Deck 9: The End of the Contractual Relationship

Question 1

Which of the following would most likely result in the court finding the contract had been discharged by frustration?

A) Moore, a sculptor, was delivering a $15,000 work when he lost control of the car and the work was crushed. He had been drinking heavily and had not bothered to wrap or box the work.
B) McGee contracts to give a lecture at a convention on modern marketing, but the convention was cancelled because of an epidemic.
C) Cooper contracts to deliver ten bushels of ripe tomatoes to Haig's restaurant, and Cooper's tomato crop is destroyed by hail a few days before the delivery date.
D) McDonald agreed to buy Thornburn's horse, but unknown to both of them, at the time of the contract the horse was dead.
E) Binks agreed to purchase the business from Kealy, but Binks suffered such great losses in the recent stock market crash that he couldn't afford to go through with it.

Answer 1

B

Question 2

Which of the following is false with regard to remedies for breach of contract?

A) Specific performance is an equitable remedy forcing a person to comply with the terms of the contract.
B) The victim of a breach cannot recover damages that he could have avoided if he had tried to mitigate his loss.
C) A person who breaches a contract is liable for all the foreseeable loss that directly and naturally flows from the breach.
D) Damages are awarded by the court to a person who has suffered loss because of a breach of an essential term of the contract, but are not awarded for a breach of an non-essential term, i.e., a warranty.
E) An exemption clause that a seller claims absolves him from liability may be of no effect if the seller has committed a "fundamental breach" of the contract.

Answer 2

D

Question 3

Which of the following statements is true with respect to the law of damages?

A) A deposit is an amount of money a party to a contract agrees to forfeit if he or she breaches the contract.
B) Damages are intended to punish the wrongdoer for breaching the contract.
C) Damages are awarded for a breach of a condition but not for a breach of warranty.
D) Damages are an order from the court for the breaching party to perform the contract as he or she agreed to do.
E) If a contract contains a liquidated damages clause, the party who has breached the contract has agreed to pay to the party wronged an amount equal to all the loss that directly and naturally flows from the breach.

Answer 3

A

Question 4

Which of the following is one of the remedies generally available for a breach of contract?

A) Novation
B) Anticipatory breach
C) Repudiation
D) Specific performance
E) Punitive damages

Question 5

In which one of the following instances would the seller most likely succeed in an attempt to escape liability by the use of an exemption clause?

A) The exemption clause that covers the situation was posted in plain view and was brought to their attention at the place and time of contract.
B) There has been a breach of the fundamental obligation of the contract, and the court holds that, on its true construction, the parties did not mean it to cover a serious breach.
C) The store had posted at the entrance to the dressing rooms a large sign reading "Not responsible for stolen articles," and the customer lost articles in a fire that swept through the dressing rooms.
D) The clause says there will be no liability for breach of a condition and the breach that occurs is minor in nature.
E) The purchaser of goods, after the sale, is sent an invoice on which the exemption clause is printed in boldface type at the top of the first page.

Question 6

Which of the following statements is correct with respect to breach of contract?

A) When a contract for the purchase of goods is breached, the warranty will require that the goods be repaired by the seller.
B) When a condition is breached, the victim can treat the contract as ended.
C) When a condition is breached, a person can only sue for damages but must perform their part of the contract.
D) When a warranty is breached, the victim can treat the contract as ended.
E) When a contract is repudiated before performance is due, the victim must wait until the time of performance before taking any action.

Question 7

On the February 1, Smyth contracted to buy Dupont's van. They had agreed that Smyth would pay the price of $7,000 on March 1 and take delivery and the risk on that date. Smyth then contracted to sell the van in Smithers on March 5 for $7,600. On February 22, Dupont called Smyth and said he wasn't going to sell it; he decided to keep it. On these facts, which of the following is false?

A) Smyth could refuse to acknowledge a breach, but that would result in the possibility that the contract could be breached later.
B) Smyth could acknowledge that Dupont was in breach but has to wait until after the performance date to sue him for breach of contract.
C) Dupont's call is an express repudiation of the contract and is an anticipatory breach.
D) Smyth could agree to call off the contract; neither of them had yet performed.
E) Smyth could refuse to acknowledge a breach and press Dupont to complete the contact.

Question 8

Which of the following is true with regard to remedies for breach of contract?

A) Damages are awarded by the court to a person who has suffered loss because of a breach of an essential term of the contract, but are not awarded for a breach of an non-essential term, i.e., a warranty.
B) If the seller has committed a "fundamental breach" of the contract, an exemption clause absolves the seller from liability.
C) A person who breaches a contract is liable for all the foreseeable loss that directly and naturally flows from the breach.
D) The victim of a breach can recover damages that he could have avoided if he had tried to mitigate his loss.
E) Non est factum is an equitable remedy forcing a person to comply with the terms of the contract.

Question 9

Gill, a wholesale fish seller, agreed to provide Blanchet's Restaurant with 1,000 pounds of fresh salmon per week throughout the months of July, August, and September. Things went as planned for July and August. However, Gill was unable to meet the requirements of the contract for the first two weeks of September because his boats simply did not catch that much, although other companies did better and the fish were available for Gill to purchase, but at a higher price than what Blanchet was paying him. Rather than sell at a loss, Gill simply did not supply during that two-week period. At the end of that period, the Federal Fisheries Department shut down the fishery altogether because of the depletion of fish. After that, no more fresh salmon were available at all. Blanchet sued Gill for breach of contract with respect to his failure to deliver any fresh salmon in September. Which one of the following statements accurately sets out the legal situation here?

A) Gill is liable for breach of contract with respect to the first two weeks of September, but the second two weeks' failure was caused by frustration for which he was not responsible.
B) Gill was under a strict obligation to supply the fish and no excuses for failure are allowed.
C) By not suing Gill as soon as he failed to deliver in the first two weeks of September, Blanchet lost the right to complain, and then the subsequent governmental closure excused his failure to deliver any fish in September.
D) The contract was frustrated for the whole month of September by Gill's inability to obtain fish in the way that he intended, and thus he is not liable at all.
E) The doctrine of frustration does not apply here because this is a sale-of-goods situation.

Question 10

Which of the following is true with regard to ending a contract by performance, agreement, or breach?

A) A person has legally tendered performance if he pays a $500 debt in 25-cent coins.
B) If one party to the contract has paid for a service, but now the other doesn't want to perform, the contract is ended by agreement as long as they both agree to call it off.
C) A contract ends by agreement when the parties include in the contract a "condition subsequent," i.e., a clause that says the contract will end upon the happening of a specified future event that then takes place.
D) If a person properly tenders performance of a service that is rejected by the other party, he is required to try again and again.
E) A contract can be ended by breach if there was a either a breach of condition or a breach of warranty.

