Deck 19: Breachapter of Contract and Remedies

Question 1

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.

Answer 1

True

Question 2

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

Answer 2

False

Question 3

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 3

False

Question 4

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

Question 5

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 6

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

Question 7

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

Question 8

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 9

Liquidated damages provisions normally are unenforceable.

Question 10

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

Question 11

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 12

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

Question 13

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

Question 14

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

Question 15

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

Question 16

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

Question 17

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

Question 18

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

Question 19

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

Question 20

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 21

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 22

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 23

A contract clause that excludes liability for willful misconduct is enforceable if the provision is sufficiently prominent in the body of the contract.

Question 24

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

Question 25

Restitution may be available in a situation in which damages cannot be proved or are difficult to prove.

Question 26

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 27

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

Question 28

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 29

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

Question 30

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

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

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 33

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

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

Question 34

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 35

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

Question 36

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 37

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

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

Question 38

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 39

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

Question 40

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

Question 41

Concrete Company agrees to lay a foundation for Diamond Properties, but fails to finish the job. Diamond hires Earth Projects Inc. to complete the work. In a suit for breach, Diamond may recover from Concrete

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 42

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 43

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 44

Shi's lease of retail premises from Thuy requires Shi to pay certain fees, subject to the landlord's proof of the correct amount. Thuy overcharges Shi 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 45

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

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

Question 46

Food Court Inc. leases space to Gourmet Café. Gourmet abandons the premises when the amount of the rent due on the lease is $5,000. Food finds a new tenant, Hasty Bowls, which agrees to pay $3,500 for the space over the remainder of Gourmet's term. Food's measure of damages is

A)$5,000.
B)$1,500, minus any expenses reduced by mitigating the damages.
C)$1,500, plus any additional expenses to find the new tenant.
D)$6,500.

Question 47

Sparkle 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 48

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 49

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 50

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 51

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 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, asking the court to order her to perform at his club. 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

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 54

Renew Turf Inc. enters into a contract with Sports Park to provide surface material for Sports Park's baseball field 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 55

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 56

Dory enters into a contract with Eton for the construction of a Fast Food franchise, according to a certain schedule. The parties perform some preparatory steps, but Eton materially and willfully fails to begin work on the specified date. To rescind the contract, Dory 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 57

Len contracts to work for Media Corporation during May for $4,500. On April 30, Media cancels the contract. Len declines a similar job with New Ads Inc., which would have paid $3,500. Len files a suit against Media. As compensatory damages, Len can recover

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

Question 58

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 59

Copper Wire 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 60

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 61

Jet enters into a contract to buy a certain commercial building from Kim. At the closing, Kim refuses to transfer title. In a suit for breach, Jet 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 62

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 63

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 64

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 65

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 66

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 67

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 68

Permian Oil Corporation ships its only pump to Quality Repair Inc. for repair. Permian hires Route Shipping Inc. to take the pump to Quality and to return it as soon as the repair is complete. Permian is forced to suspend operations without the pump, but Route does not know this. Permian expects to be without the pump for five days and to lose profits of $50,000. When Route does not return the pump by the end of the fifth day, Permian rents a substitute at a cost of $1,000 per day. Route delays five more days before returning the pump. Permian files a suit against the shipping company, asking for compensatory, consequential, and punitive damages. Will Permian recover?

Question 69

Lunch Truck Inc. contracts to deliver and serve Meal Catering Service's products to its clients for $5,000 per event, payable in advance. Meal pays the money, but Lunch fails to perform. Can Meal rescind the contract? Can Meal 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 a 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

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 72

Dwelling Inc. enters into a contract with Estate Management to manage and maintain Dwelling's apartment complex. Their contract contains a clause that limits Estate'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.