Question 1

Rural Utility,Inc.,enters into a contract with Shovel Excavation Service to dig up,replace,and rebury Rural's cables in a certain location.Rural advances Shovel 10 percent of its cost.If the parties rescind the contract,Shovel's refund of the payment would be
A) a penalty.
B) liquidated damages.
C) restitution.
D) specific performance.

Accepted Answer

The answer of Rural Utility,Inc.,enters into a contract with Shovel...

Question 2

Karson orally agrees to pay Jaime to plant and harvest a quarter of Karson's farm acreage for four corn-planting seasons.After Jaime prepares the land and plants the first crop,Karson says that their deal is off.Jaime can most likely recover
A) in quasi contract.
B) in reformation.
C) in restitution.
D) on the parties' existing contract.

Accepted Answer

In this scenario, Karson made an oral agreement with Jaime to pay him for planting and harvesting a quarter of Karson's farm acreage for four corn-planting seasons. However, after Jaime had prepared the land and planted the first crop, Karson said that their deal was off. Since there was no written contract, Jaime can most likely recover in quasi contract, which is a legal doctrine that allows a court to impose a contract-like obligation on a party even in the absence of an actual contract. This would allow Jaime to recover the reasonable value of the work that he had already completed on Karson's farm.

Question 3

General Equity Corporation enters into a contract with Honi,who agrees to create artwork for General's main office building.Honi delays and eventually refuses to perform.Meanwhile,General contracts to sell the building to Ideal Investments,Inc.,but before the transaction is complete,Jewel Funds Company offers to pay a higher price.General refuses to transfer the building to Ideal.In separate suits by General against Honi and by Ideal against General,each plaintiff seeks specific performance.How might the court rule in each case,and why?

Accepted Answer

The answer of General Equity Corporation enters into a contract...

Question 4

A contract between E-Debits,Inc.,and First Credit Corporation includes a provision excluding liability as a result of fraud.This provision is
A) enforceable because the parties are protected from liability.
B) enforceable because the parties consented to it.
C) enforceable if the parties have equal bargaining power.
D) not enforceable.

Accepted Answer

A provision that excludes liability for fraud is generally not enforceable because fraud is considered a type of intentional tort that cannot be waived or released. Additionally, public policy dictates that parties should not be allowed to contract away liability for intentional wrongdoing.

Question 5

Grady enters into a contract to buy 440 acres from Hollis to expand Grady's ranch.If Hollis breaches the contract,Grady's normal remedy would be
A) damages.
B) quasi contract.
C) reformation.
D) specific performance.

Accepted Answer

Grady's normal remedy for breach of contract by Hollis in this case would be specific performance, which is a court order requiring the breaching party (Hollis) to fulfill their contractual obligation (to sell the 440 acres) as specified in the contract. This is the most appropriate remedy since the land is unique and damages may not adequately compensate Grady for the loss of this specific property.

Question 6

Dino hires Eve to perform at Dino's Club,but Eve later breaches the agreement to accept a higher-paying job at First Star Arena.Dino files a suit against Eve.The court will most likely
A) award damages to Dino.
B) cancel Dino and Eve's contract.
C) order Eve to perform the contract.
D) reform Dino and Eve's contract.

Accepted Answer

If Eve breached the agreement by accepting a higher-paying job without giving proper notice or obtaining Dino's consent, then Dino may have suffered damages as a result. The court may award Dino the amount of money he would have made from Eve's performance or any other foreseeable losses caused by her breach of contract. Canceling the contract or ordering Eve to perform may not be feasible or practical, especially if Eve has already started performing at First Star Arena. Reforming the contract is also unlikely to be an appropriate remedy for this situation.

Question 7

Ira orally agrees to buy a unique collection of sports memorabilia for $1,000 from Jane and sends her $250 as a down payment.When Ira sends her the rest of the price,Jane refuses to ship Ira the collection.Ira should seek
A) damages.
B) reformation.
C) rescission.
D) specific performance.

Accepted Answer

Ira should seek specific performance, which is a court-ordered remedy that requires the breaching party (Jane, in this case) to fulfill their contractual obligation. Since the sports memorabilia collection is unique, monetary damages or reformation (rewriting the contract) may not fully compensate Ira for his loss. Rescission (cancellation of the contract) may also not be a desirable option for Ira if he really wants the collection. Therefore, seeking specific performance would be the best choice to ensure that Jane fulfills her obligation and sends Ira the collection he agreed to purchase.

