Question 1

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
A)reduce the damages that Fashion might otherwise suffer.
B)reduce the loss that Great Promotions might otherwise suffer.
C)punish Great Promotions and deter others from similar acts.
D)take no action.

Accepted Answer

If Great Promotions breaches the contract, Fashion has a duty to mitigate or reduce the damages that it might otherwise suffer. Mitigation means taking reasonable steps to minimize losses or damages. Therefore, Fashion should take actions to reduce the harm caused by Great Promotions' breach of contract.

Question 2

Pure Oil Company enters into a contract with QuikBilt,Inc. ,to construct an offshore 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
A)establish,as a matter of principle,that QuikBilt acted wrongfully.
B)provide Pure with funds for a foreseeable loss beyond the contract.
C)provide Pure with funds for its loss of the bargain.
D)punish QuikBilt and deter others from similar acts.

Accepted Answer

Punitive damages are awarded as a punishment to the defendant and to deter others from engaging in similar wrongful conduct. In this case, if QuikBilt breaches the contract and the duty of care, Pure may be awarded punitive damages to punish QuikBilt and discourage others from similar acts. Choice A might be relevant to awarding nominal damages, while choices B and C relate to compensatory damages.

Question 3

Lester and Myrtle want to rescind their contract under which Lester sold an MP3 player for $40.To rescind the contract
A)Lester must return the $40 and Myrtle must return the player.
B)Lester must return the $40 only.
C)Myrtle must return the player only.
D)the parties can keep the "benefits" of their bargain.

Accepted Answer

Rescinding a contract means that both parties want to cancel the agreement and go back to their original positions before the contract was made. In this case, Lester would return the $40 and Myrtle would return the MP3 player. This restores them to their pre-contract positions. Choice B or C would not be fair to one of the parties as they would not be fully restored to their pre-contract positions. Choice D would not be a rescission, as both parties would still be benefiting from the contract.

Question 4

To avoid liability for intentional injuries,Northwest Power Corporation in?cludes in its contracts an exculpatory clause.This is
A)enforceable if the other parties are protected from liability.
B)enforceable if the other parties consent to it.
C)enforceable if the other parties have equal bargaining power.
D)not enforceable.

Accepted Answer

Exculpatory clauses that attempt to waive liability for intentional injuries are generally not enforceable as they are against public policy and violate basic principles of justice and fairness.

Question 5

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
A)avoid reletting the premises to recover damages from Ray.
B)make reasonable efforts to relet the premises to mitigate dam?ages.
C)relet the premises to recover damages from Ray.
D)sell the premises to recover damages from Ray.

Accepted Answer

In many states, landlords have a duty to mitigate damages by making reasonable efforts to relet the premises after a tenant breaches the lease and vacates early. This means that Sunny Properties would need to try to find a new tenant in order to minimize the damages caused by Ray's breach. Choosing option A would not be appropriate because avoiding reletting the premises would not mitigate damages. Option C is incorrect because it is not a requirement in many states, although Sunny may choose to do so if it is in their best interest. Option D is not relevant since selling the premises would not recover damages from Ray.

Question 6

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
A)compensatory damages.
B)consequential damages.
C)nominal damages.
D)punitive damages.

Accepted Answer

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

Question 7

Refined Commodities,Inc. ,agrees to deliver ten tons of sheet metal to Select Builders Corporation.The agreement states that delivery is to be within "3" days,although the parties intend "30" days.Refined cannot convince Select to amend the contract.Refined should seek
A)damages.
B)reformation.
C)rescission.
D)specific performance.

Accepted Answer

Refined should seek reformation of the contract to correct the mistake regarding the delivery timeline. This would involve asking the court to modify the contract to reflect the parties' true intentions. Damages, rescission, and specific performance are not appropriate remedies in this situation.

Question 8

Vacation Vistas,Inc. ,agrees to sell certain acreage to Umiko,who intends to develop a destination resort.Vacation Vistas repudiates the deal.Umiko sues Vacation Vistas and recovers dam?ages.She can now obtain
A)an amount in a quasi-contractual recovery.
B)damages representing restitution.
C)specific performance of the deal.
D)nothing more.

Accepted Answer

The answer of Vacation Vistas,Inc. ,agrees to sell certain acreage...

