Deck 20: Breach of Contract and Remedies

Question 1

Consequential damages are those that necessarily flow from the breach.

Answer 1

False

Question 2

An anticipatory repudiation must be clear, absolute, and unequivocal.

Answer 2

True

Question 3

When a party waives compliance with one provision of a contract, the other party may thereafter ignore other provisions of that contract.

Answer 3

False

Question 4

The measure of monetary damages when there has been a breach of contract is the sum of money that will place the injured party in the same position that would have been attained if the contract had been performed.

Question 5

A party injured by the other party's anticipatory repudiation of a contract has the right to bring suit at the time of the repudiation, and before the date on which performance is due.

Question 6

A waiver of a breach may be either express or implied.

Question 7

A reservation of rights is an assertion by a party to a contract that even though a tendered performance is accepted, the right to damages for the nonconformity to the contract is reserved.

Question 8

If there is a breach of contract, the law requires that the other party terminate the contract and bring a lawsuit.

Question 9

Only direct losses from a breach of contract may be recovered by an injured party.

Question 10

The normal remedy for breach of contract where the plaintiff has suffered a loss is compensatory damages.

Question 11

An injured party that does not suffer an actual loss from the breach of a contract is entitled to nominal damages.

Question 12

Consequential damages may not be recovered, even if they were within the contemplation of the parties at the time of contracting.

Question 13

When one party breaks the contract, the contract is said to be breached.

Question 14

Punitive damages are generally recoverable in contract actions.

Question 15

Damages representing annoyance ordinarily may not be recovered in a breach-of-contract action.

Question 16

Whether there has been a waiver is a question of fact.

Question 17

When a party expressly declares before the time for performance arrives that the contract will not be performed, such a declaration is called an anticipatory repudiation.

Question 18

Damages in excess of actual loss, imposed for the purpose of punishing or making an example of the defendant, are known as compensatory damages.

Question 19

If one party to a contract breaks the contract, the other party generally is under a duty to stop any further performance to avoid sustaining greater damages.

Question 20

An acceptance with a reservation of right must be in writing.

Question 21

If a seller delivers defective goods, the buyer does not lose the right to object to the breach of contract if the buyer:

A) accepts the goods.
B) accepts the goods with a reservation of right.
C) agrees to a modification of the contract.
D) accepts the performance without protest.

Question 22

If a plaintiff's loss involves damaged property, it is described as liquidated damages.

Question 23

When one party commits a non-material breach of contract, the other party may rescind the contract.

Question 24

A party must mitigate damages at all costs.

Question 25

An injured party who rescinds a contract after having performed services may recover the reasonable value of the performance rendered under restitutionary or quasi-contractual damages.

Question 26

If monetary damages would be an adequate remedy, then an action for specific performance would be appropriate.

Question 27

When an anticipatory repudiation of a contract occurs, the aggrieved person's option(s) include:

A) doing nothing and waiting for performance per the contract.
B) immediately declaring a breach of contract.
C) considering the contract cancelled.
D) all of the above.

Question 28

A contractual provision which states that a waiver of rights will not constitute a modification to the contract is:

A) not enforceable as being in bad faith.
B) not enforceable as a violation of law.
C) enforceable by one party only.
D) enforceable.

Question 29

When one party has broken a contract, there are several remedies available to the non-breaching party, including:

A) bringing an action for money damages.
B) rescinding the contract.
C) seeking specific performance.
D) all of the above.

Question 30

When the plaintiff seeks the remedy of specific performance, the plaintiff wants the other party to carry out the terms of the contract and not pay damages.

Question 31

Contract provisions that limit the remedies of the parties are generally unenforceable.

Question 32

A party that rescinds a contract without proper grounds for rescission is liable for damages for breach of the contract.

Question 33

One party to a contract permitting the other party to continue performance without objecting that the performance is unsatisfactory is an example of a(n):

A) waiver.
B) breach.
C) anticipatory repudiation.
D) forbearance.

Question 34

The failure to act or perform in the manner called for by a contract is a:

A) waiver.
B) breach.
C) forbearance.
D) reservation of right.

Question 35

A landlord who continuously accepts late rental payments without collecting the late fee provided in the lease:

A) waives the late fee.
B) will collect the late fee at a later date.
C) is ignorant of the late fee.
D) allows the tenant to repudiate the lease.

Question 36

If an exculpatory clause or limitation of liability clause limits liability for damages caused only by negligent conduct, liability is neither excluded nor limited if the conduct alleged is found to be grossly negligent, willful, or wanton.

Question 37

If a plaintiff seeking damages in a breach of contract action receives $1 in damages, the damages would most likely be classified as:

A) punitive damages.
B) exemplary damages.
C) nominal damages.
D) compensatory damages.

Question 38

When the contract requires that both parties submit disputes to arbitration, this is an example of a limitation-of-remedies clause.

Question 39

When a party expressly declares that performance will not be made when required, this declaration is a(n):

A) anticipatory repudiation.
B) injunction.
C) negotiating technique.
D) waiver of breach.

Question 40

Repeated breaches and waivers are generally interpreted to indicate:

A) poor business practices.
B) illegal behavior.
C) ignorance of the law.
D) modification of contract.

Question 41

The party that breaks a contract may be required to pay damages to the other party to compensate for:

A) losses that could have been avoided by hiring someone else to perform the contract.
B) emotional disturbance caused by the breach of contract.
C) a heart attack induced by the emotional disturbance caused by the breach of contract.
D) damages resulting necessarily and directly from the breach of contract.

