Deck 18: Contract Remedies

Question 1

Liquidated damages are an equitable remedy.

Answer 1

False

Question 2

Where a contract is unenforceable because of the statute of frauds, a party may recover the benefits conferred on the other party in reliance on the contract.

Answer 2

True

Question 3

Courts will usually uphold a liquidated damage clause that represents a reasonable approximation of the damages where the actual amount would be very difficult to determine.

Answer 3

True

Question 4

Equitable remedies are available any time the plaintiff chooses them over money damages.

Question 5

Equitable remedies result in money awards to the plaintiff.

Question 6

Compensatory damages are intended to protect the injured party's expectation interest.

Question 7

To fully compensate plaintiffs in breach of contract cases, courts always award punitive damages commensurate with the losses the plaintiffs have suffered.

Question 8

Under the rule in Hadley v. Baxendale, only foreseeable damages can be recovered.

Question 9

UCC "Election of Remedies" rules would require the aggrieved party to choose one remedy he wants to pursue and forego the others.

Question 10

An employee's promise of providing ordinary personal services may be enforced by an injunction against serving
another employer.

Question 11

Specific performance is the usual remedy for breach of contract.

Question 12

An action to recover damages for breach of contract may be maintained only if the plaintiff has sustained or can prove an injury or loss resulting from the breach.

Question 13

Consequential damages include lost profits and injury to person or property resulting from defective performance.

Question 14

If Kenneth signs an employment contract for one year but is fired without cause after two months and spends $500 in reasonable fees trying to find a comparable job, he may recover $500 in incidental damages.

Question 15

If the parties to a contract stipulate an amount that will be paid in the event of a breach (a liquidated damages clause), the courts will always enforce it.

Question 16

The majority of states allow the injured party who has been induced to enter into a contract by fraud to recover only "out-of-pocket" damages equal to the difference between the value of what she has received and the value of what she has given for it.

Question 17

Restitution is available as an alternative remedy for a party's repudiation of the contract.

Question 18

Restitution involves a return of consideration or its value to the aggrieved party.

Question 19

The basic remedy for misrepresentation is restitution.

Question 20

At its discretion, a court may grant the equitable remedy of injunction against breach of a contractual duty where damages would be inadequate.

Question 21

Monetary damages are the most frequently granted remedy for breach of contract.

Question 22

Miller made a contract to sell his condominium to Jefferson for $80,000. Two days later Miller changed his mind after discovering that he could have sold the property to another buyer for an additional $20,000. Jefferson sues and asks the court to have the property conveyed to him at the price of $80,000. Jefferson is seeking:

A) restitution.
B) punitive damages.
C) specific performance.
D) valid tender.

Question 23

Delay will have no effect on the power of avoidance.

Question 24

A contractor and Buckingham, Inc. have a contract, which calls for the contractor to build a building with the completion of it by June 15. If the building is not completed by that date, the contract calls for the contractor to pay $100 per day in damages. The $100 per day is:

A) punitive damages.
B) nominal damages.
C) liquidated damages.
D) an illegal penalty.

Question 25

Courts of equity will grant specific performance of contracts for personal service.

Question 26

The return to the aggrieved party of the consideration, or its value, which he gave to the other party is:

A) injunction.
B) restitution.
C) specific performance.
D) reformation.

Question 27

The purpose of reliance damages is to place the injured party in a position as good as he would have held had there been no contract.

Question 28

If a liquidated damage provision is found to be unenforceable, the injured party loses any remedy for breach of contract.

Question 29

Garrett ordered 100 pieces of 2 × 6 lumber from his supplier and paid upon delivery. Later, when he unpacked the lumber, he discovered that the supplier had delivered 2 × 4 lumber. After being notified, the supplier picked up the lumber, apologized, and gave Garrett his money back. The response the supplier made to rectify the breach is:

A) an injunction.
B) mitigation.
C) liquidation of damages.
D) None of these

Question 30

When an injured party is required to elect remedies, which of the following would be mutually exclusive?

A) Restitution and liquidated damages
B) Specific performance and compensation for incidental damages
C) Specific performance and restitution
D) Incidental and consequential damages

Question 31

Costs incurred to acquire a nondelivered performance from some other source are consequential damages.

