chapter 16

44) Which of the following constitutes material breach? A) inferior performance B) substantial performance C) anticipatory repudiation D) rescission without notification

A) inferior performance

74) Which of the following torts arises when a third party induces a contracting party to breach the contract with another party? A) intentional interference with contractual relations B) breach of the covenant of good faith and fair dealing C) tort of bad faith D) malicious breach of contractual relations

A) intentional interference with contractual relations

43) A(n) ________ breach of a contract occurs when a party renders inferior performance of his or her contractual obligations. A) material B) minor C) anticipatory D) defensive

A) material

65) A ________ is an order of the court that enables a government officer to seize property of the breaching party and sell it at auction to satisfy a judgment. A) writ of attachment B) writ of garnishment C) specific performance D) liquidation of damages

A) writ of attachment

49) ________ place the nonbreaching party in the same position as if the contract had been fully performed. A) Tort damages B) Compensatory damages C) Nominal damages D) Consequential damages

B) Compensatory damages

61) Which of the following hold true in case of liquidated damages? A) For liquidated damages to be lawful, the actual damages must be precisely determined. B) Liquidated damages are enforceable even if actual damages are later determined to be different. C) A liquidated damages clause is considered a penalty if actual damages are not determinable in advance. D) If a liquidated damages clause is found to be a penalty, it continues to be enforceable.

B) Liquidated damages are enforceable even if actual damages are later determined to be different.

37) ________ is a situation in which a party to a contract renders performance exactly as required by the contract. A) Substantial performance B) Strict performance C) Anticipatory repudiation D) Restitution

B) Strict performance

47) When a party commits an anticipatory breach, the nonbreaching party ________. A) must wait until the performance was due before suing B) is immediately discharged from his or her own duties C) cannot seek damages because he or she received advance notice of the breach D) loses his or her right to sue after the due-date for performance is reached

B) is immediately discharged from his or her own duties

55) Which of the following terms refers to a nonbreaching party's legal duty to avoid or reduce damages caused by a breach of contract? A) tender of performance B) mitigation of damages C) liquidation of damages D) disclaimer of consequential damages

B) mitigation of damages

64) Jenson and Johnson enter into a contract that involves Johnson paying Jenson $1,000 for shoveling the snow from his driveway throughout winter. Jenson, who was paid before work commenced, breached the contract on the very first day. He should refund $1,000 to Johnson as ________. A) compensatory damages B) restitution C) liquidated damages D) consequential damages

B) restitution

45) ________ occurs when one contracting party informs the other that he or she will not perform his or her contractual duties when due. A) Restitution B) Rescission C) Anticipatory repudiation D) Material breach

C) Anticipatory repudiation

52) ________ damages are awarded when the nonbreaching party sues the breaching party even though no financial loss has resulted from the breach. A) Consequential B) Compensatory C) Nominal D) Liquidated

C) Nominal

63) ________ is a term that denotes the return of goods or property received from the other party to undo a contract. A) Rescission B) Recession C) Restitution D) Retribution

C) Restitution

40) Which of the following statements is true of discharge of contracts? A) Anticipatory breach discharges the breaching party's obligations to the contract. B) Substantial performance is sufficient to discharge a contract. C) Tender of performance discharges a party's contractual obligations. D) Tender is a conditional offer by contracting party to perform his or her obligations under the contract.

C) Tender of performance discharges a party's contractual obligations.

67) Which of the following is used in case of a breach of contract that cannot be adequately compensated through a legal remedy? A) mitigation of damages B) liquidation of damages C) equitable remedies D) tort remedies

C) equitable remedies

71) A court order that prohibits a person from doing a certain act is termed as a(n) ________. A) rescission B) reformation C) injunction D) restitution

C) injunction

73) Kinetosphere Automation Inc. (K.A.) makes a mandatory employment contract with all its employees. The contract states that K.A.'s employees are not to work for any other organization while they are employed by K.A. If K.A. finds an employee who is also serving another company, it can approach the court to obtain a(n) ________ to prevent the employee from working in the other company. A) restitution B) rescission C) injunction D) subjugation

