Question 1

Rikki agrees to sell her Sunrise Breakfast Café to Tia. As part of the deal,Rikki signs a covenant not to open a competing business within a hundred-mile radius for ten years. If this covenant is later determined to be unreasonable,the appropriate remedy

Accepted Answer

A)  damages.
B)  reformation.
C)  rescission.
D)  specific performance. B

Question 2

Expenses that are caused directly by a breach of a contract are known as primary damages.

Accepted Answer

A) True 
 B)False  False

Question 3

Handcrafts & Hobbies Store agrees to hire Iliana for one year at a salary of $600 per week. When Handcrafts & 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

A)  the amount of the wages that Handcrafts & Hobbies promised only.
B)  the difference between the wages at the two jobs only.
C)  the difference between the wages at the two jobs plus $150.
D)  $150 only. D

Question 4

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)  meant to pay for additional liquid sealant in the event of damage.
B)  a reasonable estimate of the loss on a breach.
C)  designed to penalize the breaching party.
D)  intended to quickly provide cash to the nonbreaching party.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Compensatory damages compensate a party injured by a breach of contract by punishing the party that breached the contract.

Accepted Answer

A) True 
 B)False

Question 7

Restitution is limited to rescission cases.

Accepted Answer

A) True 
 B)False

Question 8

Nominal damages are designed to punish a wrongdoer and set an example to deter similar conduct in the future.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

RidgeviewMining Inc. agrees to deliver ten tons of coal to Static Energy Corporation. The agreement states that delivery is to be within "9" days,although the parties intend "90" days. Ridgeview cannot convince Static to amend the contract. Ridgeview should seek

Accepted Answer

A)  damages.
B)  reformation.
C)  rescission.
D)  specific performance.

Question 11

In most situations,when a breach of contract occurs,the innocent injured party is held to a duty to mitigate the damages.

Accepted Answer

A) True 
 B)False

Question 12

A remedy is the relief provided to an innocent contracting party when the other party breaches the contract.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

River Vista Inc. enters into a contract with Stable Realty Management to manage and maintain River Vista's commercial real estate. Their contract provides that neither party can recover damages for a non-fraudulent or unintentional breach. This is

Accepted Answer

A)  a limitation-of-liability clause.
B)  an exculpatory clause.
C)  a liquidated damages clause.
D)  a quasi contract.

Question 15

Global Enterprise Corporation enters into a contract with HealthCare Insurance Company to obtain insurance for Global employees. If HealthCare breaches the contract and Global is awarded compensatory damages,the purpose would be to

Accepted Answer

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

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A)  a breach of contract.
B)  a mitigation of damages.
C)  liquidated damages.
D)  a quasi contract.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

National Drilling Company ships its only pump to American Hydraulics Corporation,the manufacturer,for repair. National hires Overland Transport,Inc.,to take the pump to American Hydraulics and to return it to National as soon as the repair is complete. National is forced to sus-pend operations without a pump,but Overland does not know this. National 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,National rents a pump at a cost of $100 per day. Overland delays five more days before returning the pump. National files a suit against Overland,asking for compensatory,consequential,and punitive damages. Will National recover?

Accepted Answer

The answer of National Drilling Company ships its only pump...

Question 20

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.

Exam 17: Breach and Remedies

Rikki agrees to sell her Sunrise Breakfast Café to Tia. As part of the deal,Rikki signs a covenant not to open a competing business within a hundred-mile radius for ten years. If this covenant is later determined to be unreasonable,the appropriate remedy

Expenses that are caused directly by a breach of a contract are known as primary damages.

Handcrafts & Hobbies Store agrees to hire Iliana for one year at a salary of $600 per week. When Handcrafts & 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

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

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

Compensatory damages compensate a party injured by a breach of contract by punishing the party that breached the contract.

Restitution is limited to rescission cases.

Nominal damages are designed to punish a wrongdoer and set an example to deter similar conduct in the future.

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

RidgeviewMining Inc. agrees to deliver ten tons of coal to Static Energy Corporation. The agreement states that delivery is to be within "9" days,although the parties intend "90" days. Ridgeview cannot convince Static to amend the contract. Ridgeview should seek

In most situations,when a breach of contract occurs,the innocent injured party is held to a duty to mitigate the damages.

A remedy is the relief provided to an innocent contracting party when the other party breaches the contract.

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

River Vista Inc. enters into a contract with Stable Realty Management to manage and maintain River Vista's commercial real estate. Their contract provides that neither party can recover damages for a non-fraudulent or unintentional breach. This is

Global Enterprise Corporation enters into a contract with HealthCare Insurance Company to obtain insurance for Global employees. If HealthCare breaches the contract and Global is awarded compensatory damages,the purpose would be to

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

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

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

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