LEGL 3000 - Chapter 12

A breach of contract entitles the nonbreaching party to sue for monetary damages. a. True b. False

a

A contract may include a clause stating that damages will be limited to a maximum amount. a. True b. False

a

A party seeking to recover compensatory damages can also recover incidental damages. a. True b. False

a

A party seeking to recover in quasi-contract must show that the other party has been unjustly enriched. a. True b. False

a

Compensatory damages replace what was lost because of what the breaching party did and, for this reason, are often said to "make the person whole." a. True b. False

a

Consequential damages are awarded for damage caused by special circumstances beyond a contract itself. a. True b. False

a

Consequential damages are foreseeable damages that arise from a party's breach of a contract. a. True b. False

a

Courts order reformation most often when fraud or mutual mistake is present. a. True b. False

a

Generally, compensatory damages are reduced by any loss that the innocent party has avoided. a. True b. False

a

In a contract for a sale of goods, the usual measure of compensatory damages is the difference between the retail price and the wholesale price. a. True b. False

a

In most situations, when a breach of contract occurs, the innocent injured party is held to a duty to mitigate the damages.​ a. True b. False

a

Jack and Scotty begin negotiations where Scotty will give Jack hockey lessons for a certain amount of money per week. While they are still negotiating the dollar amount and the number of lessons, they begin to meet weekly to have lessons. After ten lessons, Jack tells Scotty that it is clear that they are not going to be able to agree on the number of lessons or the dollar amount, so he will not participate any more. If Scotty sues Jack, the court will: a. award Scotty a reasonable amount for the lessons he already taught. b. award Scotty specific performance to make Jack finish the series of lessons agreed to. c. award Scotty the reasonable value of a reasonable length of a contract for this type of lesson. d. award Scotty nothing because there is no contract.

a

Luciano Pavarotti was an opera tenor of unparalleled talent, but also a temperamental one. He became known as the "King of Cancellations" for his failure to appear at contracted performances at opera houses and other venues, sometimes mere days before sold-out performances. Why didn't the opera houses sue Pavarotti for specific performance? a. Because of laws prohibiting involuntary servitude b. Because of liquidated damages clauses c. Because of contract reformation d. None of these choices

a

Luis contracts with Greenfield to buy several of Greenfield's dairy cows. Greenfield delivers the cows, but Luis doesn't pay for them. Greenfield may be able to have his cows returned if he seeks the remedy of: a. restitution. b. specific performance. c. reformation. d. novation.

a

Matthew has a contract to sell a piece of real estate to Betty for $35,000. Matthew breaches the contract and decides to keep the property even though the market price is only $31,000. Betty can recover: a. specific performance. b. $35,000 as the contract price on the land. c. nothing, because Matthew wanted to keep his land. d. $4,000 as the difference between the market price and the contract price.

a

One dollar is a common amount for nominal damages. a. True b. False

a

Punitive damages are generally not awarded in an action for breach of contract. a. True b. False

a

Punitive damages are rarely awarded in contract cases. a. True b. False

a

Recovery under quasi contract may be used when one party partially performs under a contract that is unenforceable. a. True b. False

a

Restitution involves one party's recapture of a benefit through which another party has been unjustly enriched. a. True b. False

a

Sadie contracted with Sean, who agreed to replace the carpets in her house. Sean damaged some of the walls when he installed the carpets. Sadie did not pursue a claim against Sean for his defective performance of the contract. Sadie's actions are known as: a. a waiver of breach. b. a breach. c. a penalty. d. an exculpatory clause.

a

Specific performance will not be granted unless the party's legal remedy is inadequate. a. True b. False

a

Suppose that Jennifer agrees to tutor Sal's children during the summer. After one week, Jennifer decides that she can't handle the children and refuses to tutor them any longer. If Sal sues Jennifer for specific performance, a court would likely: a. refuse to order specific performance of the contract because it is a contract for personal services. b. grant Sal's request, because Jennifer breached her contract. c. require Jennifer to mitigate her damages. d. grant Sal's request, but only if Sal could not find another tutor.