Question 11

Ellis agreed to paint Lee's house for a price of $1,500. A month before the performance was due, Lee called and told Ellis that she had changed her mind and was going to have her house restuccoed instead. Ellis insisted that they had a contract and that he was going to paint the house anyway. Lee repeated that she was not going to go through with it, but Ellis insisted the contract was still on. Before further steps could be taken by either party, Lee's house was destroyed by a freak airplane accident. Which one of the following statements describes the law applicable to these facts?

A) Lee could have accepted Ellis's conduct as an anticipatory breach.
B) Ellis's conduct amounted to repudiation, and Lee could have sued for breach of contract immediately after the phone call.
C) The contract has been discharged by frustration.
D) Lee's conduct did not amount to a breach since she told him a month before performance was due that she didn't want the house painted.
E) Ellis will be able to successfully claim as damages the amount that he would have made if the contract had been performed.

Question 12

Which of the following is true with regard to ending a contract by performance, agreement, frustration, or breach?

A) If a person owing money has tendered payment in a reasonable way, at a reasonable time, and it has been refused, he is free from any further obligation to pay.
B) The victim of a breach can recover damages even for the loss he could have avoided if he had tried to.
C) If the court holds that a contract has been ended by frustration, the damages awarded by the court will be the same as if the contract was ended by a breach.
D) An exemption clause that a seller claims absolves him from liability may be of no effect if the seller has committed a "fundamental breach" of the contract.
E) A person who breaches a contract is liable for all the loss that directly and naturally flows from the breach, no matter how unforeseeable.

Question 13

When an anticipatory breach has taken place (where a person, before performance is due, states that he will not perform the contract)

A) the victim must wait to see if the contract is performed, but damages are calculated from the time of the refusal.
B) the victim may not be able to recover damages that occur after the anticipatory breach.
C) such a statement made before performance is due has no effect on the contractual obligations of the parties.
D) the victim may sue immediately and not wait to see if the contract is performed or not.
E) the victim can get someone else to do the job but then cannot sue the original party to the contract if it costs more.

Question 14

Smedlap, a trucker, and Dewdney, a farmer, entered into a contract under which Smedlap agreed to haul all of Dewdney's 2011 pumpkin crop to market in time for the Halloween sales. However, the day before Smedlap was to pick up the pumpkins, he called Dewdney and told him that, since he had received such a good offer to buy his truck, he had sold it and therefore was not able to haul Dewdney's pumpkins. There was not enough time for Smedlap to buy another truck, but he was sure that Dewdney could make other arrangements and he hoped that he hadn't unduly inconvenienced him. Unfortunately, Dewdney was not able to make arrangements in time for the Halloween market, and instead he had to sell his crop to a pie-filling canner for much less than he could reasonably have expected at the market. Furthermore, the market owners were so disappointed by Dewdney's failure to deliver that they refused to give him their usual order for Christmas turkeys, in contrast to previous years, where this had generated his major income for the year. He was forced to find another outlet for his turkeys, and again he ended up selling to commercial processors for a substantially lower price. As a result of these two events, Dewdney was unable to keep up his mortgage payments on the farm and eventually he lost it to the bank in a foreclosure action. Dewdney is now suing Smedlap to recover these losses. Identify the correct statement with respect to the question of whether Smedlap's conduct was a breach of contract.

A) Smedlap is not liable because it was not his fault that Dewdney was unable to make other suitable arrangements.
B) The contract was discharged by frustration.
C) This was a breach that consisted of self-induced frustration.
D) Smedlap simply cancelled the contract, which he was entitled to do as long as it was before performance was due.
E) This was not a breach because Smedlap did not do it maliciously, and he gave Dewdney what he honestly believed was adequate notice to make other arrangements.

Question 15

A contract is terminated by agreement in which of the following situations:

A) The occurrence of a condition subsequent
B) Unilateral release
C) Breach
D) A written statement by one party to cancel an accepted order
E) Frustration

Question 16

In all but one of the following situations, the contract is frustrated. Identify the exception.

A) Jack contracts with Bill to build a barn on his one-acre lot, but before the permit is obtained, a new law prohibits barns on less than three acres.
B) Rudolph is due to appear in a local variety theatre that has just been destroyed in a fire of unknown origin.
C) Frank has contracted to ride Emperor, a prize horse, in the Canada Day races on July 1, but on June 28 the horse breaks a leg and has to be destroyed.
D) Gregory, a trucker with whom you contracted last month to haul potatoes tomorrow, phones to tell you that his truck has broken down.
E) Jerry, a doctor, is due to perform a heart transplant operation on Mary, and the night before the surgery his arthritis becomes so painful that he cannot hold a scalpel.

Question 17

Mike contracted to buy Rita's house in a written contract that provided for a deposit of $10,000 to be forfeited in the event of Mike's failing to go through with the deal. This deposit was an honest estimate of the damages Rita would suffer. On these facts, which of the following is true?

A) If Mike breaches the contract, he will have to pay Rita all the damages that directly and naturally flow from the breach.
B) If Mike breaches the contract, he would have to pay $10,000 even if Rita's actual loss was $40,000.
C) A clause in a contract that provides for the forfeiture of a deposit is called an exemption clause.
D) If Mike breaches the contract, he would not have to pay $10,000 even if Rita suffered a substantial loss.
E) If the contract price agreed upon was $150,000 and Rita, after Mike breaches the contract, sells the house in one week for $138,000, she will still be able to recoup all her losses.

Question 18

Pat O'Grady owes Robinson $5,000 in cash, but resented Robinson talking about O'Grady's debt among mutual acquaintances. O'Grady wants to know which of the following tactics would be legal performance.

A) Not pay Robinson until Robinson came for it.
B) Pay Robinson on time but pay it all in dimes.
C) Pay him on time in $5 bills.
D) Pay him on time but with a cheque.
E) Deliver the money to his house instead of to his office at 3:00 a.m. on the due date.

Question 19

Which of the following is true with regard to remedies for breach of contract?

A) The victim of a breach can recover damages that he could have avoided if he had tried to mitigate his loss.
B) An injunction is an equitable remedy forcing a person to comply with the terms of the contract.
C) The quantum (amount) of damages to be given to the victim of the breach may be limited to the amount specified in a liquidated damages clause of her contract.
D) A person who breaches a contract is liable for all the loss that directly and naturally flows from the breach, no matter how unforeseeable.
E) Specific performance is the proper remedy to stop a person from doing something that he had promised in the contract not to do, e.g., not to compete, not to disclose secrets, etc.