C) injunction

75) Alan is a subject matter expert for First University, with an employment contract of three years. Two years into the contract, Second University—fully aware of Alan's contract—offers him twice the money he currently makes for a similar post. Alan takes the job. First University can recover damages from Second University for which of the following torts? A) malicious breach of contractual relations B) malicious inducement of contractual breach C) intentional interference with contractual relations D) breach of the covenant of good faith and fair dealing

C) intentional interference with contractual relations

57) Rudy was working as an applications developer in a software firm in San Jose. His employment contract was for three years at $100,000 a year. Two years into the contract, Rudy's employer fired him as a part of downsizing. Which of the following jobs could Rudy take in order to mitigate damages? A) Any job that offers $100,000 or more a year. B) Another software applications developer job, irrespective of the salary. C) A job in any software firm in any part of the country. D) An applications developer job in San Jose for $100,000 a year or more.

D) An applications developer job in San Jose for $100,000 a year or more.

51) Mary buys a new toaster for $500. The toaster's label bears a disclaimer stating that the manufacturer is not liable for consequential damages. On Monday morning, while Mary is using the toaster, it emits sparks and damages the electric wiring in the kitchen. The electrician tells Mary that the toaster malfunctioned and that the cost of repairs in her kitchen would come up to $2,000. What can Mary recover from the manufacturer of the toaster? A) $500 B) $2,500 C) $2,000 D) No damages can be recovered.

A) $500

70) ________ refers to an equitable doctrine that permits the court to rewrite a contract to express the parties' true intentions. A) Reformation B) Injunction C) Conjunction D) Garnishment

A) Reformation

62) ________ is an action to undo a contract. A) Rescission B) Recession C) Restitution D) Retribution

A) Rescission

69) Which of the following is true of specific performance? A) Specific performance of personal service contracts is not granted. B) Specific performance is not awarded if the subject matter of the contract is unique. C) Works of art, antiques and heirlooms are exempted as subject matter for specific performance. D) Specific performance is not available to enforce land contracts.

A) Specific performance of personal service contracts is not granted.

36) Which of the following statements is a true of a breach of contract? A) Strict performance by a party discharges that party's duties under the contract. B) Inferior performance constitutes a minor breach of contract. C) Substantial performance constitutes a material breach. D) The most common remedy for a breach of contract is an award of equitable remedies.

A) Strict performance by a party discharges that party's duties under the contract.

58) An employee who has been dismissed improperly accepts a job that is less comparable. Which of the following is a subsequent course of action? A) The employee can sue the prior employer for damages. B) The previous employer must offer salary compensation on a monthly basis, until the employee's new salary becomes comparable to that offered by the previous job. C) The employee can sue the former employer to recover his or her salary for one year. D) The employee can take no legal action against his or her formal employer after accepting a different job.

A) The employee can sue the prior employer for damages.

41) When does a minor breach occur? A) when a party rescinds the contract before actual work on the contract has commenced B) when a party renders substantial performance of his or her contractual duties C) when the party who is being offered goods or services rescinds the contract D) when the party who is offering goods or services rescinds the contract

B) when a party renders substantial performance of his or her contractual duties

66) A ________ is an order of the court that orders that wages, bank accounts, or other property of the breaching party held by third persons be paid to the nonbreaching party to satisfy a judgment. A) writ of attachment B) writ of garnishment C) specific performance D) liquidation of damages

B) writ of garnishment

60) Parties to a contract agree in advance to pay ________ damages if the contract is breached. A) nominal B) compensatory C) liquidated D) consequential

C) liquidated

54) QuickClicks, an online advertising company makes a contract to purchase six computers from Comptail, a local retailer, for $20,000. However, Comptail breaches the contract by not delivering the computers on time. The next day, QuickClicks manages to purchase six computers from another retailer for $18,000 and receives immediate delivery. QuickClicks can bring a lawsuit against Comptail to recover ________ damages. A) consequential B) compensatory C) nominal D) liquidated

