Question 1

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

Accepted Answer

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.

Question 2

Normally, when a nonbreaching party has been damaged by a breach of contract, he or she has a duty to mitigate those damages.

Accepted Answer

A) True 
 B)False

Question 3

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.

Question 4

A orally agrees to pay B to plant and harvest a quarter of A's farm acreage for four corn-planting seasons. After B prepares the land and plants the first crop, A says that their deal is off. B can most likely recover

Accepted Answer

A)  in quasi contract. 
B)  in reformation. 
C)  in restitution. 
D)  on the parties' existing contract.

Question 5

A enters into a contract with B to provide surface material for A's tennis courts by April 1 for a tournament to begin May 1. 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)  an excessive estimate of the loss on a breach. 
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 6

Outdoor Properties, Inc. (OPI), agrees to sell certain acreage to Pia. OPI repudiates the deal. Pia sues OPI and recovers dam?ages. Pia can now obtain

Accepted Answer

A)  an amount in a quasi-contractual recovery. 
B)  damages representing restitution. 
C)  specific performance of the deal. 
D)  nothing more.

Question 7

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

Accepted Answer

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.

Question 8

Whether a contract's limitation-of-liability clause will be enforced depends on the type of breach that the clause excuses.

Accepted Answer

A) True 
 B)False

Question 9

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.

Question 10

A party seeking to recover compensatory damages may also be entitled to recover in?cidental damages.

Accepted Answer

A) True 
 B)False

Question 11

Punitive damages are never awarded in breach of contract actions.

Accepted Answer

A) True 
 B)False

Question 12

A, Inc., enters into a contract with B Service to fix A's precisely engineered molding equipment. If B delays the repair for five days, knowing that A will lose a certain percentage of profit for the delay, A might be awarded consequential damages to

Accepted Answer

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

Question 13

Fact Pattern 18-B1 
A enters into a contract to buy 132 acres from B to subdivide and sell in quarter-acre lots for C Acres, a residential development.
-Refer to Fact Pattern 18-B1. If A breaches the contract, B's remedy would most likely be

Accepted Answer

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

Question 14

Beachside Pools, Inc., agrees to build a swimming pool for Candy, but fails to build it according to the contract specifications. Candy hires Do-We Fix-It Company to finish the project. Candy may recover from Beachside

Accepted Answer

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.

Question 15

Value Acquisitions, Inc., contracts to buy Wobbling Corporation's as?sets. Wobbling breaches the contract. Value files a suit against Wobbling, seeking various remedies. The doc?trine of election of remedies has been elimi?nated in contracts involving sales of

Accepted Answer

A)  goods. 
B)  intellectual property. 
C)  real property. 
D)  services.

Question 16

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

Accepted Answer

A)  damages. 
B)  quasi contract. 
C)  reformation. 
D)  specific performance.

Question 17

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

Accepted Answer

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.

Question 18

A party who knowingly accepts defective performance of a contract thereby acknowledges the breach and can take later action on it.

Accepted Answer

A) True 
 B)False

Question 19

On the breach of a contract involving the sale of land, money damages is always the most appro?priate remedy.

Accepted Answer

A) True 
 B)False

Question 20

If a party breaches a contract, the other party can file a criminal complaint

Accepted Answer

A) True 
 B)False

Exam 18: Breach of Contract and Remedies

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

Normally, when a nonbreaching party has been damaged by a breach of contract, he or she has a duty to mitigate those damages.

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

A orally agrees to pay B to plant and harvest a quarter of A's farm acreage for four corn-planting seasons. After B prepares the land and plants the first crop, A says that their deal is off. B can most likely recover

A enters into a contract with B to provide surface material for A's tennis courts by April 1 for a tournament to begin May 1. The contract specifies an amount to be paid if the contract is breached. This is a liquidated damages clause if the amount is

Outdoor Properties, Inc. (OPI) , agrees to sell certain acreage to Pia. OPI repudiates the deal. Pia sues OPI and recovers dam?ages. Pia can now obtain

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

Whether a contract's limitation-of-liability clause will be enforced depends on the type of breach that the clause excuses.

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

A party seeking to recover compensatory damages may also be entitled to recover in?cidental damages.

Punitive damages are never awarded in breach of contract actions.

A, Inc., enters into a contract with B Service to fix A's precisely engineered molding equipment. If B delays the repair for five days, knowing that A will lose a certain percentage of profit for the delay, A might be awarded consequential damages to

Fact Pattern 18-B1 A enters into a contract to buy 132 acres from B to subdivide and sell in quarter-acre lots for C Acres, a residential development. -Refer to Fact Pattern 18-B1. If A breaches the contract, B's remedy would most likely be

Beachside Pools, Inc., agrees to build a swimming pool for Candy, but fails to build it according to the contract specifications. Candy hires Do-We Fix-It Company to finish the project. Candy may recover from Beachside

Value Acquisitions, Inc., contracts to buy Wobbling Corporation's as?sets. Wobbling breaches the contract. Value files a suit against Wobbling, seeking various remedies. The doc?trine of election of remedies has been elimi?nated in contracts involving sales of

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

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

A party who knowingly accepts defective performance of a contract thereby acknowledges the breach and can take later action on it.

On the breach of a contract involving the sale of land, money damages is always the most appro?priate remedy.

If a party breaches a contract, the other party can file a criminal complaint