Deck 10: Contract Performance, Breach, and Remedies

Question 1

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

Answer 1

True

Question 2

After a contract is made, a supervening event may make performance impossible and discharge the contract.

Answer 2

True

Question 3

Contracts that are executory on both sides can be rescinded by agreement.

Answer 3

True

Question 4

Giving notice is legally necessary to establish the validity of an assignment.

Question 5

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

Question 6

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

Question 7

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

Question 8

​An assignee has a right to demand performance from the obligor.

Question 9

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

Question 10

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

Question 11

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

Question 12

A material breach occurs when performance is substantial, but not complete.

Question 13

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

Question 14

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

Question 15

Rights to receive funds can be assigned.

Question 16

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 17

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

Question 18

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

Question 19

An intended beneficiary can sue directly to enforce a promisor's promise.

Question 20

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

Question 21

A contract is substantially performed when performance creates substantially the same benefits as those promised in the contract.

Question 22

Contractors Service, Inc., enters into a contract to build a restaurant for Dierdre's Soup Spoons Bistro with Dierdre's payment due on August 1. On August 1, her bank is closed, and for this reason, she claims that she cannot pay on time. In this situation​

A)Dierdre's bank is liable to Contractors Service.
B)Dierdre is in breach of contract.
C)the contract is discharged.
D)the contract is suspended.

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

Question 24

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

Question 25

Most contracts need to be performed only to the satisfaction of a reasonable person unless they expressly state otherwise.

Question 26

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 27

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

Question 28

A liquidated damages provision specifies that a certain amount is to be paid by a breaching party when damages are difficult to determine.

Question 29

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

Question 30

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

Question 31

A contract comes to an end when both parties fulfill their respective duties by performing the acts they have promised.

Question 32

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 compensatory damages, Sati can recover​

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

Question 33

Both intended and incidental beneficiaries acquire legal rights in a contract.

Question 34

A novation requires the existence of a previous, valid obligation.

Question 35

Any breach discharges the non breaching party from the contract.

Question 36

All rights can be assigned with no exceptions.

Question 37

The most common way to discharge one's contractual duties is by breach of contract.

Question 38

A delegation relieves the party making it of the obligation to perform.

Question 39

Subjective impossibility of performance can discharge a contract.

Question 40

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 41

D'Alemberte contracts with Elias to render personal nursing services for the benefit of Federica. This is​

A)a delegation.
B)an assignment.
C)a third party beneficiary contract.
D)an alienation.

Question 42

Planners & Builders, Inc., enters into a contract with O'Reilly to refurbish a garage on his property as an auto repair shop. O'Reilly's neighbor Nora challenges the project as a violation of the local zoning laws. A court orders a permanent halt to the project. O'Reilly's contract with Planners & Builders is

A)breached.
B)discharged.
C)not affected.
D)suspended.

Question 43

Hilda signs a contract with Indemnity Insurance Company that intentionally confers a benefit on Hilda's daughter Jackie as the designated beneficiary. Jackie's rights under the contract will vest

A)automatically.
B)if she demonstrates her consent to the promise at Hilda's request.
C)if Indemnity attempts to modify the terms of the contract.
D)on the occurrence of the event for which the insurance was procured.

Question 44

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 45

Refer to Fact Pattern 10-31 If Ambrose breaches the contract, Belle Vista's remedy would most likely be​

A)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 46

Gliding Light, LLC, and Hang Gliders, Inc., are parties to a contract. They subsequently agree that High Riders Inc. should take Gliding Light's place and assume all of its rights and duties under the contract. This is​

A)a mutual agreement to rescind.
B)an accord and satisfaction.
C)a novation.
D)a settlement agreement.

Question 47

Orchid and Peony enter into a contract for the sale of Orchid's textbook at the end of the fall semester for which Peony agrees to pay Orchid $75. Peony wants to transfer her right to payment for the book to Queenie. A transfer of this right is​

A)a delegation.
B)an assignment.
C)prohibited.
D)a third-party beneficiary contract.

Question 48

Renee contracts with Scott to pay him $25,000 for his work on Renee's new album "Hip Pop." After Scott performs, they sign an accord, in which Renee promises to pay him $21,000 within thirty days instead of $25,000 later. But she does not pay. Scott can sue Renee on​

A)neither the accord nor the original obligation.
B)the accord only.
C)the accord or the original obligation.
D)the original obligation only.

Question 49

Joy and Kris enter into a contract for Kris to lay sod in Joy's yard for which she agrees to pay Kris. When Kris's schedule conflicts, she contacts Leza, to whom Kris "assigns all rights under the contract." Kris is​

A)absolved of any liability under the contract.
B)liable to Joy for breach of contract.
C)liable to Joy if Leza does not perform.
D)liable to Leza for inducing a prohibited contract.

Question 50

Metro Facilities, Inc., contracts to sell a parking lot to Nouveau Property Company. The contract provides 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)an exculpatory clause.
C)a limitation-of-liability clause.
D)a penalty clause.

