Deck 19: Breach of Contract and Remedies

Question 1

Consequential damages are foreseeable damages that arise from a party's breach of a contract.

Answer 1

True

Question 2

Under the doctrine of mitigation of damages, the duty owed depends on the nature of the contract.

Answer 2

True

Question 3

The measure of compensatory damages often varies by type of contract.​

Answer 3

True

Question 4

An award of damages for a breach of contract can elevate the nonbreaching party to a better position than he or she would have been in if the contract had not been breached.

Question 5

A remedy is the relief provided to an innocent contracting party when the other party breaches the contract.

Question 6

In a contract for a sale of goods, the usual measure of compensatory damages is the difference between the retail price and the wholesale price.

Question 7

A breach of contract entitles the nonbreaching party to sue for monetary damages.

Question 8

A party seeking to recover compensatory damages can also recover incidental damages.

Question 9

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

Question 10

Nominal damages are awarded for the breach of a contract to nominate someone or something to a higher office, position, or category.

Question 11

Ordinarily, the remedy for a seller's breach of a contract for a sale of real estate is damages.

Question 12

Punitive damages are generally not awarded in an action for breach of contract.

Question 13

The most common remedies available to a nonbreaching party include damages, rescission and restitution, and specific performance.

Question 14

In most situations, when a breach of contract occurs, the innocent injured party is held to a duty to mitigate the damages.​

Question 15

Consequential damages are awarded for damage caused by special circumstances beyond a contract itself.

Question 16

Expenses that are caused directly by a breach of a contract are known as primary damages.

Question 17

Compensatory damages compensate a party injured by a breach of contract by punishing the party that breached the contract.

Question 18

Usually, a court will not award an equitable remedy unless the remedy at law is inadequate.

Question 19

Damages that compensate the nonbreaching party for the loss of a bargain are known as consecutive damages.

Question 20

The injury suffered by a nonbreaching party due to the breach of a contract may be remedied by payment of coincidental damages.

Question 21

Whether a contract's limitation-of-liability clause will be enforced depends on the type of breach that is excused by the provision.​

Question 22

Reformation is an equitable remedy that allows a court to rewrite a contract to suit itself.

Question 23

Clay Pots pays Dora $25,000 to propose an online marketing campaign. Two days later, Dora tells Clay Pots that she has accepted a job with its competitor Earthenware Inc. and cannot plan the campaign. As compensatory damages, Clay Pots can recover

A) ​$250,000.
B) ​$25,000.
C) ​$2,500.
D) ​$0.

Question 24

Courts order reformation most often when fraud or mutual mistake is present.

Question 25

A party seeking to recover in quasi contract must show that the other party has been unjustly enriched.

Question 26

Global Enterprise enters into a contract with HealthCare Insurance to obtain insurance for Global employees. HealthCare breaches the contract and Global is awarded compensatory damages. The purpose is to

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

Question 27

A contract may include a clause stating that damages will be limited to a maximum amount.

Question 28

When a waiver of a breach of contract occurs, the party waiving the breach cannot take any later action on it.

Question 29

Ready Repair Service enters into a contract to fix washers and dryers in Scrub n' Dry Company's coin-operated laundries. If Ready Repair breaches the contract, Scrub n' Dry can

A) ​do nothing but make a deal with a different service provider.
B) ​do nothing but temporarily suspend operations and wait.
C) ​file a criminal complaint against Ready Repair.
D) ​sue Ready Repair for damages.

Question 30

Specific performance will not be granted unless the party's legal remedy is inadequate.

Question 31

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

Question 32

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

A) ​$3,000.
B) ​$2,000.
C) ​$1,000.
D) ​$0.

Question 33

Liquidated damages provisions are generally unenforceable.

Question 34

Restitution is limited to rescission cases.

Question 35

Ordinarily, the remedy for a seller's breach of a contract for a sale of real estate is specific performance.

Question 36

Restitution involves one party's recapture of a benefit through which another party has been unjustly enriched.

Question 37

A liquidated damages provision specifies that a certain amount is to be paid on a breach of contract when the nonbreaching party elects to receive cash.

Question 38

Nominal damages are designed to punish a wrongdoer and set an example to deter similar conduct in the future.

Question 39

​Rescission is an equitable remedy used when the parties have imperfectly expressed their agreement in writing.

Question 40

Rita contracts to work for Social Media Corporation (SMC) during April for $4,500. On March 31, SMC cancels the contract. Rita declines a job of a different type and rank 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 in shares of SMC stock.
D) ​$0.

