Question 1

Fact Pattern 16-1 (Questions 7–8 apply)
Estelle enters into a contract to buy 132 acres from Desmond to subdivide and sell in quarter-acre lots for Country Acres, a residential development.

-Refer to Fact Pattern 16-1.If Estelle breaches the contract,Desmond's remedy would most likely be

Accepted Answer

If Estelle breaches the contract, Desmond's remedy would most likely be the difference between the land's contract and market prices, as this compensates for the loss incurred due to the breach. Specific performance is typically not granted for contracts involving the sale of land unless the land is unique or the damages are inadequate.

Question 2

Development Associates (DA)agrees to buy five acres of land from Eastside Properties for $15,000.Eastside sells the acreage to Fealty Realty,and fails to go through with DA's deal on the agreed date,when the market price of the land is $17,000.DA may recover

Accepted Answer

DA may recover the difference between the market price at the time of breach and the contract price, which is $2,000 ($17,000 - $15,000).

Question 3

Fashion Retail Center enters into a contract with Great Promotions,Inc.,to provide Fashion with a plan to retool its merchandising strategy.If Great Promotions breaches the contract,Fashion has a duty to

Accepted Answer

If Great Promotions breaches the contract, Fashion's duty is to mitigate or reduce the damages that it might suffer. This means taking reasonable steps to minimize the harm caused by the breach. It is not Fashion's duty to reduce the loss that Great Promotions might suffer, punish them, or take no action.

Question 4

Beachside Pools,Inc.,agrees to build a swimming pool for Candy,but fails to build it according to the contract specifications.Candy hires Do-We Fix-It Company to finish the project.Candy may recover from Beachside

Accepted Answer

Candy can recover the costs needed to complete the construction from Beachside, as they failed to build it according to the contract specifications.

Question 5

Fact Pattern 16-1 (Questions 7–8 apply)
Estelle enters into a contract to buy 132 acres from Desmond to subdivide and sell in quarter-acre lots for Country Acres, a residential development.

-Refer to Fact Pattern 16-1.If Desmond breaches the contract,Estelle's remedy would most likely be

Accepted Answer

Estelle's remedy for breach of contract by Desmond would most likely be specific performance, which would require Desmond to follow through with the sale of the 132 acres. This would be the most appropriate remedy given the unique and specific nature of the land in question, which may not have an easily determinable market price or unrealized profit potential.

Question 6

Mikayla enters into a contract with Logan to provide surface material for Mikayla's tennis courts by April 1 for a tournament to begin May 1.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 a provision in a contract that specifies a predetermined amount of damages to be paid by the breaching party in the event of a breach. To be enforceable, the amount must be a reasonable estimate of the anticipated loss resulting from the breach, rather than an excessive penalty or designed to punish the breaching party. The purpose of the clause is to provide certainty and predictability for both parties, allowing them to assess the risks and benefits of the contract. Therefore, in this case, the amount specified in the liquidated damages clause should be a reasonable estimate of the loss that Mikayla would suffer if Logan breached the contract by failing to provide the surface material by the deadline.

Question 7

Ray breaches his lease with Sunny Properties and vacates the premises six months before the end of the term.In some states,Sunny would have to

Accepted Answer

In most states, landlords have a legal duty to mitigate damages when a tenant breaches their lease and vacates the premises early. This means that Sunny Properties would have to make reasonable efforts to relet the premises in order to minimize the damages caused by Ray's breach of the lease. Once a new tenant is found, Sunny can then recover damages from Ray for the period of time the unit remained vacant.

Question 8

Mona contracts to repair a computer for NuData,Inc.(NDI).Mona knows that without the computer,NDI will lose a sale.Mona does not perform as promised.NDI files a suit against Mona.As consequential damages,NDI can recover

Accepted Answer

Consequential damages are damages that result from a breach of contract, but are not directly related to the contract itself. In this scenario, NDI lost a sale as a result of Mona's failure to repair the computer as promised. Therefore, NDI can recover the loss of profit from the lost sale as consequential damages. The cost of a new computer or the difference between Mona's price and the actual cost of repair are not consequential damages in this case.

Question 9

Lava Excavators,Inc.,needs a drill to continue its operations and orders one for $3,000 from Mining Supplies Company.Lava tells Mining that it must receive the drill by Tuesday or it will lose $10,000.Mining ships the drill late.Lava can recover

Accepted Answer

Lava Excavators made it clear that if they did not receive the drill by Tuesday, they would lose $10,000. Therefore, since Mining Supplies Company shipped the drill late, Lava can recover the $10,000 they lost as a result. They still need to pay for the drill at the original cost of $3,000, so their total recovery would be $10,000.

Question 10

Dobry Die & Mold,Inc.,enters into a contract with Chet's Refitting Service to fix Dobry's precisely engineered molding equipment.If Chet's delays the repair for five days,knowing that Dobry will lose a certain percentage of profit for the delay,Dobry might be awarded consequential damages to

Accepted Answer

Consequential damages are awarded to compensate for a foreseeable loss that goes beyond the contract itself. In this case, Dobry's loss of profit due to the delay in repair is a foreseeable outcome of Chet's actions, and therefore Dobry may be awarded consequential damages to compensate for this loss. Options A, C, and D are not relevant in this scenario.

