Question 1

Courts order reformation most often when fraud or mutual mistake is present.

Accepted Answer

A) True 
 B)False  True

Question 2

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

Accepted Answer

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. 
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. A

Question 3

Lunch Trucks, Inc., contracts to deliver and serve Meals Catering Service's products to its clients for $5,000 per event, payable in advance. Meals Catering pays the money, but Lunch Trucks fails to perform. Can Meals Catering rescind the contract? Can Meals Catering also obtain restitution? What does it mean to "rescind" a contract? How is a contract rescinded? What is restitution? How is restitution accomplished? Explain.

Accepted Answer

Yes, Meals Catering can rescind the contract and obtain restitution.
A breach of contract by a failure to perform entitles the nonbreaching party to rescind, or cancel, the contract, and the parties must make restitution, which is the returning of whatever benefit they conferred on each other. These remedies are particularly available when the breaching party would otherwise be unjustly enriched, as in this question. Rescission is an action to cancel a contract-to return the parties to the positions they were in before the transaction. It is also available in cases involving fraud, mistake, duress, or failure of consideration. To rescind, a nonbreaching party must give prompt notice to the breaching party. Both parties must then make restitution to each other by returning whatever was conveyed in execution of their contract. If the goods or property conveyed can be returned, they must be. If the actual items cannot be returned, an equivalent amount in money must be paid.

Question 4

Fact Pattern 19-1
Andre enters into a contract to buy 350 acres from Belle Vista Farms to cultivate grapes and open a winery.
-Refer to Fact Pattern 19-1. If Belle Vista breaches the contract, Andre's remedy would most likely be

Accepted Answer

A)  ​the amount that Andre expected to invest in the project. 
B)  ​a percentage of Belle Vista's unrealized profit. 
C)  ​the difference between the land's contract and market prices. 
D)  ​specific performance. 
A)  ​the amount that Andre expected to invest in the project. 
B)  ​a percentage of Belle Vista's unrealized profit. 
C)  ​the difference between the land's contract and market prices. 
D)  ​specific performance.

Question 5

Ordinarily, the remedy for a seller's breach of a contract for a sale of real estate is specific performance.

Accepted Answer

A) True 
 B)False

Question 6

Clay Pots pays Dora $25,000 to propose an online marketing campaign. Two days later, Dora tells Clay Pots that she has accepted a job with its competitor Earthenware Inc. and cannot plan the campaign. As compensatory damages, Clay Pots can recover

Accepted Answer

A)  ​$250,000. 
B)  ​$25,000. 
C)  ​$2,500. 
D)  ​$0. 
A)  ​$250,000. 
B)  ​$25,000. 
C)  ​$2,500. 
D)  ​$0.

Question 7

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

A)  ​a liquidated damages clause. 
B)  ​a nominal-damages clause. 
C)  ​a waiver-of-breach clause. 
D)  ​a penalty clause. 
A)  ​a liquidated damages clause. 
B)  ​a nominal-damages clause. 
C)  ​a waiver-of-breach clause. 
D)  ​a penalty clause.

Question 8

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

A)  ​establish, as a matter of principle, that the seller acted wrongfully. 
B)  ​provide the buyer with funds for a foreseeable loss beyond the contract. 
C)  ​provide the buyer with funds for its loss of the bargain. 
D)  ​punish the seller and deter others from similar acts. 
A)  ​establish, as a matter of principle, that the seller acted wrongfully. 
B)  ​provide the buyer with funds for a foreseeable loss beyond the contract. 
C)  ​provide the buyer with funds for its loss of the bargain. 
D)  ​punish the seller and deter others from similar acts.

Question 9

A breach of contract entitles the nonbreaching party to sue for monetary damages.

Accepted Answer

A) True 
 B)False

Question 10

A party seeking to recover compensatory damages can also recover incidental damages.

Accepted Answer

A) True 
 B)False

Question 11

Ready Repair Service enters into a contract to fix washers and dryers in Scrub n' Dry Company's coin-operated laundries. If Ready Repair breaches the contract, Scrub n' Dry can

Accepted Answer

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 Ready Repair. 
D)  ​sue Ready Repair for damages. 
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 Ready Repair. 
D)  ​sue Ready Repair for damages.

Question 12

The most common remedies available to a nonbreaching party include damages, rescission and restitution, and specific performance.

Accepted Answer

A) True 
 B)False

Question 13

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

A)  ​do nothing. 
B)  ​reduce the damages that Scott might otherwise suffer. 
C)  ​rescind the contract with Rig. 
D)  ​punish Rig and set an example to deter others from similar acts. 
A)  ​do nothing. 
B)  ​reduce the damages that Scott might otherwise suffer. 
C)  ​rescind the contract with Rig. 
D)  ​punish Rig and set an example to deter others from similar acts.

