Business Law Chapter 19 HW

Nominal damages

A small monetary award granted when no actual economic harm has been done

Specific Performance

An equitable remedy where a court orders one party to complete its obligations under the contract

Restitution

An equitable remedy where a person is returned to his or her original position

Which two of the following are often present in a situation where a court will grant reformation?

Fraud Mutual mistake

Mitigation

Minimization of damages by the plaintiff

Equitable remedies do not include which one of the following?

Monetary damages

Consequential damages

Special damages that are a foreseeable result of the breach but not a normal expectation of a breach

Matthew has a contract to sell a piece of real estate to Betty for $35,000. Betty breaches the contract, and Matthew immediately sells the land to someone else at the best price he can get: $31,000. Matthew can recover:

$4,000 as the difference between the market price and the contract price

Sayed and Ann form a contract under which Sayed agrees to sell Ann 500 copies of a book. The contract price is $3.50 per book. Sayed breaches the contract by not delivering the books to Ann by the deadline. At the time of the breach, the books are available from the publisher for $4.50 each. Ann's damages are:

$500

Carmen contracted with Miles, who agreed to replace the carpets in her house. A clause in the contract provides that the only remedy for breach is replacement, repair, or refund of the purchase price. This type of provision in a contract is known as:

a limitation-of-liability clause

Vicky contracts with Cyrus to have him remodel her kitchen. Vicky, however, changes her mind and breaches the contract before Cyrus can begin work. As a remedy for the breach, Cyrus can seek:

expected profits from the contract.

Specific performance normally is granted as an option where monetary damages are sufficient but not desirable.

false

The difference between market price and contract price of land that is sold to someone else is a measure of consequential damages.

false

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

false

When one party breaches a contract, the other party can choose from one or more of several _____ . Generally, a court will grant money, a remedy at _____ , unless money is not sufficient. If that is the case, the court will grant a remedy in _____ .

remedies, law, equity

In addition to being available in a ________ situation,______ might be available when there has been misconduct by a party in a special relationship.

rescission, restitution

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

restitution.

Matthew has a contract to sell a piece of real estate to Betty for $35,000. Matthew breaches the contract and decides to keep the property even though the market price is only $31,000. Betty can recover:

specific performance

In a construction contract, when the contractor breaches, the damages are measured as __________

the cost of completion

In most states, when a seller of real estate breaches a contract and sells the land to someone else, the measure of compensatory damages is:

the difference between the market price and the contract price.

Marie contracts to buy coffee beans for her store from Owen. The contract price is $5.00 per pound. Owen breaches the contract and delivers no coffee. Marie's damages will be:

the difference between the market price of the coffee and the contract price.

The standard measure of compensatory damages can be stated as:

the difference between the promised performance and the actual performance

If parties enter into a contract with a covenant not to compete for valid reasons and in good faith, but the geographic and time constraints are_______ , some courts will ____ the contract to make them _________

unreasonable, reform, reasonable

A knowing relinquishment of a legal right is called a .

waiver

A court will use the doctrine of quasi contract in all of the following except:

when a well-written contract is executed.

Select the two types of contract provisions that limit remedies.

Exculpatory clauses Limitation of liability clauses

Penalty

An amount in the contract that sets forth a punishment for breach

Liquidated damages

An amount in the contract that sets forth a reasonable estimate of damages

Rescission

An equitable remedy to "undo" a contract

Reformation

An equitable remedy to correct a contract to accurately reflect the true intentions of the parties

Incidental damages

Damages that are incurred because of a breach of contract, such as the expense of finding performance elsewhere

Compensatory damages

Damages that compensate the party for the loss of the bargain

Which of the following is not one of the reasons that innocent parties prefer specific performance as an equitable remedy?

No judge has to be involved.

Nicole has a contract to buy fourteen cases of hammers from Tyler. Tyler breaches the contract. Even though she can get similar hammers somewhere else, Nicole wants to sell his hammers because she secretly likes his logo and thinks it will draw customers in to her store. If she sues for specific performance, will she win?

No, because she can get similar hammers elsewhere.

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.

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

Karl 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

Jack and Scotty begin negotiations where Scotty will give Jack hockey lessons for a certain amount of money per week. While they are still negotiating the dollar amount and the number of lessons, they begin to meet weekly to have lessons. After ten lessons, Jack tells Scotty that it is clear that they are not going to be able to agree on the number of lessons or the dollar amount, so he will not participate any more. If Scotty sues Jack, the court will:

award Scotty a reasonable amount for the lessons he already taught.

Which two of the following typically include a liquidated damages clause?

construction contracts, contracts for the sale of goods

Sometimes monetary damages are ________ for a breach of contract. In these situations, the innocent party may ask the court for a(n) __________ remedy. These remedies typically are based in ___________ .

inadequate, equitable, fairness

Normally a provision excluding liability for fraudulent or ______ injury will not be enforced. A clause excluding liability for_______ acts will not be enforced. A clause excluding acts that are _______ to public policy will not be enforced, and clauses excluding liability for _________ of law will not be enforced.

intentional, illegal, contrary, violations

Sometimes, the buyer of goods breaches a contract before the seller produces the goods. If that is the case, the seller can receive _______ as compensatory damages.

lost profits

Valerie contracts with Esteban, who agrees to build a stone retaining wall and 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 Esteban breaches the contract, Valerie is under a legal obligation to:

mitigate her damages.

Patrick hires Bryan, a well-known artist, to paint a mural on the wall of Patrick's restaurant. After signing the contract, Bryan calls Patrick and tells him that he is too busy to do it. Patrick wants one of Bryan's murals on the wall, so he sues for specific performance. A court will:

not grant specific performance because it is a personal service

In a construction contract, if the owner breaches before construction begins, the contractor can receive ________ . If the owner breaches during construction, the contractor can recover__________ plus __________ incurred. If the owner breaches after construction is completed, the contractor can receive the __________ plus __________ .

profits, profits, costs, contract price, interest

To recover under quasi contract, the party seeking recovery must show that the party has _________ a benefit with the ________ expectation of being paid, not acting as a __________ , and the other party would be ________ if no award is granted.

provided, reasonable, volunteer, unjustly enriched

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

quasi contract.

Specific performance is _______ granted in contracts for _______ services because forcing someone to perform a personal service may be a form of ________ .

rarely, personal, involuntary servitude

Rena contracts with Darryl to buy two horses. They agree that she will pay $2,000 for each horse. 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.

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

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

Contracts for the sale of goods only qualify for specific performance if the goods are unique

true

Generally, compensatory damages are reduced by any loss that the innocent party has avoided.

true

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 limit remedies for breach to replacement, repair, or refund.

true

One dollar is a common amount for nominal damages.

true

Punitive damages are rarely awarded in contract cases.

true

Print Quik, Inc., seeks punitive damages in a lawsuit against Reddy Supply Company. Generally, punitive damages may be recovered when a contract has been breached:

when the breaching party's actions also constitute a tort.

The enforceability of a liquidated damages clause normally requires a ________ answer to two questions. First, when the contract was entered into, was it apparent that the damages would be__________ to estimate in the event of a breach? Second, was the amount that was set __________ ?

yes, difficult, reasonable