Question 11

Medical Centre enters into a contract with Local Motion Fitness Club for discounted memberships for the Centre's employees.If the Club breaches the contract and the Centre enters into a contract with KO Sports for the same service at a lower price,the Centre might be awarded nominal damages to

Accepted Answer

Nominal damages are awarded to establish, as a matter of principle, that the defendant acted wrongfully or breached the contract. They are usually a small sum of money, such as $1, and are not meant to compensate the plaintiff for any actual loss or damage. In this case, the Centre would be awarded nominal damages to show that Local Motion Fitness Club breached the contract and acted wrongfully by not providing the agreed-upon service.

Question 12

Pure Oil Company enters into a contract with QuikBilt,Inc.,to construct an oil pipeline to withstand specific conditions.If QuikBilt fails to meet this standard,which is construed as a breach of contract and a breach of a duty of care,Pure might be awarded punitive damages to

Accepted Answer

Punitive damages are awarded to punish the defendant and deter others from engaging in similar conduct. In this case, if QuikBilt breached its duty of care and the contract, resulting in damages to Pure, punitive damages may be awarded to deter others from breaching contracts and causing harm in the future.

Question 13

Drew contracts to sell a residential duplex to Evan.The contract provides that if Drew does not close the deal by September 15,he must pay Evan one-half of the contract price.This provision is not enforceable because it is

Accepted Answer

This provision is not enforceable because it is a penalty clause. A penalty clause is a provision in a contract that imposes an excessively harsh or unreasonable penalty for a breach of contract. In this case, the provision that Drew must pay Evan one-half of the contract price if he does not close the deal by September 15 is considered to be an excessive and unreasonable penalty. As a result, this provision would be unenforceable under contract law.

Question 14

Office Accounting,Inc.,hires Perry to repair a computer on site for $400,but Perry does not show up as agreed.Office Accounting hires Raul to do the job for $350.Office Accounting may recover from Perry

Accepted Answer

The answer of Office Accounting,Inc.,hires Perry to repair a computer...

Question 15

Rite Contractors,Inc.,agrees to build a motel for Sleep Inn Corporation.The project proceeds according to plan,but before it is done,Sleep tells Rite to quit.Rite may recover

Accepted Answer

The answer of Rite Contractors,Inc.,agrees to build a motel for...

Question 16

Earl holds 1,000 pounds of perishable fruit in storage for Fresh Food Corporation.Fresh Food does not pay for the storage.Earl sells the fruit to Green Grocers,Inc.This sale represents

Accepted Answer

Earl is mitigating his damages by selling the fruit to Green Grocers, Inc. since Fresh Food Corporation did not pay for the storage. Mitigating damages means taking reasonable steps to minimize the losses suffered as a result of a breach of contract.

Question 17

Home Delivery Corporation and Interstate Transport,Inc.,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 estimate but approximately $1,000." This is

Accepted Answer

This is a liquidated damages clause because it specifies a predetermined amount of damages in the event of a material breach that creates difficult-to-estimate damages. A penalty clause would impose a greater amount of damages than the actual harm caused, whereas a mitigation of damages clause would address the parties' obligations to minimize damages after a breach has occurred. A nominal damages clause would provide for a minimal amount of damages, typically $1, to be awarded in the event of a breach without actual monetary loss.

Question 18

Bret contracts to work for City Construction Corporation (CCC)during July for $4,500.On June 30,CCC cancels the contract.Bret declines a similar job with Downtown Builders,Inc.,which would have paid $4,000.Bret files a suit against CCC.As compensatory damages,Bret can recover

Accepted Answer

Bret can recover the difference between what he would have earned with CCC and what he could have earned with another job. Therefore, he can recover $500 ($4,500 - $4,000).

Question 19

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 damages, meaning he must take reasonable steps to lessen the harm caused by Rig's breach. This duty is imposed on Scott in order to prevent him from recovering damages that could have been avoided by taking reasonable steps. Scott is not obligated to do nothing, rescind the contract, or punish Rig.

Question 20

Kris contracts to work exclusively for Little Manufacturing Company during May for $5,000.On April 30,Little cancels the contract.Kris finds another job during May but earns only $3,000.Kris files a suit against Little.As compensatory damages,Kris can recover

Accepted Answer

Kris can recover the difference between the amount he would have earned with Little ($5,000) and the amount he actually earned ($3,000), which is $2,000. Therefore, the answer is B.

Quiz 16: Breach and Remedies

Fact Pattern 16-1 (Questions 7–8 apply) Estelle enters into a contract to buy 132 acres from Desmond to subdivide and sell in quarter-acre lots for Country Acres, a residential development. -Refer to Fact Pattern 16-1.If Estelle breaches the contract,Desmond's remedy would most likely be

Development Associates (DA) agrees to buy five acres of land from Eastside Properties for $15,000.Eastside sells the acreage to Fealty Realty,and fails to go through with DA's deal on the agreed date,when the market price of the land is $17,000.DA may recover