Chapter 19 quiz questions

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

False

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

False

True/False A liquidated damages provision specifies that a certain amount is to be paid in the event of a future default or breach of contract.

True

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

True

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

True

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

b. $10,000

Renew Turf, Inc., enters into a contract with Sports Park to provide surface material for Sports Park's baseball fields by October 1 for a series to begin October 5. The contract specifies an amount to be paid if the contract is breached. This is a liquidated damages clause if the amount is: a. meant to pay for additional liquid sealant in the event of damage b. a reasonable estimate of the loss on a breach c. designed to penalize the breaching party d. intended to quickly provide cash to the non-breaching party

b. a reasonable estimate of the loss on a breach

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. quasi-contractual recovery b. reformation c. rescission d. specific performance

b. reformation

Metro Facilities, Inc., contracts to sell a parking garage to Nouveau Property Company. The contract provides that if Metro does not close the deal by September 15, it must pay Nouveau one-half of the contract price. This provision is NOT enforceable because it is: a. a liquidated damages clause b. a waiver of breach clause c. a limitation-of-liability clause d. a penalty clause

d. a penalty clause

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 hired Fernando to go the job for $2,000. Dry Gulch may recover from Elliot: a. nothing b. compensatory damages c. consequential damages d. nominal damages

d. nominal damages

Nonny agrees to buy a unique collection of Olympics memorabilia for $7,000 from Piper and sends $1,500 as a down payment. When Nonny sends Piper the rest of the price, she refuses to ship the collection. Nonny should seek: a. damages b. quasi-contractual recovery c. rescission d. specific performance

d. specific performance