Question 9

Clear Creek Corporation enters into a contract with Brightside Management Associates to manage and maintain Clear Creek's apartment complex.Their contract provides that neither party can recover damages for a non-fraudulent or unintentional breach.This is
A)a limitation-of-liability clause.
B)an exculpatory clause.
C)a liquidated damages clause.
D)a quasi contract.

Accepted Answer

This is a limitation-of-liability clause, which limits the amount of damages that can be recovered for non-fraudulent or unintentional breaches. It is commonly used in contracts to protect parties from excessive damages claims.

Question 10

Grady enters into a contract to buy 440 acres from Hollis to expand Grady's ranch.Hollis breaches the contract.Grady's normal remedy is
A)damages.
B)reformation.
C)rescission.
D)specific performance.

Accepted Answer

The best choice for Grady's remedy would be specific performance, as the subject matter of the contract (land) is unique and cannot be easily replaced by monetary damages. Rescission and reformation may also be available remedies, but specific performance would be the most appropriate in this situation.

Question 11

SFX Paintball Games,Inc. ,and Truck & Trailer Delivery Corporation 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
A)a liquidated damages clause.
B)a mitigation of damages clause.
C)a nominal damages clause.
D)a penalty clause.

Accepted Answer

This is a liquidated damages clause, as it specifies a predetermined amount that will be paid in the event of a material breach. The amount is also approximately equal to the damages that are difficult to estimate.

Question 12

Fidelio Corporation enters into a contract with Equi Insurance,Inc. ,to obtain health insurance for Fidelio employees.Equi breaches the contract.If Fidelio is awarded compensatory damages,the purpose would be to
A)establish,as a matter of principle,that Equi acted wrongfully.
B)provide Fidelio with funds for a foreseeable loss beyond the contract.
C)provide Fidelio with funds for its loss of the bargain.
D)punish Equi and set an example to deter others from similar acts.

Accepted Answer

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

Question 13

Development Associates (DA)agrees to buy five acres of land from Eastside Properties for $15,000.Eastside fails to go through with the deal on the agreed date,when the market price of the land is $17,000.DA may recover
A)$17,000.
B)$15,000.
C)$2,000.
D)$0.

Accepted Answer

The answer of Development Associates (DA)agrees to buy five acres...

Question 14

Karif orally agrees to buy a unique collection of sports memorabilia for $1,000 from Jane and sends her $250 as a down payment.When Karif sends her the rest of the price,Jane refuses to ship the collection.Karif should seek
A)damages.
B)reformation.
C)rescission.
D)specific performance.

Accepted Answer

Specific performance is the best choice as Karif wants the unique collection of sports memorabilia and monetary damages may not compensate for the unique items. Specific performance is a remedy where the court orders the breaching party to perform the agreed-upon obligation.

Question 15

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
A)do nothing but make a deal with .a different service provider.
B)do nothing but temporarily suspend operations and wait.
C)file a criminal complaint against Even-Flo.
D)sue Even-Flo for damages.

Accepted Answer

If Even-Flo breaches the contract, Fiesta can sue them for damages. This is the most common course of action in a breach of contract situation where the party that suffers the breach seeks compensation for any losses they may have incurred. Options A and B are not realistic solutions as they do not hold Even-Flo accountable for the breach. Option C is not applicable as a breach of contract is a civil matter and not a criminal one.

Question 16

Dondi contracts to buy a custom espresso maker from Caffee Specialties,Inc. ,for $4,500,but Caffee fails to deliver.Dondi buys the appliance else?where for $5,500.Dondi's measure of damages is
A)$1,000.
B)$1,000 plus incidental damages.
C)incidental damages only.
D)$0.

Accepted Answer

Dondi's measure of damages is the difference between the contract price and the cost of buying a substitute, which in this case is $1,000 ($5,500 - $4,500). In addition, Dondi may also be entitled to recover any incidental damages, such as the cost of arranging for alternative transportation to receive the espresso maker. Therefore, option B is the correct choice.

Question 17

Rural Power Utility,Inc. ,enters into a contract with Shovel Excavation Service to dig up,replace,and rebury Rural's cables in a certain location.Rural advances Shovel 10 percent of its cost.The parties rescind the contract.Shovel's refund of the payment is
A)a penalty.
B)liquidated damages.
C)restitution.
D)a breach of contract.

