Business Law Exam 3- Chapter 19

Drag and Drop the appropriate terms into the spaces provided. (a) When one party breaches a contract, the nonbreaching party can choose one or more of several. (b) A remedy is the relief provided by the _____ party when the other party has breached the contract. (c) Today, the remedy at law for breach of contract is normally _____ damages. (d) Usually a court will not award an equitable remedy unless the remedy at law is

(a) remedies (b) innocent (c) monetary (d) Inadequate

Highlight two possible contract provisions that limit remedies

Exculpatory clauses, limitation of liability clauses

When the parties have completely and exactly expressed their agreement in writing, the equitable remedy of reformation is available.

False

Unilateral rescission is NOT available for one of the following:

Minor clerical errors

Velma contracts with Gordon, who agrees to build a stone retaining wall and French 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 Gordon breaches the contract by failing to get to work, Velma is under a legal obligation to

Mitigate her damages

Equitable remedies do NOT include one of the following:

Monetary damages

Louis contracts with Greenfield to buy several of Greenfield's dairy cows. Greenfield deliveries the cows, but Louis doesn't pay for them. Greenfield may be able to have his cows returned if he seeks the remedy of:

Restitution

A waiver erases a past breach, and the contract continues as if that breach had never occurred

True

A waiver prevents the nonbreaching party from declaring that the contract has terminated or been rescinded

True

Compensatory damages are reduced by any loss that the nonbreaching party has avoided.

True

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."

True

Kipp agrees to sell Lucio 500 copies of a book for $3.50 each. Kipp does not deliver the books. At the time of the breach, the books are available at $4.50 each. Lucio's damages are

$500

Drag and Drop the appropriate terms into the spaces provided. (a) Sometimes monetary damages are ______ for a breach of contract. (b) In these situations, the nonbreaching party may ask the court for a(n) ____ remedy. (c) Equitable remedies are typically based on

(a) Inadequate (b) equitable (c) fairness

Drag and Drop the appropriate terms into the spaces provided. To recover under the theory of quasi contract, the party seeking recovery must show the following: (a) The party has conferred a benefit on the ______ party (b) The party conferred the benefit with the ______ expectation of being paid (c) The party did not act as a _____ in conferring the benefit (d) The party receiving the benefit would be _____ enriched if allowed to retain the benefit without paying for it

(a) other (b) reasonable (c) volunteer (d) unjustly

Kevin 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

An exculpatory clause

Legal obligations arise under the doctrine of quasi contract because the law considers that the party accepting the benefits has made an implied promise to pay for them.

True

Many contracts have provisions that state that the only remedy for breach is replacement, repair, or refund of the purchase price

True

Restitution might be available when there has been misconduct by a party in a confidential or other special relationship.

True

A clause ________ liability for illegal acts will not be enforced

excluding

Clauses excluding liability for _____ of law will not be enforced

violations

Carmen contracted with Stevenson to replace the carpets in her house, but Stevenson damaged some of the walls in so doing. Carmen does not pursue a claim against Stevenson and her actions are known as

waiver of breach

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 waiver of breach

Why is specific performance rarely granted for personal service contracts?

Because courts rarely want to monitor contracts for personal services, which usually require the exercise of personal judgement or talent

When the cost of repairing or completing the performance as required by the contract greatly outweighs the benefit to the owner, ____ occurs

Economic waste

Which of the following types of contracts typically do NOT include a liquidated damage clause?

Contracts for college tutoring services

Which of the following is typically NOT present when the courts order reformation of a contract?

Duress

Allison contracts with Jackson to have him remodel the kitchen in her home. Allison changes her mind and breaches the contract before Jackson can begin work. As a remedy for the breach, Jackson can seek

Expected profits from the contract

Leslie contracts with Remodel, Inc., to redo her living room, but she changes her mind and breaches the contract before Remodel can begin work. As a remedy for the breach, Remodel can seek:

Expected profits from the contract

Contracts for the sale of goods usually qualify for specific performance.

False

Punitive damages are generally awarded in lawsuits for breach of contract.

False

There are rarely any good reasons to waive a breach of contract

False

Which of the following is NOT one of the reasons that specific performance is an attractive remedy to the nonbreaching party?

No judge has to be involved

Max and Starla orally agree to a contract in which Max will replace the fixtures in Starla's bathroom. In exchange, Starla agrees to cut Max's hair every six weeks for the next three years. Max performs his side of the bargain, and Starla cuts his hair on schedule for six months. Then she sells her house and moves 2,000 miles away. Max can seek recovery based on

Quasi Contract

Olga and Chenoa orally agree that Olga will replace Chenoa's bathroom fixtures in exchange for which Chenoa agrees to cut Olga's hair every six weeks for the next three years. Olga performs her side of the bargain but then Chenoa sells the house and moves away. Olga may seek recovery based on:

Quasi Contract

Brandon contracts with Starcross to buy several of Starcross's dairy cows. Starcross delivers the cows, but Brandon doesn't pay for them. Starcross may be able to have his cows returned if he seeks the remedy of

Restitution

Which of the following examples would NOT be classified as consequential damages?

The difference between the contract price and the market price of land that was sold to someone else

In a majority of states, when a seller of a parcel of land breaches the contract and has sold the real property to someone else, the measure of consequential damages is:

The difference between the contract price and the market price of the land

A knowing relinquishment of a legal right is called a:

Waiver

Normally a waiver does not extend to subsequent defective performance. Under what circumstances will a waiver in fact extend to future defective performance?

When a pattern of conduct that waives a number of successive breaches occurs

What are the circumstances under which a court will NOT use the doctrine of quasi contract?

When a well-written contract is executed

The enforceability of a liquidated damages clause normally requires a yes answer to the following two questions.

When the contract was entered into, was it apparent that damages would be _difficult_ to _estimate_ in the event of a _breach?_ Was the amount set as damages a _reasonable_ estimate and _not_ excessive

Suppose that a buyer breaches a contract for the sale of goods that have not yet been produced. In such a situation, expenses incurred to obtain performance from another source are known as

incidental damages

Normally a provision excluding liability for fraudulent or _______ injury will not be enforced

intentional

A clause excluding acts that are contrary to _______ policy will not be enforced

public

Rhena contracts with Darrel to buy two show dogs. They agree that she will pay $2,000 for each dog. 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

reformation