Question 1

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

Accepted Answer

This provision is commonly known as a "limitation of liability" clause and is often included in contracts. It limits the amount of damages that can be recovered for certain types of breaches or events, such as a delay in delivery or a failure of a product to perform as described. However, it is important to note that such clauses are subject to various legal limitations and may be unenforceable in certain situations.

Question 2

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 dur?ing May but earns only $3,000. Kris files a suit against Little. As compen?satory damages, Kris can recover

Accepted Answer

Since Kris was only able to earn $3,000 instead of the agreed-upon $5,000, Kris is entitled to recover the difference, which is $2,000.

Question 3

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

Accepted Answer

This means that the innocent party has a duty to take reasonable steps to minimize their losses resulting from the breach. Failure to mitigate damages may result in a reduction in the amount of damages that the injured party can recover.

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

This statement is true. The enforceability of a limitation-of-liability clause in a contract will depend on the nature of the breach that the clause seeks to excuse. Some types of breaches may not be subject to such limitations, while others may be. It is important to carefully review and understand the terms of any such clause before agreeing to it.

Question 5

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 allows one party to recover or recapture a benefit or value that another party has received or gained unjustly. It is an equitable remedy designed to prevent unjust enrichment, and it can be sought in a wide range of legal scenarios, including breach of contract, fraud, and property disputes. Ultimately, the goal of restitution is to restore the parties to their pre-dispute or pre-injury position, and to ensure that any benefits or gains that were obtained through unjust means are returned.

Question 6

Liquidated damages provisions are usually not enforceable.

Accepted Answer

Liquidated damages provisions are usually enforceable if they are a reasonable estimate of the anticipated damages that would result from a breach of contract. However, courts may scrutinize such provisions and strike them down if they are deemed to be excessive or punitive in nature.

Question 7

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

Accepted Answer

Specific performance is the legal remedy that requires a party to fulfill their contractual obligations precisely as they were agreed upon in the contract. It is often used in cases where monetary damages are not sufficient to compensate for the breach of contract.

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

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 sets a predetermined amount of damages to be paid in case of a future default or breach of contract.

Question 10

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

Accepted Answer

Quasi contract is a legal theory that allows a court to imply a contract exists even if there is no express agreement between parties, in order to prevent one party from being unjustly enriched at the expense of the other party. It is also known as "implied-in-law contract" or "constructive contract."

Question 11

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 she paid Damien as compensatory damages, which is $10,000. Option A is incorrect as there is no basis for multiplying the amount by ten. Option C is incorrect as it is too low a sum to be considered adequate compensation. Option D is incorrect as there is a valid claim for breach of contract.

Question 12

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, also known as implied-in-law contract, does not require an actual contract or agreement between the parties. It is a legal remedy used to avoid unjust enrichment when there is no formal contract in place, but one party has received a benefit from the other party.

Question 13

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 contractual provision that specifies a certain amount to be paid in the event of a default or breach of contract. The purpose of the penalty provision is to deter the party from defaulting or breaching the contract.

Question 14

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 them for damages. This is the most common solution for a breach of contract and would allow Fiesta to seek compensation for any losses incurred due to the breach. The other options are not practical or feasible.

Question 15

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 16

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

Accepted Answer

If one party fails to perform their obligations under a contract, the other party may be entitled to rescind the contract and seek damages or other remedies. This principle is often referred to as a breach of contract.

Question 17

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

Accepted Answer

A liquidated damages provision is a clause in a contract that specifies the amount of damages that will be payable in the event of a breach of contract by one party. The purpose of such a provision is to provide certainty and predictability in the event of a breach. A penalty provision, on the other hand, is a clause that imposes a penalty or fine for breach of contract, which is in excess of the actual damage suffered by the non-breaching party. Penalty provisions are generally unenforceable as they are considered to be punitive in nature.

Question 18

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

Accepted Answer

This is known as an exculpatory clause or limitation of liability clause. It is legal and enforceable in most cases, as long as it is clearly written and agreed upon by both parties.

Question 19

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 20

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 difference between the wages at the two jobs, which is $50 per week for 52 weeks totaling $2,600. She is also entitled to recover the $100 she spent to obtain the similar job, bringing the total amount she can recover to $2,700.

Quiz 15: Breach and Remedies