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McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 12: Contractual Remedies
a. The plaintiff is entitled to recover both reliance damages and expectation damages.
b. They are available only to the extent that the plaintiff entered into a bad bargain.
c. The plaintiff is entitled to spend the damage award as it chooses.
d. Because contractual promises look to the future, reliance damages are forward-looking.
e. They are intended to allow the plaintiff to complete any work that the defendant did not
perform.
34) Restitution is
a. a cause of action that sometimes is available in a contractual context.
b. a remedy that may require the defendant to give up a benefit that it acquired from a third
party as a result of committing a wrong against the plaintiff.
c. another appropriate name for an account of profits.
d. never able to exceed the value of expectation damages.
e. available as a remedy for unjust enrichment.
35) On May 1, George contractually agreed to purchase a painting from Laura for $50 000.
On that date, George prepaid half of the purchase price and promised to pay the other half
upon delivery. Laura promised to deliver the painting to George on June 1. In anticipation
of receiving the painting, George spent $10 000 building a special display case in his home.
On May 15, the artist who created the painting died and the value of the painting
immediately increased to $75 000. Laura therefore refused to deliver the painting to
George. George is entitled to receive
a. no more than $10 000 as reliance damages.
b. $25 000 in expectation damages.
c. $50 000 in expectation damages.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 12: Contractual Remedies
d. $75 000 in expectation damages.
e. $35 000 in expectation damages.
36) On August 1, Brian contractually agreed to purchase a diamond from Mila for $100
000. On that date, Brian prepaid half of the purchase price and promised to pay the other
half upon delivery. Mila promised to deliver the diamond to Brian on October 1. The
diamond has a unique size and shape. In anticipation of receiving it, Brian spent $25 000 on
a custom-made ring that could accommodate the diamond. On September 1, political
revolutions in several diamond producing countries disrupted the flow of diamonds. The
diamond that was the subject of Brian and Mila’s contract consequently increased in value
to $150 000. Mila therefore refused to deliver the diamond to Brian. Brian is entitled to
receive
a. restitution of $100 000.
b. restitution of $150 000.
c. reliance damages of no more than $25 000.
d. reliance damages of no more than $75 000.
e. expectation damages of $150 000.
37) On March 1, Joe contractually agreed to purchase an antique family heirloom from his
third cousin, Maureen, for $40 000. Joe paid half of that price immediately and promised to
pay the other half upon delivery. Maureen promised to deliver the heirloom on May 1. On
April 1, another member of the family discovered that the heirloom had not belonged to a
famous ancestor, as everyone had believed, but rather to that person’s half-brother. The
market value of the heirloom consequently dropped to $10 000. Maureen nevertheless
refuses to deliver it as promised. Joe is entitled to
a. expectation damages of $40 000.
b. expectation damages of $10 000.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 12: Contractual Remedies
c. expectation damages of $30 000.
d. reliance damages of $20 000.
e. restitution of $20 000.
38) Munchable Catering Company contractually agreed to cater Indira’s wedding for a price
of $25 000. Because Indira was anxious for everything to go just right on her wedding day,
she insisted that the agreement contain a clause that said that, if Munchable breached the
contract, it would be required to pay damages of $250 000. Tarik, the owner-operator of
Munchables, agreed to the insertion of that clause because he was (1) new to the business,
(2) very confident that he would perform exactly as required, and (3) easily persuaded. Two
weeks before the wedding, however, disaster struck. Tarik was hospitalized with a
mysterious illness. He immediately called Indira and explained that he would not be able to
fulfill the contract. Indira became hysterical and demanded payment of $250 000. She
eventually calmed down and was able to hire a replacement caterer at a price of $35 000.
The wedding then occurred precisely as Indira had long hoped. She nevertheless still wants
to sue Tarik for as much money as possible. Which of the following statements is most
likely to be TRUE if a judge decides the case?
a. If Indira paid $25 000 to Tarik at the outset, she is now entitled to receive $35 000.
b. Indira is entitled to receive $250 000 from Tarik.
c. Tarik merely has to repay $25 000 to Indira.
d. Tarik is liable for punitive damages.
e. The judge will classify the contractual clause that requires the payment of $250 000 as a
nominal damages clause.