Question 41

Equine World enters into a contract with FabuloSales to provide Equine World with a plan to repurpose its marketing strategy. If FabuloSales breaches the contract, Equine World has a duty to

A) ​reduce the damages that Equine World might otherwise suffer.
B) ​reduce the loss that FabuloSales might otherwise suffer.
C) ​punish FabuloSales and deter others from similar acts.
D) ​take no action.

Question 42

Excavate n' Fill, Inc., enters into a contract with Fred to fill and landscape an abandoned quarry on Fred's land. Fred advances Excavate n' Fill 10 percent of its cost. The parties rescind the contract. Excavate n' Fill's refund of the payment is

A) ​a penalty.
B) ​liquidated damages.
C) ​restitution.
D) reformation.​

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 nominal-damages clause.
C) ​a waiver-of-breach clause.
D) ​a penalty clause.

Question 44

Oxley contracts to buy a pizza oven from Restaurant Supplies Warehouse (RSW) for $2,500, but RSW fails to deliver. Oxley buys the appliance else-where for $3,500. Oxley's measure of damages is

A) ​$1,000.
B) ​$1,000 plus incidental damages.
C) ​incidental damages only.
D) ​$0.

Question 45

Dry Gulch Farms hires Elliot to repair its irrigation system on site on a certain date for $2,500, but Elliot does not show up as agreed. Dry Gulch hires Fernando to do the job for $2,000. Dry Gulch may recover from Elliot

A) ​nothing.
B) ​compensatory damages.
C) ​consequential damages.
D) ​nominal damages.

Question 46

Isaac holds one ton of perishable fruit in storage for Juice Smoothies Corporation. Juice Smoothies does not pay for the storage. Isaac sells the fruit to Kayo Beverage Company. This sale represents

A) ​a breach of contract.
B) ​a mitigation of damages.
C) ​liquidated damages.
D) ​a quasi contract.

Question 47

Porches & Verandas, Inc., agrees to build a screen porch for Quinn, but fails to complete the job. Quinn hires Ramadas, Inc., to finish the project. Quinn may recover from Porches & Verandas

A) ​the contract price less costs of materials and labor.
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 48

Tile & Grout (T&G) contracts to resurface the insides of the pools at Water Park. T&G knows that without the resurfacing, Water Park will have to delay its seasonal opening. T&G does not perform as promised. As consequential damages, Water Park can recover

A) ​the cost of new pools.
B) ​the difference between T&G's price and the eventual cost of resurfacing.
C) ​the loss of profit from the delayed opening.
D) ​nothing.

Question 49

Handicrafts & Hobbies Store agrees to hire Iliana for one year at a salary of $600 per week. When Handicrafts & Hobbies cancels the contract, Iliana spends $150 to obtain a similar job that pays $450 per week for a year. Iliana is entitled to recover

A) ​the amount of the wages that Handicrafts & Hobbies promised only.
B) ​the difference between the wages at the two jobs only.
C) ​the difference between the wages at the two jobs plus $150.
D) ​$150 only.

Question 50

Guido and Hal want to rescind their contract under which Guido sold Hal a mountain bike for $100. To rescind the contract

A) ​Guido must return the $100 and Hal must return the bike.
B) ​Guido must return the $100 only.
C) ​Hal must return the bike only.
D) ​the parties can keep the "benefits" of their bargain.

Question 51

Bread & Bagels Bakery (B&B) enters into a contract with CinePass for discounted movie tickets for B&B's employees. CinePass breaches the contract and B&B enters into a contract with Dine+View for the same service at a lower price. B&B might be awarded nominal damages to

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

Question 52

Rig Heli-Pads, Inc., enters into a contract to employ Scott as an on-site project manager for two years. If Rig breaches the contract, Scott has a duty to

A) ​do nothing.
B) ​reduce the damages that Scott might otherwise suffer.
C) ​rescind the contract with Rig.
D) ​punish Rig and set an example to deter others from similar acts.

Question 53

Mother & Daughter Jewelers breaches its lease with Longview Mall and vacates the premises six months before the end of the term. In some states, Longview would have to

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

Question 54

Cow's Milk Creamery, Inc., needs a certain part for its pasteurizing equipment to continue its operations and orders one for $3,000 from Dairy Supplies Company. 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 55

Fact Pattern 19-1
Andre enters into a contract to buy 350 acres from Belle Vista Farms to cultivate grapes and open a winery.
Refer to Fact Pattern 19-1. If Belle Vista breaches the contract, Andre's remedy would most likely be

A) ​the amount that Andre expected to invest in the project.
B) ​a percentage of Belle Vista's unrealized profit.
C) ​the difference between the land's contract and market prices.
D) ​specific performance.

