Business Law 2, Test 1 - Chapter 19 Worksheet
Restitution
An equitable remedy under which a person is restored to his or her original position prior to loss or injury, or placed in the position he or she would have been in had the breach not occurred.
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
In these situations, the nonbreaching party may ask the court for an ________ remedy.
equitable
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.
Equitable remedies are typically based on _______ .
fairness
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.
The party receiving the benefit would be ________ enriched if allowed to retain the benefit without paying for it.
unjustly
The party did not act as a ________ in conferring the benefit.
volunteer
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
When the parties have completely and exactly expressed their agreement in writing, the equitable remedy of reformation is available.
False
Equitable remedies do NOT include one of the following:
Monetary damages
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
Today, the remedy at law for breach of contract is normally ___________ damages.
monetary
The party has conferred a benefit on the ________ party.
Other
When the cost of repairing or completing the performance as required by the contract greatly outweighs the benefit to the owner, _______ occurs.
economic waste
Sometimes monetary damages are _______ for a breach of contract.
inadequate
Usually a court will not award an equitable remedy unless the remedy at law is ________
inadequate
When one party breaches a contract, the nonbreaching party can choose one or more of several _________
remedies
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
Consequential damages
A money award equivalent to the actual value of injuries or damages sustained by the aggrieved party.
Reformation
A court-ordered correction of a written contract so that it reflect the true intentions of the parties.
Mitigation of damages
A rule requiring a plaintiff to have done whatever was reasonable to minimize the damages caused by the defendant.
Nominal damages
A small monetary award (often one dollar) granted to a plaintiff when no actual damage was suffered or when the plaintiff is unable to show such loss with sufficient certainty.
Penalty
A sum inserted into a contract, not as a measure of compensation for its breach but rather as punishment for a default.
Liquidated damages
An amount, stipulated in the contract, that the parties to a contract believe to be a reasonable estimation of the damages that will occur in the event of a breach
Specific performance
An equitable remedy requiring the breaching party to perform as promised under the contract.
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 judgment or talent.
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
A clause ________ liability for illegal acts will not be enforced.
Excluding
Two possible contract provisions that limit remedies are:
Exculpatory clauses and limitation of liability clauses.
Compensitory damages
Expenses that are caused directly by a breach of contract, such as those incurred to obtain performance from another source.
Contracts for the sale of goods usually qualify for specific performance.
False
Normally a provision excluding liability for fraudulent or ________ injury will not be enforced.
Intentional
Unilateral rescission is NOT available for one of the following:
Minor clerical errors
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.
A clause excluding acts that are contrary to _______ policy will not be enforced.
Public
The party conferred the benefit with the _______ expectation of being paid.
Reasonable
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
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
Incidental damages
Special damages that compensate for a loss that is not direct or immediate (for example, lost profits). The special damages must have been reasonably foreseeable at the time the breach or injury occurred in order for the plaintiff to collect them.
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.
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
Clauses excluding liability for _______ of law will not be enforced.
Violations
A knowing relinquishment of a legal right is called a:
Waiver
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
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.
a. When the contract was entered into, was it apparent that damages would be difficult to estimate in the event of a breach? b. 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
A remedy is the relief provided by the __________ party when the other party has breached the contract.
innocent
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.