39) Mountain City Construction Company (MCCC) contractually agreed to build a
recreational complex for Valley City. The City agreed to pay $2 million upon completion
of the project. Shortly after starting the project, MCCC realized that it had entered into a
very bad bargain. It would have to provide $4 million in services and materials in order to
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 12: Contractual Remedies
build the recreational complex. It decided to nevertheless fulfill its obligations. After
MCCC had finished 75 per cent of the project, at a total cost of $3 million, a new mayor
was elected. True to the new mayor’s campaign promise, the City immediately locked
MCCC out of the work site. The City then hired Valley City Construction Incorporated
(VCCI) to complete the recreational complex at a cost of $1 million. The City refuses to
pay anything to MCCC. MCCC therefore has discharged the contract and taken its case to
court. A judge most likely would award
a. expectation damages worth $4 million.
b. reliance damages worth $3 million.
c. restitution worth $3 million.
d. an account of profits worth $1 million.
e. expectation damages worth $3 million.
40) Alpha Corp has sued Beta Inc for breach of contract. The judge imposed liability as a
result of relying upon the concept of a fundamental breach. The case must have dealt with
a. punitive damages.
b. unjust enrichment.
c. an exclusion clause.
d. liquidated damages.
e. an injunction
41) Yuri enters into a contact for the purchase of an antique table for $300. He has a buyer
willing to pay $2000 for the same table. Yuri pays before receiving the table. The seller
breaches the contract when he realizes the table is worth more. Yuri can recover
a. $300.
b. $1700.
c. $2000.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 12: Contractual Remedies
d. $2300.
e. $0.
42) Irma was in a contract for the purchase of two tickets to Disneyland for which she had
already paid. The contract was breached the day before she was supposed to leave and
caused Irma to buy another set of tickets for twice the price, as well, her mother, who was
supposed to come as well, could not. Irma could not receive damages for
a. the cost of buying the new tickets.
b. the amount she paid for the original tickets.
c. the intangible loss caused by her disappointment.
d. the amount she spent on new holiday clothes.
e. the expected amount she may have won from a contest she and 3 others entered that
would take place during the trip.
43) Wendy was fired from her job for reasons that violated her contract. She began a
process of suing her employer for breach of contract and does not attempt to find a new job.
Wendy made approximately $3000 a month and the case is decided 6 months after her
termination. Which of the following is true?
a. Wendy is entitled to $18 000 in damages.
b. Wendy may be denied damages based on lost wages because she did not try to mitigate
her loss.
c. Wendy is entitled to damages from intangible losses.
d. Wendy is entitled to her monthly wage until the date the trial begins.
e. Wendy is entitled to the cost of suing her employer (the cost of the cure).
44) Remington Construction enters into a contract with Royal Condominiums to build a
new apartment building. Before receiving payment, Remington puts $100 000 into pouring
the foundation. Royal breaches the contract by missing a payment. Which of the following
is true?
a. Remington will be able to receive reliance damages.
b. Remington will be able to receive an account for profits.
c. Remington can only receive nominal damages.
d. Remington’s expectation damages will be limited to $100 000.
e. Remington will not be able to recover the $100 000 because it is too remote.
45) Judy is suing Craig because she believes she suffered a wrong when he did not
contribute to her fundraiser. She did not necessarily lose anything monetarily, but she is
suing for the symbolic purpose. The damages she hopes to receive are referred to as
a. liquidated damages.
b. punitive damages.
c. nominal damages.
d. reliance damages.
e. account for profits.
46) Millennium Properties enter into a contract to purchase land from Oxford Management.
Because Millennium wants to avoid the risk of a timely and complicated lawsuit in the case
of a breach of contract, they input a clause stating the following, “If either party breaches
their side of the agreement, the innocent party is entitled to $650,000.” Following this,
Oxford breaches the agreement and it costs Millennium $1.2 million. What action can
Millennium take?
a. Millennium is entitled to $1.2 million in damages.
b. Millennium is entitled only to $650 000 in liquidated damages.
c. Millennium is entitled to $1.2 million in penalties.
d. Millennium is entitled to $650 000 in penalties.
e. Millennium is entitled to $650 000 in liquidated damages and $1.2 million in punitive
damages.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 12: Contractual Remedies
47) On April 1st Ken entered into a contract with John to buy a rare 1983 L3 Corvette (the
only one ever built) for a price of $500 000 to be picked up on April 15. On that same date,
Ken paid a deposit of $100 000 with the balance due upon delivery. In preparation for the
transportation of the Corvette, Ken spent $50 000 on a special cargo container. On April 5,
the Arab Prince Alwaheed offered John $1 million for the Corvette, stating that the
Corvette is worth at least $750 000 and to sell it for $500 000 would be foolish. John sold
the Corvette to Prince Alwaheed and is refusing to release the vehicle to Ken. Ken’s best
course of action is to
a. sue for reliance damages in the amount of $150 000.
b. sue for expectation damages in the amount of $500 000.
c. sue for expectation damages in the amount of $1 million.
d. sue for reliance damage in the amount of $150 000 and expectation damages in the
amount of $350 000.
e. sue for specific performance.