Question 32

The process whereby a court "rewrites" or "corrects" a written contract to make it conform to the true intentions of the parties is:

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

Question 33

When a breach of contract occurs, the nonbreaching party is required to take reasonable steps to lessen or mitigate the damages that he may sustain.

Question 34

The expectation interest is protected by the contract remedy of:

A) restitution.
B) compensatory damages.
C) reliance damages.
D) All of these.

Question 35

A liquidated damage is a provision by which the parties agree in advance to the damages to be paid in the event of breach.

Question 36

If Jana, a minor, transfers property to Scott and Scott sells the property to a good faith purchaser for value before Jana avoids the transfer:

A) Jana loses the right to recover the property if the transfer involved goods.
B) Jana can recover the property as long as the property was a sale of goods.
C) Jana can recover the property whether it was real or personal property.
D) the good faith purchaser of goods for value receives a voidable title.

Question 37

Even if a party has the power to avoid a contract for lack of capacity, duress, or undue influence, the party will lose that power by affirming the contract.

Question 38

In relation to damages, the test of foreseeability is subjective.

Question 39

Restitution can be obtained where a voidable contract is avoided.

Question 40

Lost profits can never be recovered as damages since they are speculative and cannot be established with reasonable certainty.

Question 41

A power of avoidance held by a party may be lost if:

A) the contract is affirmed.
B) there are unreasonable delays in exercising the power.
C) the rights of third parties intervene.
D) All of these.

Question 42

Which of the following is correct with respect to election of remedies?

A) The Code rejects any doctrine of election of remedies; its remedies are cumulative.
B) The remedy of specific performance is inconsistent with that of restitution.
C) A person who seeks an injunction may also seek incidental damages for the breach.
D) All of these are correct.

Question 43

In which of the following situations will a court grant specific performance?

A) In a case involving breach of contract for the sale of real property or rare goods.
B) In contracts for personal services.
C) Where goods have been identified to the contract.
D) Where goods are mixed with other goods of the same type.

Question 44

Equitable remedies will not be granted where:

A) the terms of the contract are fair.
B) the consideration is adequate.
C) the terms of the contract are sufficiently certain.
D) the contract is tainted with fraud, duress, undue influence, mistake, or unfair practices.

Question 45

Bartow signed a contract to coach baseball for Washington High for a period of three years. After two years he is offered and accepts an assistant coach position at State University. Contract law will not allow Washington High to ask for:

A) specific performance.
B) payment of compensatory damages.
C) an injunction.
D) liquidated damages.

Question 46

Contract damages that put the injured party in as good a position as if the other party had performed are:

A) compensatory damages.
B) incidental damages.
C) consequential damages.
D) liquidated damages.

Question 47

A small damage amount fixed without regard to the amount of loss is known as:

A) reliance damages.
B) out-of-pocket damages.
C) nominal damages.
D) incidental damages.

Question 48

Damages for reliance include expenses for:

A) lost profits.
B) injury to the person.
C) preparing to perform.
D) punishment of the breaching party.

Question 49

The majority of states follow the rule in awarding damages for fraud.

A) benefit-of-the-bargain
B) out-of-pocket
C) liquidated
D) restitution

Question 50

Lynne agrees to buy Harriette's farm for $100,000 and puts $20,000 down. Then Lynne learns she is allergic to hay and repudiates the contract. If Harriette can sell the farm one month later for $90,000, she may:

A) keep Lynne's $20,000.
B) keep $10,000 of Lynne's down payment.
C) not keep any of the down payment money.
D) sue for specific performance.

Question 51

David enters into a contract to give Edward the right of first refusal to purchase a tract of land owned by David. David subsequently offers the land to Fred without first offering it to Edward. An appropriate remedy for Edward to seek would be:

A) injunction.
B) liquidated damages.
C) reformation.
D) punitive damages.

Question 52

Restitution is available when:

A) Elizabeth agrees to sell an acre of land to Vanessa, and after Vanessa makes a partial payment Elizabeth wrongfully refuses to transfer title.
B) Lawrence makes an oral contract to provide physical training for Lee for fourteen months and Lee discharges Lawrence after six months.
C) Gilbert uses undue influence to induce Cynthia to sell him an antique chair for $10.
D) Restitution is available in all of these cases.

