Deck 14: Breach of Contract and Remedies

Question 1

________ is a situation in which a party to a contract renders performance exactly as required by the contract.

A) Substantial performance
B) Strict performance
C) Anticipatory repudiation
D) Restitution

Answer 1

B

Question 2

When does a minor breach occur?

A) when a party rescinds the contract before actual work on the contract has commenced
B) when a party renders substantial performance of his or her contractual duties
C) when the party who is being offered goods or services rescinds the contract
D) when the party who is offering goods or services rescinds the contract

Answer 2

B

Question 3

When a party commits an anticipatory breach,the nonbreaching party ________.

A) must wait until the performance was due before suing
B) is immediately discharged from his or her own duties
C) cannot seek damages because he or she received advance notice of the breach
D) loses his or her right to sue after the due-date for performance is reached

Answer 3

B

Question 4

Which of the following terms refers to an unconditional and absolute offer by a contracting party to perform his or her obligations under a contract?

A) injunction
B) writ of garnishment
C) tender of performance
D) pro forma

Question 5

Which of the following constitutes material breach?

A) inferior performance
B) substantial performance
C) anticipatory repudiation
D) rescission without notification

Question 6

Where there has been a material breach of contract,the nonbreaching party ________.

A) cannot treat the contract as being in effect
B) is strictly liable to complete performance under the contract
C) is allowed to rescind the contract
D) can be sued by the breaching party

Question 7

________ occurs when one contracting party informs the other that he or she will not perform his or her contractual duties when due.

A) Restitution
B) Rescission
C) Anticipatory repudiation
D) Accommodation

Question 8

Which of the following statements is true of discharge of contracts?

A) Anticipatory breach discharges the breaching party's obligations to the contract.
B) Substantial performance is sufficient to discharge a contract.
C) Tender of performance discharges a party's contractual obligations.
D) Tender is a conditional offer by contracting party to perform his or her obligations under the contract.

Question 9

Nett Labs orders 30 desktop computers from iDeal,a local computer dealer.Nett Labs requires that each computer has a 2.6 GHz processor,500 GB hard disk,and Windows operating system.iDeal supplies 30 desktop computers,each with a 2 GHz processor,500 GB hard disk and Windows operating system.Which of the following terms hold true for iDeal's performance?

A) complete performance
B) material breach
C) substantial performance
D) anticipatory breach

Question 10

Which of the following statements is true of the performance of a contract?

A) Strict performance by a party discharges that party's duties under the contract.
B) Inferior performance constitutes a minor breach of contract.
C) Substantial performance constitutes a material breach.
D) A performance is said to have occurred if one of the parties do not perform their duties as specified in the contract.

Question 11

When a party to a contract renders substantial performance,the nonbreaching party ________.

A) cannot deduct the cost of repairing the damage from the contract price
B) can sue to recover damages from the breaching party, if the breach is not corrected
C) is discharged of its rights to receive performance under the contract
D) has to incur the cost of repairing the damage in addition to the contract price

Question 12

A(n)________ breach of a contract occurs when a party renders inferior performance of his or her contractual obligations.

A) material
B) minor
C) anticipatory
D) defensive

Question 13

Poole Contractors makes a contract with Delta Resources to pay $50,000 for the supply of 500 truckloads of sand within next week.Delta Resources delivers the sand in two days after the contract was made.Poole Contractors pays the $50,000 promised in the contract.This is an instance of ________.

A) substantial performance
B) material breach
C) minor breach
D) strict performance

Question 14

Anticipatory breach of a contract is also referred to as anticipatory ________.

A) reformation
B) rescission
C) repudiation
D) restitution

Question 15

Which of the following is a legal consequence of a complete performance?

A) The contract is discharged.
B) The nonbreaching party may recover damages caused by the breach.
C) One of the parties to the contract may rescind the contract.
D) The contract is substituted by the parties.

Question 16

Which of the following is true of anticipatory breach?

A) It occurs when a contracting party fails to inform the other party in advance about non-performance of his or her contractual duties when due.
B) In case of anticipatory breach, nonbreaching party's obligations under the contract are not discharged.
C) The nonbreaching party must wait till performance is due to sue the breaching party.
D) It can be derived from the conduct of the breaching party without being expressly stated by that party.

Question 17

Which of the following is true of monetary damages?

A) Nominal damages are paid once the nonbreaching party has suffered a financial loss.
B) Anticipatory breaches cannot be awarded monetary damages.
C) Liquidated damages are set by the court towards the breaching party.
D) Consequential damages are considered as monetary damages.