Question 51

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 52

Pico, a famous chef, agrees to give ten culinary les-sons to Rhoda in exchange for $1,200. Pico's attempt to transfer his contract duties to Sven, an unknown sous-chef, will probably be​

A)permitted because contracts may be freely delegated.
B)permitted because the contract is concerned with cookery.
C)prohibited because contracts may not be freely delegated.
D)prohibited if Pico and Sven have different skill levels.

Question 53

Paolho and Roth agree that Paolho will fix Roth's boat dock in exchange for $5,000. Paolho spends half of the amount due under the contract to acquire the materials for the job from Sav-U Economy Lumber. Sav-U is​

A)a delegatee.
B)an intended beneficiary.
C)an incidental beneficiary.
D)an assignor.

Question 54

Refer to Fact Pattern 10-1. If Belle Vista breaches the contract, Ambrose's remedy would most likely be​

A)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 55

Laramie contracts to provide cattle-herding services to Miles for $1,400 per month. Laramie cannot transfer this duty​

A)under any circumstances.
B)without continuing to be potentially liable.
C)without Miles's consent.
D)without paying Miles at least one monthly fee.Fact Pattern 10-1 Ambrose enters into a contract to buy 350 acres from Belle Vista Farms to cultivate grapes and open a winery.

Question 56

Opportunity Market Company (OMC) and Pierce enter into a contract for Pierce to cut and trim the landscaping around OMC's building before a meeting of the company's sales staff. When Pierce's schedule conflicts, he asks Rachel to do the cutting and trimming. This transfer of duties is​

A)a delegation.
B)an assignment.
C)a third party beneficiary contract.
D)prohibited.

Question 57

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

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

Question 58

Ilene and Jerry enter into a contract under which Ilene agrees to provide grounds keeping services for Jerry's Family Fun Center. Under an anti-delegation clause, the contract can prohibit and prevent the transfer of​

A)only duties that are personal in nature.
B)only duties that are impersonal in nature.
C)no duties under the contract.
D)all duties under the contract.

Question 59

​Bea takes out a life insurance policy with Vida Insurance Corporation that names her spouse Wendell as the beneficiary. This is

A)a delegation.
B)an assignment.
C)a third party incidental beneficiary contract.
D)a third party intended beneficiary contract.

Question 60

A contract between Laser Maintenance, Inc., and Medical Vision Operation Corporation contains a clause stating that any assignment is "void." This ordinarily prohibits​

A)any assignment.
B)no assignment.
C)only an assignment of contract rights to personal services.
D)only an assignment that would change the obligor's risk.Fact Pattern 10-1 Ambrose enters into a contract to buy 350 acres from Belle Vista Farms to cultivate grapes and open a winery.

Question 61

Tile & Grout (T&G) contracts to resurface the insides of the pools at Water World Park. T&G knows that without the resurfacing, Water World will have to delay its seasonal opening. T&G does not perform as promised. As consequential damages, Water World 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 62

Copper Conduit, Inc., and Dependable Electric Company 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 esti-mate but approximately $1,000." This is​

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

Question 63

​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 64

​Kali contracts to sell Levon her car for $3,000. This contract will be fully discharged when Kali and Levon

A)agree to sign a bill of sale.
B)exchange the car for the $3,000.
C)sign a receipt.
D)shake hands and go their separate ways.

Question 65

Rikki agrees to sell her Sunrise Breakfast Café to Tia. As part of the deal, Rikki 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 66

A-One Landscapers, Inc., owes Friendly Finance Company $5,000. A-One enters into a contract with Suburban Office Park under which A-One promises to maintain the landscaping on Suburban's property. Under the contract, Suburban promises to pay Friendly Finance the amount that will be due A-One until A-One's debt to Friendly Finance is paid. A-One performs as promised, but Suburban does not pay Friendly Finance. Can Friendly Finance succeed in a suit against Suburban? Why or why not?​

Question 67

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 by only partially performing the contract, Scrub n' Dry can

A)sue Ready Repair for specific performance.
B)sue Ready Repair for punitive damages.
C)file a criminal complaint against Ready Repair.
D)sue Ready Repair for compensatory and consequential damages.

Question 68

Building Restoration, Inc. (BRI), enters into a contract to refurbish an old train depot for Casual Dining, Inc., to open as Eat Up Restaurant. If BRI completes most of the work promised in the contract, its performance will be​

A)absolute.
B)complete.
C)material.
D)substantial.

Question 69

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 70

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 71

Rough Hewn Lumber Company orally contracts with Joe for the purchase of five acres of Joe's timberland. Joe makes the transfer but Rough Hewn does not pay the price. The lack of a written contract could bar enforcement of this deal. If so, Joe could most likely recover on a theory of​

A)rescission.
B)restitution.
C)liquidated damages.
D)quasi contract.

Question 72

Ed's Electric substantially performs its contract with Forest Hills Apartments, Inc., to deliver and install an alarm system and parking lot lighting. Forest Hills is entitled to

A)damages.
B)nothing more.
C)be excused from performance.
D)suspend performance.