Question 1

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 in cases where there was a breach of contract, but the actual damages suffered by the non-breaching party are difficult to ascertain or are too small to warrant compensation. Nominal damages are generally awarded to establish, as a matter of principle, that the breaching party acted wrongfully, and to vindicate the non-breaching party's rights under the contract. In this case, since the Centre was able to contract with KO Sports for the same service at a lower price, the damages they suffered were minimal, thus qualifying for nominal damages.

Question 2

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's sale of the fruit to Green Grocers, Inc. represents mitigation of damages, as he is taking action to minimize his losses by selling the fruit after Fresh Food Corporation failed to pay for its storage.

Question 3

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...

Question 4

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 a penalty clause because it imposes a punitive amount on Drew for failing to close the deal by the designated date. A liquidated damages clause would provide a reasonable estimation of the damages that Evan would suffer if Drew failed to close on time, and a mitigation clause would require Drew to take reasonable steps to minimize Evan's damages in the event of a delay. A nominal damages clause would provide a token amount of damages, typically $1, and would not be applicable in this scenario.

Question 5

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 cover losses that were foreseeable at the time the contract was formed but that are not directly caused by the breach itself. In this case, the delay in repairing the molding equipment resulted in Dobry losing a certain percentage of profit, and this loss was a foreseeable consequence of Chet's delay. Therefore, Dobry might be awarded consequential damages to provide funds for this loss. The other choices are not applicable in this scenario.

Question 6

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 meant to punish the defendant for their wrongful conduct and to deter others from engaging in similar behavior. In this case, if QuikBilt breached their duty of care and failed to meet the standards set forth in the contract, they may be liable for punitive damages to deter them and other construction companies from cutting corners and potentially putting others at risk.

Question 7

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, Inc. had a specific deadline in place and Mining Supplies Company failed to meet that deadline. As a result, Lava can recover the $10,000 it would lose due to the late delivery. However, Lava still received the drill and agreed to pay the $3,000 cost, so it cannot recover that amount. Therefore, the best choice is option B to recover the $10,000 only.

Question 8

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 under the contract and the amount he actually earned after Little's breach, which is $2,000 (i.e. $5,000 - $3,000).

Question 9

Fact Pattern 12-1 
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 12-1.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 price and its market price. This is because the contract price is the price that the parties agreed on when they entered into the contract, and if Estelle breaches the contract, Desmond should be put in the same position he would have been in if the contract had been performed. This would mean that Desmond would be entitled to the difference between the contract price and the market price of the land at the time of the breach. This remedy is known as expectation damages. The other choices are not relevant to this case.

Question 10

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

Since Bret declined a similar job with Downtown Builders, Inc. that would have paid $4,000, his damages would be the difference between that amount and the amount he was supposed to earn with CCC, which is $500. Therefore, he can recover $500 as compensatory damages. He cannot recover the full contract amount of $4,500 because CCC has the right to cancel the contract before Bret begins working.

Question 11

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, as it sets a specific amount of damages to be paid in the event of a material breach, instead of leaving it up to the court to determine the amount of damages.

Question 12

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 that must be paid in the event of a breach. The amount specified must be a reasonable estimate of the actual damages that would be incurred in the event of a breach. If the amount is excessive or designed to punish the breaching party, it may be considered a penalty and could be unenforceable. The purpose of a liquidated damages clause is to provide a quick and efficient means of resolving disputes without the need for costly litigation. Therefore, B is the correct answer since it specifies that the amount is a reasonable estimate of the loss on a breach.

Question 13

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 may recover the costs needed to complete construction since Beachside Pools, Inc. failed to build the swimming pool according to the contract specifications. This includes the cost of hiring Do-We Fix-It Company to finish the project.

Question 14

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 the breach of a contract, but are not a direct result of the breach. In this case, the loss of profit from the lost sale is a consequential damage that NDI can recover from Mona. The cost of a new computer (choice A) would be direct damages, since that is what NDI would have paid for anyway. The difference between Mona's price and the actual cost of repair (choice B) would also be direct damages. Therefore, the correct choice is C.

Question 15

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 or reduce the damages that he might otherwise suffer. This means that Scott should take reasonable steps to minimize his losses or find another job to replace the income he was expecting from Rig. It is not Scott's duty to do nothing, rescind the contract or punish Rig, although he may have legal remedies available if Rig breaches the contract.

Question 16

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

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Question 17

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...

Question 18

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 has a duty to mitigate its damages. This means taking reasonable steps to reduce the harm caused by the breach, such as seeking alternative solutions or suppliers to complete the project. Failing to mitigate damages could result in Fashion being unable to recover the full amount of damages suffered as a result of Great Promotions' breach.

Question 19

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 duty to mitigate damages when a tenant breaches a lease and vacates the premises before the end of the term. This duty requires the landlord to make reasonable efforts to relet the premises in order to minimize the damages caused by the breach. Therefore, the best choice is B, which states that Sunny Properties must make reasonable efforts to relet the premises to mitigate damages. Choices A, C, and D are incorrect because they do not reflect this duty to mitigate damages.

Question 20

Fact Pattern 12-1 
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 12-1.If Desmond breaches the contract,Estelle's remedy would most likely be

Accepted Answer

Specific performance is a remedy in contract law that compels a party to execute the contract according to its precise terms when monetary damages are inadequate, especially in real estate transactions where each parcel of land is considered unique.

Quiz 12: Breach and Remedies