Question 18

Which of the following best describes a breach of contract?

A) a situation in which one or both parties to a contract do not perform their duties
B) a situation in which both the parties agree to substitute the existing contract
C) a situation in which an intended beneficiary holds a party liable for not performing to his satisfaction
D) a situation in which one or both parties intend to assign the benefits to a third party

Question 19

A fully performed contract is called a(n)________ contract.

A) executed
B) mitigated
C) liquidated
D) substituted

Question 20

The most common remedy for a breach of contract is an award of ________.

A) injunctions
B) substitute contracts
C) reformations
D) monetary damages

Question 21

An employee whose employer breaches an employment contract can recover lost wages or salary as ________ damages.

A) nominal
B) liquidated
C) compensatory
D) consequential

Question 22

Which of the following terms refers to a nonbreaching party's legal duty to avoid or reduce damages caused by a breach of contract?

A) tender of performance
B) mitigation of damages
C) liquidation of damages
D) disclaimer of consequential damages

Question 23

Rudy was working as an applications developer in a software firm in San Jose.His employment contract was for three years at $100,000 a year.Two years into the contract,Rudy's employer fired him as a part of downsizing.Which of the following jobs could Rudy take in order to mitigate damages?

A) Any job that offers $100,000 or more a year.
B) Another software applications developer job, irrespective of the salary.
C) A job in any software firm in any part of the country.
D) An applications developer job in San Jose for $100,000 a year or more.

Question 24

The usual measure of damages for a breach of sales contracts is the difference between the contract price and the ________.

A) current market price of the goods
B) market price at the time of contract
C) market price at the time of breach
D) current cost price of the goods

Question 25

An employee who has been dismissed improperly accepts a job that is less comparable.Which of the following is a subsequent course of action?

A) The employee can sue the prior employer for compensatory damages.
B) The previous employer must offer salary compensation on a monthly basis, until the employee's new salary becomes comparable to that offered by the previous job.
C) The employee can sue the former employer to recover his or her salary for three years.
D) The employee can take no legal action against his or her formal employer after accepting a different job.

Question 26

Kinlin,a furniture retailer has a contract with William Woods,a carpenter.The contract states that Woods must deliver five tables and that Kinlin would pay $2,000 per table.However,Woods manages to deliver only four tables and Kinlin needs to buy the fifth table from another supplier for $3,000.How much money can Kinlin recover from Woods as compensatory damages?

A) $5,000
B) $2,000
C) $3,000
D) $1,000

Question 27

________ damages are awarded when the nonbreaching party sues the breaching party even though no financial loss has resulted from the breach.

A) Consequential
B) Compensatory
C) Nominal
D) Liquidated

Question 28

________ damages are intended to compensate a nonbreaching party for the loss of the bargain.

A) Compensatory
B) Liquidated
C) Nominal
D) Consequential

Question 29

________ damages are usually awarded in a small amount.

A) Consequential
B) Compensatory
C) Nominal
D) Liquidated

Question 30

To be liable for consequential damages,the breaching party must ________.

A) be placed with a duty to make reasonable efforts to mitigate damages
B) have not caused any monetary damages to the nonbreaching party
C) provide a disclaimer of foreseeable consequential damages
D) know that the breach will cause special damages to the other party

Question 31

Which of the following statements is true of nominal damages?

A) They are also known as compensatory damages.
B) Only damages above $1,000 can qualify as nominal damages.
C) Most courts favor nominal damages lawsuits.
D) Cases involving nominal damages are usually brought on principle.

Question 32

________ damages are foreseeable damages that arise from circumstances outside a contract.

A) Compensatory
B) Consequential
C) Nominal
D) Liquidated

Question 33

QuickClicks,an online advertising company makes a contract to purchase six computers from Comptail,a local retailer,for $20,000.However,Comptail breaches the contract by not delivering the computers on time.The next day,QuickClicks manages to purchase six computers from another retailer for $18,000 and receives immediate delivery.QuickClicks can bring a lawsuit against Comptail and recover ________ damages.

A) consequential
B) compensatory
C) nominal
D) liquidated

Question 34

Brewer Refineries enters into a written contract to employ Joe Mohr as the Chief Operations Officer at a salary of $40,000 per month for a period of three years.However,Brewer Refineries fires Joe before he can start work.If Joe cannot find a comparable job,how much can Joe recover as compensatory damages from Brewer Refineries?

A) $1,440,000
B) $2,880,000
C) only $1
D) only $40,000

Question 35

Which of the following statements is true of mitigation of damages?

