Business Law Chapter 10

a third party beneficiary contract

D'Alemberte contracts with Elias to render personal nursing services for the benefit of Federica. This is​ ​a delegation. ​an assignment. ​a third party beneficiary contract. ​an alienation.

A

A contract between Laser Maintenance, Inc., and Medical Vision Operation Corporation contains a clause stating that any assignment is "void." This ordinarily prohibits​ A. ​any assignment. ​B. no assignment. ​C. only an assignment of contract rights to personal services. ​D. only an assignment that would change the obligor's risk.

True

A novation requires the existence of a previous, valid obligation.​

False

All rights can be assigned with no exceptions.​

True

Consequential damages are awarded for damage caused by special circumstances beyond a contract itself.​

Dierdre is in breach of contract

Contractors Service, Inc., enters into a contract to build a restaurant for Dierdre's Soup Spoons Bistro with Dierdre's payment due on August 1. On August 1, her bank is closed, and for this reason, she claims that she cannot pay on time. In this situation​ ​Dierdre's bank is liable to Contractors Service. ​Dierdre is in breach of contract. ​the contract is discharged. ​the contract is suspended.

a liquidated damages clause

Copper Conduit, Inc., and Dependable Electric Company 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 esti-mate but approximately $1,000." This is​ ​a liquidated damages clause. ​a mitigation-of-damages clause. ​a waiver-of-breach clause. ​a penalty clause.

False

Damages that compensate the non breaching party for the loss of a bargain are known as consecutive damages.​​

nominal damages

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​ ​nothing. ​compensatory damages. ​consequential damages. ​nominal damages.

Damages

Ed's Electric substantially performs its contract with Forest Hills Apartments, Inc., to deliver and install an alarm system and parking lot lighting. Forest Hills is entitled to​ ​damages. ​nothing more. ​be excused from performance. ​suspend performance.

B

Laramie contracts to provide cattle-herding services to Miles for $1,400 per month. Laramie cannot transfer this duty​ A. ​under any circumstances. B. ​without continuing to be potentially liable. C. ​without Miles's consent. D. ​without paying Miles at least one monthly fee.

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.

$1000 plus incidental damages

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​ ​$1,000. ​$1,000 plus incidental damages. ​incidental damages only. ​$0.

an incidental beneficiary

Paolho and Roth agree that Paolho will fix Roth's boat dock in exchange for $5,000. Paolho spends half of the amount due under the contract to acquire the materials for the job from Sav-U Economy Lumber. Sav-U is​ ​a delegatee. ​an intended beneficiary. ​an incidental beneficiary. ​an assignor.

True

Rights to receive funds can be assigned.​

quasi contract

Rough Hewn Lumber Company orally contracts with Joe for the purchase of five acres of Joe's timberland. Joe makes the transfer but Rough Hewn does not pay the price. The lack of a written contract could bar enforcement of this deal. If so, Joe could most likely recover on a theory of​ ​rescission. ​restitution. ​liquidated damages. ​quasi contract.

False

Subjective impossibility of performance can discharge a contract.​

True

​The measure of compensatory damages often varies by type of contract.

True

​An assignee has a right to demand performance from the obligor.