Question 42

Which is not a correct statement concerning rescission of a contract?

A) The breach must be material.
B) The injured party who rescinds may recover money paid under the contract.
C) The contract remains in effect after the rescission.
D) Rescission is the undoing of the contract.

Question 43

Which is not a correct statement concerning a liquidated damages clause?

A) If the clause is enforced, the injured party can collect no more than the amount specified.
B) If the clause is enforced, the injured party has a choice between compensatory damages or liquidated damages.
C) The amount of liquidated damages must not be excessive.
D) The amount of liquidated damages are established by the parties to the contract.

Question 44

A contract provision stating that one of the parties shall not be liable for damages in case of a breach is called a(n) __________ clause.

A) liquidated damages
B) exculpatory
C) waiver.
D) due process

Question 45

Which is not a correct statement concerning the remedy of specific performance?

A) The subject matter of the contract must generally be unique.
B) An award of monetary damages would be an inadequate remedy.
C) The granting of specific performance is discretionary with the court.
D) It is generally available in all breach of contract cases.

Question 46

If a liquidated damages clause demands an unusually large sum that is not related to reasonably-anticipated actual damages, the clause will be held to be void as a(n):

A) penalty.
B) unliquidated damages clause.
C) extortion
D) blackmail

Question 47

Cyril made two contracts. The first was to have his house painted one month from the date of the written contract. The second was for his neighbor's 1957 Ford Thunderbird. Each contract was definite and clear in all respects. As to the house painting, Cyril inquired with the painter as to when the work could begin. The painter explained that he was extremely busy and was not sure if he could fulfill the contract. Cyril flew into a rage and immediately hired someone else who painted the house, but at a higher price. Cyril then sued the painter, claiming that there was an anticipatory repudiation of the contract by the painter.
With regard to the automobile purchase contract, after signing the contract, the neighbor decided that she did not wish to sell her car and refused to complete the transaction. Cyril attempted to purchase a similar car elsewhere, but the car was a vintage automobile which was not available on the open market. Cyril sued the neighbor for specific performance of the contract. Discuss the probable outcomes of the lawsuits.

Question 48

An action for injunctive relief may be granted:

A) if money is due and payable.
B) if the breach consists of doing a prohibited act.
C) if the breach would cause nominal damages.
D) if the breach would cause consequential damages.

Question 49

Damages in excess of actual loss are called:

A) punitive damages.
B) compensatory damages.
C) restitution.
D) nominal damages.

Question 50

Gregory, a comedy writer, entered into a contract with Wessel, a comedian. The contract provided that Gregory would provide Wessel with a 15-minute monologue for his upcoming appearance on Comedy Hour and that Wessel would pay Gregory $250. All performers on Comedy Hour make $500 per appearance. As Gregory knows, the last time Wessel appeared on Comedy Hour he was asked to make special guest appearances at three local comedy clubs using the same monologue. He earned a total of $750 for the three performances. Shortly before Wessel was scheduled to appear on Comedy Hour, Gregory informed him that he was unable to provide the monologue. As a result, Wessel was forced to cancel his appearance. Wessel sued Gregory for breach of contract and requested damages of $1,250. What will result?

Question 51

The rule of mitigation of damages requires that a party injured by a breach of contract must:

A) take any and all steps possible to reduce the damages that will be sustained because of the breach.
B) discharge the contract before filing suit for breach.
C) hire someone else to perform the contract.
D) take reasonable steps to reduce the damages that would otherwise be sustained because of the breach.

Question 52

Between experienced businesspersons, exculpatory clauses are generally:

A) voidable.
B) void.
C) valid.
D) unenforceable.

Question 53

A provision stipulating the amount of money damages to be paid in the event of default or breach of contract is known as a __________ damages clause.

A) nominal
B) contract
C) liquidated
D) breach

Question 54

The damages that are typically recoverable when a contract has been breached and one party has suffered loss are called:

A) punitive damages.
B) emotional distress damages.
C) compensatory damages.
D) liquidated damages.

Question 55

Consequential damages may be recovered if:

A) the damages were not a foreseeable consequence of the breach.
B) the damages reasonably flow from the breach as a result of the injured party's particular circumstances.
C) the breach did not cause the damages.
D) the loss exceeds $500.

Question 56

Failure to mitigate damages limits recovery to:

A) damages that would have been sustained had the plaintiff mitigated the damages where it was possible to do so.
B) nominal damages and punitive damages.
C) damages for consequential loss.
D) exemplary damages.

Question 57

Beth Roberts purchased a "new" car from Honest John's Car Lot six months ago. The sales agreement expressly described the vehicle as a new car, and all usual factory papers accompanied the sale. However, Beth discovered that the car actually was acquired by Honest John's from another dealer who had used it as a demonstrator and loaned it to business friends on a regular basis. The car had more than 10,000 miles on it, a fact that had been concealed by turning back the odometer. Beth also discovered that Honest John's apparently had engaged in this practice before. Beth is suing for breach of contract. She is asking for compensatory damages equal to the difference between the new car price she paid and the average price the vehicle would have brought as a used car. In addition, she is asking for damages in the amount of $5,000. Honest John's attorney has told Beth that she will fight both claims and has advised Beth that the court will not award $5,000 as punitive damages for such a suit. What do you think?

Question 58

The remedy of specific performance will most likely be granted in the case of a(n):

A) employment contract.
B) contract to buy shares of publicly-traded stock.
C) contract for the sale of a business.
D) contract for the sale of Florida oranges.