Question 1

Which of the following is NOT true regarding specific performance?
A) It will not be granted if money damages would be adequate to compensate the injured party.
B) It is granted in contracts involving unique items of personal property.
C) It will be granted frequently in contracts involving the sale of goods.
D) The courts will not order directly the specific enforcement of contracts for personal services.

Accepted Answer

Specific performance is not frequently granted in contracts involving the sale of goods unless the goods are unique or rare, as money damages are typically considered adequate in such cases.

Question 2

Jimmy made a contract to sell his townhouse to Thomas for $180,000. Two days later Jimmy changed his mind after discovering that he could have sold the property to another buyer for an additional $30,000. Thomas sues and asks the court to have the property conveyed to him at the price of $180,000. Thomas is seeking:
A) restitution.
B) punitive damages.
C) specific performance.
D) valid tender.

Accepted Answer

Thomas is seeking specific performance, which is a legal remedy in contracts where the court orders the contract to be performed as agreed, rather than awarding money damages. In this case, Thomas wants the court to enforce the sale of the townhouse at the agreed price of $180,000.

Question 3

What principle did the court apply in the case of Madison Square Garden Corp., Ill. v. Carnera ?
A) When damages are not adequate, an injunction may be used to enforce a negative covenant regarding exclusive services that are unique and extraordinary.
B) When services contracted for are unusual or extraordinary, the injured party cannot obtain injunctive relief.
C) An injured party's damages may not be reduced by mitigation for his failure to accept or seek other employment of a different or inferior kind.
D) Damages are recoverable only if they were foreseeable at the time of entering into the contract.

Accepted Answer

The court applied the principle that when damages are not adequate, an injunction may be used to enforce a negative covenant regarding exclusive services that are unique and extraordinary. This principle recognizes the unique value of certain services that cannot be easily replaced or compensated for with monetary damages.

Question 4

Lynne agrees to buy Harriette's farm for $200,000 and puts $20,000 down. Then Lynne learns she is allergic to hay and repudiates the contract. If Harriette can sell the farm in a good faith transaction for $190,000 a month later, she may:
A) keep Lynne's $20,000.
B) keep $10,000 of Lynne's down payment.
C) not keep any of the down payment money.
D) sue for specific performance.

Accepted Answer

Harriette can keep $10,000 of Lynne's down payment as damages for the difference between the original contract price and the resale price.

Question 5

Busby contracts to build a house for Connell. Busby finishes approximately half of the house and quits. Connell files suit against Busby. Which remedy is not available?
A) Compensatory damages.
B) Specific performance.
C) Reformation.
D) Nominal damages.

Accepted Answer

The answer of Busby contracts to build a house for...

Question 6

Vladimir entered into a contract to buy Daniel's collection of rare stamps. Vladimir mailed payment of $10,000 for the stamps to Daniel, but now Daniel tells Vladimir, "I'll never part with these stamps." Are the following remedies available to Vladimir?
A) Restitution: Yes; Specific Performance: Yes
B) Restitution: Yes; Specific Performance: No
C) Restitution: No; Specific Performance: Yes
D) Restitution: No; Specific Performance: No

Accepted Answer

Restitution is available because Vladimir can seek the return of his $10,000 since Daniel refuses to complete the sale. Specific performance is also available because the stamps are unique, and monetary damages may not suffice to put Vladimir in the position he would have been in had the contract been performed.

Question 7

Howard needs a truck to pull a 2,000-pound trailer. Gordon tells Howard, "My truck will pull a 2,000 pound trailer with ease." Relying on Gordon's statement, Howard buys the truck, but it will not pull a 2,000-pound trailer. If Gordon did not intend to deceive and Howard sues for nonfraudulent misrepresentation, he can ask for:
A) punitive damages, but not out-of-pocket damages.
B) out-of-pocket damages, plus consequential damages.
C) out-of-pocket damages plus punitive damages.
D) nominal damages because Howard should have known the capacity of the truck.

Accepted Answer

Out-of-pocket damages plus consequential damages are typically recoverable in cases of nonfraudulent misrepresentation, as they aim to compensate the plaintiff for the actual losses incurred due to relying on the inaccurate statement.

Question 8

The usual remedy for breach of contract is:
A) injunction.
B) specific performance.
C) punitive damages.
D) money damages.

Accepted Answer

Money damages are the most common remedy for breach of contract, compensating the non-breaching party for losses incurred.

Question 9

In the case of Hadley v. Baxendale , the plaintiff was seeking damages for:
A) restitution.
B) lost profits.
C) failure to convey land.
D) failure to specifically perform a contract.