Question 20

Which of the following is true with regard to ending a contract by agreement?

A) A contract can be ended by agreement if one party has performed his obligation and agrees to take something as satisfaction from the other although that other hasn't performed according to the contract.
B) A contract can be ended by one party if he finds a better deal, e.g., by cancelling an order that has been accepted, as long as this is done before performance.
C) A contract can be ended unilaterally by one party.
D) A contract cannot be ended by agreement if neither party to the contract has performed his or her obligation.
E) A contract cannot be ended by the happening of a "condition subsequent" provided for in the contract.

Question 21

Which of the following is false with regard to remedies for breach of contract?

A) If the court holds that the liquidated damages clause in the contract is an honest attempt to estimate damages, the amount stated will be forfeited to the victim of the breach, even if he suffered no loss in fact.
B) A person who disobeys a court order, e.g., an order for specific performance, can be cited for contempt of court.
C) Damages are awarded by the court to a person who has suffered loss because of a breach of a condition of the contract, but are not awarded for a breach of a warranty.
D) As a general rule, a person who breaches a contract is liable for all of the foreseeable loss that directly and naturally flows from the breach.
E) The victim of a breach cannot recover damages that he could have avoided if he had tried to mitigate his loss.

Question 22

Which one of the following is true with regard to the ending of a contract by performance?

A) In law, a certified cheque is the same as cash.
B) If a person attempts to perform services in accordance with the terms of the contract, and the buyer refuses those services, the person attempting to perform can sue the buyer with no further attempt to perform.
C) If a person owing money has tendered payment in a reasonable way, at a reasonable time, and it has been refused, he is free from any further obligation to pay.
D) If a warranty is breached, the victim has no further obligation to perform under the contract.
E) Legal tender consists of bills or coin in any amount.

Question 23

Cleo entered into a contract with Harvey in June to redecorate his apartment before Christmas. However, in the middle of October, she informed him that she would not be able to do his job because she had been offered a big contract in Japan that would take her away until spring. Which of the following is true with respect to this situation?

A) Cleo could claim quantum meruit for any work she had done so far and that would be the end of the matter.
B) The most likely remedy would be for the court to award specific performance to make her do the job.
C) Their contract has been frustrated by circumstances outside their original contemplation, and thus they are excused from their previous obligations.
D) Cleo has repudiated the contract and Harvey can take legal action immediately.
E) Harvey must wait until Christmas to see if Cleo actually performs before he can take legal action.

Question 24

Which of the following is true with regard to tender of performance?

A) If Ivan attempts to pay his $25 debt to Jan in 25-cent pieces, that attempt constitutes a lawful tender of Ivan's obligation.
B) If Sam attempts to deliver the truckload of strawberries at Frank's produce plant at 8:00 p.m. Saturday, they cannot be refused as long as the delivery was before the specified July 10 deadline.
C) If the seller attempts to deliver the contract goods at the time and place designated in the contract, but the buyer refuses delivery, the seller will have to make another attempt to deliver before he can sue for breach of contract.
D) If Pete shows up at Valley Service Station to fix the gas pumps on the date and at the time he was supposed to, but Valley's manager tells him to come back later, Pete has no further obligations and can sue for breach of contract.
E) If Walt attempts to pay Sarah the $750 debt he owes her with a cheque on the date and at the place designated in the contract, she will have to accept that cheque even though there was no mention of payment by cheque in the contract.

Question 25

Tufts and McDougal were having an argument about the law regarding performance of a contract. Which one of the following statements of theirs is correct?

A) If Jed shows up with cash for the mechanic on the day and at the place designated in the contract, and the mechanic refuses to take it for some reason, Jed doesn't ever have to pay him.
B) If Joan owes a $500 debt due on a specific date, she doesn't have to pay until the creditor seeks her out for payment.
C) If Roscoe tries to deliver lumber to Jed in accordance with their contract and Jed doesn't take delivery of it, Roscoe can sue Jed for breach of contract without ever trying to deliver it again.
D) If Jed has to pay $500 to his mechanic, he can pay the whole debt in dimes and the mechanic has to take them.
E) If Jed owes the mechanic $500, a cheque is as good as cash in law even if the mechanic said he wouldn't take a cheque.

Question 26

Where one party refuses to perform his contractual obligations, what is the risk that the second party runs if he continues to press the first party to perform?

A) The second party might receive more damages for which he can't recover compensation.
B) The first party might breach a condition subsequent.
C) The first party may continue to refuse to perform, and there is nothing the second party can do about that.
D) The contract may be discharged by frustration.
E) The first party might expressly repudiate the contract and therefore not be liable for breach.

Question 27

When Mr. George sold his house, he rented an apartment and was forced to store some furniture until he bought another house. He attended the downtown office of Security Warehousing Ltd. and entered into a bailment contract that promised to safeguard the furniture. Four months later, his things were stolen from the warehouse, and when he asked for compensation for his loss, the company admitted it was in breach of contract, but said it was exempt from liability because of an exemption clause posted on the wall of the storage area where George had taken the furniture. The sign read "Not liable for loss due to fire or water." On these facts, which of the following would be his least successful argument to nullify the exemption clause?

A) There has been a fundamental breach of the contract.
B) On the strict construction of the clause, it doesn't cover the cause of the loss.
C) He failed to receive reasonable notice of the clause at the time of contract.
D) The Sale of Goods Act voids such an exemption clause.
E) Such terms cannot be unilaterally imposed.

Question 28

Rick was a talented computer programmer and had agreed to work for Bill in his successful computer software business, signing a one-year contract to that effect. On the day he was to start work, and after a week of training where he learned a considerable amount of confidential information about Bill's operation, he phoned Bill and announced that he was going to work for Bill's competitor instead. Which of the following is the appropriate remedy in these circumstances?

A) Rescission
B) Injunction
C) Specific performance
D) Accounting
E) No remedy

Question 29

Alan entered into a written contract for the purchase of a house owned by Joe . But as the time to move approached, Alan discovered that Joe was refusing to move out and refusing to transfer the property. Apparently a dissatisfied customer had driven through the showroom window of Joe's new car dealership causing him considerable expense. Joe could no longer afford to purchase the new luxury home in Langley to which he had intended to move. Which of the following is the appropriate remedy in these circumstances for Alan, who really wants the house?