Question 56

Metro Holding Company agrees to sell a vacant lot to New Town Property LLC. The contract provides that if Metro does not close the deal by October 15, it must pay New Town one-half of the contract price. This provision is not enforceable because it is

A) ​a liquidated damages clause.
B) ​an exculpatory clause.
C) ​a limitation-of-liability clause.
D) ​a penalty clause.

Question 57

Renew Turf, Inc., enters into a contract with Sports Park to provide surface material for Sports Park's baseball fields by October 1 for a series to begin October 5. The contract specifies an amount to be paid if the contract is breached. This is a liquidated damages clause if the amount is

A) ​meant to pay for additional liquid sealant in the event of damage.
B) ​a reasonable estimate of the loss on a breach.
C) ​designed to penalize the breaching party.
D) ​intended to quickly provide cash to the nonbreaching party.

Question 58

Builders, Inc., agrees to construct an office building for Champ Fitness Clubs, Inc. The project proceeds according to plan, but before it is done, Champ tells Builders to quit. Builders may recover

A) ​the contract price less costs of materials and labor.
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 59

Meatpackers, Inc., enters into a contract with Nevada Ranch for the delivery of a certain number of beef cattle on a set schedule. The ranch delays the first delivery for five days, aware that Meatpackers loses a certain percentage of profit each day. An award to Meatpackers of consequential damages would

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

Question 60

Fact Pattern 19-1
Andre enters into a contract to buy 350 acres from Belle Vista Farms to cultivate grapes and open a winery.
Refer to Fact Pattern 19-1. If Andre breaches the contract, Belle Vista's remedy would most likely be

A) ​the amount that Andre expected to invest in the project.
B) ​a percentage of Andre's unrealized profit.
C) ​the difference between the land's contract and market prices.
D) ​specific performance.

Question 61

Ricky agrees to sell his Sunrise Breakfast Café to Tia. As part of the deal, Ricky signs a covenant not to open a competing business within a hundred-mile radius for ten years. If this covenant is later determined to be unreasonable, the appropriate remedy is most likely

A) ​damages.
B) ​reformation.
C) ​rescission.
D) ​specific performance.

Question 62

Ruth owns Skyview, a complex under construction that will include commercial and residential suites, and a parking garage. She allows Town Contracting, the contractor, to complete a stage of the project late. This waives Ruth's right to sue for

A) ​this delay.
B) any subsequent breaches.
C) ​any past breaches.
D) ​none of the choices.

Question 63

Leif contracts to sell his Micro Brewery & Pub to Naomi on April 1. On March 15, Leif tells Naomi that he will not go through with the deal. Naomi can recover

A) ​the cost of any other property that Naomi would find suitable.
B) ​the cost of a similar, nearby brewery and pub.
C) ​the Micro Brewery & Pub.
D) ​nothing.

Question 64

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 65

Forest Lumber Company orally contracts with Gail for the purchase of five acres of Gail's timberland. Gail makes the transfer but Forest Lumber does not pay the price. Gail could most likely recover on a theory of

A) ​reformation.
B) ​restitution.
C) ​liquidated damages.
D) ​quasi contract.

Question 66

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 the contract.
D) ​reform Dino and Eve's contract.

Question 67

River Vista Inc. enters into a contract with Stable Realty Management to manage and maintain River Vista's commercial real estate. Their contract provides that neither party can recover damages for a non-fraudulent or unintentional breach. This is

A) ​a limitation-of-liability clause.
B) an exculpatory clause.​
C) ​a liquidated damages clause.
D) ​a quasi contract.

Question 68

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

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

Question 69

Isabel orally agrees to buy a unique collection of nineteenth-century cowboy memorabilia for $10,000 from Jessie and sends $2,500 as a down payment. When Isabel pays the rest of the price, Jessie refuses to ship the collection. Isabel should seek

A) ​damages.
B) ​restitution.
C) ​rescission.
D) ​specific performance.

Question 70

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

A) ​reformation.
B) ​restitution.
C) ​liquidated damages.
D) ​quasi contract.

Question 71

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 72

Ridgeview Mining Inc. agrees to deliver a certain quantity of oil to Static Energy Corporation. The agreement states that delivery is to be within "9" days, although the parties intend "90" days. Ridgeview cannot convince Static to amend the contract. Ridgeview should seek

A) ​damages.
B) ​reformation.
C) ​rescission.
D) ​specific performance.