Question 1

What distinguishes an anticipatory breach from other breaches?

Accepted Answer

A)  It involves a breach by each party to the contract. 
B)  It entitles the non-breaching party to consequential damages. 
C)  It occurs in connection with substantial performance. 
D)  It is a foreseeable breach. 
E)  It occurs prior to the time that performance is due. 
A)  It involves a breach by each party to the contract. 
B)  It entitles the non-breaching party to consequential damages. 
C)  It occurs in connection with substantial performance. 
D)  It is a foreseeable breach. 
E)  It occurs prior to the time that performance is due.

Question 2

The most common equitable remedies are general performance,restitution,and conjunction.

Accepted Answer

A) True 
 B)False

Question 3

To be liable for consequential damages,the breaching party must know or have reason to know that the breach will cause special damages to the other party.

Accepted Answer

A) True 
 B)False

Question 4

Betty is retired and works on antique cars as a hobby,sometimes working on those belonging to others,and sometimes on cars that she purchases and restores for resale.Betty has a 1965 Ford Mustang on which she has completed the mechanical and exterior restoration.She has not yet begun the restoration of the interior,which needs a lot of work.Betty needs some money quickly so she advertises the Mustang for $13,000.Bob looks at it and enters into a written contract at $12,500.Bob then offers to pay Betty $2,300 to complete the interior restoration.They agree,with the work to begin in two months and take about three months to complete.Betty changes her mind about selling the car.Can Bob get specific performance for these two contracts?

Accepted Answer

Although there are many old Mustangs in

Question 5

Rescission is available for a contract involving duress.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is a type of damages recoverable in a breach of contract action?

Accepted Answer

A)  dispensatory 
B)  consequential 
C)  non-liquidated 
D)  phenomenal 
E)  non-cumulative 
A)  dispensatory 
B)  consequential 
C)  non-liquidated 
D)  phenomenal 
E)  non-cumulative

Question 7

The general standard to obtain an injunction is that the party seeking the injunction would suffer irreparable injury without the injunction.

Accepted Answer

A) True 
 B)False

Question 8

Another term for consequential damages is:

Accepted Answer

A)  special damages. 
B)  remedial damages. 
C)  liquidated damages. 
D)  nominal damages. 
E)  distinguishable damages. 
A)  special damages. 
B)  remedial damages. 
C)  liquidated damages. 
D)  nominal damages. 
E)  distinguishable damages.

Question 9

Waldo washes windows with World-Wide Window Washers.Waldo has just begun the second year of a three-year contract that pays him $30,000 per year.Even though Waldo has performed his job perfectly,he was suddenly told that his contract was being terminated.Waldo was offered a couple of other jobs shortly after this contract was terminated.The first was as a custodian in a city 200 miles away paying $24,000 a year.The second was as a cook in a local fast food restaurant paying $22,000 a year.Waldo took neither job.In connection with his duty to mitigate,which of the following is true?

Accepted Answer

A)  Waldo would not be obligated to accept the custodian job. 
B)  Waldo would not be obligated to accept the cook job. 
C)  Waldo would not be obligated to accept either job. 
D)  Waldo would be obligated to accept one of the jobs of his choosing. 
E)  Waldo is not obligated to accept any job of any kind for the duration of the contract that was breached. 
A)  Waldo would not be obligated to accept the custodian job. 
B)  Waldo would not be obligated to accept the cook job. 
C)  Waldo would not be obligated to accept either job. 
D)  Waldo would be obligated to accept one of the jobs of his choosing. 
E)  Waldo is not obligated to accept any job of any kind for the duration of the contract that was breached.

Question 10

Which of the following is the usual measure of damages for a breach of a sales contract?

Accepted Answer

A)  the difference between the contract price and the market price of the goods at the time and place the goods were to be delivered 
B)  the difference between the contract price and the market price of the goods at the time the contract was entered into 
C)  the difference between the contract price and the market price of the previous contract entered into between the parties immediately prior to the contract that was breached 
D)  the difference between any liquidated damages provision and the amount of actual damages 
E)  the difference between the market price and the liquidated damages provision 
A)  the difference between the contract price and the market price of the goods at the time and place the goods were to be delivered 
B)  the difference between the contract price and the market price of the goods at the time the contract was entered into 
C)  the difference between the contract price and the market price of the previous contract entered into between the parties immediately prior to the contract that was breached 
D)  the difference between any liquidated damages provision and the amount of actual damages 
E)  the difference between the market price and the liquidated damages provision

Question 11

To prove intentional interference with contractual relations,the plaintiff must demonstrate the following elements: 1)a valid,enforceable contract between the contracting parties; 2)third-party knowledge of the contract; and 3)third-party inducement to breach the contract.

Accepted Answer

A) True 
 B)False

Question 12

A court will not enforce a liquidated damages clause when:

Accepted Answer

A)  the amount specified is too small and considered to be unfair. 
B)  the amount of actual damages is significantly greater than the amount specified as liquidated damages. 
C)  the amount was agreed to by the parties prior to the existence of an actual breach. 
D)  the amount is so large that it is viewed as a penalty. 
E)  the actual damages are difficult to determine and compare to the amount specified as liquidated damages. 
A)  the amount specified is too small and considered to be unfair. 
B)  the amount of actual damages is significantly greater than the amount specified as liquidated damages. 
C)  the amount was agreed to by the parties prior to the existence of an actual breach. 
D)  the amount is so large that it is viewed as a penalty. 
E)  the actual damages are difficult to determine and compare to the amount specified as liquidated damages.