A) Injunction
B) Damages
C) Specific performance
D) Rescission
E) No remedy

Question 30

Sam agreed to purchase and Joe agreed to sell a brand new Chrysler 300M that was displayed in "Joe's Fine Cars" showroom. But instead of delivering it to Sam, Joe sold it to another customer who offered him more money. Which of the following is the appropriate remedy in these circumstances?

A) No remedy
B) Rescission
C) Injunction
D) Specific performance
E) Damages

Question 31

Jones entered into a contract to purchase a 1957 Edsel automobile from Smith for $2,000. Unknown to Smith, Jones had an opportunity to resell that car for $5,000 to Brown, who wanted to use it as a prop in a movie being shot in town. Before the car was delivered and payment made, it was destroyed by fire, when one of Smith's employees carelessly spilled a can of gasoline in the garage where the car was kept. If the court found that the normal market value for such a vehicle was only $3,000, which of the following statements is correct with respect to the appropriate remedy that should be awarded by the court for such a breach of contract?

A) In these circumstances, there should be no remedy since the contract has been frustrated.
B) Because of the uniqueness of the vehicle, the court should award specific performance.
C) The court should award only $1,000, the difference between the market price and the purchase price.
D) The court could award $3,000.
E) In these circumstances, the court should award $5,000, representing the lost profits.

Question 32

Carson arranged with his brother-in-law, Waxman, that he would try to buy a famous old B.C. coastal airplane, the Spruce Ghost, which Waxman would then buy from him to display in his flight museum. Waxman promised to pay Carson a 10% commission over the price that Carson had to pay to buy the plane, so that their price would be 110% of Carson's purchase price. Carson and the owner, Wonka, agreed on a price of $80,000. After reconditioning the plane but before delivering it to Carson, Wonka decided to take it up for one last nostalgic flight and, because of his carelessness, he crashed it on take-off. Although Wonka escaped uninjured, the plane caught fire and was totally destroyed. Carson was able to locate a similar plane for only $60,000 but Waxman wasn't interested. Carson sued his brother-in-law and Wonka. What is the likely outcome of this suit?

A) Wonka will have to pay Carson damages (probably $8,000) for breach of contract.
B) Waxman will have to pay Carson $6,000 as the commission he would have made on the purchase of the second plane.
C) Waxman will have to pay Carson $8,000, the commission on the agreed sale price between Carson and Wonka.
D) Because the contract between Carson and Wonka was frustrated by the destruction of the Spruce Ghost, Carson has no claim against anyone.
E) The Frustrated Contracts Act will require Carson to share in the expense of reconditioning the Spruce Ghost that Wonka had undertaken in preparation for sale.

Question 33

Which one of the following statements accurately describes the operation of a condition precedent?

A) This is a term in a contract that must be met before the contract becomes fully operational.
B) This is a term in the contract that provides for the cessation (ending) of the parties' obligations upon the occurrence of some particular event.
C) There is no such thing recognized in the common law.
D) This occurs when one party shows up at the right time and place ready, willing, and able to carry out his obligations under the contract.
E) This occurs when some event that the parties have not anticipated makes performance radically different from what they agreed to.

Question 34

Harry agreed to make a new violin for Ted at a particularly attractive price. Before he finished crafting it, however, an opportunity arose to work as a salesman for "Joe's Fine Cars." Since it was clear that he could never make a living as a violin maker, he took the job and refused to finish the violin for Ted. Which of the following is the appropriate remedy in these circumstances?

A) No remedy
B) Injunction
C) Specific performance
D) Rescission
E) Damages

Question 35

Which of the following is false with regard to ending a contract by agreement?

A) A contract can be ended by agreement by "mutual release."
B) A contract can be ended by one party if he finds a better deal, e.g., by cancelling an order that has been accepted, as long as this is done before performance.
C) A contract can be ended by agreement if one party has performed his obligation and agrees to take something as satisfaction from the other although that other hasn't performed according to the contract.
D) A contract can be ended by agreement if neither party to the contract has performed his or her obligation.
E) A contract can be ended by the happening of a "condition subsequent" provided for in the contract.

Question 36

Which one of the following statements accurately describes the effect of a liquidated damages clause on a plaintiff's claim in a breach of contract action?

A) This clause conclusively determines the amount of damages that the court can award.
B) This clause requires the injured party to take all reasonable steps to mitigate (lessen) his losses.
C) Liquidated damages only apply to losses caused by excess water, such as floods or tidal waves.
D) The plaintiff will likely be awarded a judgment for all the damages that "naturally and directly flow" from the breach.
E) The court will likely award the amount set out in the clause if it considers that to be a genuine estimate by the parties of the likely consequences of the breach.

Question 37

Which of the following would most likely result in the court's finding that the contract had been discharged by frustration?

A) Thornburn agreed to buy Patterson's tulip crop, but unknown to both of them, at the time of the contract the crop had been destroyed by the frost.
B) Mellowcream Ltd. contracted to deliver 40 dozen donuts to Pat's Place, but called Pat and told her it couldn't deliver because another customer needed another 40 dozen for an unexpected event.
C) Lowe contracted to purchase a business from Lerner, but the interest rates jumped so quickly that, even before closing, he realized he would lose money, so he told Lerner he couldn't go ahead with it.
D) Lee Ltd. agrees to haul lumber for Len Lumberjack, but a few days before the delivery date the company's best truck, the one they wanted to use, broke down.
E) N. Yung contracts to give a performance at B.C. Place stadium, but the performance was cancelled because he was poisoned by contaminated food at a local restaurant.

Question 38

Sam entered into a contract for the purchase of a used dump truck from "Joe's Heavy Duty Trucks." The written contract clearly specified, among other things, that "it shall be a warranty for this contract that the truck has the capacity of carrying and properly dumping loads of up to 4,000 kg of gravel." In fact, when Sam loaded the truck with 4,000 kg of gravel, he discovered that the hoist on the truck was not capable of dumping it. Only if the load was reduced to 3,000 kg could the gravel be dumped. Sam obtained an estimate stating that it would cost $8,000 to reinforce the hoist mechanism of the truck so that it could handle the dumping of 4,000 kg of gravel. When Sam approached Joe demanding satisfaction, Sam pointed out another term of the agreement that stated that in the event of a breach of contract the "maximum damages payable to the purchaser are limited to $5,000." Sam sued. Which of the following statements is correct with respect to the legal position of the parties?

