Question 1

In a contract for a sale of goods,the usual measure of compensatory dam-ages is the difference between the contract price and the market price.

Accepted Answer

A) True 
 B)False

Question 2

Liquidated damages provisions are usually not enforceable.

Accepted Answer

A) True 
 B)False

Question 3

Earl holds 1,000 pounds of perishable fruit in storage for Fresh Food Corpo-ration.Fresh Food does not pay for the storage.Earl sells the fruit to Green Grocers,Inc.This sale represents

Accepted Answer

A) a breach of contract. 
B) a mitigation of damages. 
C) rescission and restitution. 
D) specific performance. 
A) a breach of contract. 
B) a mitigation of damages. 
C) rescission and restitution. 
D) specific performance.

Question 4

When a breach of contract occurs,the innocent injured party has a duty to mitigate the damages.

Accepted Answer

A) True 
 B)False

Question 5

To rescind a contract,each party essentially advances to the position he or she would have been in if the contract had been fully executed.

Accepted Answer

A) True 
 B)False

Question 6

Rough & Ready Timber Company orally contracts with Shawn for the purchase of five acres of Shawn's timberland.Shawn makes the transfer but Rough & Ready does not pay the price.The lack of a written contract could bar enforcement of this deal.If so,Shawn could most likely recover on a theory of

Accepted Answer

A) reformation. 
B) restitution. 
C) liquidated damages. 
D) quasi contract. 
A) reformation. 
B) restitution. 
C) liquidated damages. 
D) quasi contract.

Question 7

Consequential damages are awarded to cover all of the remote conse-quences of whatever injury a nonbreaching party suffers.

Accepted Answer

A) True 
 B)False

Question 8

Home Delivery Corporation and Interstate Transport,Inc.,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

Accepted Answer

A) a liquidated damages clause. 
B) a mitigation of damages clause. 
C) a nominal damages clause. 
D) a penalty clause. 
A) a liquidated damages clause. 
B) a mitigation of damages clause. 
C) a nominal damages clause. 
D) a penalty clause.

Question 9

The measure of damages for breach of a construction contract depends on which party breaches and when.

Accepted Answer

A) True 
 B)False

Question 10

Special damages are awarded for damage caused by special circumstances beyond a contract.

Accepted Answer

A) True 
 B)False

Question 11

Compensatory damages compensate the injured party for injuries sustained due to loss of the contract and also punish the party that breached the contract.

Accepted Answer

A) True 
 B)False

Question 12

Hybrid Corporation enters into a contract with Insure Service,Inc.(ISI),to obtain health insurance for Hybrid employees.If ISI breaches the contract and Hybrid is awarded compensatory damages,the purpose would be to

Accepted Answer

A) establish,as a matter of principle,that ISI acted wrongfully. 
B) provide Hybrid with funds for a foreseeable loss beyond the contract. 
C) provide Hybrid with funds for its loss of the bargain. 
D) punish ISI and set an example to deter others from similar acts. 
A) establish,as a matter of principle,that ISI acted wrongfully. 
B) provide Hybrid with funds for a foreseeable loss beyond the contract. 
C) provide Hybrid with funds for its loss of the bargain. 
D) punish ISI and set an example to deter others from similar acts.

Question 13

Consequential damages are foreseeable damages that arise from a party's breach of a contract.

Accepted Answer

A) True 
 B)False

Question 14

The injury suffered by a nonbreaching party due to the breach of a con-tract may be remedied by payment of compensatory damages.

Accepted Answer

A) True 
 B)False

Question 15

Clarice pays Damien $10,000 to design an ad campaign for her Sweetwater Coffee Stand chain.The next day,Damien tells Clarice that he has accepted a job in New York and cannot design her campaign.She files a suit against Damien.As compensatory damages,she can recover

Accepted Answer

A) $100,000. 
B) $10,000. 
C) $1,000. 
D) $0. 
A) $100,000. 
B) $10,000. 
C) $1,000. 
D) $0.

Question 16

Punitive damages are generally available in contract disputes.

Accepted Answer

A) True 
 B)False

Question 17

Normally,when a nonbreaching party has been damaged by a breach of contract,he or she does not have a duty to mitigate those damages.

Accepted Answer

A) True 
 B)False

Question 18

Fact Pattern 13-1 
Bella Homes enters into a contract to buy 132 acres from Watershed Holdings to subdivide and sell in fifth-acre lots for Pristine Meadow,a residential development.
-Refer to Fact Pattern 13-1.If Bella breaches the contract,Watershed's remedy would most likely be

Accepted Answer

A) a certain ratio of the amount that Bella has in liquidated funds. 
B) a percentage of Bella's unrealized profit. 
C) the difference between the land's contract and market prices. 
D) specific performance. 
A) a certain ratio of the amount that Bella has in liquidated funds. 
B) a percentage of Bella's unrealized profit. 
C) the difference between the land's contract and market prices. 
D) specific performance.

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

A) avoid reletting the premises to recover damages. 
B) use reasonable means to find a new tenant to mitigate dam-ages. 
C) relet the premises to recover any damages. 
D) sell the premises to recover any damages. 
A) avoid reletting the premises to recover damages. 
B) use reasonable means to find a new tenant to mitigate dam-ages. 
C) relet the premises to recover any damages. 
D) sell the premises to recover any damages.

Question 20

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

Accepted Answer

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. 
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.

Exam 13: Breach and Remedies

In a contract for a sale of goods,the usual measure of compensatory dam-ages is the difference between the contract price and the market price.

Liquidated damages provisions are usually not enforceable.

Earl holds 1,000 pounds of perishable fruit in storage for Fresh Food Corpo-ration.Fresh Food does not pay for the storage.Earl sells the fruit to Green Grocers,Inc.This sale represents

When a breach of contract occurs,the innocent injured party has a duty to mitigate the damages.

To rescind a contract,each party essentially advances to the position he or she would have been in if the contract had been fully executed.

Rough & Ready Timber Company orally contracts with Shawn for the purchase of five acres of Shawn's timberland.Shawn makes the transfer but Rough & Ready does not pay the price.The lack of a written contract could bar enforcement of this deal.If so,Shawn could most likely recover on a theory of

Consequential damages are awarded to cover all of the remote conse-quences of whatever injury a nonbreaching party suffers.

Home Delivery Corporation and Interstate Transport,Inc.,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

The measure of damages for breach of a construction contract depends on which party breaches and when.

Special damages are awarded for damage caused by special circumstances beyond a contract.

Compensatory damages compensate the injured party for injuries sustained due to loss of the contract and also punish the party that breached the contract.

Hybrid Corporation enters into a contract with Insure Service,Inc.(ISI),to obtain health insurance for Hybrid employees.If ISI breaches the contract and Hybrid is awarded compensatory damages,the purpose would be to

Consequential damages are foreseeable damages that arise from a party's breach of a contract.

The injury suffered by a nonbreaching party due to the breach of a con-tract may be remedied by payment of compensatory damages.

Clarice pays Damien $10,000 to design an ad campaign for her Sweetwater Coffee Stand chain.The next day,Damien tells Clarice that he has accepted a job in New York and cannot design her campaign.She files a suit against Damien.As compensatory damages,she can recover

Punitive damages are generally available in contract disputes.

Normally,when a nonbreaching party has been damaged by a breach of contract,he or she does not have a duty to mitigate those damages.

Fact Pattern 13-1 Bella Homes enters into a contract to buy 132 acres from Watershed Holdings to subdivide and sell in fifth-acre lots for Pristine Meadow,a residential development. -Refer to Fact Pattern 13-1.If Bella breaches the contract,Watershed's remedy would most likely be

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

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

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