Question 13

Creative Charlie had sketched plans for an invention,but had not yet built a prototype.He wanted to make sure that the invention could actually be manufactured before going through the expense of applying for a patent.He contracted with a local machine shop to work on the prototypes.As part of the agreement,the machine shop agreed to not disclose any information about the invention.Charlie learned from one of the employees that the owner of the machine shop had successfully built a prototype without telling Charlie and that the owner was going to begin marketing the invention in a joint venture with another firm.Could Charlie get an injunction in this situation?

Accepted Answer

A)  no, this is a situation where the only allowable damages would be liquidated damages 
B)  no, Charlie could be adequately compensated with compensatory damages 
C)  yes, assuming that Charlie would likely suffer irreparable harm if others learn of his invention and it becomes public before he can obtain a patent 
D)  yes, because this is an anticipatory breach and injunctions can be issued in connection with any anticipatory breach. 
E)  no, this is a situation where Charlie has no remedies because he should have kept the invention a secret 
A)  no, this is a situation where the only allowable damages would be liquidated damages 
B)  no, Charlie could be adequately compensated with compensatory damages 
C)  yes, assuming that Charlie would likely suffer irreparable harm if others learn of his invention and it becomes public before he can obtain a patent 
D)  yes, because this is an anticipatory breach and injunctions can be issued in connection with any anticipatory breach. 
E)  no, this is a situation where Charlie has no remedies because he should have kept the invention a secret

Question 14

If the exchanged consideration is consumed or otherwise unavailable,there cannot be a valid restitution following a rescission of the contract.

Accepted Answer

A) True 
 B)False

Question 15

If an employee breaches an employment contract,the employer can recover the costs to hire a new employee,but cannot recover any increase in salary paid to the replacement.

Accepted Answer

A) True 
 B)False

Question 16

Substantial performance occurs when there has been a material breach of contract.

Accepted Answer

A) True 
 B)False

Question 17

Where there has been a material breach of contract,the non-breaching party is discharged from any further performance under the contract.

Accepted Answer

A) True 
 B)False

Question 18

Courts have the absolute discretion to award a remedy of specific performance if the subject matter of the contract is common.

Accepted Answer

A) True 
 B)False

Question 19

Bob is moving to another job across the country and decides to sell a majority of his household goods. In various separate contracts he agrees to sell his 50" HD TV which is two weeks old, his coffee maker bought at Wal-Mart, his antique, custom-built bicycle and his hand-signed and numbered Salvador Dali lithograph. He is moving on August 8th and the buyers, who have written contracts, are to pay and pick up their purchases on August 3rd. On August 3rd they all arrive with money in hand but Bob refuses to go through with the contracts claiming sentimental attachment that he hadn't anticipated. Which of the following is true?

Accepted Answer

A)  All four purchasers may successfully sue based on specific performance. 
B)  Sentimental attachment is a valid defense to all of these contracts, so Bob may breach. 
C)  Specific performance will only apply to the coffee maker and television, but not to the bike and the lithograph. 
D)  Specific performance will only apply to the bike and the lithograph, but not to the coffee maker and the television. 
E)  Specific performance will only apply to the television, the bike and the lithograph, but not to the coffee maker. 
A)  All four purchasers may successfully sue based on specific performance. 
B)  Sentimental attachment is a valid defense to all of these contracts, so Bob may breach. 
C)  Specific performance will only apply to the coffee maker and television, but not to the bike and the lithograph. 
D)  Specific performance will only apply to the bike and the lithograph, but not to the coffee maker and the television. 
E)  Specific performance will only apply to the television, the bike and the lithograph, but not to the coffee maker.

Question 20

Liquidated damages will be invalidated if they are unreasonably large or small.

Accepted Answer

A) True 
 B)False

Exam 14: Breach of Contract and Remedies

What distinguishes an anticipatory breach from other breaches?

The most common equitable remedies are general performance,restitution,and conjunction.

To be liable for consequential damages,the breaching party must know or have reason to know that the breach will cause special damages to the other party.

Rescission is available for a contract involving duress.

Which of the following is a type of damages recoverable in a breach of contract action?

The general standard to obtain an injunction is that the party seeking the injunction would suffer irreparable injury without the injunction.

Another term for consequential damages is:

Which of the following is the usual measure of damages for a breach of a sales contract?

To prove intentional interference with contractual relations,the plaintiff must demonstrate the following elements: 1)a valid,enforceable contract between the contracting parties; 2)third-party knowledge of the contract; and 3)third-party inducement to breach the contract.

A court will not enforce a liquidated damages clause when:

If the exchanged consideration is consumed or otherwise unavailable,there cannot be a valid restitution following a rescission of the contract.

If an employee breaches an employment contract,the employer can recover the costs to hire a new employee,but cannot recover any increase in salary paid to the replacement.

Substantial performance occurs when there has been a material breach of contract.

Where there has been a material breach of contract,the non-breaching party is discharged from any further performance under the contract.

Courts have the absolute discretion to award a remedy of specific performance if the subject matter of the contract is common.

Liquidated damages will be invalidated if they are unreasonably large or small.

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