Question 53

Barbara, an antique dealer, intentionally represents the value of an antique chest of drawers, as $6,000 when she has reason to know the value is considerably less. Margaret agrees to buy it for $5,500. It is worth $2,500. In a state that uses the "benefit-of-the-bargain" rule, Margaret's damage award would be:

A) $3,500.
B) $3,000.
C) $500.
D) $2,500.

Question 54

Carolyn agrees to sell Marianne an antique handmade lace tablecloth for $1,500. When Carolyn discovers that her cousin wants it too, she breaks the contract with Marianne. Marianne can ask the court to order:

A) nominal damages.
B) specific performance.
C) restitution.
D) equitable rescission.

Question 55

In which of the following situations is restitution available as a remedy?

A) As an alternative remedy for a party injured by breach
B) For a party in default
C) For a party who may not enforce the contract because of the statute of frauds
D) All of these are situations where restitution is available.

Question 56

Howard needs a truck to pull a 2,000-pound trailer. Gordon tells Howard, "My truck will pull a 2,000-pound trailer with ease." Relying on Gordon's statement, Howard buys the truck, but it will not pull a 2,000-pound trailer. If Gordon did not intend to deceive and Howard sues for nonfraudulent misrepresentation, he can recover:

A) punitive damages, but not out-of-pocket damages.
B) out-of-pocket and consequential damages, but not punitive damages.
C) out-of-pocket damages plus punitive damages.
D) nominal damages, because Howard should have known the capacity of the truck.

Question 57

Harry said to Marge, "I have a ring once owned by Marilyn Monroe. Would you like to buy it for $500?" Marge pays for the ring, but the next day a friend tells her that Harry had recently purchased the ring at a local department store. Marge enjoys wearing the ring and wears it constantly for twelve months. Finally, she goes to Harry and says, "Here is the ring you lied about. Give me my $500." Most likely Marge will:

A) get her money back since Harry's representation was fraudulent.
B) not get her money back since she should have investigated the facts about the ring more carefully.
C) get her money back since she is a good faith purchaser of merchandise.
D) not get her money back since she has affirmed the contract by taking an unduly long time to disaffirm.

Question 58

Busby contracts to build a house for Connell. Busby finishes approximately half of the house and quits. Connell files suit against Busby. Which remedy is not available to her?

A) Compensatory damages
B) Specific performance
C) Special damages
D) Incidental damages

Question 59

Vladimir entered into a contract to buy Daniel's collection of rare stamps. Vladimir mailed payment of $10,000 for the stamps to Daniel, but now Daniel tells Vladimir, "I'll never part with these stamps." Are the remedies of restitution and specific performance available to Vladimir?

A) Restitution: Yes; Specific Performance: Yes
B) Restitution: Yes; Specific Performance: No
C) Restitution: No; Specific Performance: Yes
D) Restitution: No; Specific Performance: No

Question 60

In the case of Hadley v. Baxendale, the plaintiff was seeking damages for:

A) restitution.
B) lost profits.
C) failure to convey land.
D) failure to specifically perform a contract.

Question 61

Bob's brother, Steve, planned to visit over Labor Day weekend. Together they planned to build a deck in Bob's backyard. Bob ordered the lumber, concrete, nails, and other supplies to be delivered on Friday. He also contracted to rent a saw for the weekend (Sat., Sun., and Mon.) at a cost of $20 a day. When he went to pick up the saw, the store had rented it to someone else. He drove all over town trying to borrow another, but he could only get one for Sunday, Monday, and Tuesday at a cost of $50 per day. Because they couldn't work on Saturday without a saw, Bob had to hire Mac at a cost of $80 to work with him on Tuesday and, of course, Bob had to take off from work. Calculate the damages to which Bob is entitled from the rental company. Explain.

Question 62

What interests of an injured party are protected by contract remedies?

Question 63

When will a court enforce a liquidated damage clause? When will a court refuse to enforce one?

Question 64

Answer the following:
a. When will a court specifically enforce a contract?
b. Under what circumstances will a court specifically enforce a contract involving personal services?
c. What remedy did the court award in the Madison Square Garden case? Why did the court award this remedy?

Question 65

Explain consequential damages. Give an example.

Question 66

Explain three limitations on monetary damages.

Question 67

What Article of the UCC governs sales of goods?

A) 1
B) 2
C) 3
D) None of these.

Question 68

Define incidental damages and give an example.