Question 1

Home Delivery Corporation and Interstate Transport,Inc.,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

Accepted Answer

This clause sets a predetermined amount of damages in the event of a material breach, which is characteristic of a liquidated damages clause.

Question 2

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

Accepted Answer

If Great Promotions breaches the contract, Fashion has a duty to mitigate the damages that it might suffer. This means that Fashion must take reasonable steps to minimize the harm caused by Great Promotions' breach, such as by seeking another company to provide the needed services, rather than just allowing the damages to pile up.

Question 3

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

Kris can recover the difference between their expected pay of $5,000 and the amount they actually earned of $3,000, which is $2,000.

Question 4

Quest Resources,Inc.,contracts with Ring Communications Corporation (RCC) for RCC to design and build an all-weather communications sys?tem for Quest's field operations.RCC builds the system,but it func?tions effec?tively 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 Corporation (RCC)...

Question 5

Rig Heli-Pads,Inc.,enters into a contract to employ Scott as an on-site project manager for two years.If Rig breaches the contract,Scott has a duty to

Accepted Answer

If Rig breaches the contract, Scott has a duty to mitigate or reduce the damages that he might otherwise suffer. This means that Scott must take reasonable steps to lessen the harm caused by the breach, such as looking for other employment opportunities. Scott is not required to do nothing, rescind the contract, or punish Rig.

Question 6

National Drilling Company ships its only pump to American Hydraulics Corporation,the manufacturer,for repair.National hires Overland Transport,Inc.,to take the pump to American Hydraulics and to return it to National as soon as the repair is complete.National is forced to sus?pend operations without a pump,but Overland does not know this.National expects to be without the pump for five days and to lose profits of $5,000.When the pump is not returned by the end of the fifth day,National rents a pump at a cost of $100 per day.Overland delays five more days before returning the pump.National files a suit against Overland,asking for compensatory,consequential,and punitive damages.Will National recover?

Accepted Answer

The answer of National Drilling Company ships its only pump...

Question 7

Dobry Die & Mold,Inc.,enters into a contract with Chet's Refitting Service to fix Dobry's precisely engineered molding equipment.If Chet's delays the repair for five days,knowing that Dobry will lose a certain percentage of profit for the delay,Dobry might be awarded consequential damages to

Accepted Answer

Consequential damages are designed to compensate the non-breaching party for foreseeable losses beyond the terms of the contract. In this case, Dobry's loss of profit due to the delay in repair by Chet's is a foreseeable loss beyond the terms of the contract, and therefore Dobry may be awarded consequential damages to compensate for this loss. None of the other options accurately describe the purpose of consequential damages in this scenario.

Question 8

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

Accepted Answer

Dino can sue Eve for breach of contract and seek damages (compensation) for any losses he incurred as a result of Eve's breach, such as lost profits or expenses incurred to find a replacement act. The court is unlikely to order Eve to specifically perform the contract since she has already accepted another job, and rewriting the contract is also unlikely as it is not clear what the parties would agree to under the new terms. Cancelling the contract would not provide a remedy for Dino's losses.

Question 9

Sonny agrees to buy a unique collection of Olympics memorabilia for $7,000 from Jana and sends $1,500 as a down payment.When Sonny sends Jana the rest of the price,she refuses to ship the collection.Sonny should seek

Accepted Answer

The best option for Sonny is to seek specific performance, which is an equitable remedy that would require Jana to fulfill her contractual obligation to ship the collection to Sonny. This is because the collection is unique, and it would be difficult for Sonny to obtain similar memorabilia elsewhere, making specific performance the most appropriate remedy in this situation. Neither A, B, nor C would be as effective in this case. A penalty would not necessarily compel Jana to ship the collection, and liquidated damages and restitution would only provide monetary compensation, which may not be satisfactory to Sonny.

Question 10

Rural 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.If the parties rescind the contract,Shovel's refund of the payment would be

Accepted Answer

Restitution is the return of funds or property to the party who provided them, in order to bring both parties back to their pre-contractual position. In this case, if the contract is rescinded, Shovel Excavation Service would be required to return the advance payment made by Rural Utility, Inc., as restitution. Neither a penalty nor liquidated damages are appropriate because there has been no breach of contract, and specific performance is not relevant in this situation as it relates to a court order to carry out the terms of a contract, rather than a refund of payments.

Question 11

Karson orally agrees to pay Jaime to plant and harvest a quarter of Karson's farm acreage for four corn-planting seasons.After Jaime prepares the land and plants the first crop,Karson says that their deal is off.Jaime can most likely recover

Accepted Answer

Jaime can potentially recover in quasi contract, also known as unjust enrichment, which allows a party to recover compensation for services rendered even in the absence of a formal contract. Since Jaime has already done work on the land and planted the first crop, they may be entitled to some form of compensation for their labor and resources.

Question 12

Earl holds 1,000 pounds of perishable fruit in storage for Fresh Food Corpo?ration.Fresh Food does not pay for the storage.Earl sells the fruit to Green Grocers,Inc.This sale represents

Accepted Answer

Earl's action of selling the fruit to Green Grocers, Inc. can be considered a mitigation of damages as he is trying to minimize his losses by selling the fruit instead of letting it perish in storage. It is not a breach of contract as there is no mention of any contract between Earl and Fresh Food Corporation regarding payment for storage. Rescission and restitution and specific performance are also not applicable in this scenario.

Quiz 16: Contract Discharge and Remedies