Question 1

Ray breaches his lease with Sunny Properties and vacates the premises six months before the end of the term.In some states,Sunny would have to
A)avoid reletting the premises to recover damages from Ray.
B)make reasonable efforts to relet the premises to mitigate dam?ages.
C)relet the premises to recover damages from Ray.
D)sell the premises to recover damages from Ray.

Accepted Answer

In most states, landlords have a duty to mitigate damages when a tenant breaches the lease and vacates the premises before the end of the term. This means that the landlord must make reasonable efforts to find a new tenant and relet the premises as soon as possible in order to minimize the damages caused by the breach. Therefore, choice B is the best option.

Question 2

Clear Creek Corporation enters into a contract with Brightside Management Associates to manage and maintain Clear Creek'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)a liquidated damages clause.
D)a quasi contract.

Accepted Answer

The clause in the contract that states neither party can recover damages for a non-fraudulent or unintentional breach is a limitation-of-liability clause. This type of clause is commonly used in contracts to limit the amount of liability one party can incur in the event of a breach of contract.

Question 3

Fidelio Corporation enters into a contract with Equi Insurance,Inc.,to obtain health insurance for Fidelio employees.Equi breaches the contract.If Fidelio is awarded compensatory damages,the purpose would be to
A)establish,as a matter of principle,that Equi acted wrongfully.
B)provide Fidelio with funds for a foreseeable loss beyond the contract.
C)provide Fidelio with funds for its loss of the bargain.
D)punish Equi and set an example to deter others from similar acts.

Accepted Answer

Compensatory damages aim to cover the loss of the bargain, putting the injured party in the position they would have been in if the contract had been fulfilled.

Question 4

Even-Flo Hydraulics enters into a contract to repair valves and fittings in Fiesta Company's plant.If Even-Flo breaches the contract,Fiesta can
A)do nothing but make a deal with .a different service provider.
B)do nothing but temporarily suspend operations and wait.
C)file a criminal complaint against Even-Flo.
D)sue Even-Flo for damages.

Accepted Answer

If Even-Flo breaches the contract, Fiesta Company can sue Even-Flo for damages. This is the appropriate legal remedy for a breach of contract, allowing for compensation for any losses suffered by Fiesta Company as a result of Even-Flo's failure to perform the agreed-upon services.

Question 5

To avoid liability for intentional injuries,Northwest Power Corporation in?cludes 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 attempt to release a party from liability for intentional harm or gross negligence are generally not enforceable as a matter of public policy.

Question 6

Rural Power 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.The parties rescind the contract.Shovel's refund of the payment is
A)a penalty.
B)liquidated damages.
C)restitution.
D)a breach of contract.

Accepted Answer

Restitution means making a payment to restore something to its original condition. In this case, as the contract is rescinded, and Rural Power Utility, Inc. has paid an advance payment to Shovel Excavation Service, the refund of payment by Shovel to Rural is considered restitution. It is not a penalty or breach of contract since the contract has been rescinded, and no obligations remain. It is not liquidated damages as there is no damage to quantify. Therefore, option C is correct.

Question 7

Pure Oil Company enters into a contract with QuikBilt,Inc.,to construct an offshore oil pipeline to withstand specific conditions.If QuikBilt fails to meet this standard,which is construed as a breach of contract and a breach of a duty of care,Pure might be awarded punitive damages to
A)establish,as a matter of principle,that QuikBilt acted wrongfully.
B)provide Pure with funds for a foreseeable loss beyond the contract.
C)provide Pure with funds for its loss of the bargain.
D)punish QuikBilt and deter others from similar acts.

Accepted Answer

Punitive damages are awarded to punish the defendant for egregious behavior and to deter others from engaging in similar conduct. In this case, if QuikBilt breached the duty of care and the contract by failing to construct the offshore oil pipeline to withstand specific conditions, Pure may be awarded punitive damages to punish QuikBilt and deter others from acting similarly in the future.

Question 8

SFX Paintball Games,Inc.,and Truck & Trailer Delivery Corporation sign an agree?ment 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)a liquidated damages clause.
B)a mitigation of damages clause.
C)a nominal damages clause.
D)a penalty clause.