48) You deliver the final payment of rent to your landlord, Jimmy. Because of a post office
error, the money ends up next door at Fred’s house. Fred refuses to give the money back.
What action do you have against Fred?
a. Restitution because there is no contract between you and Fred, but he has been unjustly
enriched
b. The court can order an injunction against Fred to return the money since there is an
implied contract that has been enforced
c. Restitution because there is a contract between you and Fred and he has been unjustly
enriched
d. The court can order an injunction against Fred to return the money since there is an
expressed contract that has been enforced
e. You have no action against Fred and your only option is to repay your landlord
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 12: Contractual Remedies
Multiple Choice Questions
1) Susan contractually agreed to sell a particular computer to Davor for $5000. Although
Davor paid the money, Susan refuses to actually give him the computer. A court will likely
award monetary damages, rather than specific performance, to Davor because
a. judges do not have the authority to force the defendant to act in a particular way.
b. Davor has already paid the purchase price.
c. Susan has not committed a serious breach of contract.
d. monetary damages will provide Davor with an adequate remedy.
e. the loss of the computer is too remote.
2) Savannah agreed to buy a car from Rhett for $10 000. Savannah paid the price, but Rhett
refused to perform the contract after he discovered that the vehicle was really worth $17
000. At the time that the contract was created, neither he nor Savannah was aware of the
vehicle’s actual value. Which of the following statements is TRUE?
a. The court will likely award expectation damages based on the profit that Rhett expected
to receive under the contract.
b. The court will likely award specific performance because of the significant difference
between the contract price and the actual value of the car.
c. Savannah cannot get expectation damages for $17 000 because she did not expect to
receive a car of that value when she entered into the contract.
d. Savannah will be entitled to receive a total of $7000 in expectation damages because that
is the profit that she should have received under the contract.
e. Even though he breached the contract, Rhett may not be liable for the full difference
between the contract price and the market value if Savannah could have purchased a similar
car from a third party for less than $17 000.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 12: Contractual Remedies
3) Which of the following statements is TRUE?
a. Damages in contract are always forward-looking.
b. Damages in contract are always backward-looking.
c. In deciding whether or not damages in contract should be forward-looking or backward-
looking, a court will be influenced by whether or not the defendant’s breach was deliberate.
d. Damages in contract are usually forward-looking because the courts want to protect the
fact that promises are valuable only if they will be kept in the future.
e. Expectation damages compensate the plaintiff for expenses that it actually paid in
reliance upon the contract.
4) Luis contractually agreed to sell a widget to Monica for $20 000. Monica accepted
delivery of the widget, but has paid only $13 000. Although neither party realized it when
they created their contract, the widget is actually worth $23 000. A court will order Monica
to pay Luis
a. $10 000.
b. $7000.
c. $20 000.
d. $13 000.
e. $23 000.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 12: Contractual Remedies
5) Joshua contractually agreed to sell a widget to Maya for $50 000. Before the sale was
completed, however, Maya announced that she no longer wanted the widget. She therefore
refused to accept delivery of it or to make any payment. The widget is really worth $55
000. There are several other parties who are willing to buy it from Joshua at that price. At
the time of entering into his contract with Maya, however, Joshua thought that the widget
was worth $60 000. He therefore thought that he would earn a profit of $10 000 under the
contract. A court will order Maya to pay Joshua
a. $5000.
b. $50 000.
c. $10 000.
d. $55 000.
e. $1.
6) Armand contractually agreed to sell a widget to Melanie for $100 000. However, she
refused to accept delivery of the widget or to pay the contract price because the widget is
really worth $80 000. Britt then offered to buy the widget from Armand for $80 000, but he
rejected that offer. If Armand claims expectation damages, a court will order Melanie to
pay him
a. $100 000.
b. $20 000.
c. $40 000.
d. $80 000.
e. $0.
7) The victim of a breach of contract is entitled to
a. claim expectation damages for remote losses.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 12: Contractual Remedies
b. enforce a contractual term regarding liquidated damages but not penalties.
c. compel the party in breach to mitigate the losses.
d. insist upon receiving cost of cure damages.
e. recover damages for intangible losses only if the defendant deliberately breached the
contract.