a

The failure of one party to perform a contract entitles the other party to rescind it. a. True b. False

a

The measure of compensatory damages often varies by type of contract.​ a. True b. False

a

The most common remedies available to a nonbreaching party include damages, rescission and restitution, and specific performance. a. True b. False

a

Under the doctrine of mitigation of damages, the duty owed depends on the nature of the contract. a. True b. False

a

Usually, a court will not award an equitable remedy unless the remedy at law is inadequate. a. True b. False

a

When a waiver of a breach of contract occurs, the party waiving the breach cannot take any later action on it. a. True b. False

a

Whether a contract's limitation-of-liability clause will be enforced depends on the type of breach that is excused by the provision.​ a. True b. False

a

A liquidated damages provision specifies that a certain amount is to be paid on a breach of contract when the nonbreaching party elects to receive cash. a. True b. False

b

A person who waives a contract breach loses the right to sue for any damages the breach caused. a. True b. False - The breaching party remains liable for damages caused by the defective performance despite the waiver.

b

An award of damages for a breach of contract can elevate the nonbreaching party to a better position than he or she would have been in if the contract had not been breached. a. True b. False

b

Compensatory damages compensate a party injured by a breach of contract by punishing the party that breached the contract. a. True b. False

b

Damages that compensate the nonbreaching party for the loss of a bargain are known as consecutive damages. a. True b. False

b

Expenses that are caused directly by a breach of a contract are known as primary damages. a. True b. False

b

Karla could not believe her luck. She located exactly what she was looking for at a used furniture store, a beautiful old desk at a bargain price. The desk was to be shipped to her to arrive on a Tuesday, and Karla was to pay the purchase price upon the desk's delivery. However, the desk did not arrive on Tuesday. When Karla called the store the next day, she was told that the desk had been sold and shipped to someone else. The salesperson had not realized that the desk was already sold. Karla was to have paid $325 for the desk, but it was easily worth $750 on the market. What will be Karla's measure of damages? a. $750 b. $425 c. $500 d. $325

b

Liquidated damages provisions are generally unenforceable. a. True b. False

b

Mason and Chenoa orally agree to a contract in which Mason will replace the fixtures in Chenoa's bathroom. In exchange, Chenoa agrees to cut Mason's hair every six weeks for the next two years. Mason performs his side of the bargain, and Chenoa cuts his hair on schedule for six months. Then she sells her house and moves 2,000 miles away. Mason can seek recovery based on: a. specific performance. b. quasi-contract. c. reformation. d. attenuation.

b

Nominal damages are awarded for the breach of a contract to nominate someone or something to a higher office, position, or category. a. True b. False

b

Nominal damages are designed to punish a wrongdoer and set an example to deter similar conduct in the future. a. True b. False

b

Ordinarily, the remedy for a seller's breach of a contract for a sale of real estate is damages. a. True b. False

b

Patrick hires Bryan, a well-known artist, to paint a mural on the wall of Patrick's restaurant. After signing the contract, Bryan calls Patrick and tells him that he is too busy to do it. Patrick wants one of Bryan's murals on the wall, so he sues for specific performance. A court will: a. grant specific performance because Bryan's murals are unique. b. not grant specific performance because it is a personal service. c. not grant specific performance because a mural will not enhance the restaurant's profitability. d. grant specific performance because painting is a mechanical act.

b

Print Quik, Inc., seeks punitive damages in a lawsuit against Reddy Supply Company. Generally, punitive damages may be recovered when a contract has been breached: a. only if the contract involved the sale of goods or the sale of land. b. when the breaching party's actions also constitute a tort. c. in almost all cases. d. in no circumstances.

b

Quasi-contractual recovery: a. is rarely granted when one party has partially performed under a contract that is unenforceable. b. provides an alternative to suing for damages. c. applies only in cases where a true contract exists. d. all of these choices.

b

Reformation is an equitable remedy that allows a court to rewrite a contract to suit itself. a. True b. False

b

Rena contracts with Darryl to buy two horses. They agree that she will pay $2,000 for each horse. When they draw up the contract, the sales price is inadvertently changed to read $40,000 rather than $4,000. They can seek the remedy of: a. restitution. b. reformation. c. recovery based on quasi-contract. d. novation.