Accepted Answer

This is a liquidated damages clause because it specifies a predetermined amount of damages to be paid in the event of a material breach that is difficult to estimate. It does not impose a penalty or nominal damages, and it does not aim to mitigate damages.

Question 9

Dondi contracts to buy a custom espresso maker from Caffee Specialties,Inc.,for $4,500,but Caffee fails to deliver.Dondi buys the appliance else?where for $5,500.Dondi's measure of damages is
A)$1,000.
B)$1,000 plus incidental damages.
C)incidental damages only.
D)$0.

Accepted Answer

Dondi's measure of damages is the difference between the contract price and the cost of cover, which in this case is $1,000. Additionally, Dondi may be entitled to incidental damages such as the cost of finding a substitute product, as long as they are reasonable and foreseeable. Therefore, the best choice is B, which includes both the $1,000 difference in price and the possibility of incidental damages.

Question 10

Development Associates (DA)agrees to buy five acres of land from Eastside Properties for $15,000.Eastside fails to go through with the deal on the agreed date,when the market price of the land is $17,000.DA may recover
A)$17,000.
B)$15,000.
C)$2,000.
D)$0.

Accepted Answer

DA may recover the difference between the market price and the contract price, which is $2,000.

Question 11

Fashion Retail Center enters into a contract with Great Promotions,Inc.,to provide Fashion with a plan to retool its merchandising strategy.If Great Promotions breaches the contract,Fashion has a duty to
A)reduce the damages that Fashion might otherwise suffer.
B)reduce the loss that Great Promotions might otherwise suffer.
C)punish Great Promotions and deter others from similar acts.
D)take no action.

Accepted Answer

Fashion Retail Center has a duty to mitigate damages, meaning they must take reasonable steps to reduce the damages they might suffer due to Great Promotions' breach of contract.

Question 12

Lester and Myrtle want to rescind their contract under which Lester sold an MP3 player for $40.To rescind the contract
A)Lester must return the $40 and Myrtle must return the player.
B)Lester must return the $40 only.
C)Myrtle 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 need to return the items they received in the transaction. Therefore, Lester must return the $40 and Myrtle must return the MP3 player. This will nullify the contract and put both parties back in their original position prior to the transaction.

Question 13

Consumer Credit Union pays Derby $10,000 to design an ad campaign.The next day,Derby tells the credit union that he has accepted a job in Boston and cannot design the campaign.As compensatory damages,the credit union can recover
A)$100,000.
B)$10,000.
C)$1,000.
D)$0.

Accepted Answer

Compensatory damages are meant to compensate the injured party for losses suffered due to a breach of contract. In this case, the credit union hired Derby to design an ad campaign for $10,000, and Derby's breach of contract caused them to lose out on that money. Therefore, the credit union can recover the $10,000 paid to Derby as compensatory damages. Choice A is too high as it exceeds the original amount paid to Derby, while choices C and D are too low as they do not compensate the credit union for their losses.

Question 14

Office Accounting,Inc.,hires Perry to repair a computer on site for $400,but Perry does not show up as agreed.Office Accounting hires Raul to do the job for $350.Office Accounting may recover from Perry
A)compensatory damages.
B)consequential damages.
C)nominal damages.
D)punitive damages.

Accepted Answer

The answer of Office Accounting,Inc.,hires Perry to repair a computer...

Question 15

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 16

Damon contracts to repair the turf on a soccer field for Carousel Sports Park.Damon knows that without the repair,Carousel will have to cancel an upcoming game.Damon does not perform as promised.As consequential damages,Carousel can recover
A)the cost of new turf.
B)the difference between Damon's price and the actual cost of repair.
C)the loss of profit from the canceled game.
D)nothing.

Accepted Answer

The consequential damages in this case would be the loss of profit from the canceled game, since that is the direct result of Damon's failure to repair the turf. The cost of new turf or the difference between Damon's price and the actual cost of repair would be considered direct damages, and therefore not applicable in this scenario. As such, the best choice(s) is option C.

Question 17

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

Accepted Answer

Grady's normal remedy in this case would be specific performance. This is because the subject matter of the contract (440 acres of land) is unique and cannot be easily substituted with damages. Therefore, the best way to fully compensate Grady for the breach would be to require Hollis to specifically perform the contract by selling the land as agreed.

