Question 1

A penalty provision specifies a certain amount to be paid in the event of a default or breach of contract.

Accepted Answer

A penalty provision is a clause in a contract that specifies a certain amount to be paid by the breaching party in the event of a breach or default under the contract.

Question 2

Clarice pays Damien $10,000 to design an ad campaign for her Sweetwater Coffee Stand chain. The next day, Damien tells Clarice that he has accepted a job in New York and cannot design her campaign. She files a suit against Damien. As compensatory damages, she can recover

Accepted Answer

Clarice can recover the amount of money she paid to Damien as compensatory damages, which is $10,000.

Question 3

Even-Flo Hydraulics enters into a contract to repair valves and fittings in Fiesta Company's plant. If Even-Flo breaches the contract, Fiesta can

Accepted Answer

If Even-Flo breaches the contract, Fiesta can sue Even-Flo for damages to recover any losses or harm caused by the breach. This is the typical remedy available to a party when there is a breach of contract. The other options of doing nothing, making a deal with a different service provider, or filing a criminal complaint may not be appropriate or necessary in this situation.

Question 4

Whether a contract's limitation-of-liability clause will be enforced depends on the type of breach that the clause excuses.

Accepted Answer

A limitation-of-liability clause will only be enforced for certain types of breaches, such as negligence or a failure to perform a specific obligation. If the breach falls outside of the scope of the clause, it may not be enforceable.

Question 5

A liquidated damages provision specifies that a certain amount to be paid in the event of a future default or breach of contract.

Accepted Answer

A liquidated damages provision is a clause in a contract that specifies in advance the amount of damages that will be paid if one of the parties breaches the contract, allowing both parties to understand the potential consequences of any breach of the contract.

Question 6

To rescind a contract, each party essentially advances to the position he or she would have been in if the contract had been fully executed.

Accepted Answer

The answer of To rescind a contract, each party essentially...

Question 7

Specific performance is an equitable remedy requiring exactly the performance that was specified in a contract.

Accepted Answer

Specific performance is an equitable remedy that requires the exact performance specified in a contract. It is often used as a remedy when damages are not adequate, such as in cases involving unique or one-of-a-kind items.

Question 8

Hybrid Corporation enters into a contract with Insure Service, Inc. (ISI), to obtain health insurance for Hybrid employees. If ISI breaches the contract and Hybrid is awarded compensatory damages, the purpose would be to

Accepted Answer

The answer of Hybrid Corporation enters into a contract with...

Question 9

Handy Hardware Store agrees to hire Ilsa for one year at a salary of $500 per week. When Handy cancels the contract, Ilsa spends $100 to obtain a similar job that pays $450 per week for a year. Ilsa is entitled to recover

Accepted Answer

Ilsa is entitled to recover the amount of wages she would have earned from Handy, which would have been $26,000 ($500 x 52 weeks). However, she must also subtract the wages she actually earned from her new job, which is $23,400 ($450 x 52 weeks). The difference between the two amounts is $2,600. Additionally, she spent $100 to obtain the new job, which she is entitled to recover. Therefore, the total amount Ilsa is entitled to recover is $2,700 ($2,600 + $100).

Question 10

A party seeking to recover in quasi contract must show that he or she has been unjustly enriched.

Accepted Answer

The answer of A party seeking to recover in quasi...

Question 11

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 they would have earned from Little Manufacturing Company ($5,000) and the lesser amount they actually earned ($3,000), which is $2,000.

Question 12

When a breach of contract occurs, the innocent injured party has a duty to mitigate the damages.

Accepted Answer

The duty to mitigate means that the injured party must take reasonable steps to limit the damages suffered as a result of the breach. Failing to mitigate can limit the amount of damages that the injured party can recover.

Question 13

Quasi contract allows a court to act as if a contract exists when there is no contract.

Accepted Answer

Quasi contract is a legal concept in which a court may create an obligation between two parties even if there was no actual contract in place. This is done to prevent one party from being unjustly enriched or to provide compensation for services or goods that were provided but not paid for.

Question 14

A party seeking to recover in quasi contract must show that there was an actual contract or agreement between the parties.

Accepted Answer

Quasi contract is not a real contract, but rather a legal principle used to prevent unjust enrichment. It does not require an actual contract or agreement between the parties, but rather a situation where one party has received a benefit from another party under circumstances that would make it unfair to keep that benefit without paying for it.

Question 15

A contract can include a provision stating that no damages can be recovered for certain types of breaches.

Accepted Answer

This provision is often referred to as a limitation of liability clause and is commonly included in contracts to limit the amount and types of damages that can be recovered by one party in the event of a breach by the other party.

Question 16

The failure of one party to perform a contract entitles the other party to rescind it.

Accepted Answer

This is the general rule stated in most jurisdictions, but there may be exceptions or limitations depending on the specific terms of the contract and the circumstances of the breach.

Question 17

A liquidated damages provision is the same as a penalty provision.

Accepted Answer

A liquidated damages provision is included in a contract to establish a predetermined amount of damages in the event of a breach. It is a reasonable estimate of the actual damages that may be difficult to calculate at the time of contract formation. A penalty provision, on the other hand, is intended to punish the breaching party and deter future breaches. Penalty provisions are generally unenforceable under the law.

Question 18

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

Accepted Answer

Restitution is a legal concept that involves one party recovering or recapturing a benefit that another party has received unjustly. The goal is to restore the injured party to their original position before the unjust enrichment occurred. This may involve returning property, paying for damages, or providing compensation in some other form.

Question 19

A contract may include a clause stating that no damages can be recovered for a certain type of breach.

Accepted Answer

It is possible for a contract to include a clause that limits or waives certain damages for breach. However, the enforceability of such a clause may vary depending on the jurisdiction and the type of damages being waived.

Question 20

Liquidated damages provisions are usually not enforceable.

Accepted Answer

Liquidated damages provisions are enforceable if they are a reasonable estimate of the damages that would result from a breach of contract and not intended as a penalty for non-performance. However, if the provision is deemed to be a penalty, it would not be enforced.

Quiz 14: Breach and Remedies