Deck 19: Breach of Contract and Remedies

Question 1

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

Answer 1

False

Question 2

Liquidated damages provisions usually are enforceable.

Answer 2

True

Question 3

A party seeking to recover in quasi contract must show that he or she acted as a volunteer in conferring a benefit on another party.

Answer 3

False

Question 4

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

Question 5

Punitive damages generally are awarded in lawsuits for breach of contract.

Question 6

Ordinarily, a waiver by a contracting party will not operate to waive subsequent, additional, or future breaches of contract.

Question 7

When one party breaches a contract, the other party can only sue for damages.

Question 8

In a contract for a sale of goods, the usual measure of compensatory dam?ages is the difference between the contract price and the market price.

Question 9

Restitution involves one party's recapture of a benefit conferred on the other party that has unjustly enriched him or her.

Question 10

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

Question 11

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 12

A liquidated damages provision specifies that a certain amount is to be paid in the event of a future default or breach of contract.

Question 13

A party seeking to recover compensatory damages cannot also recover in?cidental damages.

Question 14

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

Question 15

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

Question 16

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

Question 17

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

Question 18

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

Question 19

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

Question 20

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

Question 21

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 22

Metro Facilities, Inc., contracts to sell a parking garage to Nouveau Property Company. The contract pro?vides that if Metro does not close the deal by September 15, it must pay Nouveau one-half of the contract price. This provision is not enforceable because it is

A) a liquidated damages clause.
B) a waiver of breach clause.
C) a limitation-of-liability clause.
D) a penalty clause.

Question 23

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) quasi-contractual recovery.
B) reformation.
C) rescission.
D) specific performance.

Question 24

Dawson owns Evergreen, a complex under construction that will include commercial and residential suites, as well as a parking garage. Dawson allows First Call Construction, Inc., the contractor, to complete a stage of construction late. This waives Dawson's right to sue for

A) this delay only.
B) any subsequent breaches by First Call.
C) any future breaches by First Call or any subcontractor.
D) none of the choices.

Question 25

Rebecca hires Samson to perform at Becca's Bistro, but he breaches the agreement to accept a higher-paying job at Three Courses Dinner Theater. Rebecca files a suit against him. The court will most likely

A) award damages to Rebecca.
B) cancel Samson and Three Courses' contract.
C) order Samson to perform the contract with Rebecca.
D) reform Rebecca and Samson's contract.

Question 26

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

Question 27

Ileana orally agrees to pay Jaime to plant and harvest a quarter of Ileana's farm acreage for four corn-planting seasons. After Jaime prepares the land and plants the first crop, Ileana says that their deal is off. Jaime can most likely recover

A) in quasi contract.
B) in reformation.
C) in restitution.
D) on the parties' existing contract.

Question 28

Rashi contracts to work for Social Data Analysis Corporation dur?ing June for $4,500. On May 31, Social Data cancels the contract. Rashi declines a job of a different type and rank with Tech Collection, Inc., which would have paid $3500. Rashi files a suit against Social Data. As compensatory damages, Rashi can recover

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

Question 29

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 30

Fact Pattern 19-B1 (Questions B3-B4 apply)
Ambrose enters into a contract to buy 350 acres from Belle Vista Farms to cultivate grapes and open a winery.
Refer to Fact Pattern 19-B1. If Ambrose breaches the contract, Belle Vista's remedy would most likely be

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

Question 31

Cowtown Creamery, Inc., needs a certain part for its pasteurizing equipment to continue its operations and orders one for $3,000 from Dairy Supplies Company. Cowtown tells Dairy Supplies that it must receive the part by Tuesday or it will lose $10,000. Dairy Supplies ships the part late. Cowtown can recover

A) $13,000.
B) $10,000.
C) $3,000.
D) $0.

Question 32

Bread & Bagels Bakery enters into a contract with Cineplex for discounted tickets for Bread & Bagels' employees. Cineplex breaches the contract and Bread & Bagels enters into a contract with DigiMovies for the same service at a lower price. Bread & Bagels might be awarded nominal damages to

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

Question 33

Nonny agrees to buy a unique collection of Olympics memorabilia for $7,000 from Piper and sends $1,500 as a down payment. When Nonny sends Piper the rest of the price, she refuses to ship the collection. Nonny should seek

A) damages.
B) quasi-contractual recovery.
C) rescission.
D) specific performance.

Question 34

Fact Pattern 19-B1 (Questions B3-B4 apply)
Ambrose enters into a contract to buy 350 acres from Belle Vista Farms to cultivate grapes and open a winery.
Refer to Fact Pattern 19-B1. If Belle Vista breaches the contract, Ambrose's remedy would most likely be

A) a certain ratio of the amount that Ambrose 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 35

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

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

Question 36

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 37

A contract between Recreational Games & Rides, Inc., and Summer Fair Corporation includes a provision excluding liability as a result of fraud. This provision is

A) enforceable because the parties are protected from liability.
B) enforceable because the parties consented to it.
C) enforceable if the parties have equal bargaining power.
D) not enforceable.

Question 38

Meatpackers, Inc., enters into a contract with Nemiah's Ranch for the delivery of a certain number of beef cattle on a set schedule. Nemiah's 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 Nemiah's acted wrongfully.
B) provide Meatpackers with funds for a foreseeable loss beyond the contract.
C) provide Meatpackers with funds for its loss of the bargain.
D) punish Nemiah's and set an example to deter other suppliers from similar acts.

Question 39

Isaac holds one ton of perishable fruit in storage for Juice Smoothies Corpo?ration. 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 40

Handcrafts & Hobbies Store agrees to hire Iliana for one year at a salary of $600 per week. When Handcrafts & 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 Handcrafts & 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 41

Medical Eye Clinic Corporation enters into a contract with local musician Natalie, who agrees to perform for a meeting of Medical Eye's personnel to be held in its main office building. Before the date of the meeting, Natalie refuses to perform, citing a higher-paying gig. Meanwhile, Medical Eye contracts to sell the building to Optical Center, Inc., but before the transaction is complete, Perfect Vision Company offers to pay a higher price. Medical Eye re?fuses to transfer the building to Optical Center. In separate suits by Medical Eye against Natalie and by Optical Center against Medical Eye, each plaintiff seeks specific performance. How might the court rule in each case, and why?

Question 42

Lunch Trucks, Inc., contracts to deliver and serve Meals Catering Service's products to its clients for $5,000 per event, payable in ad?vance. Meals Catering pays the money, but Lunch Trucks fails to perform. Can Meals Catering rescind the contract? Can Meals Catering also ob?tain restitution? What does it mean to "rescind" a contract? How is a contract rescinded? What is restitution? How is restitution accom?plished? Explain.