REVIEW QUESTIONS TRUE/FALSE QUESTIONS (CIRCLE THE CORRECT ANSWER) 1. T F The nonbreaching party is entitled to a remedy for the breach of an enforceable contract. 2. T F A remedy for breach of contract may involve expectation, reliance, or restitution interests. 3. T F Courts give the breaching party what he or she expected to receive when an expectation interest is being protected. 4. T F Courts require the nonbreaching party to give what he or she expected to give when an expectation interest is being protected. 5. T F The reliance interest concerns the nonbreaching party s expectations. 6. T F What the nonbreaching party expected to receive and expected to give must be considered when computing damages based on the reliance interest. 7. T F The restitution interest is not concerned with what the nonbreaching party expected to receive and expected to give. 8. T F The restitution interest is concerned with what the nonbreaching party gave or received in reliance on the breaching party s promise. 9. T F The restitution interest is concerned with the benefit that the nonbreaching party conferred on the breaching party and what the nonbreaching party received for conferring that benefit. 10. T F The restitution remedy measures damages by considering the reasonable value of the benefit conferred to the breaching party. 11. T F When the expectation interest is protected, the nonbreaching party will be placed in the position he or she would have been in had the contract been fully performed according to its terms. 12. T F Damages for breach of contract include incidental damages. 13. T F Damages for breach of contract include punitive damages. 14. T F The intentions of the breaching party are relevant when computing damages for breach of contract. 15. T F Intentional and unintentional breaches yield the same measure of expectation damages. 16. T F A contracting party will never find that breaching a contract will be in his or her best economic interest. 17. T F The breaching party is held up to the public as an example of what might happen to a party who breaches.
18. T F Determining what will place the injured party in the position he or she would have been in had the contract been fully performed often is not achievable with mathematical precision. 19. T F Damages for breach of contract are limited to those that the breaching party could reasonably foresee, when the contract was made, as a probable result of breach. 20. T F Only general damages are foreseeable. 21. T F General damages arise naturally while special damages do not. 22. T F Damages for pain and suffering or for emotional distress are never available in a breach of contract action. 23. T F Damages that are speculative and incapable of being ascertained with reasonable certainty are not recoverable for breach of contract. 24. T F The nonbreaching party has a duty to mitigate the damages in the event of a breach. 25. T F Although the nonbreaching party is required by the doctrine of mitigation to prevent increasing damages, he or she is not required to decrease the damages the breaching party must pay. 26. T F A nonbreaching party who establishes a breach of contract but is unable to prove damages is entitled to nominal damages. 27. T F A judgment for nominal damages compensates the nonbreaching party in dollars. 28. T F A judgment for nominal damages clarifies the rights and duties of the parties and may include an award of court costs. 29. T F An injunction is a court order directing the breaching party to refrain from a specified act and is designed to prevent future injuries to the nonbreaching party. 30. T F Specific performance is available to a nonbreaching party who prefers it as compensation for his or her injury rather than accepting damages. 31. T F Specific performance may be available in a contract for the sale of real property if the property is unique. 32. T F Specific performance is not available when the breach is a failure to pay money. 33. T F Specific performance is available in personal service contracts if the service is unique. 34. T F The nonbreaching employer in an employment contract may not be entitled to damages even though he or she has found a substitute employee. 35. T F Liquidated damages are those imposed on the parties by the court. 36. T F Parties to a contract may agree upon what damages will be in the event of a breach and incorporate this agreement in a provision known as a liquidated damage clause.
