Question 1

Lana agrees to work as Michelle's personal assistant for one year but dies in the ninth month of the contract. Lana's death
A) discharges the contract.
B) breaches the contract.
C) requires Lana's estate to pay damages.
D) suspends performance of the contract .

Accepted Answer

Lana's death makes it impossible for her to continue fulfilling the contract, thus discharging it due to impossibility of performance.

Question 2

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 LLC can recover the amount it would have earned if it had received the part on time, which is $10,000. In addition, they still have the part, so they do not need to recover the cost of the part itself. Therefore, the answer is $10,000.

Question 3

Ready Repair Service enters into a contract to fix washers and dryers in Scrub n' Dry Company's coin-operated laundries. Ready breaches the contract. Scrub n' Dry is awarded compensatory damages. The purpose is to
A) establish, as a matter of principle, that Ready acted wrongfully.
B) provide Scrub n' Dry with funds for a loss beyond the contract.
C) provide Scrub n' Dry with funds for its loss of the bargain.
D) punish Ready and deter others from similar acts .

Accepted Answer

Compensatory damages are intended to provide the non-breaching party with funds to cover the loss of the bargain, essentially putting them in the position they would have been in had the contract been fulfilled.

Question 4

Copper Circuit, 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 as it specifies a pre-determined amount to be paid in the event of a material breach, rather than leaving the determination of damages to a court or other entity.

Question 5

Isabel orally agrees to buy a unique collection of nineteenth-century cowboy memorabilia for $10,000 from Jessie and sends $2,500 as a down payment. When Isabel pays the rest of the price, Jessie refuses to ship the collection. Isabel should seek
A) damages.
B) restitution.
C) rescission.
D) specific performance.

Accepted Answer

Specific performance is the best option for Isabel in this scenario as she wants the unique collection of cowboy memorabilia which cannot be easily replaced. Specific performance is a remedy where the court orders the party in breach to fulfill their contractual obligation, in this case, Jessie would be ordered to ship the collection to Isabel.

Question 6

Isaac holds one ton of perishable fruit in storage for Juice Smoothies Corporation. Juice Smoothies does not pay for the storage. Isaac sells the fruit to Kayo Beverage Company. This sale represents
A) a breach of contract.
B) a mitigation of damages.
C) liquidated damages.
D) specific performance.

Accepted Answer

The answer of Isaac holds one ton of perishable fruit...

Question 7

Floors n' More, Inc., hires Gordon to renovate Floors n' More ' s six floor showroom. Gordon submits plans that Floors n' More approves. Gordon completes the extensive reconstruction, paints the interior, and buys the fixtures and furnishings. Floors n' More rejects two fixtures because they do not match the plans, and subsequently refuses to allow Gordon to finish the work or to collect payment. Could Gordon sue successfully for payment for the entire contract?

Accepted Answer

The answer of Floors n' More, Inc., hires Gordon to...

Question 8

Sam contracts to work exclusively for Thermal Company during July for $5,000. On June 30, Thermal cancels the contract. Sam finds a similar job for the month of July but earns only $3,000. Sam files a suit against Thermal. As compensatory damages, Sati can recover
A) $3,000.
B) $2,000.
C) $1,000.
D) $0.

Accepted Answer

Sam can recover the difference between the original contract amount and what he earned from the new job, which is $5,000 - $3,000 = $2,000.

Question 9

Quest Resources, Inc., contracts with Ring Communications Corporation (RCC) for RCC to design and build an all-weather communications system for Quest's field operations. RCC builds the system, but it functions effectively only in good weather. Is this a breach of the contract? If so, what remedies does Quest have?

Accepted Answer

The answer of Quest Resources, Inc., contracts with Ring Communications...

Question 10

City Delivery, Inc., enters into a contract to deliver furniture to Damien's house with payment due on July 4. On July 4, Damien's bank is closed, and for this reason, he claims that he cannot pay on time. In this situation
A) the bank is liable for breach.
B) Damien is in breach.
C) the contract is discharged.
D) the contract is suspended.

Accepted Answer

Damien is in breach because his inability to pay on time is not a valid excuse for non-performance. Unless there is a provision in the contract allowing for a later payment date or a force majeure event occurs, Damien is obligated to pay on the due date agreed upon in the contract. The bank's closure is not a valid excuse for non-performance because Damien could have made alternative arrangements such as paying in cash or making a transfer through another bank. Therefore, City Delivery, Inc. can pursue its legal remedies for breach of contract against Damien.

Question 11

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. The court will most likely
A) award damages to Dino.
B) cancel Dino and Eve's contract.
C) order Eve to perform the contract.
D) rescind Dino and Eve's contract.

Accepted Answer

The court will most likely award damages to Dino because Eve breached the contract by accepting another job. Specific performance (ordering Eve to perform) is typically not granted for personal service contracts.

Question 12

Guido and Hal want to rescind their contract under which Guido sold Hal a mountain bike for $250. To rescind the contract
A) Guido must return the $250 and Hal must return the bike.
B) Guido must return the $250 only.
C) Hal must return the bike only.
D) the parties can keep the "benefits" of their bargain.

Accepted Answer

To rescind a contract, both parties must return what they received under the contract, effectively restoring them to their pre-contract positions.

Quiz 16: Termination and Remedies

Lana agrees to work as Michelle's personal assistant for one year but dies in the ninth month of the contract. Lana's death

Ready Repair Service enters into a contract to fix washers and dryers in Scrub n' Dry Company's coin-operated laundries. Ready breaches the contract. Scrub n' Dry is awarded compensatory damages. The purpose is to

Copper Circuit, 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

Isabel orally agrees to buy a unique collection of nineteenth-century cowboy memorabilia for $10,000 from Jessie and sends $2,500 as a down payment. When Isabel pays the rest of the price, Jessie refuses to ship the collection. Isabel should seek

Isaac holds one ton of perishable fruit in storage for Juice Smoothies Corporation. Juice Smoothies does not pay for the storage. Isaac sells the fruit to Kayo Beverage Company. This sale represents

Sam contracts to work exclusively for Thermal Company during July for $5,000. On June 30, Thermal cancels the contract. Sam finds a similar job for the month of July but earns only $3,000. Sam files a suit against Thermal. As compensatory damages, Sati can recover

City Delivery, Inc., enters into a contract to deliver furniture to Damien's house with payment due on July 4. On July 4, Damien's bank is closed, and for this reason, he claims that he cannot pay on time. In this situation

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. The court will most likely

Guido and Hal want to rescind their contract under which Guido sold Hal a mountain bike for $250. To rescind the contract