Chapter 18. Contract Remedies
1. An employee’s promise of providing ordinary personal services may be enforced by an injunction against serving
another employer.
a. True
b. False
2. To fully compensate plaintiffs in breach of contract cases, courts always award punitive damages commensurate
with the losses the plaintiffs have suffered.
a. True
b. False
3. Courts will usually uphold a liquidated damage clause that represents a reasonable approximation of the damages
where the actual amount would be very difficult to determine.
a. True
b. False
4. Equitable remedies result in money awards to the plaintiff.
a. True
b. False
5. If Kenneth signs an employment contract for one year but is fired without cause after two months and spends $500
in reasonable fees trying to find a comparable job, he may recover $500 in incidental damages.
a. True
b. False
6. Equitable remedies are available any time the plaintiff chooses them over money damages.
a. True
b. False
7. Restitution involves a return of consideration or its value to the aggrieved party.
a. True
b. False
8. Restitution is available as an alternative remedy for a party’s repudiation of the contract.
a. True
b. False
9. UCC “Election of Remedies” rules would require the aggrieved party to choose one remedy he wants to pursue and
forego the others.
a. True
b. False
10. Where a contract is unenforceable because of the statute of frauds, a party may recover the benefits conferred on
the other party in reliance on the contract.
a. True
b. False
11. If the parties to a contract stipulate an amount that will be paid in the event of a breach (a liquidated damages
clause), the courts will always enforce it.
a. True
b. False
12. At its discretion, a court may grant the equitable remedy of injunction against breach of a contractual duty where
damages would be inadequate.
a. True
b. False
13. Consequential damages include lost profits and injury to person or property resulting from defective performance.
a. True
b. False
14. The majority of states allow the injured party who has been induced to enter into a contract by fraud to recover only
“out-of-pocket” damages equal to the difference between the value of what she has received and the value of what
she has given for it.
a. True
b. False
15. The basic remedy for misrepresentation is restitution.
a. True
b. False
16. An action to recover damages for breach of contract may be maintained only if the plaintiff has sustained or can
prove an injury or loss resulting from the breach.
a. True
b. False
17. Liquidated damages are an equitable remedy.
a. True
b. False
18. Under the rule in Hadley v. Baxendale, only foreseeable damages can be recovered.
a. True
b. False
19. Specific performance is the usual remedy for breach of contract.
a. True
b. False
20. Compensatory damages are intended to protect the injured party’s expectation interest.
a. True
b. False
21. When a breach of contract occurs, the nonbreaching party is required to take reasonable steps to lessen or mitigate
the damages that he may sustain.
a. True
b. False
22. Even if a party has the power to avoid a contract for lack of capacity, duress, or undue influence, the party will lose
that power by affirming the contract.
a. True
b. False
23. Delay will have no effect on the power of avoidance.
a. True
b. False
24. Lost profits can never be recovered as damages since they are speculative and cannot be established with
reasonable certainty.
a. True
b. False
25. Costs incurred to acquire a nondelivered performance from some other source are consequential damages.
a. True
b. False
26. In relation to damages, the test of foreseeability is subjective.
a. True
b. False
27. Restitution can be obtained where a voidable contract is avoided.
a. True
b. False
28. Courts of equity will grant specific performance of contracts for personal service.
a. True
b. False
29. Monetary damages are the most frequently granted remedy for breach of contract.
a. True
b. False
30. The purpose of reliance damages is to place the injured party in a position as good as he would have held had there
been no contract.
a. True
b. False
31. A liquidated damage is a provision by which the parties agree in advance to the damages to be paid in the event of
breach.
a. True
b. False
32. If a liquidated damage provision is found to be unenforceable, the injured party loses any remedy for breach of
contract.
a. True
b. False
33. The expectation interest is protected by the contract remedy of:
a. restitution.
b. compensatory damages.
c. reliance damages.
d. All of these.
34. If Jana, a minor, transfers property to Scott and Scott sells the property to a good faith purchaser for value before
Jana avoids the transfer:
a. Jana loses the right to recover the property if the transfer involved goods.
b. Jana can recover the property as long as the property was a sale of goods.
c. Jana can recover the property whether it was real or personal property.
d. the good faith purchaser of goods for value receives a voidable title.
35. Miller made a contract to sell his condominium to Jefferson for $80,000. Two days later Miller changed his mind
after discovering that he could have sold the property to another buyer for an additional $20,000. Jefferson sues and
asks the court to have the property conveyed to him at the price of $80,000. Jefferson is seeking:
a. restitution.
b. punitive damages.
c. specific performance.
d. valid tender.
36. A contractor and Buckingham, Inc. have a contract, which calls for the contractor to build a building with the
completion of it by June 15. If the building is not completed by that date, the contract calls for the contractor to pay
$100 per day in damages. The $100 per day is:
a. punitive damages.
b. nominal damages.
c. liquidated damages.
d. an illegal penalty.
37. Garrett ordered 100 pieces of 2 × 6 lumber from his supplier and paid upon delivery. Later, when he unpacked the
lumber, he discovered that the supplier had delivered 2 × 4 lumber. After being notified, the supplier picked up the
lumber, apologized, and gave Garrett his money back. The response the supplier made to rectify the breach is:
a. an injunction.
b. mitigation.
c. liquidation of damages.
d. None of these
38. When an injured party is required to elect remedies, which of the following would be mutually exclusive?
a. Restitution and liquidated damages
b. Specific performance and compensation for incidental damages
c. Specific performance and restitution
d. Incidental and consequential damages
39. The return to the aggrieved party of the consideration, or its value, which he gave to the other party is:
a. injunction.
b. restitution.
c. specific performance.
d. reformation.
40. The process whereby a court “rewrites” or “corrects” a written contract to make it conform to the true intentions of
the parties is:
a. injunction.
b. reformation.
c. specific performance.
d. rescission.