37. T F All contract provisions that purport to be liquidated damage clauses are enforceable. 38. T F Liquidated damage clauses that are classified by the court as penalties are unenforceable. 39. T F Parties to a contract may not include a provision regarding who will pay costs if litigation ensues. 40. T F Most courts will allocate costs to the losing party in a contractual dispute in which the contract does not include a provision for costs. 41. T F Costs in a breach of contract case usually include attorney fees. 42. T F Attorney fees may not be allocated by contract. 43. T F A nonbreaching party may choose between a breach of contract action and a restitution action. 44. T F A restitution action is the same thing as a restitution remedy for a breach of contract action. FILL-IN-THE-BLANK QUESTIONS 1.. Damages that place the nonbreaching party in a position he or she would have been in had both parties fully performed according to the terms of the contract. 2.. Damages based on what the nonbreaching party did give and did receive in reliance on the breaching party s promise. 3.. Damages based on the benefit that the nonbreaching party conferred on the breaching party and what the nonbreaching party received for conferring that benefit. 4.. Damages intended to compensate the nonbreaching party for not receiving his or her expectation under the contract. 5.. Damages that the breaching party could reasonably foresee, at the time of the making of the contract, as a probable result of the breach. 6.. Damages that arise naturally, i.e., according to the usual course of things, from such breach of contract itself. 7.. Damages that may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it. 8.. Action that the aggrieved party must take after a breach of contract to limit the damages that will arise due to the breach. 9.. Damages that clarify the rights and duties of the parties but do not compensate the nonbreaching party in dollars. 10.. A court order directing the breaching party to refrain from a specified act.
11.. A remedy whereby a court directs a party to do a specified act. 12.. Damages agreed to by the parties, at the time of contract formation, that will apply to the transaction if a breach occurs. 13.. Expenses incurred in litigation that generally include filing fees, service of process, jury fees, and court officer charges, but not attorney fees. MULTIPLE-CHOICE QUESTIONS (CIRCLE ALL THE CORRECT ANSWERS) 1. Naomi contracted to sell Greenacre to Watson for $1,500,000. Watson paid Naomi $100,000, and Naomi delivered Greenacre. The reasonable value of Greenacre to Naomi was $1,300,000. The Watson refused to pay the balance. In a breach of contract action, Naomi is entitled to recover which of the following amounts? 2. Naomi contracted to sell a Greenacre to Watson for $1,500,000. Watson paid Naomi $100,000 and was to pay an additional $400,000 before Naomi had a duty to deliver Greenacre. Watson never paid the $400,000, so Naomi never delivered Greenacre. The reasonable value of Greenacre to Naomi was $1,300,000. The reasonable value of Greenacre on the open market was $1,600,000. Watson refused to pay the balance. In a breach of contract action, Naomi is entitled to recover which of the following amounts? (b) $1,400,000 (c) $1,300,000 (d) $1,200,000 (e) $ 0 3. Naomi contracted to sell Greenacre to Watson for $1,500,000. Watson paid Naomi $100,000, and Naomi delivered Greenacre. The reasonable value of Greenacre to Naomi was $1,300,000. The Watson refused to pay the balance. If Naomi seeks to protect her reliance interest in a breach of contract action, she is entitled to recover which of the following amounts?
4. Naomi contracted to sell Greenacre to Watson for $1,500,000. Watson paid Naomi $100,000, and Naomi delivered Greenacre. The reasonable value of Greenacre to Naomi was $1,300,000. The The reasonable value of Greenacre to Watson was $1,700,000. Watson refused to pay the balance. If Naomi seeks to protect her restitution interest in a breach of contract action, she is entitled to recover which of the following amounts? 5. Delana contracted to refinish an antique dining room table for Cornelia for $950. After Cornelia made a $200 down payment, Delana refused to work on the table. Cornelia found another furniture restorer to refinish the table, but it cost her $1,500. The restoration increased the value of the table by $2,000. It will cost $1,000 in attorney s fees for Cornelia to successfully maintain her breach of contract action. If Delana sues Cornelia for breach of contract, she could recover which of the following amounts? (a) $2,500 (b) $2,400 (c) $1,750 (d) $ 750 (e) $ 200 SHORT-ANSWER QUESTIONS 1. Complete the expectation damages diagram and discuss. 2. Complete the reliance damages diagram and discuss. 3. Complete the restitution damages diagram and discuss.