Chapter 19 Quiz

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Question #1

Sometimes, when a buyer breaches a contract for a sale of goods and the seller has not yet produced the goods, the seller can recover the lost profits.

A FALSE

B TRUE

Question #2

A liquidated damages provision specifies an amount to be paid in the event of a future default or breach of contract to make the innocent party whole.

A TRUE

B FALSE

Question #3

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

A nothing.

B the contract price.

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

D the costs needed to complete construction.

Question #4

The breach of a contract for a sale of goods qualifies for specific performance only when substantially identical goods can be bought or sold in the market.

A FALSE

B TRUE

Question #5

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.

A TRUE

B FALSE

Question #6

In contract law, damages compensate for harm suffered as a result of another’s wrongful act, not for the loss of a bargain.

A FALSE

B TRUE

Question #7

Erma enters into a contract to buy a tract of lakefront property from Forest Acres to build and sell a residential development. Forest Acres fails to close the sale. Erma’s remedy is most likely

A the difference between the contract and market prices of the land.

B the amount that Erma invested in the project to the date of the closing.

C specific performance.

D nothing—Forest Acres still owns the land.

Question #8

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.

A FALSE

B TRUE

Question #9

Max orally agrees to construct two outbuildings on Ned’s ranch for a stated price. Max performs, but Ned does not pay. To recover on a theory of quasi contract, Max must show that if Ned were allowed to retain the benefit of their bargain, Ned would

A be unjustly enriched.

B be restored to the status quo.

C profit from Max’s performance.

D obtain a reasonable exchange of values.

Question #10

Ochre holds one ton of perishable fruit in storage for Produce Corporation. If Produce does not pay for the storage, under the doctrine of mitigation of damages, Ochre is held to a duty to

A continue to store the fruit until Produce pays.

B do whatever is reasonable to minimize the damages.

C dispose of the fruit immediately.

D set an example to deter similar misconduct in the future.

Question #11

Steel Mill Inc. agrees to deliver a certain quantity of steel to T-Bar Framing Corporation. The agreement states that delivery is to be within “9” days, although the parties intend “90” days. The seller cannot convince the buyer to amend the contract. The most appropriate remedy is most likely

A a quasi contract.

B specific performance.

C reformation.

D rescission.

Question #12

If the Statute of Frauds bars the enforcement of an oral contract, a court will not impose a quasi contract regardless of the other circumstances.

A TRUE

B FALSE

Question #13

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

A sell the premises to recover any damages.

B avoid reletting the premises for six months to recover damages.

C relet the premises to recover any damages.

D use reasonable means to find a new tenant.

Question #14

Expenses incurred because of a breach of contract to obtain performance from another source are not recoverable in a suit for breach.

A TRUE

B FALSE

Question #15

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

A if the parties have equal bargaining power.

B because the parties consented to it.

C under none of the choices.

D because the parties are protected from liability.

Question #16

When no actual damage or loss results from a breach of contract and only a technical injury is involved, the innocent party can recover no damages.

A FALSE

B TRUE

Question #17

In most states, a person whose employment is wrongfully terminated has no duty to take a similar job if one is available.

A FALSE

B TRUE

Question #18

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.

A TRUE

B FALSE

Question #19

When both an owner and a contractor breach a construction contract, a court will attempt to strike a fair balance in awarding damages.

A TRUE

B FALSE

Question #20

The remedy available when a court imposes a quasi contract is the recovery of the reasonable value of a benefit conferred or detriment suffered.

A TRUE

B FALSE

Question #21

Restore Inc. contracts to resurface the pools at Swim Park by June 1. Restore knows that if performance is not timely, Swim Park will have to delay its seasonal opening. Restore finishes the job June 15. In a suit for breach, Swim Park can recover

A the loss of profit from the delayed opening.

B nothing—the work is done.

C the difference between the contract and market prices for the work.

D the cost of new pools.

Question #22

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

A FALSE

B TRUE

Question #23

To induce the sale of an auto parts business, Carmel fraudulently represents the worth of the inventory to Drew, who offers an inflated price. They enter into a contract to close the deal. On closer inspection, the buyer learns the true value of the goods. Drew can

A force the seller to accept a more reasonable price.

B none of the choices.

C impose a penalty on the seller.

D rescind the contract.

Question #24

Liquidated damages provisions normally are unenforceable.

A FALSE

B TRUE

Question #25

The failure of one party to perform under a contract entitles the other party to rescind the contract.

A FALSE

B TRUE

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