Business Law Chpt 18 Breach of Contract and Remedies

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Even-Flo Hydraulics enters into a contract to repair valves and fittings in Fiesta Company's plant. If Even-Flo breaches the contract, Fiesta can

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 Even-Flo.
d. sue Even-Flo for damages.

D

Handy Hardware Store agrees to hire Ilsa for one year at a salary of $500 per week. When Handy cancels the contract, Ilsa spends $100 to obtain a similar job that pays $450 per week for a year. Ilsa is entitled to recover

a. the amount of the wages that Handy promised only.
b. the difference between the wages at the two jobs only.
c. the difference between the wages at the two jobs plus $100.
d. $100 only.

C

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

a. $100,000.
b. $10,000.
c. $1,000.
d. $0.

B

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

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.

c

Development Associates (DA) agrees to buy five acres of land from Eastside Properties for $15,000. Eastside fails to go through with the deal on the agreed date, when the market price of the land is $17,000. DA may recover

a. $17,000.
b. $15,000.
c. $2,000.
d. $0.

c

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

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.

d.

Pam contracts to buy a Quotient-brand computer set-up from Regal Systems for $5,000, but Regal fails to deliver. Pam buys the computer elsewhere for $6,500. Pam's measure of damages is

a. $1,500 only.
b. $1,500 plus incidental damages.
c. incidental damages only.
d. $0.

b

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

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.

c

Lava Excavators, Inc., needs a drill to continue its operations and orders one for $3,000 from Mining Supplies Company. Lava tells Mining that it must receive the drill by Tuesday or it will lose $10,000. Mining ships the drill late. Lava can recover

a. $13,000.
b. $10,000.
c. $3,000.
d. $0.

b

Mona contracts to repair a computer for NuData, Inc. (NDI). Mona knows that without the computer, NDI will lose a sale. Mona does not perform as promised. NDI files a suit against Mona. As consequential damages, NDI can recover

a. the cost of a new computer.
b. the difference between Mona's price and the actual cost of repair.
c. the loss of profit from the lost sale.
d. nothing.

c

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

a. a breach of contract.
b. a mitigation of damages.
c. rescission and restitution.
d. specific performance.

b

Pure Oil Company enters into a contract with QuikBilt, Inc., to construct an oil pipeline to withstand specific conditions. If QuikBilt fails to meet this standard, which is construed as a breach of contract and a breach of a duty of care, Pure might be awarded punitive damages to

a. establish, as a matter of principle, that QuikBilt acted wrongfully.
b. provide Pure with funds for a foreseeable loss beyond the contract.
c. provide Pure with funds for its loss of the bargain.
d. punish QuikBilt and deter others from similar acts.

d

Bret contracts to work for City Construction Corporation (CCC) during July for $4,500. On June 30, CCC cancels the contract. Bret declines a similar job with Downtown Builders, Inc., which would have paid $4,000. Bret files a suit against CCC. As compensatory damages, Bret can recover

a. $4,500.
b. $4,000.
c. $500.
d. $0.

c

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

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.

a

Kris contracts to work exclusively for Little Manufacturing Company during May for $5,000. On April 30, Little cancels the contract. Kris finds another job during May but earns only $3,000. Kris files a suit against Little. As compensatory damages, Kris can recover

a. $3,000.
b. $2,000.
c. $1,000.
d. $0.

b

Office Accounting, Inc., hires Perry to repair a computer on site for $400, but Perry does not show up as agreed. Office Accounting hires Raul to do the job for $350. Office Accounting may recover from Perry

a. compensatory damages.
b. consequential damages.
c. nominal damages.
d. punitive damages.

c

A enters into a contract with B Fitness Club for discounted memberships for A's employees. If B breaches the contract and A enters into a contract with D Sports for the same service at a lower price, A might be awarded nominal damages to

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.

a

Ray breaches his lease with Sunny Properties and vacates the premises six months before the end of the term. In some states, Sunny would have to

a. avoid reletting the premises to recover damages from Ray.
b. make reasonable efforts to relet the premises to mitigate damages.
c. relet the premises to recover damages from Ray.
d. sell the premises to recover damages from Ray.

b

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. 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.

b

Home Delivery Corporation and Interstate Transport, Inc., 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. a liquidated damages clause.
b. a mitigation of damages clause.
c. a nominal damages clause.
d. a penalty clause.

a

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

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.

b

Rural Utility, Inc., enters into a contract with Shovel Excavation Service to dig up, replace, and rebury Rural's cables in a certain location. Rural advances Shovel 10 percent of its cost. If the parties rescind the contract, Shovel's refund of the payment would be

a. a penalty.
b. liquidated damages.
c. restitution.
d. specific performance.

b

Drew contracts to sell a residential duplex to Evan. The contract provides that if Drew does not close the deal by September 15, he must pay Evan one-half of the contract price. This provision is not enforceable because it is

a. a liquidated damages clause.
b. a mitigation clause.
c. a nominal damages clause.
d. a penalty clause.

d

Lou and Mira want to rescind their contract under which Lou sold an MP3 player to Mira for $50. To rescind the contract

a. Lou must return the $50 and Mira must return the player.
b. Lou must return the $50 only.
c. Mira must return the player only.
d. the parties can keep the "benefits" of their bargain.

a

Roy contracts to sell his Double-R Ranch to Sam on May 1. On April 20, Roy tells Sam that he will not go through with the deal. Sam files a suit against Roy. Sam can recover

a. the cost of any ranch that would suit him.
b. the cost of a similar, nearby ranch.
c. the Double-R Ranch.
d. nothing.

c

Ira orally agrees to buy a unique collection of sports memorabilia for $1,000 from Jane and sends her $250 as a down payment. When Ira sends her the rest of the price, Jane refuses to ship Ira the collection. Ira should seek

a. damages.
b. reformation.
c. rescission.
d. specific performance.

d

For Petra to recover the benefit of her bargain from a breached real estate contract with Quality Properties, Inc., the most appropriate remedy is

a. damages.
b. quasi-contractual recovery.
c. rescission.
d. specific performance.

d

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

a. damages.
b. quasi contract.
c. reformation.
d. specific performance.

d

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. in quasi contract.
b. in reformation.
c. in restitution.
d. on the parties' existing contract.

a

Refined Commodities, Inc., agrees to deliver ten tons of sheet metal to Select Builders Corporation. The agreement states that delivery is to be within "3" days, although the parties intend "30" days. Refined cannot convince Select to amend the contract. Refined should seek

a. damages.
b. reformation.
c. rescission.
d. specific performance.

b

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

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

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

a. an amount in a quasi-contractual recovery.
b. damages representing restitution.
c. specific performance of the deal.
d. nothing more.

d

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

a. damages.
b. reformation.
c. rescission.
d. specific performance.

b

Creekside Property Corporation enters into a contract with Delta Management Associates to manage and maintain Creekside's apartment complex. Their contract provides that neither party can recover damages for a non-fraudulent or unintentional breach. This is

a. a limitation-of-liability clause.
b. an exculpatory clause.
c. an illegal clause.
d. a quasi contract.

a

Value Acquisitions, Inc., contracts to buy Wobbling Corporation's assets. Wobbling breaches the contract. Value files a suit against Wobbling, seeking various remedies. The doctrine of election of remedies has been eliminated in contracts involving sales of

a. goods.
b. intellectual property.
c. real property.
d. services.

a

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

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.

d

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

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.

d

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