A) Sam must keep the truck and sue for damages, but those damages are limited to $5,000.
B) Sam can get an order of specific performance, which will force the seller, Joe, to fix the truck even if it does cost $8,000.
C) Sam must keep the truck but can obtain the $8,000 in damages or what it takes to repair the hoist mechanism.
D) Sam can treat his obligation as over, return the truck, and demand the return of his purchase price.
E) There is nothing Sam can do as this was a breach of warranty.

Question 39

Adams signed a contract in which he promised to sell his house to Jefferson for $225,000. The "deposit" to be paid was set at $4,000, and the liquidated damages clause provided that the deposit would be forfeited in the event that the buyer breached the contract. The buyer did breach the contract. Because the cost of housing was falling, it was difficult, even after a reasonable time had passed, to find a new buyer. The highest offer was $218,000. Adams accepted. Which of the following is true with regard to Adams's remedies?

A) Adams must sue for specific performance, which is the only remedy, an equitable remedy, available to the parties in land transactions.
B) He would be entitled to the $4,000 only, if the court held that the deposit was an honest attempt of the parties to estimate damages.
C) He could sue for an injunction to stop him from buying another house.
D) He would be entitled to damages for money lost $7,000 plus selling costs.
E) He could ask the court to order an accounting.

Question 40

Which one of the following statements accurately describes the operation of a condition subsequent?

A) This occurs when some event that the parties have not anticipated makes performance radically different from what they agree to.
B) This occurs when one party shows up at the right time and place ready, able, and willing to carry out his obligations under the contract.
C) This is a term in a contract that must be met before the contract becomes fully operational.
D) There is no such thing recognized in the common law.
E) This is a term in the contract that provides for the premature cessation (ending) of the parties' obligations upon the occurrence of some particular event.

Question 41

Rahilly entered into a contract with Khan, whereby Rahilly agreed to paint a portrait of Khan's wife to be completed by her 30th birthday, six months from the time of this agreement. Three months before the portrait was to be completed, Rahilly told Khan that he would not be doing the portrait because he accepted a job in Boston and was leaving immediately. Which of the following is false with regard to the rights of the parties in this situation?

A) If Khan presses Rahilly to perform according to the contract, it is possible that the contract could be ended by frustration.
B) If Khan presses Rahilly to perform according to the contract, it is possible that the contract could be ended by performance.
C) Khan must wait to see if Rahilly really fails to perform the contract before Khan can sue.
D) The contract has been repudiated, and Khan can elect to acknowledge the breach and sue Rahilly right away.
E) The contract has not been frustrated because there was no unforeseen event beyond the control of either party making it impossible or meaningless to perform the contract.

Question 42

Mr. Jones rented an apartment to Ms. Smith under a one-year tenancy agreement. Ms. Smith abandoned the apartment after three months. Jones located Smith and sued her for breach of contract. Which of the following is the best statement with regard to the quantum of damages Jones can recover?

A) All the damages that directly and naturally flow from the breach no matter how unforeseeable.
B) Damages equivalent to nine months rent less whatever rent was received from a subsequent tenant of that apartment.
C) He will get nothing. When dealing with land the appropriate remedy is specific performance.
D) Nothing, even if it takes six months to rent the apartment again.
E) Damages equivalent to nine months rent even if the apartment is rented again.

Question 43

Which one of the following statements accurately describes the effect of a liquidated damages clause on a plaintiff's claim in a breach of contract action?

A) Liquidated damages only apply to losses caused by excess water, such as floods or tidal waves.
B) The plaintiff will likely be awarded a judgment for all the damages that "naturally and directly flow from the breach."
C) The court will likely award the amount set out in the clause if it considers that to be a genuine estimate by the parties of the likely consequences of a breach.
D) This clause requires the injured party to take all reasonable steps to lessen (mitigate) his losses.
E) The court will award the amount specified only if it accurately reflects the losses that actually took place.

Question 44

Monroe sold computers. On the purchase of a new IBM computer the buyer signed the written contract that contained the following clause: "The seller is not liable for any breach of condition or warranty express or implied in this contract." The buyer was a businessman who intended to use the machine in his business for a while and then resell it. The machine was used properly but didn't operate well, and within one week it would not work at all. Monroe refused to take back the machine or to refund any money by relying on the exemption clause. Which of the following would be the buyer's best argument for avoiding the effect of the exemption clause in this case?

A) The buyer had no notice of the clause; therefore, it is not a term of the contract.
B) There is a breach of a non-essential term of the contract.
C) There is a fundamental breach of contract.
D) Such clauses are prohibited under contract law and are therefore void.
E) On a narrow interpretation of the words used in the exemption clause, they do not cover his complaint.

Question 45

In which one of the following instances would the seller most likely succeed in an attempt to escape liability by the use of an exemption clause when the buyer suffers a loss?

A) Ralph bought a used lawnmower under a written and signed contract that contained an "as is" clause.
B) The buyer of an expensive computer software program received, a month after the sale, an invoice on which was printed an exemption clause that he hadn't been shown before.
C) A consumer transaction is involved and provincial legislation prohibits such exemption clauses in consumer transactions.
D) The store had posted at the entrance to the dressing rooms a large sign reading "Not responsible for stolen articles," and the customer lost a briefcase in a fire that swept through the dressing rooms.
E) There has been a breach of the fundamental obligation of the contract, and the court holds that on its true construction the parties did not mean it to cover a serious breach.

Question 46

A term in a contract that says that, on the occurrence of an event, the parties' obligations will end is an example of

A) discharge by frustration.
B) discharge by agreement.
C) condition subsequent.
D) condition precedent.
E) tender of performance.

Question 47

Which one of the following does not terminate a contract?

A) Twain had contracted to build a model of a proposed building for architects who were to meet with their clients today, March 10. The model was destroyed last night when a car left the road and crashed into the workshop and destroyed the model.
B) When Ben's new car is delivered, the seats are vinyl rather than cloth as ordered.
C) The buyer and seller agree orally to cancel their contract when neither one has performed his obligations under it.
D) Fred no longer wants to honour his contract to sell Mitra his printer but tells Mitra he'd substitute a $500 boat. Mitra agrees.
E) Minnie and Mickey agree that Minnie will take less than the amount Mickey owes, as full payment of the debt, and Mickey will pay her two days early.

Question 48

The principle of substantial performance can best be described as

A) minor terms of the contract are disregarded.
B) only exact compliance with the contract will qualify as performance.
C) a major term of the contract is mostly fulfilled.
D) all or most of contractual obligations are fulfilled.
E) minor terms of the contract are yet to be fulfilled.

Question 49

Which one of the following is false with regard to exemption (exclusion) clauses?

