Question 1

Ambrose enters into a contract to buy 350 acres from Belle Vista Farms to cultivate grapes and open a winery.
-Refer to Fact Pattern 17-1. If Ambrose breaches the contract,Belle Vista's remedy would most likely be

Accepted Answer

The typical remedy for breach of a real estate contract is the difference between the contract price and the market price of the land at the time of the breach.

Question 2

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' Fill10 percent of its cost. The parties rescind the contract. Excavate n' Fill's refund of the payment is

Accepted Answer

Restitution is the return of any money or property exchanged due to a rescinded contract. In this scenario, Excavate n' Fill needs to refund the advanced payment to Fred since the contract has been rescinded. It is not a penalty or liquidated damages as no breach of contract occurred, and reformation is not applicable since the contract is entirely rescinded.

Question 3

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

Accepted Answer

Isaac holding the fruit without payment from Juice Smoothies Corporation is not a breach of contract as the terms of their agreement are not specified. Selling the fruit to Kayo Beverage Company can be seen as a mitigation of damages as Isaac is taking action to minimize his losses by finding a buyer for the perishable fruit.

Question 4

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

Accepted Answer

The provision in the contract is a penalty clause because it seeks to punish Metro Facilities, Inc. for not closing the deal on time by imposing a disproportionately high penalty. Penalty clauses are generally unenforceable because they are considered to be a form of punitive damages, rather than a reasonable estimate of the damages suffered by the other party.

Question 5

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

Accepted Answer

Oxley's measure of damages would be the difference between the contract price and the cost of the cover from another source, which is $1,000. Additionally, Oxley may also be entitled to incidental damages, such as any costs associated with obtaining the cover from another source, such as additional shipping costs. Therefore, the correct answer is choice B.

Question 6

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

Accepted Answer

If Rig breaches the contract, Scott has a duty to mitigate his damages by taking reasonable steps to minimize his losses. This means that Scott cannot simply sit back and do nothing, but must try to find alternative employment or take other steps to limit his financial losses as a result of the breach. This is a fundamental principle of contract law that applies in most jurisdictions.

Question 7

Ambrose enters into a contract to buy 350 acres from Belle Vista Farms to cultivate grapes and open a winery.
-Refer to Fact Pattern 17-1. If Belle Vista breaches the contract,Ambrose's remedy would most likely be

Accepted Answer

Ambrose's remedy for breach of contract by Belle Vista Farms would be specific performance, which means that the court would order Belle Vista to fulfill their obligation under the contract of selling the 350 acres to Ambrose. This remedy is often used in cases involving real estate, where monetary damages would not be sufficient to make the injured party whole.

Question 8

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

Accepted Answer

In some states, if a tenant breaches a lease and vacates the premises before the end of the term, the landlord has a duty to mitigate damages by using reasonable efforts to find a new tenant to take over the space. This means that Longview Mall would need to make a good faith effort to relet the premises in order to recover any damages caused by the breach.

Question 9

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

Accepted Answer

If FabuloSales breaches the contract, Equine World has a duty to mitigate its damages, which means taking reasonable steps to reduce the harm caused by the breach. This could include seeking alternative solutions or finding a new contractor to complete the work. Taking no action (Option D) is not an appropriate response as it could result in Equine World suffering greater losses. Punishing the breaching party (Option C) may be an option in some cases, but it is not the first step and is not the primary duty of Equine World. Option B is not relevant as Equine World is not responsible for compensating FabuloSales for any losses they might suffer as a result of the breach.

Question 10

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

Accepted Answer

Nominal damages are awarded when there has been a breach of contract, but no actual loss or damages have been suffered by the plaintiff. In this scenario, B&B entered into a contract with Cineplex for discounted tickets, but Cineplex breached the contract. B&B then entered into a contract with DigiMovies for the same service at a lower price. Since B&B did not suffer any actual loss or damages, they may be awarded nominal damages to establish as a matter of principle that Cineplex acted wrongfully.

Question 11

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

Accepted Answer

Builders, Inc. is entitled to recover the costs needed to complete construction as Champion Fitness Clubs, Inc. breached the contract by telling Builders to quit before the project was completed. The costs needed to complete construction would enable Builders to recover their losses and also compensate them for the work already completed. Options A and B do not take into account the costs incurred by Builders and therefore do not provide full compensation. Option D includes profits, which may not be recoverable as they are dependent on the completion of the project.

Question 12

Copper Conduit,Inc.,and Dependable Electric Company sign an agree-ment 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

Accepted Answer

The agreement describes a specific amount of damages that will be paid if a material breach of the contract occurs, which is characteristic of a liquidated damages clause.

Question 13

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

Accepted Answer

The answer of Dry Gulch Farms hires Elliot to repair...

Question 14

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

Accepted Answer

The answer of Meatpackers,Inc.,enters into a contract with Nemiah's Ranch...

Question 15

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

Accepted Answer

Cowtown had informed Dairy Supplies that they needed the part by Tuesday or they would lose $10,000. Since Dairy Supplies had shipped the part late, Cowtown can recover the amount they lost, which is $10,000. However, they cannot recover the cost of the part itself, which remains $3,000. Therefore, the best choice is option B, which is $10,000.

Question 16

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

Accepted Answer

As a result of T&G's failure to perform as promised, WaterWorld is entitled to recover consequential damages. The delay in opening the park which leads to the loss of profit is a valid form of consequential damages. WaterWorld cannot recover the cost of new pools, as that would be considered direct damages, and cannot recover the difference between T&G's price and the eventual cost of resurfacing, as that would be too speculative. Thus, option C is the best choice.

Question 17

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

Accepted Answer

Rescinding a contract means that both parties want to undo the agreement as if it never happened. In this case, Guido must return the $100 that he received from Hal and Hal must return the mountain bike to Guido. This ensures that both parties are returned to the position they were in before the contract was entered into.  Retaining the benefits of the bargain would not be a valid rescission of the contract.

Question 18

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

Accepted Answer

Iliana is entitled to recover the difference between the wages at the two jobs because she had an expectation to earn the higher salary promised to her by Handcrafts & Hobbies, and had to spend additional money to secure a similar job. Therefore, she should be compensated for her loss of income. Additionally, she should be reimbursed for the $150 she spent to obtain the new job.

Question 19

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

Accepted Answer

A liquidated damages clause is meant to be a reasonable estimate of the loss that the non-breaching party would experience in the event of a breach. It is not meant to punish or penalize the breaching party, but rather to provide a pre-determined amount of compensation to the non-breaching party without having to go through the process of proving actual damages in court. Therefore, B is the best choice as it aligns with the concept of a liquidated damages clause.

Question 20

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

Accepted Answer

Quinn may recover from Porches & Verandas the cost needed to complete construction, which is the amount necessary for Ramadas, Inc. to finish the project according to the contract specifications. This would be the cost of labor and materials associated with completing the project, and may exceed the original contract price if Porches & Verandas failed to complete significant portions of the project.

Quiz 17: Breach and Remedies

Ambrose enters into a contract to buy 350 acres from Belle Vista Farms to cultivate grapes and open a winery. -Refer to Fact Pattern 17-1. If Ambrose breaches the contract,Belle Vista's remedy would most likely be