b

Restitution is limited to rescission cases. a. True b. False

b

Sayed and Ann form a contract under which Sayed agrees to sell Ann 500 copies of a book. The contract price is $3.50 per book. Sayed breaches the contract by not delivering the books to Ann by the deadline. At the time of the breach, the books are available from the publisher for $4.50 each. Ann's damages are: a. $1,650. b. $500. c. $1,275. d. $750.

b

The difference between market price and contract price of land that is sold to someone else is a measure of consequential damages. a. True b. False

b

The injury suffered by a nonbreaching party due to the breach of a contract may be remedied by payment of coincidental damages. a. True b. False

b

The standard measure of compensatory damages can be stated as: a. the profit to the innocent party. b. the difference between the promised performance and the actual performance. c. the difference between the contract value and the market value, with a penalty for poor behavior. d. the benefit to the breaching party for the breach of contract.

b

The standard measure of compensatory damages is the value of breaching party's promised performance. a. True b. False

b

Tony and Tina enter into a contract for the sale of Tony's used lawn mower to Tina. Which of the following clauses in the contract is an exculpatory clause? a. Neither party to the contract shall be liable to the other for consequential damages. b. Neither party shall be liable to the other for any damages for breach of this contract. c. If the lawn mower stops working within sixty days of the sale, Tina's sole remedy is for Tony to repair or replace the lawn mower or to refund the purchase price to Tina. d. If this contract is breached, the maximum amount of damages that the breaching party must pay the nonbreaching party is $100.

b

​Rescission is an equitable remedy used when the parties have imperfectly expressed their agreement in writing. a. True b. False

b

Alan contracts for the sale of an ancient vase, a Renaissance painting, and a modern mansion to Beth. Alan breaches the contract. Beth files a suit against Alan. The court will most likely award specific performance for: a. the mansion only. b. the painting and the vase only. c. the mansion, the painting, and the vase. d. the painting or the vase only, but not both.

c

Bob contracts to work for Central Construction Corporation (CCC) during July for $4,500. On June 30, CCC cancels the contract. Bob declines a similar job with Design Builders, Inc., which would have paid $4,000. Bob files a suit against CCC. As compensatory damages, Bob can recover: a. $4,500. b. nothing. c. $500. d. $4,000.

c

Development Associates (DA) agrees to buy five acres of land from Eagle Properties for $15,000. Eagle fails to go through with the deal on the agreed date, when the market price of the land is $17,000. DA files a suit against Eagle. DA may recover: a. $17,000. b. nothing. c. $2,000. d. $15,000.

c

For Donna's breach of their contract, Ed seeks restitution, which is: a. the canceling of a contract. b. the loss of a bargain. c. the recapture of a benefit conferred on a contracting party through which the party has been unjustly enriched. d. the performance of an act promised in a contract.

c

Karl buys a new Volkswagen and signs a contract with Volkswagen saying that he will never sue the company for any personal injuries he may receive as a result of a faulty car. In exchange, Volkswagen reduces the price of the automobile by $6,500. This type of contract provision is: a. a dormant commerce clause. b. a revisionary clause. c. an exculpatory clause. d. a liquidated damages clause.

c

Matthew has a contract to sell a piece of real estate to Betty for $35,000. Betty breaches the contract, and Matthew immediately sells the land to someone else at the best price he can get: $31,000. Matthew can recover: a. nothing because he was able to sell the land to someone else. b. $35,000 as the contract price on the land. c. $4,000 as the difference between the market price and the contract price. d. specific performance.

c

Neil Dewerff was a teacher and basketball coach for Unified School District No. 315 in Kansas. His employment contract included a clause that provided that if the employee broke the contract before August 1, a lump sum of $400 could be collected from the employee as a penalty. Many other contracts between school districts and teachers' organizations contained similar provisions. Dewerff resigned on June 28 and was told that the school would accept his resignation upon his payment of the $400 designated by the contract. Dewerff refused to make the payment, and the school district filed a lawsuit in a state court claiming that the amount served as a liquidated damages clause. Dewerff contended that the contract provision was a penalty and therefore unenforceable. The court most likely held that the contract provision was a: a. penalty, because the language of the contract labeled it as such. b. liquidated damages provision, because the amount was unreasonably high. c. liquidated damages provision, because actual damages were difficult to ascertain and the amount was reasonable. d.penalty, because he resigned only one month before the contract was completed.

