Question 1

Handy Hardware Store agrees to hire Ilsa for one year at a salary of $500 per week. When Handy cancels the contract, Ilsa spends $100 to obtain a similar job that pays $450 per week for a year. Ilsa is entitled to recover

Accepted Answer

Ilsa is entitled to recover the difference between the wages at the two jobs plus the amount she spent to obtain the similar job that Handy cancelled. This means she can recover the difference between $500 and $450 per week, which is $50 per week. In one year, this amounts to $2,600 ($50 x 52 weeks). In addition to this, she can also recover the $100 she spent to obtain the similar job. Therefore, her total recovery would be $2,700 ($2,600 + $100).

Question 2

Lily is a farmer. When bad weather destroys her crop, her obliga?tion to deliver it un?der an outstanding contract with Macro Food Corporation is

Accepted Answer

Lily's obligation to deliver the crop is discharged due to the occurrence of an unforeseeable event (bad weather) that made it impossible for her to fulfill the contract. This is known as frustration of contract.

Question 3

Leonardo contracts to install automatic watering troughs in Kendall's dairy barn. Leonardo then becomes seriously ill and contracts with Jake to install the troughs. Jake is unreliable and never shows up to install the troughs. Kendall can sue

Accepted Answer

Kendall can sue both Jake and Leonardo. Leonardo's illness may be a valid excuse for not completing the contract, but he still remains responsible for the contract and ensuring that it is completed. By contracting with Jake to install the troughs, Leonardo has essentially assigned his obligation to Jake. However, if Jake fails to complete the work, Leonardo remains liable for the breach of contract. Therefore, Kendall can sue both Jake and Leonardo for breach of contract.

Question 4

Valley View Farms enters into a contract to sell Sarah's Corner Shop a truckload of eggs from free-range chickens. If Valley View fails to deliver the eggs, Sarah's

Accepted Answer

If Valley View fails to deliver the eggs, it would be a breach of contract. Sarah's can then choose not to pay for the eggs and sue Valley View for breach of contract. Therefore, option B is the best choice.

Question 5

Phil enters into a contract to hire Bob's Building Business to build a warehouse for Phil. The contract specifies that the warehouse should be built with HighQual Bricks. When construction starts, HighQual Bricks cannot provide enough bricks for the warehouse. Bob's Building Business substitutes Big Red Bricks, which are comparable in quality and price to HighQual Bricks. This deviation from the contract

Accepted Answer

The substitution of Big Red Bricks, which are comparable in quality and price to HighQual Bricks, does not fundamentally alter the nature or purpose of the contract, so it has no effect on the contract.

Question 6

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

Accepted Answer

If Even-Flo breaches the contract, Fiesta can sue them for damages. This is the legal remedy available to Fiesta in case of breach of contract.

Question 7

Clarice pays Damien $10,000 to design an ad campaign for her Sweetwater Coffee Stand chain. The next day, Damien tells Clarice that he has accepted a job in New York and cannot design her campaign. She files a suit against Damien. As compensatory damages, she can recover

Accepted Answer

Clarice can recover the amount she paid to Damien as compensatory damages, which is $10,000. She cannot recover more than the actual amount she paid for the service that was not provided. Therefore, options A and C are incorrect. Option D is incorrect because she can recover compensatory damages.

Question 8

Tristan promises to paint Katy's house in exchange for Lila's promise to plant trees on Tristan's property. This is

Accepted Answer

This is a third party beneficiary contract because Lila is not a party to the original contract between Tristan and Katy, but she will benefit from Katy's house being painted and has agreed to do something in exchange (planting trees on Tristan's property). Therefore, Lila is a third party beneficiary to this contract.

Question 9

Beachside Pools, Inc., agrees to build a swimming pool for Candy, but fails to build it according to the contract specifications. Candy hires Do-We Fix-It Company to finish the project. Candy may recover from Beachside

Accepted Answer

Candy can recover the costs needed to complete the construction because Beachside failed to build the pool according to the contract specifications, making it necessary for Candy to hire another company to finish the job. This is a remedy called "cost of completion."

Question 10

Lava Excavators, Inc., needs a drill to continue its operations and orders one for $3,000 from Mining Supplies Company. Lava tells Mining that it must receive the drill by Tuesday or it will lose $10,000. Mining ships the drill late. Lava can recover

Accepted Answer

Lava made it clear to Mining Supplies that if the drill was not received by Tuesday, it would lose $10,000. Since Mining Supplies shipped the drill late, Lava can recover the $10,000 it lost as a result of the breach of contract. In addition, it can also recover the $3,000 it paid for the drill, since it did eventually receive it. Therefore, the total amount that Lava can recover is $10,000 + $3,000 = $13,000.

Question 11

Dylan enters into a contract to manage the operations of Cash's accounting office for one year, renewable for subsequent one-year terms. If this contract is discharged like most contracts, it will be

Accepted Answer

The language of the question suggests that the contract is a typical one - meaning that it was entered into willingly and without defects or coercion. If this is the case, and there are no subsequent breaches or issues, the contract will be expected to be performed as agreed.

Question 12

App Developers, Inc. (ADI), enters into a contract with Carmen, the chief executive officer of SalesCorp, to create an app for the firm. To fulfill the contract, ADI hires Max and ten other student interns. With respect to the contract, Max is

Accepted Answer

The answer of App Developers, Inc. (ADI), enters into a...

Question 13

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

Accepted Answer

Dondi's measure of damages would be the difference between the contract price and the cost of cover (the price paid for the substitute good), plus any incidental damages. In this case, that would be $1,000 plus any incidental damages.

Question 14

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

Accepted Answer

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

Question 15

Red's Plumbing Service substantially performs its contract with Shady Grove Condominiums, Inc. Shady Grove is entitled to

Accepted Answer

Since Red's Plumbing Service substantially performed their contract with Shady Grove Condominiums, Inc., Shady Grove is entitled to damages. This means that they can potentially recover any losses they suffered due to Red's not fully meeting their obligations under the contract.

Question 16

Juan and Isidro enter into a contract to buy, restore, and reopen the Coastal Park Carousel. Before either party begins to perform, they agree to cancel their deal. This is

Accepted Answer

The parties have mutually agreed to cancel their contract before any performance has occurred, therefore this is an example of mutual rescission.

Question 17

Cooper's Brakes, Inc., enters into a contract with Byron's Service to fix Cooper's hydraulic equipment. Byron delays the repair for three days, but is not aware that Cooper loses a certain percentage of profit each day the equipment is out of service. Cooper is most likely to be awarded

Accepted Answer

Consequential damages are damages that arise from indirect or special circumstances beyond the contract itself, and Cooper's lost profits due to Byron's delay in repairing the equipment fall under this category. Therefore, Cooper is most likely to be awarded consequential damages.

Question 18

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

Accepted Answer

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

Question 19

Hybrid Corporation enters into a contract with Insure Service, Inc. (ISI), to obtain health insurance for Hybrid employees. If ISI breaches the contract and Hybrid is awarded compensatory damages, the purpose would be to

Accepted Answer

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

Question 20

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 damages awarded to compensate for a loss that is not a direct result of the breach of contract, but rather a foreseeable result of the breach. In this case, Dobry's loss of profit due to the delay in repair is a foreseeable loss beyond the contract, making option B the correct choice. Option A is incorrect because consequential damages are not awarded to establish wrongdoing, but rather to compensate for a loss. Option C refers to direct damages, which compensate for the loss of the bargain itself, and option D refers to punitive damages, which are not typically awarded in breach of contract cases.

Quiz 9: Third Party Rights and Discharge