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T/F? An insurance policy is an example of a right that can be assigned.


T/F? 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.


T/F? A party seeking to recover compensatory damages cannot also recover incidental damages.


T/F? Expenses that are caused directly by a breach of contract¾such as those incurred to obtain performance from another source¾are compensatory damages.


T/F? A party seeking to recover in quasi contract must show that there was an actual contract or agreement between the parties.


T/F? A life insurance contract involves an intended beneficiary.


T/F? A contract may include a clause stating that no damages can be recovered for a certain type of breach.


T/F? An incidental beneficiary can sue directly to enforce a promisor's promise.


T/F? Performance can be accomplished by tender.


T/F? Ordinarily, the remedy for a seller's breach of a contract for a sale of real estate is 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


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

the difference between the wages and the two jobs plus $100

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


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 penalty clause

Ralph contracts to sell his Double-R Ranch to Samantha on May 1. On April 20, Ralph tells Samantha that he will not go through with the deal. Samantha can recover

the Double-R Ranch

Valley View Farms enters into a contract to sell Sarah's Corner Shop a truckload of eggs from free-range chickens. If Valley View fails to deliver the eggs, Sarah's

does not have to pay for the eggs and can sue Valley View for breach

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

nominal damages

Richly Merchandise, Inc., contracts with Stand-Rite Contractors to build a store. Stand-Rite assigns the contract to Town Builders, which has a poor record of completing projects. Richly could most successfully argue that the contract cannot be assigned because

the assignment will materially increase the risk of nonperformance

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


Phil enters into a contract to hire Bob's Building Business to build a warehouse for Phil. The contract specifies that the warehouse should be built with HighQual Bricks. When construction starts, HighQual Bricks cannot provide enough bricks for the warehouse. Bob's Building Business substitutes Big Red Bricks, which are comparable in quality and price to HighQual Bricks. This deviation from the contract

has no effect on the contract

T/F? A party is entitled to cancel a contract based on the other party's material breach.


T/F? A breach of contract entitles the nonbreaching party to sue for monetary damages.


T/F? Objective impossibility discharges a contract.


T/F? A liquidated damages provision specifies that a certain amount to be paid in the event of a future default or breach of contract.


T/F? A right can be assigned even if the assignment will significantly alter the risks or duties of the obligor.


T/F? Only personal contracts can be discharged by agreement of the parties.


T/F? 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.


T/F? Whether a contract's limitation-of-liability clause will be enforced depends on the type of breach that the clause excuses.


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

provide Dobry with funds for a foreseeable loss beyond the contract

Tristan promises to paint Katy's house in exchange for Lila's promise to plant trees on Tristan's property. This is

a third party beneficiary contract

Juan and Isidro enter into a contract to buy, restore, and reopen the Coastal Park Carousel. Before either party begins to perform, they agree to cancel their deal. This is

mutual recission

Red's Plumbing Service substantially performs its contract with Shady Grove Condominiums, Inc. Shady Grove is entitled to


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

not enforceable

Leonardo contracts to install automatic watering troughs in Kendall's dairy barn. Leonardo then becomes seriously ill and contracts with Jake to install the troughs. Jake is unreliable and never shows up to install the troughs. Kendall can sue

Jake or Leonardo

Pat, a world famous musician and composer, agrees to give ten piano lessons to Quinn in exchange for $1,000. Pat's attempt to delegate his contract to Ruth, an inexperienced pianist, will probably be

prohibited because Pat and Ruth have very different skill levels

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


T/F? Liquidated damages provisions are usually not enforceable.


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


T/F? The measure of damages for the breach of a contract for a sale of land depends on which party breaches and when.


T/F? A transfer of contract duties to a third party is an assignment.


T/F? The measurement of compensatory damages for breach of contract is the same for all types of contracts.


T/F? An assignment of rights in real estate often cannot be prohibited.


Cooper's Brakes, Inc., enters into a contract with Byron's Service to fix Cooper's hydraulic equipment. Byron delays the repair for three days, but is not aware that Cooper loses a certain percentage of profit each day the equipment is out of service. Cooper is most likely to be awarded

consequential damages

Will owes Jenny $1,000. Brad owes Will $1,000. Will unconditionally assigns his rights to Jenny. Will's right to the $1,000 is then


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

Lou must return the $50 and Mira must return the player

Marco and Fred enter into a contract for the sale of Marco's apartment for which Fred agrees to pay him $100,000. Marco cannot prohibit Fred from transferring his right to the ownership of the apartment because such a prohibition is

against public policy

Dondi contracts to buy a custom espresso maker from Caffee Specialties, Inc., for $4,500, but Caffee fails to deliver. Dondi buys the appliance elsewhere for $5,500. Dondi's measure of damages is

$1,000 plus incidental damages

App Developers, Inc. (ADI), enters into a contract with Carmen, the chief executive officer of SalesCorp, to create an app for the firm. To fulfill the contract, ADI hires Max and ten other student interns. With respect to the contract, Max is

an incidental beneficiary

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


Stephanie's sale of rights she has under a contract with Runway Retail, Inc., to buy the retailer's clothing overstock is

An assignment

SealCoat Paving enters into a contract with Royal Golf & Tennis Club to provide surface material for Royal'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 reasonable estimate of the loss on a breach.

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

the costs needed to complete construction.

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

sue Even-Flo for damages.

Restitution involves one party's recapture of a benefit through which another party has been unjustly enriched.


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

provide Hybrid with funds for its loss of the bargain.

A breach of contract occurs only when a party fails to perform all of his or her duties under a contract.


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

a limitation of liability clause

As long as a contract is personal in nature, all rights under the contract can be assigned.


It is legally necessary to notify the obligor of any assignment of rights to a third party.


Sonny agrees to buy a unique collection of Olympics memorabilia for $7,000 from Jana and sends $1,500 as a down payment. When Sonny sends Jana the rest of the price, she refuses to ship the collection. Sonny should seek

specific performance

Clutch Auto Parts enters into a contract with Bio Health Club for discounted memberships for Clutch's employees. Bio breaches the contract and Clutch enters into a contract with Apex Fitness for the same service at a lower price. Clutch might be awarded nominal damages to

establish, as a matter of principle, that Bio acted wrongfully.

Lily is a farmer. When bad weather destroys her crop, her obligation to deliver it under an outstanding contract with Macro Food Corporation is


Dylan enters into a contract to manage the operations of Cash's accounting office for one year, renewable for subsequent one-year terms. If this contract is discharged like most contracts, it will be


A material breach occurs when performance is substantial, but not complete.


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

profits plus the costs incurred up to the time of the breach.

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


Compensatory damages compensate an injured party for damages arising from the loss of a bargain caused by a breach of contract.


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