Business Law- Chapter 16

Question 1

Breach of Contract

Answer 1

A contracting party’s failure to perform an absolute duty owed under a contract.

Question 2

Complete Performance

Answer 2

A situation in which a party to a contract renders performance exactly as required by the contract. Complete performance discharges that party’s obligations under the contract.

Question 3

Tender of Performance

Answer 3

An unconditional and absolute offer by a contracting party to perform his or her obligations under a contract.

Question 4

Substantial Performance

Answer 4

Performance by a contracting party that deviates only slightly from complete performance.

Question 5

Minor Breach

Answer 5

A breach that occurs when a party renders substantial performance of her contractual duties.

Question 6

Material Breach

Answer 6

A breach that occurs when a party renders inferior performance of his contractual duties.

Question 7

Inferior Performance

Answer 7

A situation in which a party fails to perform express or implied contractual obligations and impairs or destroy the essence of a contract.

Question 8

Anticipatory Breach

Answer 8

A breach that occurs when one contracting party informs the other that she will not perform the other her contractual duties when done.

Question 9

Monetary Damages

Answer 9

An award of Money

Question 10

Compensatory Damages

Answer 10

An award of money intended to compensate a non-breaching party for the loss of the bargain. Compensatory damages place the non breaching party in the same position as if the contract had been fully performed by restoring the “benefit of the bargain”.

Question 11

Mitigation

Answer 11

A non-breaching party’s legal duty to avoid to reduce damages caused by a breach of contract.

Question 12

Consequential Damages

Answer 12

Foreseeable damages that arise from circumstances outside a contract. To be liable for these damages, the breaching party must know or have reason to know that the breach will cause special damages to the other party.

Question 13

Liquidated Damages

Answer 13

Damages that parties to a contract agree in advance should be paid if the contract is breached.

Question 14

Nominal Damages

Answer 14

Damages awarded when the non-breaching party sues the breaching party even though no financial loss has resulted from the breach. Nominal damages are usually $1 or some other small amount.

Question 15

Writ of Attachment

Answer 15

An order of the court that enables a government officer to seize property of the breaching party and sell it at auction to satisfy a judgment.

Question 16

Writ of Garnishment

Answer 16

An order of the court that orders that wages, bank accounts, or other property of the breaching party held by third persons be paid to the non-breaching party to satisfy a judgement.

Question 17

Rescission

Answer 17

An action to rescind a contract. Rescission is available if there has been a material breach of contract, fraud, duress, undue influence, or mistake.

Question 18

Restitution

Answer 18

The return of goods or property received from the other party to rescind a contract. If the actual goods or property are not available, a cash equivalent must be made.

Question 19

Specific Performance

Answer 19

A remedy that orders the breaching party to perform the acts promised in the contract. Specific performance is usually awarded in cases in which the subject matter is unique, such as in contracts involving land, heirlooms, and paintings.

Question 20

Reformation

Answer 20

An equitable doctrine that permits the court to rewrite a contract to express the parties’ true intentions.

Question 21

Injunction

Answer 21

A court order that prohibits a person from doing a certain act.

Question 22

Intentional Interference with Contractual Relations

Answer 22

A tort that arises when a third party induces a contracting party to breach the contract with another party.

Question 23

Covenant of Good Faith and Fair Dealing

Answer 23

An implied covenant under which the parties to a contract not only are held to the express terms of the contract but are also required to act in “good faith” and deal fairly in all respects in obtaining the objective of the contract.