Question 1

Excavate n' Fill, Inc., enters into a contract with Fred to fill and landscape an abandoned quarry on Fred's land. Fred advances Excavate n' Fill 10 percent of its cost. The parties rescind the contract. Excavate n' Fill's refund of the payment is

Accepted Answer

Restitution is the appropriate remedy in this scenario, as it is a return of the advance payment made by Fred. Restitution is the restoration of the parties to their pre-contract positions, and is intended to undo any unjust enrichment that may have occurred as a result of the contract. A penalty refers to a sum of money imposed as a punishment, while liquidated damages are a pre-determined sum that can be recovered by a party in the event of a breach. Reformation refers to a change made to a contract to reflect the parties' intentions, and is not applicable in this scenario.

Question 2

Copper Circuit, Inc., and Direct Electric LLC 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 estimate but approximately $1,000." This is

Accepted Answer

This is a liquidated damages clause because it specifies a predetermined amount of damages that will be paid in the event of a material breach, where the damages are difficult to estimate but approximately $1,000.

Question 3

Fact Pattern 12-1
Andre enters into a contract to buy 350 acres from Belle Vista Farms to cultivate grapes and open a winery.
-Refer to Fact Pattern 12-1. If Andre breaches the contract, Belle Vista's remedy would most likely be

Accepted Answer

If Andre breaches the contract, Belle Vista's remedy would most likely be the difference between the land's contract and market prices, as this is a common measure of damages in real estate transactions.

Question 4

Porches & Verandas, Inc., agrees to build a screen porch for Quinn, but fails to complete the job. Quinn hires Ramadas, Inc., to finish the project. Quinn may recover from Porches & Verandas

Accepted Answer

Quinn may recover the costs needed to complete construction from Porches & Verandas because they breached the contract by failing to complete the job. This would allow Quinn to be in the same position he would have been in had Porches & Verandas completed the job as promised. The other choices do not take into account the additional costs that Quinn had to incur by hiring Ramadas to finish the project.

Question 5

Handicrafts & Hobbies Store agrees to hire Iliana for one year at a salary of $600 per week. When Handicrafts & Hobbies cancels the contract, Iliana spends $150 to obtain a similar job that pays $450 per week for a year. Iliana is entitled to recover

Accepted Answer

Iliana is entitled to recover the difference between the wages at the two jobs ($600 - $450 = $150), plus the cost she incurred in obtaining the similar job ($150), for a total of $300. This is because Handicrafts & Hobbies breached their contract with Iliana, causing her to incur damages (i.e. the cost of obtaining a similar job at a lower salary). Therefore, Iliana is entitled to recover the amount of her lost wages (the difference between the promised salary and the salary at the similar job) as well as the cost of obtaining the similar job.

Question 6

Fact Pattern 12-1
Andre enters into a contract to buy 350 acres from Belle Vista Farms to cultivate grapes and open a winery.
-Refer to Fact Pattern 12-1. If Belle Vista breaches the contract, Andre's remedy would most likely be

Accepted Answer

Andre's remedy for Belle Vista's breach of the contract to sell 350 acres would most likely be specific performance. This means that a court would order Belle Vista to fulfill its obligation to transfer the land to Andre as promised in the contract. This remedy is most appropriate when the subject matter of the contract is unique or when money damages would not adequately compensate the injured party. Since the land in this scenario is unique and Andre's intention is to cultivate grapes and open a winery, specific performance is the best remedy for him. options A, B, and C are not appropriate remedies in this scenario.

Question 7

Guido and Hal want to rescind their contract under which Guido sold Hal a mountain bike for $100. To rescind the contract

Accepted Answer

Rescinding the contract means the parties want to undo the transaction and return to their original positions. Therefore, Guido must return the $100 he received, and Hal must return the bike he received. This will effectively undo the transaction and restore the parties to their pre-contract positions.

Question 8

Rig Heli-Pads, Inc., enters into a contract to employ Scott as an on-site project manager for two years. If Rig breaches the contract, Scott has a duty to

Accepted Answer

In the event of a breach of contract, Scott has a duty to mitigate (reduce) the damages he might otherwise suffer. This means that he must take reasonable steps to minimize the harm caused by Rig's breach, such as seeking new employment or finding other sources of income. Scott is not required to rescind the contract or punish Rig, but rather to protect his own interests by minimizing his losses.

Question 9

Builders, Inc., agrees to construct an office building for Champ Fitness Clubs, Inc. The project proceeds according to plan, but before it is done, Champ tells Builders to quit. Builders may recover

Accepted Answer

Builders, Inc. can recover the profits they would have made on the contract plus the costs they incurred up to the time Champ Fitness Clubs, Inc. told them to quit. This is because Champ's instruction to stop work constitutes a breach of contract, and the non-breaching party (Builders, Inc.) is entitled to damages that put them in the position they would have been in had the breach not occurred.