C) nominal

42) Nett Labs orders 30 desktop computers from iDeal, a local computer dealer. Nett Labs requires that each computer has a 2.6 GHz processor, 500 GB hard disk and Windows operating system. iDeal supplies 30 desktop computers, each with a 2 GHz processor, 500 GB hard disk and Windows operating system. Which of the following terms hold true for iDeal's performance? A) complete performance B) material breach C) substantial performance D) anticipatory breach

C) substantial performance

38) Which of the following terms refers to an unconditional and absolute offer by a contracting party to perform his or her obligations under a contract? A) injunction B) writ of garnishment C) tender of performance D) writ of attachment

C) tender of performance

50) Kinlin, a furniture retailer has a contract with William Luellin, a carpenter. The agreement states that Luellin must deliver five tables and that Kinlin would pay $2,000 per table. However, Luellin manages to deliver only four tables and Kinlin needs to buy the fifth table from another supplier for $3,000. How much money can Kinlin recover from Luellin? A) $10,000 B) $2,000 C) $3,000 D) $1,000

D) $1,000

59) Andrew is employed as a Chief Financial Officer of EasyMoney firm in New York City, for a salary of $200,000 per year on a three-year contract. His employer terminates Andrew with two years left in the contract. Andrew accepts employment as a financial analyst at a different firm that pays $150,000 per year. Which of the following hold true in this scenario? A) Andrew cannot take any legal action against his formal employer after accepting another job. B) Andrew's former employer must pay Andrew two years' worth of his former salary. C) Andrew can only sue to receive nominal damages. D) Andrew can sue his prior employer and recover $100,000.

D) Andrew can sue his prior employer and recover $100,000.

46) Which of the following constitutes a case of anticipatory breach? A) It occurs when a contracting party fails to inform the other party in advance about non- performance of his or her contractual duties when due. B) In case of anticipatory breach, nonbreaching party's obligations under the contract are not discharged. C) The nonbreaching party must wait till performance is due to sue the breaching party. D) Anticipatory breach can be derived from the conduct of the breaching party without being expressly stated by that party.

D) Anticipatory breach can be derived from the conduct of the breaching party without being expressly stated by that party.

48) Which of the following is true of monetary damages? A) Nominal damages are paid once the nonbreaching party has suffered a financial loss. B) Anticipatory breaches cannot be awarded monetary damages. C) Liquidated damages are set by the court towards the breaching party. D) Consequential damages are considered as monetary damages.

D) Consequential damages are considered as monetary damages.

56) Which of the following statements is true of mitigation of damages? A) The breaching party must make efforts to mitigate damages resulting from the breach of contract. B) If an employer breaches an employment contract, he or she owes a duty to mitigate damages by trying to find substitute employment for the employee. C) The extent of mitigation of damages required is common to all kinds of contracts. D) If an employer breaches a contract, the employee is only required to accept comparable employment.

D) If an employer breaches a contract, the employee is only required to accept comparable employment.

53) Which of the following statements is true of nominal damages? A) They are also known as compensatory damages. B) Only damages above $1,000 can qualify as nominal damages. C) Most courts favor nominal damages lawsuits. D) They are awarded even when a breach did not result in financial loss.

D) They are awarded even when a breach did not result in financial loss.

72) Kimberly Inc., a jewelry store, and JKCent, a retailer, draft a contract that permits JKCent to retail Kimberly's jewelry in its stores. However, the parties discover a minor clerical error six months into the contract and the court rewrites their contract. This is an instance of ________. A) restitution B) rescission C) injunction D) reformation

D) reformation

68) An award of ________ orders the breaching party to perform the acts promised in a contract. A) reformation B) injunction C) restitution D) specific performance

D) specific performance

39) Poole Contractors makes a contract with Delta Resources to pay $50,000 for the supply of 500 truckloads of sand within next week. Delta Resources delivers the sand in two days after the contract was made. Poole Contractors pays the $50,000 promised in the contract. This is an instance of ________. A) substantial performance B) material breach C) minor breach D) strict performance

D) strict performance