Question 8

To avoid liability for intentional injuries,Vermont Power Corporation includes in its contracts an exculpatory clause.This is
A) enforceable if the other parties are protected from liability.
B) enforceable if the other parties consent to it.
C) enforceable if the other parties have equal bargaining power.
D) not enforceable.

Accepted Answer

Exculpatory clauses that release liability for intentional injuries are not enforceable as they are against public policy and undermine the purpose of tort law.

Question 9

National Drilling Company ships its only pump to American Hydraulics Corporation,the manufacturer,for repair.National hires Overland Transport,Inc.,to take the pump to American Hydraulics and to return it to National as soon as the repair is complete.National is forced to suspend operations without a pump,but Overland does not know this.National expects to be without the pump for five days and to lose profits of $5,000.When the pump is not returned by the end of the fifth day,National rents a pump at a cost of $100 per day.Overland delays five more days before returning the pump.National files a suit against Overland,asking for compensatory,consequential,and punitive damages.Will National recover?

Accepted Answer

The answer of National Drilling Company ships its only pump...

Question 10

Refined Commodities,Inc.,agrees to deliver ten tons of sheet metal to Select Builders Corporation.The agreement states that delivery is to be within "3" days,although the parties intend "30" days.Refined cannot convince Select to amend the contract.Refined should seek
A) damages.
B) reformation.
C) rescission.
D) specific performance.

Accepted Answer

Refined should seek reformation of the contract because the agreement stated delivery within 3 days, but the parties intended delivery within 30 days. Reformation would allow for the correction of a mistake in the contract to reflect the parties' true intentions. Damages, rescission, and specific performance are not appropriate remedies in this situation.

Question 11

Creekside Property Corporation enters into a contract with Downstream Management Associates to manage and maintain Creekside's apartment complex.Their contract provides that neither party can recover damages for a non-fraudulent or unintentional breach.This is
A) a limitation-of-liability clause.
B) an exculpatory clause.
C) an illegal clause.
D) a quasi contract.

Accepted Answer

This is a limitation-of-liability clause, which limits the amount of damages a party can recover for a breach of contract, as long as the breach was not fraudulent or intentional.

Question 12

Lou and Mira want to rescind their contract under which Lou sold an MP3 player to Mira for $50.To rescind the contract
A) Lou must return the $50 and Mira must return the player.
B) Lou must return the $50 only.
C) Mira must return the player only.
D) the parties can keep the "benefits" of their bargain.

Accepted Answer

In order to rescind the contract, both parties must return what they received under the contract. Lou must return the $50 and Mira must return the MP3 player. This is known as the "restitution" requirement for rescission of a contract. Only then will both parties be restored to their pre-contract positions.

Quiz 14: Breach and Remedies

Rural Utility,Inc.,enters into a contract with Shovel Excavation Service to dig up,replace,and rebury Rural's cables in a certain location.Rural advances Shovel 10 percent of its cost.If the parties rescind the contract,Shovel's refund of the payment would be

Karson orally agrees to pay Jaime to plant and harvest a quarter of Karson's farm acreage for four corn-planting seasons.After Jaime prepares the land and plants the first crop,Karson says that their deal is off.Jaime can most likely recover

A contract between E-Debits,Inc.,and First Credit Corporation includes a provision excluding liability as a result of fraud.This provision is

Grady enters into a contract to buy 440 acres from Hollis to expand Grady's ranch.If Hollis breaches the contract,Grady's normal remedy would be

Dino hires Eve to perform at Dino's Club,but Eve later breaches the agreement to accept a higher-paying job at First Star Arena.Dino files a suit against Eve.The court will most likely

Ira orally agrees to buy a unique collection of sports memorabilia for $1,000 from Jane and sends her $250 as a down payment.When Ira sends her the rest of the price,Jane refuses to ship Ira the collection.Ira should seek

To avoid liability for intentional injuries,Vermont Power Corporation includes in its contracts an exculpatory clause.This is

Refined Commodities,Inc.,agrees to deliver ten tons of sheet metal to Select Builders Corporation.The agreement states that delivery is to be within "3" days,although the parties intend "30" days.Refined cannot convince Select to amend the contract.Refined should seek

Creekside Property Corporation enters into a contract with Downstream Management Associates to manage and maintain Creekside's apartment complex.Their contract provides that neither party can recover damages for a non-fraudulent or unintentional breach.This is

Lou and Mira want to rescind their contract under which Lou sold an MP3 player to Mira for $50.To rescind the contract