Question 1

Concrete Company agrees to lay a foundation for Diamond Properties, but fails to finish the job. Diamond hires Earth Projects Inc. to complete the work. In a suit for breach, Diamond may recover from Concrete
A)nothing.
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

Diamond may recover the costs needed to complete construction from Concrete Company because Concrete failed to fulfill its contractual obligation, necessitating Diamond to hire another company to finish the work. This recovery aims to put Diamond in the position it would have been in had Concrete completed the job as agreed.

Question 2

Erma enters into a contract to buy a tract of lakefront property from Forest Acres to build and sell a residential development. Forest Acres fails to close the sale. Erma's remedy is most likely
A)the amount that Erma invested in the project to the date of the closing.
B)nothing-Forest Acres still owns the land.
C)the difference between the contract and market prices of the land.
D)specific performance.

Accepted Answer

Specific performance is a legal remedy that compels a party to execute a contract according to the precise terms agreed upon or to perform it to the extent that it is possible. It is often used in the sale of real estate transactions where the property is unique and monetary damages are insufficient to remedy the harm caused by the breach of contract. In this case, since real estate is considered unique, Erma can seek a court order for Forest Acres to complete the sale as per the contract terms.

Question 3

Ziplines Inc. enters into a contract to employ Scot as a manager for two years. If Ziplines breaches the contract, Scot has a duty to
A)do nothing.
B)reduce the damages that Scot might otherwise suffer.
C)rescind the contract with Ziplines.
D)act to punish Ziplines as an example to deter others from similar acts.

Accepted Answer

Scot has a duty to mitigate damages, which means taking reasonable action to reduce the damages that might result from Ziplines Inc.'s breach of contract. This is a general principle in contract law aimed at minimizing the financial impact of the breach.

Question 4

Shi's lease of retail premises from Thuy requires Shi to pay certain fees, subject to the landlord's proof of the correct amount. Thuy overcharges Shi for the fees, without explanation. Most likely, the tenant can rescind the lease
A)after paying the overcharge.
B)by finding a new tenant for the premises.
C)with prompt notice.
D)under no circumstances.

Accepted Answer

The tenant can most likely rescind the lease with prompt notice if the landlord overcharges fees without explanation, as this could constitute a breach of the lease agreement. Prompt notice is essential to allow the landlord an opportunity to rectify the situation or for the parties to resolve the dispute.

Question 5

Guy orally agrees to buy a unique collection of sports memorabilia for $10,000 from Hec and sends $2,500 as an initial payment. When Guy pays the rest of the price, Hec refuses to ship the collection. In a suit for breach, Guy should seek
A)damages.
B)restitution.
C)a quasi contract.
D)specific performance.

Accepted Answer

Specific performance is appropriate because the collection is unique, and monetary damages may not suffice to compensate for its uniqueness.

Question 6

Food Court Inc. leases space to Gourmet Café. Gourmet abandons the premises when the amount of the rent due on the lease is $5,000. Food finds a new tenant, Hasty Bowls, which agrees to pay $3,500 for the space over the remainder of Gourmet's term. Food's measure of damages is
A)$5,000.
B)$1,500, minus any expenses reduced by mitigating the damages.
C)$1,500, plus any additional expenses to find the new tenant.
D)$6,500.

Accepted Answer

Food Court Inc. can claim the difference between the original rent and the new rent ($5,000 - $3,500 = $1,500) plus any additional expenses incurred in finding the new tenant.

Question 7

Sparkle Jewelers breaches its lease with Town Mall and vacates the premises six months before the end of the term. In some states, the mall would be required to
A)avoid reletting the premises for six months to recover damages.
B)use reasonable means to find a new tenant.
C)relet the premises to recover any damages.
D)sell the premises to recover any damages.

Accepted Answer

In many jurisdictions, landlords, including malls, are required to mitigate damages when a tenant breaches a lease by using reasonable efforts to relet the premises. This means the mall would need to actively seek a new tenant to minimize the financial loss resulting from the breach.

Question 8

Metro Holdings Inc. contracts to sell a commercial parking garage to New Property LLC. The contract provides that if Metro does not close the deal by a certain date, it must pay the buyer one-half of the value of the property. This provision is not enforceable if it is
A)meant to pay for additional work in the event of damage.
B)a reasonable estimate of the loss on the breach.
C)designed to penalize Metro.
D)intended to quickly provide cash to New Property.

Accepted Answer

This provision is considered a penalty clause, which is generally not enforceable in contracts. Penalty clauses are meant to punish the breaching party rather than to compensate the non-breaching party for losses incurred due to the breach.

Question 9

Faiz enters into a contract to buy 350 acres from Grain Farm to cultivate hops and open a brewery. Faiz fails to make the purchase. Grain Farm's remedy is most likely
A)the amount that Faiz expected to invest in the brewery.
B)a percentage of Faiz's unrealized profit.
C)the difference between the contract and market prices of the land.
D)nothing-Grain Farm still owns the land.

Accepted Answer

The most common legal remedy for a breach of contract in real estate transactions is to award damages equal to the difference between the contract price and the market value of the land at the time of the breach. This compensates the seller for the loss in value of the contract not being fulfilled.

