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Exam 19: Breachapter of Contract and Remedies

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Question 1

True/False

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Special damages that compensate for a loss caused by circumstances beyond the contract itself are incidental damages .

A) True
B) False

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Question 2

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A contract between Speculative Investment Company and Trusts & Bonds Inc. excludes liability as a result of fraud. This exclusion is enforceable

A) because the parties are protected from liability.
B) because the parties consented to it.
C) if the parties have equal bargaining power.
D) under none of the choices.

E) B) and C)
F) None of the above

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Question 3

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A contract clause that excludes liability for willful misconduct is enforceable if the provision is sufficiently prominent in the body of the contract.

Copper Wire Inc. and Direct Electric LLC 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

Len contracts to work for Media Corporation during May for $4,500. On April 30, Media cancels the contract. Len declines a similar job with New Ads Inc., which would have paid $3,500. Len files a suit against Media. As compensatory damages, Len can recover

When a seller breaches a contract for a sale of goods, knowing the buyer plans to resell the goods, the buyer can recover the lost profits from the planned resale.

When a contract mistakenly specifies a crane instead of a forklift, a court could reform the contract to reflect the parties' original intent as to the equipment.

Home Furnishing Store's contract for a sale of its appliances provides that the only remedy for breach is replacement, repair, or refund of the purchase price. With respect to this provision, on a customer's suit for breach, a court is most likely to

Dwelling Inc. enters into a contract with Estate Management to manage and maintain Dwelling's apartment complex. Their contract contains a clause that limits Estate's liability except in cases of gross negligence or willful misconduct. With respect to this clause, a court would most likely

Sparkle Jewelers breaches its lease with Town Mall and vacates the premises six months before the end of the term. In some states, the mall would be required to

Food Court Inc. leases space to Gourmet Café. Gourmet abandons the premises when the amount of the rent due on the lease is $5,000. Food finds a new tenant, Hasty Bowls, which agrees to pay $3,500 for the space over the remainder of Gourmet's term. Food's measure of damages is

Permian Oil Corporation ships its only pump to Quality Repair Inc. for repair. Permian hires Route Shipping Inc. to take the pump to Quality and to return it as soon as the repair is complete. Permian is forced to suspend operations without the pump, but Route does not know this. Permian expects to be without the pump for five days and to lose profits of $50,000. When Route does not return the pump by the end of the fifth day, Permian rents a substitute at a cost of $1,000 per day. Route delays five more days before returning the pump. Permian files a suit against the shipping company, asking for compensatory, consequential, and punitive damages. Will Permian recover?

When a breach is material and willful, an innocent party seeking to rescind it must show that the contracting parties cannot be restored to the status quo.

Restitution may be available in a situation in which damages cannot be proved or are difficult to prove.

The terms of a contract must be sufficiently definite for a court to determine the amount of damages to award.

Concrete Company agrees to lay a foundation for Diamond Properties, but fails to finish the job. Diamond hires Earth Projects Inc. to complete the work. In a suit for breach, Diamond may recover from Concrete

City Nurses College loses its accreditation. As a consequence, City students can still obtain a state nurse's license, but their earning capacity is impaired. In a suit against the school for breach, the students are most likely to recover

In most situations, when a breach of contract occurs, the injured party is held to a duty to mitigate, or reduce, the damages that he or she suffers.

Reese contracts to sell a Saucy Pizza restaurant to Titian. As part of the deal, Reese agrees not to open a competing business within a hundred-mile radius for ten years. Reese later sues Titian, alleging that the agreement is illegal. To enforce the covenant not to compete, the court will most likely

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