A) Even if there is an exemption clause in the contract, the court can hold that the exemption clause is of no effect if the breach is a "fundamental breach."
B) Where there is an exemption clause in a contract, the court will strictly construe that clause; i.e., the wording of the clause must cover the situation that occurred.
C) To be part of the contract, such clauses must be brought to the attention of the parties before or at the time of contract.
D) An effective exemption clause is a barrier blocking the party wronged from his or her remedy, e.g., from damages.
E) Such clauses are prohibited in any sale of goods contract.

Question 50

The claim of frustration is not available in which of the following circumstances?

A) The law changes, making performance illegal.
B) A government policy prevents performance.
C) The subject matter of the agreement is destroyed.
D) An event that forms the basis of the contract does not take place.
E) A change in circumstances makes it difficult or more costly for one of the parties to perform.

Question 51

In all but one of the following situations, the contract is frustrated. Identify the exception.

A) On December 1, Pak contracted to buy Scott's horse. Delivery day was set for December 10. On December 8, the horse contracted rabies and had to be destroyed.
B) Dubocovich had contracted to supply a health-food store jars of Melatonin, a hormone now thought to be a miracle potion. After the contract but before the delivery the government banned the sale of Melatonin so that it could be properly tested under government auspices.
C) Issacs contracted to sing at the your club on March 10, but that morning the club was destroyed by lightning.
D) Ed, a trucker with whom you contracted last month to transport stoves tomorrow, phones to tell you that his truck has broken down.
E) You agree to paint Joe's house on the following Tuesday, and on the Monday before, through no fault of either party, it is destroyed by fire.

Question 52

Perfect Programs Ltd. hired Gill, who had training not only in programming but also in pharmacy management, to create a computer program for use in a pharmacy to take care of all its needs with regard to inventory, billings, prescriptions, etc. The employment contract provided for a three-year term with no provision for early termination and the following covenant: "The employee, upon his leaving the employ of the employer, shall not compete, directly or indirectly, in any capacity whatsoever, within five miles of this place of employment." After Gill had been there for two years and the project was only months away from completion, he was approached by a representative of Big Big Co. (with offices in the same building), who offered Gill a job with, among other things, a higher salary and more staff to help him complete a program for use by drugstores. Gill accepted. To replace Gill, Perfect Programs Ltd. hired a man from New York with the same training as Gill and sued Gill for breach of contract. Which of the following is true?

A) Gill will have to pay damages for all the loss that directly flows from the breach no matter how improbable.
B) Gill is not in breach of contract because the restrictive covenant is illegal, so the whole contract is void.
C) If Gill knew that there would be a delay before the new employee could reach the level Gill had attained before his departure, the costs of the delay would be factored into the damages.
D) Perfect Programs Ltd. could get an injunction against Gill, because the restrictive covenant is reasonable in this form.
E) Perfect Programs Ltd. could have abandoned the project and just sued Gill for the entire anticipated lost profit.

Question 53

Which of the following is false with regard to remedies for breach of contract?

A) The victim of a breach cannot recover damages that he could have avoided if he had tried to mitigate his loss.
B) Specific performance is an equitable remedy forcing a person to comply with the terms of the contract.
C) Damages are awarded for a breach of a condition (essential term), but not for a breach of a warranty (non-essential term).
D) The quantum (amount) of damages to be given to the victim of the breach depends on the knowledge of the party who breached the contract. Knowledge includes imputed and actual knowledge.
E) An injunction is the proper remedy to stop a person from doing something that he had promised in the contract not to do, e.g., not to compete, not to disclose secrets, etc.

Question 54

A student bought an I-Pod Nano for the stated purpose of listening to his taped notes while he took his daily run. The contract he signed with the seller, Tape Talk Ltd., included a clause excusing the seller from liability for the breach of "any term of the contract, whether a breach of condition or warranty whether express, implied, statutory or otherwise." After only 30 days, the I-Pod failed to function at all. It was totally useless for the student's purpose, so he took it back to the seller. The seller refused to take it back and pointed out the exemption clause in the signed contract. On these facts, which of the following could be true?

A) The student is out of luck because the contract with the exemption clause was in writing.
B) The student could get around the exemption clause by arguing insufficient notice.
C) The student could get around the exemption clause by the court's strict interpretation (construction) of the clause.
D) All exemption clauses are illegal, and therefore the student would not be bound by this one.
E) The student could be awarded damages if the exemption clause were found invalid by the court on the grounds that the clause could not be interpreted to mean it would forgive such a fundamental breach.

Question 55

In a jurisdiction other than B.C., Mr. Buyer sued Mr. Seller for breach of contract because Mr. Seller failed to deliver a computer system on time in accordance with the contract. Mr. Seller argued that he was not in breach, that the contract had been frustrated. The computer was destroyed by water when a careless driver knocked over a fire hydrant outside the warehouse holding the computer. No deposit had been paid. The court held that the contract was frustrated. Based on this ruling, how does the court handle the situation?

A) The court will let the losses lie where they fell, despite any of Seller's costs in preparing the computer system.
B) Buyer will succeed against Seller for damages because the court will treat it as if were an anticipatory breach.
C) The court will look at the costs incurred and any payments made, and will apportion the losses between the parties.
D) The court will treat the contract as if there were a common mistake about the existence of the subject matter.
E) Buyer will not have to pay anything to Seller unless Seller had requested a deposit at the time of contract.

Question 56

Suppliers of goods and services try to eliminate their liability, and the courts have discouraged this by applying the principle that some failures are so significant that there is no performance of the contract. This concept is known as

A) repudiation.
B) exculpatory clause.
C) fundamental breach.
D) frustration.
E) anticipatory breach.

Question 57

If neighbours have a contract agreeing not to erect a building that blocks the other's view, which remedy might the court impose if that agreement is breached?

A) Mandatory injunction
B) Accounting
C) Laches
D) Quantum meruit
E) Punitive damages

Question 58

In which of the following situations would the contract not be discharged by agreement?

A) Both parties agree to let a new person be substituted into the contract in place of one of the old parties.
B) Both parties agree to call off the contract under which one paid the other $5,000 for work that has not yet been performed, but the other now promises to return the $5,000.
C) Both parties to the contract agree to call it off before either one has performed.
D) A condition subsequent that calls for termination of the contract has not been met.
E) The two parties have reached "accord and satisfaction" with regard to terminating the contract.