Question 10

Bagels Bakery enters into a contract with Cineplex for discounted tickets for Bagels's employees. When Cineplex does not provide the tickets, Bagels enters into a contract with DigiMovies for the same service at a lower price. In a suit for breach, Bagels might be awarded nominal damages to
A)establish, as a matter of principle, that Cineplex acted wrongfully.
B)provide Bagels with funds for a foreseeable loss beyond the contract.
C)provide Bagels with funds for its loss of the bargain.
D)punish Cineplex and set an example to deter others from similar acts.

Accepted Answer

Nominal damages are awarded to recognize that a party has suffered a legal wrong, even if no actual financial loss has occurred. In this case, since Bagels Bakery found a better deal with DigiMovies, they did not suffer a financial loss but may still be awarded nominal damages to establish that Cineplex breached the contract.

Question 11

To induce the sale of an auto parts business, Carmel fraudulently represents the worth of the inventory to Drew, who offers an inflated price. They enter into a contract to close the deal. On closer inspection, the buyer learns the true value of the goods. Drew can
A)impose a penalty on the seller.
B)force the seller to accept a more reasonable price.
C)rescind the contract.
D)none of the choices.

Accepted Answer

Drew can rescind the contract because it was entered into based on fraudulent misrepresentation by Carmel regarding the worth of the inventory. Rescinding the contract would nullify it, as if it never existed, due to the fraudulent circumstances under which it was made.

Question 12

Dino hires Eve to perform at Dino's Club, but Eve later breaches the agreement to accept a higher-paying job at Five Star Arena. Dino files a suit against Eve, asking the court to order her to perform at his club. The court will most likely
A)award damages to Dino.
B)cancel Dino and Eve's contract.
C)order Eve to perform both contracts.
D)rescind Dino and Eve's contract.

Accepted Answer

The court is more likely to award damages to Dino for the breach of contract by Eve, as specific performance (forcing Eve to perform at Dino's Club) is rarely ordered in cases involving personal services.

Question 13

Berry Farm hires Chun to repair its irrigation system on site by a certain date for $2,500, but Chun fails to perform. Berry Farm hires Diego to do the job for $2,000. In a suit for breach, Berry Farm may recover from Chun
A)nothing-there is only a technical injury.
B)compensatory damages.
C)punitive damages.
D)nominal damages.

Accepted Answer

The answer of Berry Farm hires Chun to repair its...

Question 14

Renew Turf Inc. enters into a contract with Sports Park to provide surface material for Sports Park's baseball field by a certain date. The contract specifies an amount to be paid if Renew breaches the deal. This clause is enforceable if the amount is
A)meant to pay for additional work in the event of damage.
B)a reasonable estimate of the loss on the breach.
C)designed to penalize Renew.
D)intended to quickly provide cash to Sports Park.

Accepted Answer

The clause described is a liquidated damages clause, which is enforceable if it is a reasonable estimate of the damages that would be incurred from a breach. This is because it compensates for the loss rather than punishing the breaching party, which is the key factor courts consider in determining the enforceability of such clauses.

Question 15

Cow's Milk LLC needs a certain part for its pasteurizing equipment to continue its operations and orders one for $3,000 from Dairy Supplies Inc. Cow's Milk tells Dairy Supplies that it must receive the part by Tuesday or it will lose $10,000. Dairy Supplies ships the part late. Cow's Milk can recover
A)$13,000.
B)$10,000.
C)$3,000.
D)$0.

Accepted Answer

Cow's Milk can recover the $10,000 in consequential damages because Dairy Supplies was informed of the potential loss if the part was not delivered on time.

Question 16

Dory enters into a contract with Eton for the construction of a Fast Food franchise, according to a certain schedule. The parties perform some preparatory steps, but Eton materially and willfully fails to begin work on the specified date. To rescind the contract, Dory must show that the parties can
A)be restored to the status quo.
B)realize at least some of the benefit of their bargain.
C)obtain a reasonable exchange of values for the preparatory steps.
D)profit from the partial performance.

Accepted Answer

To rescind a contract, it is necessary to show that the parties can be restored to the status quo ante, meaning the position they were in before the contract was made. This involves undoing any benefits or changes that occurred due to the contract, to the extent possible.

Question 17

Len contracts to work for Media Corporation during May for $4,500. On April 30, Media cancels the contract. Len declines a similar job with New Ads Inc., which would have paid $3,500. Len files a suit against Media. As compensatory damages, Len can recover
A)$4,500.
B)$3,500.
C)$1,000.
D)$0.

Accepted Answer

Len can recover the difference between the contract price with Media Corporation ($4,500) and the amount he would have earned from the similar job with New Ads Inc. ($3,500), which is $1,000.

Question 18

Restore Inc. contracts to resurface the pools at Swim Park by June 1. Restore knows that if performance is not timely, Swim Park will have to delay its seasonal opening. Restore finishes the job June 15. In a suit for breach, Swim Park can recover
A)the cost of new pools.
B)the difference between the contract and market prices for the work.
C)the loss of profit from the delayed opening.
D)nothing-the work is done.