c

Valerie contracts with Esteban, who agrees to build a stone retaining wall and drain on her property. The wall and drain are necessary to prevent erosion of her land, which is falling into the creek on her property at a rapid rate. If Esteban breaches the contract, Valerie is under a legal obligation to: a. absorb all of the costs associated with the property erosion caused by Esteban's breach. b. not take any action, because she is the innocent party and thus has no legal duties. c. mitigate her damages. d. wait until Esteban is prepared to build the wall and drain.

c

Vicky contracts with Cyrus to have him remodel her kitchen. Vicky, however, changes her mind and breaches the contract before Cyrus can begin work. As a remedy for the breach, Cyrus can seek: a. the entire contract price. b. nothing, because the breach occurred before he began performance. c. expected profits from the contract. d. the contract price, plus interest.

c

Carmen contracted with Miles, who agreed to replace the carpets in her house. A clause in the contract provides that the only remedy for breach is replacement, repair, or refund of the purchase price. This type of provision in a contract is known as: a. an exculpatory clause. b. a breach clause. c. a penalty clause. d. a limitation-of-liability clause.

d

Courts will likely order reformation when: a. fraud is present. b. mutual mistake is present. c. the written contract incorrectly states the parties' oral agreement. d. all of these choices.

d

In most states, when a seller of real estate breaches a contract and sells the land to someone else, the measure of compensatory damages is: a. the contract price. b. fifty percent of the contract price. c. the market price of the land. d. the difference between the market price and the contract price.

d

Marie contracts to buy coffee beans for her store from Owen. The contract price is $5.00 per pound. Owen breaches the contract and delivers no coffee. Marie's damages will be: a. the difference between the contract price on the coffee and the profits that Marie may have made selling the coffee. b. the amount she seeks. c. the amount Owen can afford to pay. d. the difference between the market price of the coffee and the contract price.

d

Nicole has a contract to buy fourteen cases of hammers from Tyler. Tyler breaches the contract. Even though she can get similar hammers somewhere else, Nicole wants to sell his hammers because she secretly likes his logo and thinks it will draw customers in to her store. If she sues for specific performance, will she win? a. No, because Tyler does not want to give her the hammers. b. Yes, because he breached the contract and can be made to deliver the hammers. c. Yes, because she likes his logo and cannot get that logo somewhere else. d. No, because she can get similar hammers elsewhere.

d

Patricia Elsken leased an apartment in a large apartment complex. She entered into a written contract for security services with Network Multi-Family Security Corp. The contract stated, in capital letters, that Network was not an insurer and that the resident had responsibility for obtaining insurance to cover any losses. The contract also included a clause limiting Network's liability to $250 for any injury or damage caused by a failure of the alarm or Network's negligence. One morning, Network received an alarm signal indicating intrusion into Elsken's apartment. Network called Elsken's apartment and, receiving no answer, called the apartment manager instead of going to the apartment. The manager told Network to disregard the alarm. Later that day, Elsken was found dead in her apartment, the victim of an apparent homicide. The administrator of her estate filed a lawsuit in an Oklahoma state court for damages against Network, claiming that Network could not limit its liability for its own negligence. Network responded that its liability was limited to the $250 provided by the contract. The court most likely found that Network's limitation-of-liability clause was: a. not valid, because the damages provision was unreasonably small. b. valid, because all such clauses are enforceable as long as the damages provision is reasonable. c. not valid, because a party cannot limit its liability for wrongful acts. d. valid, because clauses limiting liability for negligence are generally enforceable.

d

Susan, an accountant, enters into a contract with Good Food Corp. to provide auditing services. The contract includes a clause stating that "no damages may be recovered if the contract is breached." This clause is called: a. a negative remedy clause. b. a limitation-of-liability clause. c. a no liability clause. d. an exculpatory clause.

d