Question 59

In B.C., Mr. Buyer sued Mr. Seller for breach of contract because Mr. Seller failed to deliver a computer system on time in accordance with the contract. Mr. Seller argued that he was not in breach; that the contract had been frustrated. The computer was destroyed by water when a careless driver knocked over a fire hydrant outside the warehouse holding the computer. No deposit had been paid. The court held that the contract was frustrated. Based on this ruling, how does the court handle the situation?

A) Buyer will not have to pay anything to Seller unless Seller had requested a deposit at the time of contract.
B) The court will treat the contract as if there were a common mistake about the existence of the subject matter.
C) The court will let the losses lie where they fell, despite any of Seller's costs in preparing the computer system.
D) Buyer will succeed against Seller for damages because the court will treat it as if were an anticipatory breach.
E) The court will look at the costs incurred and any payments made, and will apportion the losses between the parties.

Question 60

If a contract states that the contract is "subject to the purchaser obtaining financing for $10,000 at 8% by 5:00 p.m. Friday, March 11," it means that

A) there is a contract whether the purchaser gets the financing or not, because the statement is just a statement of intention and doesn't affect the contract.
B) the obtaining of financing is a condition subsequent and ends the contract.
C) if the purchaser does not obtain the financing, the contract is frustrated.
D) if the purchaser does not obtain the financing, he is in breach of contract.
E) if the purchaser does obtain the financing and properly notifies the seller, the contract is then in full force and effect.

Question 61

In Meditek Laboratory Services Ltd. v. Purolator Courier Ltd., a Purolator employee delivered equipment to the wrong address and then falsified documents. In a subsequent lawsuit, Purolator relied on an
Exemption clause that limited its liability "whether or not from negligence or gross negligence". What properly describes the outcome in this case?

A) The exemption clause was severed as being an illegal restraint of trade.
B) The exemption clause was not applied, because it was not evidenced in writing.
C) The exemption clause protected Purolator because of the principle of "freedom to contract".
D) The falsification of documents was done by the employee, not the company itself, so Purolator could not be liable.
E) The falsification of documents was wilful, not negligent, so Purolator was not protected by this clause.

Question 62

Which of the following statements regarding novation is false?

A) Novation requires the inclusion of a force majeure clause in order to be enforceable.
B) Novation requires the creditor to accept the new debtor as principal debtor, not merely as a guarantor.
C) Novation requires that the new debtor assume complete liability.
D) Novation requires the creditor to accept the new contract in full satisfaction and substitution for the old contract.
E) Novation refers to the creation of a new contract through the substitution of a third party
For one of the original parties to a contract, with everyone's consent.

Question 63

The case of Sail Labrador Ltd. v. Challenger One (The) involved an option to purchase and a breach of a contract that was inconsequential and immediately corrected. What did the Supreme Court of Canada hold?

A) The contract had been substantially performed and the option was still available.
B) The breach, although minor, rendered the contract unenforceable.
C) No breach can be considered inconsequential at law.
D) The contract had not been perfectly performed, so the contract was void.
E) The breach, although minor, rendered the contract voidable at the option of the non-breaching party.

Question 64

Courts enforce exemption clauses because it is assumed that they reflect the will of the parties to the contract.

Question 65

In which of the following is the contract not ended by agreement?

A) Goode contracted to sell his pony to Reston. Goode then changed his mind and told Reston he didn't want to sell the pony but would give him two lambs instead. Reston agreed to the substitutes.
B) Randy visited Terry two weeks after the contract but one month before performance date to say he wouldn't do it. Terry had already paid Randy for the work. After hearing Randy's story, Terry said, "Just forget it, good bye and good luck."
C) Sean hired two students to do a market survey for him for $3,000. Before the students had begun the work, they both had received offers for full time jobs. They told Sean they wanted out of the contract. Sean said, "O.K., I'm short of cash anyway."
D) After party A of the contract paid, party B said he couldn't perform. Party A agreed to waive B's obligation if B would return the money paid to him. B agreed.
E) The event contained in the condition subsequent provision of the contract has happened.

Question 66

Repudiation occurs when one party indicates that they do not intend to follow through with their end of the deal.

Question 67

When a contract anticipates some catastrophic event, such as a riot, invasion, earthquake, or flood that will interfere with the performance of the contract, this is referred to as a

A) condition precedent.
B) frustration clause.
C) "subject to" clause.
D) force majeure clause.
E) condition subsequent.

Question 68

Jones ordered a new car and was required to pay a $500 deposit. Which of the following is correct with respect to that deposit?

A) If the court feels that the damages exceed the deposit, they will order the breaching party to pay any difference.
B) A down-payment is an amount of money to be forfeited if either party is in breach of contract.
C) The deposit must be a fair reflection of the loss actually suffered.
D) The deposit must be an honest attempt by the parties to pre-estimate damages in the event of a breach.
E) If no deposit had been paid, there could be no contract.

Question 69

Which of the following is false with regard to ending a contract by performance, agreement, or breach?

A) A contract ends by agreement when the parties include in the contract a "condition subsequent," i.e., a clause that says the contract will end upon the happening of a specified future event that then takes place.
B) If a person properly tenders performance of a service that is rejected by the other party, he is not required to try again.
C) A person has not legally tendered performance if he pays a $500 debt in 25-cent coins.
D) A contract can be ended by breach only if there was a breach of condition, not a breach of warranty.
E) If one party to the contract has paid for a service, but now the other doesn't want to perform, the contract is ended by agreement as long as they both agree to call it off.

Question 70

The case of Romfo v. 1216393 involved an order of specific performance and liquidated damages. What did the Court of Appeal hold?

A) The breach was considered inconsequential at law.
B) The contract had been substantially performed and the damages were limited to the liquidated damages.
C) The deposit clauses were upheld. The vendors were required to transfer the lots to the initial purchasers at the new, higher price.
D) The contract had not been perfectly performed, so the contract was void.
E) The deposit clauses were severed and the contracts enforced. The vendors were required to transfer the lots to the initial purchasers at the original price.
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

Question 71

Which of the following is false with regard to ending contracts and remedies?

A) The term "condition precedent" refers to a clause in a contract that brings the contractual obligations of the parties to an end upon the happening of some specific event.
B) A breach of condition allows the party who suffers the breach to terminate the contract.
C) The equitable remedy of specific performance is available in those situations where monetary compensation would not be adequate.
D) If a person ignores a court order, e.g., an injunction, he could be cited for contempt of court.
E) If Sid incurred costs in preparing to perform a contract that is ended by frustration, the court can allow Sid to keep some of the deposit paid by the other party to help cover those costs.