Question 14

Fact Pattern 19-1
Andre enters into a contract to buy 350 acres from Belle Vista Farms to cultivate grapes and open a winery.
-Refer to Fact Pattern 19-1. If Andre breaches the contract, Belle Vista's remedy would most likely be

Accepted Answer

A)  ​the amount that Andre expected to invest in the project. 
B)  ​a percentage of Andre's unrealized profit. 
C)  ​the difference between the land's contract and market prices. 
D)  ​specific performance. 
A)  ​the amount that Andre expected to invest in the project. 
B)  ​a percentage of Andre's unrealized profit. 
C)  ​the difference between the land's contract and market prices. 
D)  ​specific performance.

Question 15

Rita contracts to work for Social Media Corporation (SMC) during April for $4,500. On March 31, SMC cancels the contract. Rita declines a job of a different type and rank with Tech Talk, Inc., which would have paid $3,500. Rita files a suit against SMC. As compensatory damages, Rita can recover

Accepted Answer

A)  ​$4,500. 
B)  ​$3,500. 
C)  ​$1,000 in shares of SMC stock. 
D)  ​$0. 
A)  ​$4,500. 
B)  ​$3,500. 
C)  ​$1,000 in shares of SMC stock. 
D)  ​$0.

Question 16

Complete Boring Corporation ships its only pump to Drills & Bits, Inc., the manufacturer, for repair. Complete Boring hires Everywhere Shipping, Inc., to take the pump to Drills & Bits and to return it to Complete Boring as soon as the repair is complete. Complete Boring is forced to suspend operations without a pump, but Everywhere Shipping does not know this. Complete Boring 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, Complete Boring rents a pump at a cost of $100 per day. Everywhere Shipping delays five more days before returning the pump. Complete Boring files a suit against Everywhere Shipping, asking for compensatory, consequential, and punitive damages. Will Complete Boring recover?

Accepted Answer

Yes and no. Complete Boring will succeed

Question 17

A liquidated damages provision specifies that a certain amount is to be paid on a breach of contract when the nonbreaching party elects to receive cash.

Accepted Answer

A) True 
 B)False

Question 18

Liquidated damages provisions are generally unenforceable.

Accepted Answer

A) True 
 B)False

Question 19

The failure of one party to perform a contract entitles the other party to rescind it.

Accepted Answer

A) True 
 B)False

Question 20

A contract for a sale of land from Bayside Properties, Inc., to City Development Corporation contains an erroneous legal description. The most appropriate remedy for these parties is

Accepted Answer

A)  ​a quasi contract. 
B)  ​reformation. 
C)  ​rescission. 
D)  ​specific performance. 
A)  ​a quasi contract. 
B)  ​reformation. 
C)  ​rescission. 
D)  ​specific performance.

Exam 19: Breach of Contract and Remedies

Courts order reformation most often when fraud or mutual mistake is present.

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

Fact Pattern 19-1 Andre enters into a contract to buy 350 acres from Belle Vista Farms to cultivate grapes and open a winery. -Refer to Fact Pattern 19-1. If Belle Vista breaches the contract, Andre's remedy would most likely be

Ordinarily, the remedy for a seller's breach of a contract for a sale of real estate is specific performance.

Clay Pots pays Dora $25,000 to propose an online marketing campaign. Two days later, Dora tells Clay Pots that she has accepted a job with its competitor Earthenware Inc. and cannot plan the campaign. As compensatory damages, Clay Pots can recover

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

A breach of contract entitles the nonbreaching party to sue for monetary damages.

A party seeking to recover compensatory damages can also recover incidental damages.

Ready Repair Service enters into a contract to fix washers and dryers in Scrub n' Dry Company's coin-operated laundries. If Ready Repair breaches the contract, Scrub n' Dry can

The most common remedies available to a nonbreaching party include damages, rescission and restitution, and specific performance.

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

Fact Pattern 19-1 Andre enters into a contract to buy 350 acres from Belle Vista Farms to cultivate grapes and open a winery. -Refer to Fact Pattern 19-1. If Andre breaches the contract, Belle Vista's remedy would most likely be

Rita contracts to work for Social Media Corporation (SMC) during April for $4,500. On March 31, SMC cancels the contract. Rita declines a job of a different type and rank with Tech Talk, Inc., which would have paid $3,500. Rita files a suit against SMC. As compensatory damages, Rita can recover

A liquidated damages provision specifies that a certain amount is to be paid on a breach of contract when the nonbreaching party elects to receive cash.

Liquidated damages provisions are generally unenforceable.

The failure of one party to perform a contract entitles the other party to rescind it.

A contract for a sale of land from Bayside Properties, Inc., to City Development Corporation contains an erroneous legal description. The most appropriate remedy for these parties is

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