Accepted Answer

The plaintiff in Hadley v. Baxendale was seeking damages for lost profits as a result of a delayed delivery of a shaft for their mill. The court established the principle that damages for breach of contract can only be awarded if they were foreseeable at the time the contract was made.

Question 10

Joann, an antique dealer, intentionally misrepresents the value of an antique bed, as $7,000 when she has reason to know the value is actually $3,500. Connie agrees to buy it for $6,500. In a state that uses the "out-of-pocket" rule, Connie's damage award would be:
A) $3,000.
B) $3,500.
C) $6,500.
D) $500.

Accepted Answer

Under the "out-of-pocket" rule, damages are calculated as the difference between the price paid and the actual value. Connie paid $6,500 for a bed worth $3,500, so her damages are $3,000 ($6,500 - $3,500).

Question 11

Carolyn agrees to sell Marianne an antique handmade lace tablecloth for $1,500. When Carolyn discovers that her cousin wants it too, she breaks the contract with Marianne. Marianne can ask the court to order:
A) injunctive relief.
B) specific performance.
C) restitution.
D) equitable rescission.

Accepted Answer

Specific performance is a remedy in contract law that requires the breaching party to perform the contract, rather than simply paying damages. It is often used in cases involving unique items, such as antiques, where monetary compensation would not suffice.

Question 12

Contract damages that put the injured party in as good a position as if the other party had performed are:
A) compensatory damages.
B) incidental damages.
C) consequential damages.
D) liquidated damages.

Accepted Answer

Compensatory damages are awarded to the injured party to put them in the same position they would have been in had the other party performed the contract. This includes both direct and indirect losses. Incidental damages are expenses incurred by the non-breaching party to avoid further damages, such as the cost of finding a replacement for the non-delivered goods. Consequential damages are indirect damages resulting from the breach, such as lost profits. Liquidated damages are damages that are agreed upon by the parties beforehand and are usually designed to compensate the injured party for a specific type of breach.

Question 13

To accomplish the basic purposes of contract remedies, which of the following limitations have not been imposed upon monetary damages?
A) Foreseeability.
B) Certainty.
C) Mitigation.
D) Restitution.

Accepted Answer

Restitution is not a limitation on monetary damages but rather a type of remedy itself aimed at restoring the injured party to the position they were in before the contract was made. The limitations on monetary damages typically include foreseeability, certainty, and the duty to mitigate damages.

Question 14

Marcella pays $12,000 down on a houseboat which Hugh had agreed to sell to her for $64,000. Marcella then repudiates the contract. Hugh sells the houseboat to Lloyd in good faith for $60,000. Marcella may recover from Hugh:
A) nothing, since she was the one who repudiated the contract.
B) her $12,000 down payment since Hugh's contract with Lloyd created a novation and discharged any duty Marcella had to pay anything toward the houseboat.
C) $8,000 in restitution, which represents Marcella's $12,000 down payment less the $4,000 in damages Hugh sustained because of Marcella's breach.
D) only a nominal amount.

Accepted Answer

Marcella may recover $8,000 in restitution, which is her initial $12,000 down payment minus the $4,000 loss Hugh incurred by selling the houseboat for $60,000 instead of the agreed $64,000 with Marcella. This calculation compensates Hugh for his loss due to Marcella's breach while returning the remainder of Marcella's down payment.

Question 15

A contractor and Southampton, Inc. have a contract, which calls for the contractor to build a building with the completion by June 15. If the building is not completed by that date, the contract calls for the contractor to pay $100 per day in damages. The $100 per day is:
A) punitive damages.
B) nominal damages.
C) liquidated damages.
D) an illegal penalty.

Accepted Answer

Liquidated damages are a predetermined amount of money that must be paid as damages for failure to perform under a contract when the actual damages are uncertain or difficult to quantify. In this case, the $100 per day for not completing the building by the specified date is an example of liquidated damages.

Question 16

A power of avoidance held by a party may be lost if:
A) the contract is disaffirmed.
B) there are delays in exercising the power.
C) the party lacks contractual capacity.
D) the rights of third parties are terminated.

Accepted Answer

Delays in exercising the power of avoidance can lead to the loss of that power, as timely action is often required to assert rights for avoidance or rescission of a contract.

Question 17

Arlene signs an employment contract to work for a local business, Davis Restoration, for one year but is wrongfully discharged after three months. In order to recover from Davis full pay for the remaining nine months of her contract, Arlene:
A) must accept employment 60 miles away if that is the only available similar job.
B) must use reasonable efforts to mitigate her damages by seeking other employment, even if she does not find another job.
C) need only file suit against Davis Restoration since they are contractually bound to pay Arlene for one year of employment.
D) must accept a radically different type of job if that is all she can find.

