remedies is not generally allowed in a breach of contract suit?

A) Punitive damages
B) An injunction
C) Rescission
D) Specific performance

Question 30

Smart Computer Services had a service contract with Johnson College to maintain all of the college computers used for instructional services. The college depended heavily on its computer system being maintained properly at all times. A liquidated damage clause in the contract provided that Smart Computers pay $500 to Johnson College for each day that Smart was late responding to a service call. On October 10, Smart was notified that Johnson College's computer system failed. Smart, however, did not respond to the college's request until October 15. If Johnson College sues Smart Computer Services under the liquidated damages provision of the contract, Johnson College will

A) win, unless the liquidated damage provision was determined to be a penalty.
B) win because, regardless of the circumstances, the liquidated damages provision is valid.
C) lose, because Smart's breach is only a minor.
D) lose, because the liquidated damages clause in the Smart/Johnson College contract was against public policy.

Question 31

An actual ____________________ of ____________________ occurs when one party to a contract fails to perform the obligations required.

Question 32

State statutes generally allow punitive damages to be awarded for a breach of contract

A) when the contract violates the statute of limitations.
B) when the breaching party fraudulently caused the breach.
C) when the contract is illegal.
D) all of these.

Question 33

A victim of a breach of contract will be granted specific performance in a contract to

A) buy a 1990 car.
B) purchase 100 shares of stock.
C) purchase a $130,000 house.
D) hire a professional singer for a party.

Question 34

Arnold contracted to sell Bielar an office building for $500,000. The entire amount according to the contract was to be paid at the closing. Arnold refused to close the deal. Bielar sued Arnold. To what relief is Bielar entitled?

A) Punitive damages
B) Injunction
C) Specific performance
D) Rescission

Question 35

Under threat of bodily harm, Jones signed a contract for the purchase of an apartment building. He may later have this contract set aside on the grounds of

A) duress.
B) fraud.
C) undue influence.
D) battery.

Question 36

Babitt entered into a contract with Gurtz to build an indoor swimming pool. The price was $15,000. Gurtz failed to do the work, so Babitt contracted with Dao to do the work for the same price ($15,000). Babitt then sued Gurtz for breach of contract. Babitt will receive

A) liquidated damages.
B) compensatory damages.
C) nominal damages.
D) both compensatory and nominal damages.

Question 37

Of the following, the one that is not an equitable remedy is

A) punitive damages.
B) specific performance.
C) an injunction.
D) rescission.

Question 38

Mintz sued Jacobs for breach of contract. The court awarded Mintz $1 as damages. This amount is known as

A) liquidated damages.
B) nominal damages.
C) premeditated damages.
D) abnormal damages.

Question 39

A(n) ____________________ is a course of action available to an injured party to obtain satisfaction for a breach of contract.

Question 40

A(n) ____________________ is a court order that forbids a person from doing a certain act.

Question 41

(a) Are contracts made under the influence of fraud, duress and undue influence void or voidable? (b) What rights do victims of one of these acts have?

Question 42

Fraud, duress, and undue influence make a contract ____________________.

Question 43

What are the four elements that must exist to prove fraud?

Question 44

A person who forces another to enter into a contract through violence or threats is guilty of ____________________.

Question 45

An error about certain material facts made by one party to a contract is called a(n) ____________________.

Question 46

Under what circumstances can an injured party seek compensation in the form of (a) compensatory damages and (b) consequential damages?

Question 47

What is the theory behind a liquidated damages clause in a contract?

Question 48

Sometimes a breach occurs before the performance date of a contract. What is this type of breach called?

Question 49

To be a defense in a suit for breach of contract, a mistake about some fact in a contract must have been made by ____________________ parties.

Question 50

The voluntary mutual surrender and discharge of each party's contractual rights under a contract is called ____________________.