Question 18

Rite Contractors,Inc.,agrees to build a motel for Sleep Inn Corporation.The project proceeds according to plan,but before it is done,Sleep tells Rite to quit.Rite may recover
A)the contract price less costs of materials and labor.
B)the contract price.
C)the costs needed to complete construction.
D)profits plus the costs incurred up to the time of the breach.

Accepted Answer

Rite Contractors can recover the profits they would have earned from completing the contract, plus any costs they have already incurred up to the point of breach, as this is a standard remedy for breach of contract in construction cases.

Question 19

Vacation Vistas,Inc.,agrees to sell certain acreage to Umiko,who intends to develop a destination resort.Vacation Vistas repudiates the deal.Umiko sues Vacation Vistas and recovers dam?ages.She can now obtain
A)an amount in a quasi-contractual recovery.
B)damages representing restitution.
C)specific performance of the deal.
D)nothing more.

Accepted Answer

The answer of Vacation Vistas,Inc.,agrees to sell certain acreage to...

Question 20

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

Accepted Answer

In this scenario, Karif should seek specific performance. Specific performance is a legal remedy that orders the breaching party to fulfill their contractual obligation. This is the best option for Karif as sports memorabilia is unique, and it may not be possible to find an exact replacement. Therefore, seeking specific performance is the best way for Karif to acquire the collection he agreed to purchase from Jane.

Quiz 18: Breach of Contract and Remedies

Ray breaches his lease with Sunny Properties and vacates the premises six months before the end of the term.In some states,Sunny would have to

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

Fidelio Corporation enters into a contract with Equi Insurance,Inc.,to obtain health insurance for Fidelio employees.Equi breaches the contract.If Fidelio is awarded compensatory damages,the purpose would be to

Even-Flo Hydraulics enters into a contract to repair valves and fittings in Fiesta Company's plant.If Even-Flo breaches the contract,Fiesta can

To avoid liability for intentional injuries,Northwest Power Corporation in?cludes in its contracts an exculpatory clause.This is

Rural Power 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.The parties rescind the contract.Shovel's refund of the payment is

Pure Oil Company enters into a contract with QuikBilt,Inc.,to construct an offshore oil pipeline to withstand specific conditions.If QuikBilt fails to meet this standard,which is construed as a breach of contract and a breach of a duty of care,Pure might be awarded punitive damages to

SFX Paintball Games,Inc.,and Truck & Trailer Delivery Corporation sign an agree?ment 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

Dondi contracts to buy a custom espresso maker from Caffee Specialties,Inc.,for $4,500,but Caffee fails to deliver.Dondi buys the appliance else?where for $5,500.Dondi's measure of damages is

Development Associates (DA) agrees to buy five acres of land from Eastside Properties for $15,000.Eastside fails to go through with the deal on the agreed date,when the market price of the land is $17,000.DA may recover

Fashion Retail Center enters into a contract with Great Promotions,Inc.,to provide Fashion with a plan to retool its merchandising strategy.If Great Promotions breaches the contract,Fashion has a duty to

Lester and Myrtle want to rescind their contract under which Lester sold an MP3 player for $40.To rescind the contract

Consumer Credit Union pays Derby $10,000 to design an ad campaign.The next day,Derby tells the credit union that he has accepted a job in Boston and cannot design the campaign.As compensatory damages,the credit union can recover

Office Accounting,Inc.,hires Perry to repair a computer on site for $400,but Perry does not show up as agreed.Office Accounting hires Raul to do the job for $350.Office Accounting may recover from Perry

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

Damon contracts to repair the turf on a soccer field for Carousel Sports Park.Damon knows that without the repair,Carousel will have to cancel an upcoming game.Damon does not perform as promised.As consequential damages,Carousel can recover

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

Rite Contractors,Inc.,agrees to build a motel for Sleep Inn Corporation.The project proceeds according to plan,but before it is done,Sleep tells Rite to quit.Rite may recover

Vacation Vistas,Inc.,agrees to sell certain acreage to Umiko,who intends to develop a destination resort.Vacation Vistas repudiates the deal.Umiko sues Vacation Vistas and recovers dam?ages.She can now obtain

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