Accepted Answer

Arlene must use reasonable efforts to mitigate her damages by seeking other employment, even if she does not find another job. This principle requires that a party who has suffered a loss due to a breach of contract must take reasonable actions to reduce or mitigate the financial impact of that breach.

Question 18

Glen enters into a contract giving Woody the right of first refusal on a tract of land owned by Glen . Glen subsequently offers the land to Leif without first offering it to Woody . An appropriate remedy for Woody to seek would be:
A) an injunction.
B) liquidated damages.
C) reformation.
D) punitive damages.

Accepted Answer

An injunction is the appropriate remedy for Woody because it can prevent Glen from selling the land to Leif without first offering it to Woody, as per the right of first refusal agreement.

Question 19

According to the "American Rule," when contracting parties litigate over a breach:
A) each party pays its own attorney fees, regardless of who wins.
B) attorney fees are considered consequential damages.
C) the losing party has to pay the winner's attorney fees.
D) a provision for attorney fees in the written contract will not be given effect.

Accepted Answer

Under the "American Rule," each party in a lawsuit pays its own attorney fees, regardless of the outcome of the case. This is in contrast to the "English Rule," where the losing party pays the winner's attorney fees.

Question 20

Harry said to Marge, "I have a ring once owned by Marilyn Monroe. Would you like to buy it for $500?" Marge pays for the ring, but the next day a friend tells her that Harry had recently purchased the ring at a local store. Marge enjoys wearing the ring and wears it constantly for twelve months. Finally, she goes to Harry and says, "Here is the ring you lied about. Give me my $500." Most likely Marge will:
A) get her money back since Harry's statement was fraudulent.
B) not get her money back since she should have investigated the facts about the ring more carefully.
C) not get her money back since she is a good faith purchaser of merchandise.
D) not get her money back since she has affirmed the contract by taking an unduly long time to disaffirm.

Accepted Answer

Marge is unlikely to get her money back because she affirmed the contract by keeping and using the ring for an extended period (twelve months) before attempting to rescind the deal based on Harry's misrepresentation.

Quiz 18: Contract Remedies

Which of the following is NOT true regarding specific performance?

What principle did the court apply in the case of Madison Square Garden Corp., Ill. v. Carnera ?

Lynne agrees to buy Harriette's farm for $200,000 and puts $20,000 down. Then Lynne learns she is allergic to hay and repudiates the contract. If Harriette can sell the farm in a good faith transaction for $190,000 a month later, she may:

Busby contracts to build a house for Connell. Busby finishes approximately half of the house and quits. Connell files suit against Busby. Which remedy is not available?

Vladimir entered into a contract to buy Daniel's collection of rare stamps. Vladimir mailed payment of $10,000 for the stamps to Daniel, but now Daniel tells Vladimir, "I'll never part with these stamps." Are the following remedies available to Vladimir?

The usual remedy for breach of contract is:

In the case of Hadley v. Baxendale , the plaintiff was seeking damages for:

Joann, an antique dealer, intentionally misrepresents the value of an antique bed, as $7,000 when she has reason to know the value is actually $3,500. Connie agrees to buy it for $6,500. In a state that uses the "out-of-pocket" rule, Connie's damage award would be:

Carolyn agrees to sell Marianne an antique handmade lace tablecloth for $1,500. When Carolyn discovers that her cousin wants it too, she breaks the contract with Marianne. Marianne can ask the court to order:

Contract damages that put the injured party in as good a position as if the other party had performed are:

To accomplish the basic purposes of contract remedies, which of the following limitations have not been imposed upon monetary damages?

Marcella pays $12,000 down on a houseboat which Hugh had agreed to sell to her for $64,000. Marcella then repudiates the contract. Hugh sells the houseboat to Lloyd in good faith for $60,000. Marcella may recover from Hugh:

A contractor and Southampton, Inc. have a contract, which calls for the contractor to build a building with the completion by June 15. If the building is not completed by that date, the contract calls for the contractor to pay $100 per day in damages. The $100 per day is:

A power of avoidance held by a party may be lost if:

Arlene signs an employment contract to work for a local business, Davis Restoration, for one year but is wrongfully discharged after three months. In order to recover from Davis full pay for the remaining nine months of her contract, Arlene:

Glen enters into a contract giving Woody the right of first refusal on a tract of land owned by Glen . Glen subsequently offers the land to Leif without first offering it to Woody . An appropriate remedy for Woody to seek would be:

According to the "American Rule," when contracting parties litigate over a breach: