Boston College

BUL 2222

Chapter 20-BREACH OF CONTRACT AND REMEDIES

TRUE/FALSE

1)When one party breaks the contract, the contract is said to be breached.

 

                                

 

2. When a party expressly declares that performance on a contract will not be made when required, such a declaration is called an anticipatory repudiation.

 

                                

 

3. An anticipatory repudiation must be clear, absolute, and unequivocal.

 

                                

 

4. A waiver of a breach may be either express or implied.

 

                                

 

5. If there is a breach of contract, the law requires that the other party terminate the contract and bring a lawsuit.

 

                                

 

6. Whether there has been a waiver is a question of law for the court to determine.

 

                                

 

7. When a party waives compliance with one provision of a contract, the other party may thereafter ignore other provisions of that contract.

 

                                

 

8. Repeated breaches and waivers may be construed as a modification of the contract.

 

                                

 

9. An acceptance with a reservation of right must be in writing.

 

                                

 

10. A party injured by the other party's anticipatory repudiation of a contract has the right to bring suit at the time of the repudiation, and before the date on which that performance is due.

 

                                

 

11. Damages recoverable in a breach-of-contract action are designed to place the injured party in the same position that would have been attained if the contract had been performed.

 

                                

 

12. Damages representing annoyance ordinarily may not be recovered in a breach-of- contract action.

 

                                

 

13. The normal remedy for breach of contract where the plaintiff has suffered a loss is compensatory damages.

 

                                

 

14. An injured party that does not suffer an actual loss from the breach of a contract is entitled to nominal damages.

 

                                

 

15. For damages to be recovered for breach of contract, the exact amount of the loss must be established with mathematical certainty.

 

                                

 

16. Punitive damages generally are recoverable in contract actions.

                                

 

17. Consequential damages are those that necessarily flow from the breach.

 

                                

 

18. Consequential damages may not be recovered, even if they were within the contemplation of the parties at the time of contracting.

 

                                

 

19. Only direct losses from a breach of contract may be recovered by an injured party.

 

                                

 

20. If one party to a contract breaks the contract, the other party generally is under the duty to stop any further performance to avoid sustaining greater damages.

 

                                

 

21. A party must mitigate damages at all costs.

 

                                

 

22. Whenever one is injured by a breach of contract, the injured party may rescind the contract.

 

                                

 

23. A rescinding party must restore the other party to that party's original position.

 

                                

 

24. A party that rescinds a contract without proper grounds for rescission is liable for damages for breach of the contract.

 

                                

 

25. When the plaintiff seeks the remedy of specific performance, the plaintiff wants the other party to carry out the terms of the contract and not pay damages.

 

                                

 

26. If monetary damages would be an adequate remedy, then an action for specific performance would be appropriate.

 

                                

 

27. When the contract requires that both parties submit disputes to arbitration, this is an example of a limitation-of-remedies clause.

 

                                

 

28. Contract provisions that limit the remedies of the parties generally are unenforceable.

 

                                

 

29. If a plaintiff's loss involves damaged property, it is described as liquidated damages.

 

                                

 

30. There is a trend to limit the effectiveness of exculpatory provisions.

 

                                

 

MULTIPLE CHOICE

 

1. The failure to act or perform in the manner called for by a contract is a:

a.	waiver.
b.	breach.
c.	forbearance.
d.	reservation of right.

                                

2. When a party expressly declares that performance will not be made when required, this declaration is a(n):

a.	anticipatory repudiation.
b.	injunction.
c.	negotiating technique.
d.	waiver of breach.

                                

 

3. A landlord who continuously accepts late rental payments without collecting the late fee provided in the lease:

a.	waives the late fee.
b.	will collect the late fee at a later date.
c.	is ignorant of the late fee.
d.	allows the tenant to repudiate the lease.

                                

 

4. One party to a contract permitting the other party to continue performance without objecting that the performance is unsatisfactory is an example of a(n):

a.	waiver.
b.	breach.
c.	anticipatory repudiation.
d.	forbearance.

                                

 

5. Repeated breaches and waivers generally are interpreted to indicate:

a.	poor business practice.
b.	illegal behavior.
c.	ignorance of the law.
d.	modification of contract.

                                

 

6. A contractual provision which states that a waiver of rights will not constitute a modification to the contract is:

a.	not enforceable as being in bad faith.
b.	not enforceable as a violation of law.
c.	enforceable by one party only.
d.	enforceable.

                                

 

7. If a seller delivers defective goods, the buyer does not lose the right to object to the breach of contract if the buyer:

a.	accepts the goods.
b.	accepts the goods with a reservation of right.
c.	agrees to a modification of the contract.
d.	accepts the performance without protest.

                                

 

8. When one party has broken a contract, there are several remedies, which include:

a.	bringing an action for damages.
b.	rescinding the contract.
c.	seeking specific performance.
d.	all of the above.

                                

 

9. When an anticipatory repudiation of a contract occurs, the aggrieved person's option(s) include:

a.	do nothing and wait for performance per the contract.
b.	immediately declare breach of contract.
c.	consider the contract canceled.
d.	all of the above.

                                

 

10. If a plaintiff seeking damages from a breach-of-contract action were to receive $1 in damages, the damages would most likely be classified as:

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

                                

 

11. Damages in excess of actual loss are called:

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

                                

 

12. The damages that are typically recoverable when a contract has been breached and one party has suffered loss are called:

a.	punitive damages.
b.	damages for annoyance and mental upset.
c.	compensatory damages.
d.	liquidated damages.

                                

 

13. The party that breaks a contract may be required to pay damages to the other party to compensate for:

a.	losses that could have been avoided by hiring someone else to perform the contract.
b.	emotional disturbance caused by the breach.
c.	a heart attack induced by the emotional disturbance caused by the breach.
d.	damages resulting necessarily and directly from the breach of the contract.

                                

 

14. Consequential damages may be recovered if:

a.	the damages were not a foreseeable consequence of the breach.
b.	the damages reasonably follow the breach.
c.	the breach did not cause the damages.
d.	the loss exceeds $500.

                                

 

15. The rule of mitigation of damages requires that a party injured by a breach of contract

must:

a.	take any and all steps possible to reduce the damages that will be sustained because of the breach.
b.	discharge the contract before filing suit for breach.
c.	hire someone else to perform the contract.
d.	take reasonable steps to reduce the damages that would otherwise be sustained because of the breach.

                                

 

16. Failure to mitigate damages limits recovery to:

a.	damages for direct loss.
b.	nominal damages.
c.	damages for consequential loss.
d.	exemplary damages.

                                

 

17. Which is not a correct statement concerning rescission of a contract?

a.	The breach must be material.
b.	The injured party who rescinds may recover money paid under the contract.
c.	The contract remains in effect after the rescission.
d.	Rescission is the undoing of the contract.

                                

 

18. The remedy of specific performance will most likely be granted in the case of a(n):

a.	employment contract.
b.	contract to buy shares of stock traded publicly.
c.	contract for the sale of a business.
d.	contract for the sale of Florida oranges.

                                

 

19. Which is not a correct statement concerning the remedy of specific performance?

a.	The subject matter of the contract generally must be unique.
b.	An award of monetary damages would be an inadequate remedy.
c.	The granting of specific performance is discretionary with the court.
d.	It generally is available in all breach-of-contract cases.

                                

 

20. An action for injunctive relief may be granted:

a.	if money is due and payable.
b.	if the breach consists of doing a prohibited act.
c.	if the breach consists of a violation of criminal law.
d.	if the breach would cause consequential damages.

                                

 

21. Damages to be paid in case of default that are specified in a contract are called:

a.	nominal damages.
b.	contract damages.
c.	liquidated damages.
d.	breach payments.

                                

 

22. Which is not a correct statement concerning liquidated-damages clauses?

a.	Where the clause is valid, the injured party can collect no more than the amount specified.
b.	Where the clause is valid, the injured party has the choice of choosing compensatory damages or liquidated damages.
c.	The amount of liquidated damages must not be excessive.
d.	Liquidated damages are set by the parties in the contract.

                                

 

23. If a liquidated-damages clause demands an unusually large sum that is not related to any true anticipated actual damages, the clause will be held to be void as a(n):

a.	penalty.
b.	unliquidated damages clause.
c.	punishment.
d.	both a and c.

                                

 

24. A contract provision that limits the liability of one of the parties in the event of breach is called a(n):

a.	liquidated-damages clause.
b.	exculpatory clause.
c.	waiver.
d.	exemplary clause.

                                

 

25. Between experienced businesspersons, exculpatory clauses usually are:

a.	voidable.
b.	void.
c.	valid.
d.	unenforceable.

                                

 

CASE

 

1. Cyril made two contracts. The first was to have his house painted one month from the

date of the written contract. The second was for his neighbor's 1991 automobile. Each contract was definite and clear in all respects. As to the house painting, Cyril inquired with the painter as to when the work could be begun. The painter explained that he was extremely busy and was not sure if he could fulfill the contract. Cyril flew into a rage and immediately hired someone else who painted but at a higher price. Cyril then sued the painter claiming that there was an anticipatory repudiation of the contract by the painter.

 

After signing the contract, the neighbor decided that she did not wish to sell her car and refused to complete the transaction. Cyril attempted to purchase a similar car elsewhere, but the car was a vintage automobile which was not available on the open market. Cyril sued the neighbor for specific performance of the contract. Discuss the probable outcomes of the lawsuits.