Question 10

Cow's Milk Creamery, Inc., needs a certain part for its pasteurizing equipment to continue its operations and orders one for $3,000 from Dairy Supplies Company. Cow's Milk tells Dairy Supplies that it must receive the part by Tuesday or it will lose $10,000. Dairy Supplies ships the part late. Cow's Milk can recover

Accepted Answer

Cow's Milk can recover the damages up to the amount it would have earned if the part arrived on time, which is $10,000. However, they cannot recover the cost of the part itself as it was still delivered, albeit late. Therefore, the correct choice is B, as it is the only option that represents the maximum damages that Cow's Milk can recover.

Question 11

Tile & Grout (T&G) contracts to resurface the insides of the pools at Water Park. T&G knows that without the resurfacing, Water Park will have to delay its seasonal opening. T&G does not perform as promised. As consequential damages, Water Park can recover

Accepted Answer

Water Park can recover the loss of profit from the delayed opening as consequential damages because T&G's failure to perform directly caused the delay, which was foreseeable.

Question 12

Bread & Bagels Bakery (B&B) enters into a contract with CinePass for discounted movie tickets for B&B's employees. CinePass breaches the contract and B&B enters into a contract with Dine+View for the same service at a lower price. B&B might be awarded nominal damages to

Accepted Answer

Nominal damages are awarded to establish, as a matter of principle, that the defendant acted wrongfully. They are symbolic in nature and usually a small amount of money, such as $1. In this case, B&B could be awarded nominal damages to show that CinePass breached the contract and acted wrongly.

Question 13

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

Accepted Answer

The answer of Dry Gulch Farms hires Elliot to repair...

Question 14

Renew Turf, Inc., enters into a contract with Sports Park to provide surface material for Sports Park's baseball fields by October 1 for a series to begin October 5. The contract specifies an amount to be paid if the contract is breached. This is a liquidated damages clause if the amount is

Accepted Answer

A liquidated damages clause is enforceable if the amount is a reasonable estimate of the loss on a breach. It is not designed to penalize the breaching party or provide additional benefits to the non-breaching party, but rather to compensate the non-breaching party for the losses incurred due to the breach.

Question 15

Equine World enters into a contract with FabuloSales to provide Equine World with a plan to repurpose its marketing strategy. If FabuloSales breaches the contract, Equine World has a duty to

Accepted Answer

If FabuloSales breaches the contract, Equine World has a duty to mitigate or reduce the damages they might suffer. This means that Equine World must take reasonable steps to minimize the losses resulting from FabuloSales' breach of contract. Simply taking no action is not an option for Equine World. Punishing FabuloSales or reducing the losses of FabuloSales is not within Equine World's duty in this situation.

Question 16

Isaac holds one ton of perishable fruit in storage for Juice Smoothies Corporation. Juice Smoothies does not pay for the storage. Isaac sells the fruit to Kayo Beverage Company. This sale represents

Accepted Answer

The answer of Isaac holds one ton of perishable fruit...

Question 17

Meatpackers, Inc., enters into a contract with Nevada Ranch for the delivery of a certain number of beef cattle on a set schedule. The ranch delays the first delivery for five days, aware that Meatpackers loses a certain percentage of profit each day. An award to Meatpackers of consequential damages would

Accepted Answer

Consequential damages are awarded to the non-breaching party for a foreseeable loss beyond the contract. In this case, Meatpackers would be entitled to consequential damages for the loss of profit resulting from the delayed delivery, as it was a foreseeable consequence of the breach. The purpose of consequential damages is to compensate the non-breaching party for additional losses resulting from the breach, rather than punishing the breaching party or deterring future breaches.

Question 18

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

Accepted Answer

Oxley's measure of damages in this case is the difference between the contract price and the market price at the time and place where delivery was due, plus any incidental damages. Since RSW failed to deliver the pizza oven, Oxley had to purchase it elsewhere for $3,500, which is $1,000 more than the contract price of $2,500. Therefore, Oxley's measure of damages is $1,000 plus any incidental damages.

Question 19

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

Accepted Answer

In some states, the landlord has a duty to mitigate damages by using reasonable means to find a new tenant to take over the premises, even if the tenant breaches the lease early. Therefore, Longview Mall would need to use reasonable means to find a new tenant to mitigate the damages caused by Mother & Daughter Jewelers' early departure.

Question 20

Metro Holding Company agrees to sell a vacant lot to New Town Property LLC. The contract provides that if Metro does not close the deal by October 15, it must pay New Town one-half of the contract price. This provision is not enforceable because it is

Accepted Answer

The provision is not enforceable because it is a penalty clause, which is a provision that imposes a punishment or a penalty for a breach of contract. Penalty clauses are unenforceable because they are intended to punish the breaching party rather than compensate the non-breaching party for its losses. In this case, the provision requires Metro to pay one-half of the contract price as a penalty if it fails to close the deal, which is not a reasonable estimate of the damages that New Town would suffer as a result of the breach.

Quiz 12: Breach of Contract and Remedies