Question 72

Connie enters into an agreement with Razmin, a local artist, to showcase a particular one of her sculptures at a prestigious art show. The day before the show, the gallery where the sculpture was being stored burns to the ground. Which of the following represents the most likely outcome?

A) Razmin has breached the contract by failing to deliver the sculpture.
B) Connie will still need to pay Razmin the same price agreed to in the contract, because the fire was not Razmin's fault.
C) Razmin can simply provide a different sculpture to satisfy the contract.
D) The contract is void.
E) The contract has been discharged through frustration.

Question 73

The case of Shelanu Inc. v. Print Three Franchising Corporation involved a case whether a franchisor had a duty of good faith to the franchisee. What did the Court of Appeal hold?

A) The breach was considered inconsequential at law.
B) The plaintiff was not entitled to terminate the franchise agreement since the franchisor had not breached their duty of good faith.
C) The plaintiff was entitled to terminate the franchise agreement since the franchisor had breached their duty of good faith.
D) The plaintiff was entitled to terminate the franchise agreement since there was no breach of the duty of good faith.
E) The plaintiff was entitled to terminate the franchise agreement since there was a breach of the duty of good faith.

Question 74

Mikael recently started a home-based business selling custom fishing lures. He decided that he could make a lot more money selling his homemade lures on the Internet. Mikael is not the least bit technologically-inclined, but he knows that his next-door neighbour, Perm, does web design on the side. He decides to hire her to create a website for his new venture. Perm has him sign an agreement that includes an exemption clause that limits her liability in cases of negligence. In the course of designing the website, Perm becomes annoyed at Mikael because his dog keeps digging up her rose bushes. Rather than confront Mikael directly, Perm deliberately puts the wrong pricing information on Mikael's website to get him back. If Mikael suffered damages as a result and wanted to sue Perm, what would the likely result be?

A) The exemption clause would protect Perm because of the principle of "freedom to contract".
B) Perm only did freelance web design; as a non-professional she would not face liability.
C) The exemption clause would be severed as being an illegal restraint of trade.
D) Perm's actions were outside the scope of the contract, so Mikael would have no claim in law.
E) Perm's acts were deliberate, not negligent, so Perm would not be protected by the exemption clause.

Question 75

Dubocovich had contracted to supply a health-food store with jars of Melatonin, a hormone reported in the media as a miracle potion. After they contracted, but before delivery, the government banned the sale of Melatonin so that it could be properly tested under government auspices. Dubocovich told the owner of the store, Mr. Wei, that he wouldn't be delivering the Melatonin because of the government ban. The demand for the Melatonin was high. Mr. Wei was very upset with Dubocovich for failing to honour his contractual obligations. Furthermore, he had given Dubocovich $5,000 in advance, which Dubocovich needed and used to pay the freight costs in bringing the drug to his warehouse. Wei sued Dubocovich for breach of contract. Which of the following is correct with respect to the legal position of the parties?

A) This is an example of a frustrated contract and Wei will lose, since the loss will remain where it has fallen.
B) When a contract is frustrated in this way, the frustrating party is responsible for any losses incurred by the other party.
C) Wei will be successful in his breach of contract action.
D) The contract is illegal and void.
E) Wei will be able to get back his $5,000 minus a portion of any costs Dubocovich incurred in preparing to perform the contract.

Question 76

Dagney was an author of a popular series of children's books. She signed an agreement with her publisher, in which she agreed to have a new book in the series written by October 15th. As noted in the contract, the timing was critical to ensuring the books would be on the shelves before Christmas and in order to coincide with a massive promotion the publisher had been planning. Faran had a terrible case of writer's block. By October 3rd, she realized that there was no way that she would have the book finished by the deadline. She e-mailed her publisher, admitting that she would not have the book finished in time. What are the publisher's options?

A) The publisher has the right to demand performance or sue.
B) The publisher cannot take any steps until October 15th, assuming Dagney does not deliver.
C) The publisher has no recourse, because Dagney's case of writer's block has made performance impossible.
D) The contract is voidable at the option of the publisher.
E) The date set out in the contract is not an enforceable term; if Dagney gets the manuscript to the publisher in a reasonable time, she will not be in breach.

Question 77

Ibolya entered into an employment contract with a Toronto advertising firm, VertaNet Ltd. The agreement included a non-competition clause that prevented her from participating in the advertising field in Toronto for five years after termination of her employment. In the event of abreach, the contract provided that Ibolya would have to pay VertaNet the sum of $500,000 as liquidated damages. Ibolya worked for VertaNet for a period of time, then took another job in Vancouver where she worked for four and half years. Six months before the expiry of the five-year period in her VertaNet contract, Ibolya returned to Toronto to take a part-time position as a small advertising firm. Although VertaNet did not suffer any damage, VertaNet sued Ibolya claiming $500,000. What is the likely outcome?

A) Although the amount claimed is unconscionable, the clause will be enforced as it is writing.
B) Unless the $500,000 had been prepaid, Ibolya has no good defence.
C) Liquidated damages clauses are illegal and therefore void.
D) The non-competition clause is likely a penalty and therefore unenforceable.
E) Non-competition clauses generally are void as not being in the public interest.

Question 78

In awarding damages for breach of contract

A) the plaintiff should be, to the extent possible, placed in the same position as he was prior to the agreement being made.
B) the plaintiff should only be entitled to compensation for specific and calculable costs and expenses.
C) the defendant should be, to the extent possible, punished for the breach in order to deter him from repeating this course of behaviour.
D) the defendant should only be required to pay what he can reasonably afford.
E) the plaintiff should be, to the extent possible, placed in the same position as he would have been if the contract had been performed.

Question 79

In the case of an anticipatory breach

A) you have the right to demand performance or to sue for breach.
B) you have the right to demand the other side to perform, but you will not be required to perform yourself.
C) the contract is unenforceable by either party.
D) you must wait until the actual breach occurs before you can take any steps.
E) the contract is declared void ab initio.

Question 80

If a supplier failed to honour a contract to supply parts to Mr. Matheson and the court finds the supplier in breach of contract, which of the following would be incorrect with respect to how the court determines the amount of money to award to Matheson?

A) If a deposit is involved, the damages will be restricted to that deposit.
B) The supplier would not be responsible for any unusual losses lost by Mr. Matheson because of some special use not told to the supplier.
C) Liquidated damages must be an honest attempt by the parties to pre-estimate damages.
D) The victim of the breach must take all reasonable steps to keep those damages as low as possible.
E) The supplier is responsible for all damages suffered by Matheson.