A) The breaching party must make efforts to mitigate damages resulting from the breach of contract.
B) If an employer breaches an employment contract, he or she owes a duty to mitigate damages by trying to find substitute employment for the employee.
C) The extent of mitigation of damages required is common to all kinds of contracts.
D) If an employer breaches a contract, the employee is only required to accept comparable employment.

Question 36

________ place the nonbreaching party in the same position as if the contract had been fully performed.

A) Tort damages
B) Compensatory damages
C) Nominal damages
D) Consequential damages

Question 37

Mary buys a new toaster for $500.The toaster's label bears a disclaimer stating that the manufacturer is not liable for consequential damages.On Monday morning,while Mary is using the toaster,it emits sparks and damages the electric wiring in the kitchen.The electrician tells Mary that the toaster malfunctioned and that the cost of repairs in her kitchen would come up to $2,000.What can Mary recover from the manufacturer of the toaster?

A) $500
B) $2,500
C) $2,000
D) no damages can be recovered

Question 38

When an employee breaches a fixed-term employment contract by quitting before the end of the term,the employer can recover damages for ________.

A) all expenses incurred in recruiting that employee
B) all amounts already paid to the employee under the contract
C) the amount equivalent to the employee's remaining term as per the contract
D) the costs to hire a new employee plus any additional increase in salary paid

Question 39

The Amosi Corporation contracts to have the Whetsel Builders construct a manufacturing unit for $800,000.It would take Whetsel $500,000 to build the unit.Amosi withdraws from the contract before the construction begins.Whetsel can recover ________ from Amos as compensatory damages for its lost profits.

A) $500,000
B) $300,000
C) $800,000
D) $1,100,000

Question 40

Hanson is employed as a Chief Financial Officer of EasyMoney firm in New York City,for a salary of $200,000 per year on a three-year contract.His employer terminates Hanson with two years left in the contract.Hanson accepts employment as a financial analyst at a different firm that pays $150,000 per year.Which of the following hold true in this scenario?

A) Hanson cannot take any legal action against his formal employer after accepting another job.
B) Hanson's former employer must pay Andrew two years' worth of his former salary.
C) Hanson can only sue to receive nominal damages.
D) Hanson can sue his prior employer and recover $100,000.

Question 41

Alan is a subject matter expert for First University,with an employment contract of three years.Two years into the contract,Second University-fully aware of Alan's contract-offers him twice the money he currently makes-for the similar post.Alan takes the job.First University can recover damages from Second University for which of the following torts?

A) malicious breach of contractual relations
B) malicious inducement of contractual breach
C) intentional interference with contractual relations
D) breach of the covenant of good faith and fair dealing

Question 42

A court order that prohibits a person from doing a certain act is termed as a(n)________.

A) rescission
B) reformation
C) injunction
D) restitution

Question 43

Disputes under contracts containing arbitration clauses ________.

A) are heard by a judge or a jury
B) cannot be appealed to the courts
C) are resolved in public forums
D) cannot involve federal or state laws

Question 44

Which of the following torts arises when a third party induces a contracting party to breach the contract with another party?

A) intentional interference with contractual relations
B) breach of the covenant of good faith and fair dealing
C) tort of bad faith
D) malicious breach of contractual relations

Question 45

________ is a nonjudicial,private resolution of a contract dispute.

A) Arbitration
B) Reformation
C) Injunction
D) Rescission

Question 46

Which of the following is true of specific performance?

A) Specific performance of personal service contracts is not granted.
B) Specific performance is not awarded if the subject matter of the contract is unique.
C) Works of art, antiques, and heirlooms are exempted as subject matter for specific performance.
D) Specific performance is not available to enforce land contracts.

Question 47

Kimberly,Inc.,a jewelry store,and JKCent,a retailer,draft a contract that permits JKCent to retail Kimberly's jewelry in its stores.However,the parties discover a minor clerical error six months into the contract and the court rewrites their contract.This is an instance of ________.

A) restitution
B) rescission
C) injunction
D) reformation

Question 48

________ is an action to undo a contract.

A) Rescission
B) Recession
C) Restitution
D) Retribution

Question 49

Which of the following is used in case of a breach of contract that cannot be adequately compensated through monetary awards?

A) mitigation of damages
B) liquidation of damages
C) equitable remedies
D) tort remedies

Question 50

________ refers to an equitable doctrine that permits the court to rewrite a contract to express the parties' true intentions.