Accepted Answer

Restitution is the act of compensating someone for loss, damage, or injury caused. In this scenario, Shovel Excavation Service is refunding the advance payment received from Rural Power Utility, Inc. after the contract was rescinded. This can be categorized as restitution.

Question 18

Damon contracts to repair the turf on a soccer field for Carousel Sports Park.Damon knows that without the repair,Carousel will have to cancel an upcoming game.Damon does not perform as promised.As consequential damages,Carousel can recover
A)the cost of new turf.
B)the difference between Damon's price and the actual cost of repair.
C)the loss of profit from the canceled game.
D)nothing.

Accepted Answer

Consequential damages are losses that result indirectly from the breach of a contract, and in this case, the loss of profit from the canceled game is a consequential damage that Carousel Sports Park can recover from Damon. The cost of new turf (A) would be direct damages, which are not relevant in this situation, and the difference between Damon's price and the actual cost of repair (B) is not a consequential damage that Carousel would incur. Therefore, the correct answer is (C). Option (D) is incorrect because there is a breach of contract by Damon, and Carousel has suffered consequential damages as a result.

Question 19

Consumer Credit Union pays Derby $10,000 to design an ad campaign.The next day,Derby tells the credit union that he has accepted a job in Boston and cannot design the campaign.As compensatory damages,the credit union can recover
A)$100,000.
B)$10,000.
C)$1,000.
D)$0.

Accepted Answer

The credit union can recover the $10,000 it paid to Derby as compensatory damages for breach of contract. They cannot recover more than the amount they paid him for the job. Thus, the best choice is option B.

Question 20

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
A)the contract price less costs of materials and labor.
B)the contract price.
C)the costs needed to complete construction.
D)profits plus the costs incurred up to the time of the breach.

Accepted Answer

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

Quiz 18: A: Breach of Contract and Remedies

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

Pure Oil Company enters into a contract with QuikBilt,Inc. ,to construct an offshore 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

Lester and Myrtle want to rescind their contract under which Lester sold an MP3 player for $40.To rescind the contract

To avoid liability for intentional injuries,Northwest Power Corporation in?cludes in its contracts an exculpatory clause.This is

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

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

Refined Commodities,Inc. ,agrees to deliver ten tons of sheet metal to Select Builders Corporation.The agreement states that delivery is to be within "3" days,although the parties intend "30" days.Refined cannot convince Select to amend the contract.Refined should seek

Vacation Vistas,Inc. ,agrees to sell certain acreage to Umiko,who intends to develop a destination resort.Vacation Vistas repudiates the deal.Umiko sues Vacation Vistas and recovers dam?ages.She can now obtain

Clear Creek Corporation enters into a contract with Brightside Management Associates to manage and maintain Clear Creek's apartment complex.Their contract provides that neither party can recover damages for a non-fraudulent or unintentional breach.This is

Grady enters into a contract to buy 440 acres from Hollis to expand Grady's ranch.Hollis breaches the contract.Grady's normal remedy is

SFX Paintball Games,Inc. ,and Truck & Trailer Delivery Corporation 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

Fidelio Corporation enters into a contract with Equi Insurance,Inc. ,to obtain health insurance for Fidelio employees.Equi breaches the contract.If Fidelio is awarded compensatory damages,the purpose would be to

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

Karif orally agrees to buy a unique collection of sports memorabilia for $1,000 from Jane and sends her $250 as a down payment.When Karif sends her the rest of the price,Jane refuses to ship the collection.Karif should seek

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

Dondi contracts to buy a custom espresso maker from Caffee Specialties,Inc. ,for $4,500,but Caffee fails to deliver.Dondi buys the appliance else?where for $5,500.Dondi's measure of damages is

Rural Power Utility,Inc. ,enters into a contract with Shovel Excavation Service to dig up,replace,and rebury Rural's cables in a certain location.Rural advances Shovel 10 percent of its cost.The parties rescind the contract.Shovel's refund of the payment is

Damon contracts to repair the turf on a soccer field for Carousel Sports Park.Damon knows that without the repair,Carousel will have to cancel an upcoming game.Damon does not perform as promised.As consequential damages,Carousel can recover

Consumer Credit Union pays Derby $10,000 to design an ad campaign.The next day,Derby tells the credit union that he has accepted a job in Boston and cannot design the campaign.As compensatory damages,the credit union can recover

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