Business Law Ch.19

b

Metro Holding Company agrees to sell a vacant lot to New Town Property LLC. The contract provides that if Metro does not close the deal by October 15, it must pay New Town one-half of the contract price. This provision is not enforceable because it is a. ​a limitation-of-liability clause. b. ​a penalty clause. c. ​a liquidated damages clause. d. ​an exculpatory clause.

c

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 a. ​punish Rig and set an example to deter others from similar acts. b. ​rescind the contract with Rig. c. ​reduce the damages that Scott might otherwise suffer. d. ​do nothing.

c

Rita contracts to work for Social Media Corporation (SMC) during April for $4,500. On March 31, SMC cancels the contract. Rita declines a job of a different type and rank with Tech Talk, Inc., which would have paid $3,500. Rita files a suit against SMC. As compensatory damages, Rita can recover a. ​$3,500. b. ​$0. c. ​$4,500. d. ​$1,000 in shares of SMC stock.

d

A contract for a sale of land from Bayside Properties, Inc., to City Development Corporation contains an erroneous legal description. The most appropriate remedy for these parties is a. ​specific performance. b. ​a quasi contract. c. ​rescission. d. ​reformation.

c

Bread & Bagels Bakery (B&B) enters into a contract with CinePass for discounted movie tickets for B&B's employees. CinePass breaches the contract and B&B enters into a contract with Dine+View for the same service at a lower price. B&B might be awarded nominal damages to a. ​provide B&B with funds for a foreseeable loss beyond the contract. b. ​punish CinePass and set an example to deter others from similar acts. c. ​establish, as a matter of principle, that CinePass acted wrongfully. d. ​provide B&B with funds for its loss of the bargain.

d

Cow's Milk Creamery, Inc., needs a certain part for its pasteurizing equipment to continue its operations and orders one for $3,000 from Dairy Supplies Company. Cow's Milk tells Dairy Supplies that it must receive the part by Tuesday or it will lose $10,000. Dairy Supplies ships the part late. Cow's Milk can recover a. ​$3,000. b. ​$0. c. ​$13,000. d. ​$10,000.

d

Dry Gulch Farms hires Elliot to repair its irrigation system on site on a certain date for $2,500, but Elliot does not show up as agreed. Dry Gulch hires Fernando to do the job for $2,000. Dry Gulch may recover from Elliot a. ​compensatory damages. b. ​nothing. c. ​consequential damages. d. ​nominal damages.

b

Fact Pattern 19-1 Andre enters into a contract to buy 350 acres from Belle Vista Farms to cultivate grapes and open a winery. Refer to Fact Pattern 19-1. If Andre breaches the contract, Belle Vista's remedy would most likely be a. ​the amount that Andre expected to invest in the project. b. ​the difference between the land's contract and market prices. c. ​specific performance. d. ​a percentage of Andre's unrealized profit.

b

Forest Lumber Company orally contracts with Gail for the purchase of five acres of Gail's timberland. Gail makes the transfer but Forest Lumber does not pay the price. Gail could most likely recover on a theory of a. ​liquidated damages. b. ​quasi contract. c. ​restitution. d. ​reformation.

c

Isaac holds one ton of perishable fruit in storage for Juice Smoothies Corporation. Juice Smoothies does not pay for the storage. Isaac sells the fruit to Kayo Beverage Company. This sale represents a. ​liquidated damages. b. ​a quasi contract. c. ​a mitigation of damages. d. ​a breach of contract.

c

Meatpackers, Inc., enters into a contract with Nevada Ranch for the delivery of a certain number of beef cattle on a set schedule. The ranch delays the first delivery for five days, aware that Meatpackers loses a certain percentage of profit each day. An award to Meatpackers of consequential damages would Selected Answer: a. ​establish, as a matter of principle, that the seller acted wrongfully. b. ​punish the seller and deter others from similar acts. c. ​provide the buyer with funds for a foreseeable loss beyond the contract. d. ​provide the buyer with funds for its loss of the bargain.

b

Mother & Daughter Jewelers breaches its lease with Longview Mall and vacates the premises six months before the end of the term. In some states, Longview would have to a. ​avoid reletting the premises to recover damages. b. ​use reasonable means to find a new tenant to mitigate damages. c. ​relet the premises to recover any damages. d. ​sell the premises to recover any damages.

b

Oxley contracts to buy a pizza oven from Restaurant Supplies Warehouse (RSW) for $2,500, but RSW fails to deliver. Oxley buys the appliance else-where for $3,500. Oxley's measure of damages is a. ​incidental damages only. b. ​$1,000 plus incidental damages. c. ​$1,000. d. ​$0.

c

Porches & Verandas, Inc., agrees to build a screen porch for Quinn, but fails to complete the job. Quinn hires Ramadas, Inc., to finish the project. Quinn may recover from Porches & Verandas a. ​the contract price. b. ​the contract price less costs of materials and labor. c. ​the costs needed to complete construction. d. ​profits plus the costs incurred up to the time of the breach.

d

Ricky agrees to sell his Sunrise Breakfast Café to Tia. As part of the deal, Ricky signs a covenant not to open a competing business within a hundred-mile radius for ten years. If this covenant is later determined to be unreasonable, the appropriate remedy is most likely a. ​specific performance. b. ​rescission. c. ​damages. d. ​reformation.

d

Copper Circuit, Inc., and Direct Electric LLC sign an agreement that provides for the payment of "$1,000 by whichever party commits a material breach of the contract that creates damages difficult to estimate but approximately $1,000." This is a. ​a waiver-of-breach clause. b. ​a penalty clause. c. ​a nominal-damages clause. d. ​a liquidated damages clause.

a

Equine World enters into a contract with FabuloSales to provide Equine World with a plan to repurpose its marketing strategy. If FabuloSales breaches the contract, Equine World has a duty to a. ​reduce the damages that Equine World might otherwise suffer. b. ​take no action. c. ​reduce the loss that FabuloSales might otherwise suffer. d. ​punish FabuloSales and deter others from similar acts.

b

Fact Pattern 19-1 Andre enters into a contract to buy 350 acres from Belle Vista Farms to cultivate grapes and open a winery. Refer to Fact Pattern 19-1. If Belle Vista breaches the contract, Andre's remedy would most likely be a. ​the amount that Andre expected to invest in the project. b. ​specific performance. c. ​the difference between the land's contract and market prices. d. ​a percentage of Belle Vista's unrealized profit.

d

Sara contracts to work exclusively for Thermal Company during July for $5,000. On June 30, Thermal cancels the contract. Sara finds a similar job for the month of July but earns only $3,000. Sara files a suit against Thermal. As compensatory damages, Sara can recover a. ​$0. b. ​$3,000. c. ​$1,000. d. ​$2,000.

c

Tile & Grout (T&G) contracts to resurface the insides of the pools at Water Park. T&G knows that without the resurfacing, Water Park will have to delay its seasonal opening. T&G does not perform as promised. As consequential damages, Water Park can recover a. ​the cost of new pools. b. ​nothing. c. ​the loss of profit from the delayed opening. d. ​the difference between T&G's price and the eventual cost of resurfacing.