A) Reformation
B) Injunction
C) Conjunction
D) Garnishment

Question 51

An award of ________ orders the breaching party to complete the acts promised in a contract.

A) reformation
B) injunction
C) restitution
D) specific performance

Question 52

A ________ is an order of the court that orders that wages,bank accounts,or other property of the breaching party held by third persons be paid to the nonbreaching party to satisfy a judgment.

A) writ of attachment
B) writ of garnishment
C) specific performance
D) liquidation of damages

Question 53

Which of the following holds true in case of liquidated damages?

A) For liquidated damages to be lawful, the actual damages must be precisely determined.
B) Liquidated damages are enforceable even if actual damages are later determined to be different.
C) A liquidated damages clause is considered a penalty if actual damages are not determinable in advance.
D) If a liquidated damages clause is found to be a penalty, it continues to be enforceable.

Question 54

Kinetosphere Automation,Inc.(K.A.)makes a mandatory employment contract with all its employees.The contract states that K.A.'s employees are not to work for any other organization while they are employed by K.A.If K.A.finds an employee who is also serving another company,it can approach the court to obtain a(n)________ to prevent the employee from working in the other company.

A) restitution
B) rescission
C) injunction
D) subjugation

Question 55

Jenson and Thomas enter into a contract that involves Thomas paying Jenson $1,000 for shoveling the snow from his driveway throughout winter.Jenson,who was paid before work commenced,breached the contract on the very first day.He should refund $1,000 to Thomas as ________.

A) compensatory damages
B) restitution
C) liquidated damages
D) consequential damages

Question 56

________ is a term that denotes the return of goods or property received from the other party to undo a contract.

A) Rescission
B) Recession
C) Restitution
D) Retribution

Question 57

A liquidated damage clause is unenforceable if ________.

A) the actual damages are impractical to determine
B) the liquidated damages clause is considered a penalty
C) the liquidated damages are conscionable
D) the liquidated damages do not result in a loss of money for the nonbreaching party

Question 58

A ________ is an order of the court that enables a government officer to seize property of a breaching party and sell it at an auction to satisfy a judgment.

A) writ of attachment
B) writ of garnishment
C) specific performance
D) liquidation of damages

Question 59

Liquidated damages are enforceable if ________.

A) actual damages are difficult to determine
B) they are excessive or unconscionable
C) the damage is considered to be a penalty
D) damages do not result in a loss of money to the nonbreaching party

Question 60

Parties to a contract agree in advance to pay ________ damages if the contract is breached.

A) nominal
B) compensatory
C) liquidated
D) consequential

Question 61

Rescission and restitution restore the parties to the positions they occupied prior to the contract.

Question 62

Nonbreaching parties can bring lawsuits against breaching parties for nominal damages even though no financial loss has resulted from the breach.

Question 63

Liquidated damages are enforceable only if the actual damages are easy and practical to determine.

Question 64

A breach of contract is said to have occurred only if both the parties do not perform their duties as specified in the contract.

Question 65

If the goods or property received under a contract is unavailable or consumed,the contract cannot be rescinded.

Question 66

For a contract to rescind,the parties to the contract must restitute the considerations received under the contract.

Question 67

A nonbreaching party may recover actual damages if the liquidated damages clause is found to be a penalty.

Question 68

Disclaimer of consequential damages is lawful in most instances.

Question 69

A contracting party can be held liable for a slight deviation from a complete performance.

Question 70

If a contractual duty has been discharged,the contracting party owes an absolute duty to perform the duty.

Question 71

If a builder breaches a construction contract before construction,he is not liable for nonperformance under the contract.

Question 72

Monetary damages cannot be recovered for minor breach of contracts.

Question 73

A material breach of a contract immediately discharges the nonbreaching party from the duties specified under the contract.

Question 74

When an anticipatory breach of a contract occurs,the nonbreaching party must wait until the performance is due to sue the repudiating party.

Question 75

If a breaching party refuses to pay the judgment of a contract breach,the nonbreaching party can seize the properties of the breaching party without a court order.

Question 76

Disclaimer of consequential damages does not excuse breaching parties from paying compensatory damages.

Question 77

If there has been a breach of contract that cannot be adequately compensated through a legal remedy,the breaching party is excused from nonperformance of its duties.

Question 78

An anticipatory breach of contract excuses the nonbreaching party from mitigating damages.

Question 79

In the occurrence of a substantial performance,the breaching party can correct the breach to complete performance.

Question 80

The courts have the discretion to award specific performance if the subject matter of the contract is unique.