Remedies

Question 1

True/False: Injunctions are commonly used by courts to force employees to complete their contractual obligations with their employers.

Answer 1

False

Question 2

True/False: Expectation interest can best be described as money spent in reliance upon the agreement.

Answer 2

False

Question 3

True/False: Damages must be established with reasonable certainty.

Answer 3

True

Question 4

True/False: Dr. Gonzalez ordered specialized surgical equipment from Physician’s Supply Co., but his order was not delivered by the agreed date. Gonzalez is under no obligation to minimize damages since the contract was breached by Physician’s Supply, not Gonzalez.

Answer 4

False

Question 5

True/False: The Milicic v. Basketball Marketing Company, Inc. case illustrated the proper use of a preliminary injunction.

Answer 5

True

Question 6

True/False: Liquidated damages are awarded to parties who have experienced an injury to their legal rights but have no actual loss.

Answer 6

False

Question 7

True/False: Lucky, a contractor, enters into a contract with Penny, a homeowner, to remodel her kitchen. The contract provides a specific completion date. The contract provides that if Lucky does not have the job finished by the date, Penny may deduct $100 per day from the contract price until the job is finished. This is an example of liquidated damages.

Answer 7

True

Question 8

True/False: Ernest operates an ice cream stand during the months of May, June, July, and August. Ernest’s ice cream machine is broken and needs a new part to run. He contracts to have the part shipped to him by special carrier. Ernest emphasizes that the part needs to be delivered by April 25 or he will not be able to be open on May 1 as he has advertised. If the shipper fails to deliver the part on April 25, Ernest will be able to recover consequential damages caused by the delay.

Answer 8

True

Question 9

True/False: Most courts hold that a seller of goods is not entitled to consequential damages.

Answer 9

True

Question 10

True/False: Tess, a tenant, moves from her apartment in breach of the lease agreement. The landlord, Lenny, has no duty to mitigate his damages by attempting to rent the apartment.

Answer 10

False

Question 11

True/False: Specific performance is available when the subject matter of the contract is unique.

Answer 11

True

Question 12

True/False: Under the UCC, the buyer is entitled to consequential damages if the seller could have reasonably foreseen them.

Answer 12

True

Question 13

True/False: Nominal damages are awarded in contract cases in which a damage amount was named in the contract.

Answer 13

False

Question 14

True/False: Banner enters into a contract with Sylvia to buy her house for $150,000. Sylvia decides later not to sell because she is so emotionally attached to the house. Banner insists that he is entitled to the house. Banner can successfully sue for specific performance.

Answer 14

True

Question 15

True/False: Oliver contracts with Carpet Village for replacement carpeting throughout his house. The total contract price is $15,000. Carpet Village’s anticipated profit on the job is $7500. If Oliver breaches the contract before Carpet Village has begun work on the job and has not incurred any expenses, then its damages will be $7500.

Answer 15

True

Question 16

Specific performance may be available for the breach of a contract to sell:

Answer 16

an original painting.

Question 17

Mulligan Domestics Co. breached a contract by refusing to accept its order for 60 bolts of fabric from Wellington Mills, although the fabric met the contract specifications. Wellington:

Answer 17

may choose not to resell the fabric and settle for the difference between the contract price and the market value.

Question 18

A contract clause which specifies the amount of damages to be paid in the event of a breach is called:

Answer 18

a liquidated damages clause.

Question 19

The concept that an injured party may recover consequential damages only if the breaching party should have foreseen them was established in:

Answer 19

Hadley v. Baxendale.

Question 20

Costs to rent a vehicle for a short period of time after an auto dealer fails to deliver a purchased vehicle would be:

Answer 20

incidental damages.

Question 21

The first step a court takes in choosing a remedy is to determine:

Answer 21

what interest it is trying to protect.

Question 22

In a promissory estoppel case, a court will generally award:

Answer 22

only reliance damages.

Question 23

Generally, reasonable liquidated damage clauses will be enforced:

Answer 23

when actual damages are difficult to determine.