8) The monetary value of expectation damages may be affected by
a. the concept of disgorgement.
b. the concept of esperanto.
c. the profit that the defendant unreasonably expected to receive under the contract.
d. the money that the party in breach saved as a result of the breach.
e. the fact that some of the plaintiff’s losses are intangible.
9) Which of the following statements is TRUE?
a. Cost of cure damages will never be awarded unless the plaintiff has already spent money
to cure the defect in the defendant’s performance.
b. Cost of cure damages will always be less than loss of value damages.
c. Cost of cure damages will always be awarded if the plaintiff’s only loss is intangible.
d. Cost of cure damages are more likely to be awarded if the innocent party has a
reasonable and legitimate reason for wanting to have a defect actually cured.
e. Cost of cure damages are a form of reliance damages.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 12: Contractual Remedies
10) Woody entered into a contract with Jezebel. She promised to pay $10 000 and he
promised to build a sun deck in her backyard. The contract contained specific terms
regarding the quality of the materials that Woody would use. Woody built a sun deck, but
many of the materials that he used fell below the standard required by the contract. As a
result of that breach, the deck is worth $1000 less than Jezebel expected. It will cost $9000
to replace the defective materials with materials that satisfy the terms of the contract.
Which of the following statements is TRUE?
a. A court will certainly award cost of cure damages if Woody deliberately used materials
that did not satisfy the terms of the contract.
b. A court will probably refuse to award cost of cure damages because the difference
between the loss of value and the expense of repairing the defect is very large.
c. If Jezebel is awarded cost of cure damages, she must use that money to cure the defect.
d. Cost of cure damages are classified as a form of punitive damages because they often
require the defendant to pay for more than the plaintiff’s actual loss of value.
e. If Woody deliberated breached the contract by using inferior materials, Jezebel will
receive total damages worth $18 000.
11) An intangible loss
a. is a loss that has market value.
b. traditionally resulted in expectation damages.
c. usually triggers the remedy of an account of profits.
d. usually leads to reliance damages.
e. may be the subject of damages if the contract was intended to provide “peace of mind” to
the plaintiff.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 12: Contractual Remedies
12) Harold agreed to sell a widget to Sheila for $10 000. Sheila paid the purchase price
immediately and Harold was required to deliver the widget on June 1. In fact, Harold did
not deliver the widget until June 21. As a result, Sheila was unable to perform a contract for
ABC Inc. on June 19 that would have paid her $15 000. Which of the following statements
is TRUE?
a. Sheila is entitled to recover $15 000 in damages from Harold as long as she knew, or
should have known, that late delivery would cause her to lose her contract with ABC Inc.
b. Sheila’s loss of $15 000 is best described as an intangible loss.
c. Sheila is liable to Harold for $15 000 as long as he knew, or should have known, of the
possibility of that loss when he breached the contract.
d. Damages will be reduced to the extent that Harold failed to mitigate the loss that was
caused by the breach.
e. Depending upon the facts, Sheila’s damages may be reduced on the basis of both the
concept of remoteness and the concept of mitigation.
13) The concept of remoteness
a. allows recovery for losses that were not reasonably foreseeable.
b. is related to the risks that the parties accepted when they created their contract.
c. always applies if the plaintiff mitigated the loss that was caused by the defendant’s
breach.
d. is based on facts that the defendant knew, or should have known, at the time of
committing the breach of contract.
e. applies only if the plaintiff’s loss was caused by a combination of the defendant’s breach
and the actions of a third party.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 12: Contractual Remedies
14) Widgets are manufactured by very few companies and they are often difficult to locate.
On January 1, Alpha Corp contractually agreed to sell a widget to Beta Inc. Beta paid the
total purchase price of $30 000 immediately. The contract required Alpha to deliver the
widget on April 1. On March 25, Alpha contacted Beta and announced that it would not be
able to deliver the widget. By that time, the cost of a widget had increased to $50 000. On
March 28, Beta paid $2000 to an independent firm to locate an alternative widget supplier.
That firm suggested Gamma Ltd. On March 30, Beta paid $50 000 to Gamma Ltd to deliver
a widget by April 1. A court would probably order Alpha to pay Beta
a. $2000.
b. $82 000.
c. $22 000.
d. $50 000.
e. $30 000.