Accepted Answer

Swim Park can recover the loss of profit from the delayed opening because Restore Inc. was aware that timely performance was crucial for the seasonal opening of the park. The delay caused by Restore Inc. directly led to Swim Park's inability to open on time, resulting in a loss of profit which is a foreseeable and direct consequence of the breach of contract.

Question 19

Copper Wire Inc. and Direct Electric LLC 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
A)a liquidated damages clause.
B)a mitigation of damages clause.
C)a consequential damages clause.
D)a penalty clause.

Accepted Answer

This is a liquidated damages clause because it specifies a predetermined amount of money that must be paid as damages for breach of contract, where actual damages are difficult to estimate.

Question 20

Ochre holds one ton of perishable fruit in storage for Produce Corporation. If Produce does not pay for the storage, under the doctrine of mitigation of damages, Ochre is held to a duty to
A)continue to store the fruit until Produce pays.
B)do whatever is reasonable to minimize the damages.
C)dispose of the fruit immediately.
D)set an example to deter similar misconduct in the future.

Accepted Answer

Under the doctrine of mitigation of damages, Ochre is required to take reasonable actions to minimize the damages that might result from Produce Corporation's failure to pay for the storage. This means Ochre should take steps that a reasonable person would take in similar circumstances to reduce the potential loss, which could include finding another buyer for the fruit or using other reasonable means to avoid or lessen the damages.

Quiz 19: Breachapter of Contract and Remedies

Concrete Company agrees to lay a foundation for Diamond Properties, but fails to finish the job. Diamond hires Earth Projects Inc. to complete the work. In a suit for breach, Diamond may recover from Concrete

Erma enters into a contract to buy a tract of lakefront property from Forest Acres to build and sell a residential development. Forest Acres fails to close the sale. Erma's remedy is most likely

Ziplines Inc. enters into a contract to employ Scot as a manager for two years. If Ziplines breaches the contract, Scot has a duty to

Shi's lease of retail premises from Thuy requires Shi to pay certain fees, subject to the landlord's proof of the correct amount. Thuy overcharges Shi for the fees, without explanation. Most likely, the tenant can rescind the lease

Guy orally agrees to buy a unique collection of sports memorabilia for $10,000 from Hec and sends $2,500 as an initial payment. When Guy pays the rest of the price, Hec refuses to ship the collection. In a suit for breach, Guy should seek

Food Court Inc. leases space to Gourmet Café. Gourmet abandons the premises when the amount of the rent due on the lease is $5,000. Food finds a new tenant, Hasty Bowls, which agrees to pay $3,500 for the space over the remainder of Gourmet's term. Food's measure of damages is

Sparkle Jewelers breaches its lease with Town Mall and vacates the premises six months before the end of the term. In some states, the mall would be required to

Metro Holdings Inc. contracts to sell a commercial parking garage to New Property LLC. The contract provides that if Metro does not close the deal by a certain date, it must pay the buyer one-half of the value of the property. This provision is not enforceable if it is

Faiz enters into a contract to buy 350 acres from Grain Farm to cultivate hops and open a brewery. Faiz fails to make the purchase. Grain Farm's remedy is most likely

Bagels Bakery enters into a contract with Cineplex for discounted tickets for Bagels's employees. When Cineplex does not provide the tickets, Bagels enters into a contract with DigiMovies for the same service at a lower price. In a suit for breach, Bagels might be awarded nominal damages to

To induce the sale of an auto parts business, Carmel fraudulently represents the worth of the inventory to Drew, who offers an inflated price. They enter into a contract to close the deal. On closer inspection, the buyer learns the true value of the goods. Drew can

Dino hires Eve to perform at Dino's Club, but Eve later breaches the agreement to accept a higher-paying job at Five Star Arena. Dino files a suit against Eve, asking the court to order her to perform at his club. The court will most likely

Berry Farm hires Chun to repair its irrigation system on site by a certain date for $2,500, but Chun fails to perform. Berry Farm hires Diego to do the job for $2,000. In a suit for breach, Berry Farm may recover from Chun

Renew Turf Inc. enters into a contract with Sports Park to provide surface material for Sports Park's baseball field by a certain date. The contract specifies an amount to be paid if Renew breaches the deal. This clause is enforceable if the amount is

Dory enters into a contract with Eton for the construction of a Fast Food franchise, according to a certain schedule. The parties perform some preparatory steps, but Eton materially and willfully fails to begin work on the specified date. To rescind the contract, Dory must show that the parties can

Len contracts to work for Media Corporation during May for $4,500. On April 30, Media cancels the contract. Len declines a similar job with New Ads Inc., which would have paid $3,500. Len files a suit against Media. As compensatory damages, Len can recover

Restore Inc. contracts to resurface the pools at Swim Park by June 1. Restore knows that if performance is not timely, Swim Park will have to delay its seasonal opening. Restore finishes the job June 15. In a suit for breach, Swim Park can recover

Copper Wire Inc. and Direct Electric LLC 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

Ochre holds one ton of perishable fruit in storage for Produce Corporation. If Produce does not pay for the storage, under the doctrine of mitigation of damages, Ochre is held to a duty to