Question 24

Under the UCC, if a seller of goods breaches the contract, the buyer:

Answer 24

may “cover” and then receive the difference between the original contract price and the “cover” price.

Question 25

The remedy of reformation:

Answer 25

can be used to correct mistakes in the original contract

Question 26

Mercury Motors inadvertently mixes up a work order on Peter’s car. Peter brought the car in to have the tires rotated. Mercury tuned up the motor by mistake, conferring a benefit on Peter. If Mercury Motors insists that Peter pay for the price of the tune-up, Mercury Motors:

Answer 26

cannot recover its expectation interest because there was no enforceable agreement.

Question 27

In breach of the partnership agreement, Trimble, a partner in the partnership of Morris, Newt, and Oppie, Ltd. quits the partnership and goes to work for a competitor. The former partners may ask the court for:

Answer 27

an injunction to prevent Trimble from working in competition with the former partners.

Question 28

All Seasons, Inc. ordered $5,000 worth of Christmas decorations from Santa, Inc. The shipment of decorations was to arrive no later than October 1, in time for the Christmas season. The shipment did not arrive until December 1. In spite of the delay, All Seasons covered a third of the order through other suppliers, but had to pay 15% more than the price under contract with Santa, Inc. As a further result of the delay, All Seasons’ sales were down 25%. All Seasons can recover:

Answer 28

compensatory damages and consequential damages.

Question 29

Solomon breaches his contract with Neal to purchase the 500 pairs of socks he had promised to buy. Neal is able to sell the 500 pairs to Renny for a much lower amount. Neal then sues Solomon for damages. Neal will be able to recover:

Answer 29

the difference between Solomon’s contract price and the amount paid by Renny.

Question 30

Bob, a house builder, contracts with Ollie to build a house on Ollie’s lot. The total price of the construction is $100,000, $20,000 of which will be Bob’s profit. After Bob has put $10,000 worth of materials into the house, Ollie wrongfully refuses to let him finish the house. If Bob sues for damages, he will be able to collect:

Answer 30

$30,000.

Question 31

Which of the following statements is incorrect concerning liquidated damages?

Answer 31

Liquidated damages are enforceable even if the amount is considered to be a penalty on the breaching party.

Question 32

Ralph is a professional football player. He signs a valid contract with the Jets. Later, the Giants offer him more money, so he signs a contract with them. If the Jets sue Ralph, the most likely result would be?

Answer 32

The court will enjoin Ralph from playing with any team other than the Jets.

Question 33

Which of the following is an example of incidental damages you might be awarded if you are wrongfully terminated from your job?

Answer 33

The costs of mailing resumes to prospective employers.

Question 34

If a court orders rescission and restitution of a contract under which Nala sold a baseball card to Shirley in exchange for $450:

Answer 34

Both a and b.

Question 35

Rich and Archie sign an agreement in which Archie agrees to deliver ten cases of champagne in 5 days. The parties negotiated and meant to say in the written agreement, delivery in 50 days. If the two cannot settle this dispute, and Archie still wants to deliver the champagne, then Archie should sue for the remedy of:

Answer 35

reformation.

Question 36

Reformation is:

Answer 36

an equitable remedy.

Question 37

Fred purchased a Cheapp Lawnmower because the Cheapp Company salesperson intentionally misled him by assuring him that the mower was self-propelled, mulched, and had a five-year unlimited manufacturer’s warranty. When Fred finds out that his new Cheapp Lawnmower is not self-propelled, does not mulch, and has a 90-day warranty, he may successfully sue for:

Answer 37

restitution and possibly punitive damages.

Question 38

Farmer Elvin is holding 200 pounds of potatoes in storage for Chef Noble but Chef Noble has breached the contract by failing to pay for the potatoes. The potatoes are beginning to rot. If Farmer Elvin sells the potatoes to a local diner to make potato soup and salad, then this action would be considered:

Answer 38

a reasonable mitigation of damages.

Question 39

If a court awards nominal damages it will generally:

Answer 39

award very little money.

Question 40

Compensatory damages are typically assessed against the breaching party:

Answer 40

to put the non-breaching party in the position it would have been in if the contract hadn’t been breached.