15) On June 1, Lauto Inc contractually agreed to buy a Pupmobile LX from Dos Motors
Ltd for $25 000. Payment of the price and delivery of an appropriate vehicle were
scheduled to occur on July 15. On July 1, however, Dos informed Lauto that it had
carelessly crushed its only Pupmobile LX with an industrial-sized garbage bin. Dos
apologized profusely and explained that it did not have another one in stock. It also
informed Lauto that, because a Pupmobile LX had recently appeared in a highly successful
movie, such cars were in great demand. “If you still want one,” said the manager at Dos,
“you had better act quickly. I’ll expect that they will start to go up in value very quickly.”
Between July 1 and July 10, Lauto could have agreed to purchase a Pupmobile LX from
another dealer for $30 000. Nevertheless, Lauto waited until July 11 before buying a
Pupmobile LX from Tertius Motors Ltd for $35 000. By July 15, the market value of such
vehicles had increased to $40 000. A court would probably order Dos to pay Lauto
a. $15 000.
b. $10 000.
c. $25 000.
d. $5000.
e. $30 000.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 12: Contractual Remedies
16) Dave was contractually required to deliver a widget to Pam by July 1. He failed to do
so. At that point, Pam predicted that she would suffer a loss of $100 000 during the next six
months because her factory cannot operate efficiently without a widget. Which of the
following statements is TRUE?
a. Because she is under a duty to mitigate, Pam cannot receive any damages unless she
purchases a widget from another supplier.
b. Because she is under a duty to mitigate, Pam must do everything possible to acquire a
widget from another supplier.
c. Because he is under a duty to mitigate, Dave will be held liable for $100 000 unless he
takes reasonable steps to help Pam purchase a widget from another supplier.
d. Because Dave is under a duty to mitigate, the damages that he must pay will be reduced
to the extent that he reasonably spends money trying to help Pam purchase a widget from
another supplier.
e. Because she is under a duty to mitigate, Pam will be denied damages to the extent that
she could reasonably avoid a loss flowing from Dave’s breach.
17) Alexi agreed to sell a particular type of car to Carole for $15 000. He breached the
contract by refusing to deliver the car and complete the sale. She bought another car of the
same type from Ivan for $18 000. These facts most clearly illustrate the concept of
a. remoteness.
b. mitigation.
c. cost of cure.
d. loss of value.
e. intangible losses.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 12: Contractual Remedies
18) Shinji contractually agreed to record a concert for Keith. The concert was to occur on
November 8 and Keith was to pay a price of $10 000 on the same day. On October 15,
Shinji informed Keith that he would not be able to record the concert. On November 2,
Keith entered into a contract with his good friend, Manfred. Under the terms of that
agreement, Manfred was required to record the concert on November 8 and Keith was
required to pay $25 000. The evidence indicates that Keith could have easily hired someone
other than Manfred for $17 000. Which of the following statements is TRUE? A court
would probably order Shinji to pay Keith
a. $25 000.
b. $17 000.
c. $15 000.
d. $10 000.
e. $7000.
19) Sammy Productions Inc wanted to hold an open-air concert on September 30. On
February 1, it entered into a contract with Maxine, a wealthy landowner. Under the terms of
that agreement, Maxine agreed to let the concert be held on her property and Sammy agreed
to pay her 10 percent of its gross revenues from the concert. The parties agreed to set the
price in that way because they did not have any way of knowing how many people would
attend the concert. Attendance would depend upon a large number of factors, including the
weather and the general state of the economy. Based on past experience, however, Sammy
and Maxine agreed that the event would certainly be profitable. After signing its contract
with Maxine, Sammy spent $75 000 on advertising. It also passed up an opportunity to
organize a Canada Day celebration in Ottawa, for which it would have received $100 000
in net profits from the government of Canada. Maxine was aware that Sammy sacrificed
that opportunity. On August 1, however, Maxine abruptly announced that she would not
allow the concert to be held on her land. She offered Sammy $50 000 as compensation for
its losses. It is not possible for Sammy to arrange another site for its concert given the late
date. A court would most likely order Maxine to pay Sammy
a. $50 000.
b. $100 000.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 12: Contractual Remedies
c. $75 000.
d. $175 000.
e. $0.
20) Which of the following statements is TRUE?
a. If a court awards nominal damages, it will always award costs against the party that
breached the contract.
b. Canadian judges award punitive damages more often than American judges.
c. Nominal damages are usually worth more than punitive damages.
d. Punitive damages are intended to compensate the plaintiff for losses that it unexpectedly
suffered as a result of the defendant’s breach of contract.
e. An account of profits normally is not available even if the defendant earned a large profit
as a result of committing a breach of contract against the plaintiff.
21) Brianna contractually agreed to sell a widget to Oren. She was required to deliver the
item on June 1 and he was required to pay $75 000 on the same day. Paragraph 21 of the
contract said that if Brianna breached the contract by refusing to deliver the item, Oren
would be entitled to a payment of $20 000. Brianna did, in fact, refuse to deliver the
widget. Oren therefore has not yet paid the price. Which of the following statements is
TRUE?
a. If Oren suffered a loss of $15 000 as a result of Brianna’s breach, he will be entitled to
payment of that amount if paragraph 21 of the contract was a penalty.
b. If Oren suffered a loss of $10 000 as a result of Brianna’s breach, he will be entitled to
payment of $20 000 if paragraph 21 of the contract was a penalty.
c. If Oren suffered a loss of $30 000 as a result of Brianna’s breach, he will be entitled to
payment of that amount if paragraph 21 of the contract was for liquidated damages.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 12: Contractual Remedies
d. If Oren suffered a loss of $10 000 as a result of Brianna’s breach, he will be entitled to
payment of that amount and no more if paragraph 21 of the contract was for liquidated
damages.
e. If Oren suffered a loss of $20 000, and the court classified paragraph 21 as liquidated
damages, then Brianna would be liable to pay $95 000.
22) Which of the following statements is TRUE?
a. Liquidated damages are always available if the defendant breached a contract for the sale
of land.
b. Liquidated damages are enforceable if they represent a genuine estimate of the losses
that the plaintiff might have suffered as a result of the defendant’s breach.
c. The plaintiff can recover more than a liquidated damages clause provides for if it
suffered a larger loss as a result of the defendant’s breach.
d. The plaintiff cannot recover the full amount of liquidated damages if it suffered a smaller
loss as a result of the defendant’s breach.
e. Because of the risk of unfairness, liquidated damages are never allowed unless the
defendant received independent legal advice at the time that the contract was created.
23) Mayo committed a breach of contract against Dirk. After ordering Mayo to compensate
Dirk for the losses that he suffered, the judge also ordered Mayo to pay an additional $10
000 to Dirk. These facts most likely demonstrate the concept of
a. nominal damages.
b. liquidated damages.
c. a penalty clause in the contract.
d. punitive damages.
e. equitable relief.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 12: Contractual Remedies
24) As a general rule, punitive damages will not be awarded for a breach of contract unless
a. monetary damages would not adequately compensate the plaintiff.
b. the plaintiff committed an independently actionable wrong.
c. the contract expressly allows for such relief.
d. the plaintiff seeks equitable relief.
e. the defendant is guilty of breaching at least two obligations.
25) Katarzyna contractually agreed to sell a painting to Trent. She promised to deliver it on
June 1 and he promised to pay $10 000 on the same day. On May 15, Katarzyna discovered
that the painting is really worth $25 000. She therefore has told Trent that she does not
intend to fulfill the contract. Which of the following statements is TRUE?
a. Since specific performance is an equitable remedy, Trent is entitled to receive the
painting only if he agrees to pay $25 000 to Katarzyna.
b. Trent is not entitled to an order for specific performance because a court will not force
Katarzyna to act in any particular way.
c. If specific performance is not available, Trent will probably be entitled to receive $25
000 from Katarzyna.
d. A court will probably give Trent specific performance and reliance damages.
e. Trent probably is not entitled to specific performance if Katarzyna is under the age of
majority.
26) Which of the following statements is TRUE?
a. A court will refuse to award specific performance if monetary damages are inadequate.
b. The requirement of mutuality means that specific performance will not be awarded
unless both parties provided consideration under a contract.
c. Specific performance is not available if the defendant has “dirty hands” when it comes to
court.
d. Because it is an equitable remedy, specific performance is always available even if the
plaintiff waits a long time before suing the defendant.
e. Although the courts traditionally awarded specific performance for a contract to sell a
piece of land, the plaintiff will now receive damages unless a piece of land is somehow
special or unique.
27) Iago contractually agreed to sell a particular piece of land to Desdemona. He later
changed his mind and decided to keep the property for himself. Which of the following
statements is TRUE?
a. A court would not award an order for specific performance because it would not be
willing to supervise the transfer of land.
b. Since the contract dealt with a sale of land, Desdemona will certainly receive an order for
specific performance.
c. Desdemona probably is not entitled to an order for specific performance if the land is not
unique or special.
d. Desdemona will be entitled to receive an order for specific performance only if she
grants an injunction to Iago.
e. Desdemona will receive specific performance only if Iago comes to court with unclean
hands.
