41. The majority of states follow the rule in awarding damages for fraud.
a. benefit-of-the-bargain
b. out–of-pocket
c. liquidated
d. restitution
42. Equitable remedies will not be granted where:
a. the terms of the contract are fair.
b. the consideration is adequate.
c. the terms of the contract are sufficiently certain.
d. the contract is tainted with fraud, duress, undue influence, mistake, or unfair practices.
43. David enters into a contract to give Edward the right of first refusal to purchase a tract of land owned by David.
David subsequently offers the land to Fred without first offering it to Edward. An appropriate remedy for Edward to
seek would be:
a. injunction.
b. liquidated damages.
c. reformation.
d. punitive damages.
44. A power of avoidance held by a party may be lost if:
a. the contract is affirmed.
b. there are unreasonable delays in exercising the power.
c. the rights of third parties intervene.
d. All of these.
45. In which of the following situations is restitution available as a remedy?
a. As an alternative remedy for a party injured by breach
b. For a party in default
c. For a party who may not enforce the contract because of the statute of frauds
d. All of these are situations where restitution is available.
46. Damages for reliance include expenses for:
a. lost profits.
b. injury to the person.
c. preparing to perform.
d. punishment of the breaching party.
47. In the case of Hadley v. Baxendale, the plaintiff was seeking damages for:
a. restitution.
b. lost profits.
c. failure to convey land.
d. failure to specifically perform a contract.
48. Which of the following is correct with respect to election of remedies?
a. The Code rejects any doctrine of election of remedies; its remedies are cumulative.
b. The remedy of specific performance is inconsistent with that of restitution.
c. A person who seeks an injunction may also seek incidental damages for the breach.
d. All of these are correct.
49. In which of the following situations will a court grant specific performance?
a. In a case involving breach of contract for the sale of real property or rare goods.
b. In contracts for personal services.
c. Where goods have been identified to the contract.
d. Where goods are mixed with other goods of the same type.
50. Restitution is available when:
a. Elizabeth agrees to sell an acre of land to Vanessa, and after Vanessa makes a partial payment Elizabeth
wrongfully refuses to transfer title.
b. Lawrence makes an oral contract to provide physical training for Lee for fourteen months and Lee discharges
Lawrence after six months.
c. Gilbert uses undue influence to induce Cynthia to sell him an antique chair for $10.
d. Restitution is available in all of these cases.
51. Contract damages that put the injured party in as good a position as if the other party had performed are:
a. compensatory damages.
b. incidental damages.
c. consequential damages.
d. liquidated damages.
52. Barbara, an antique dealer, intentionally represents the value of an antique chest of drawers, as $6,000 when she has
reason to know the value is considerably less. Margaret agrees to buy it for $5,500. It is worth $2,500. In a state that
uses the “benefit-of-the-bargain” rule, Margaret’s damage award would be:
a. $3,500.
b. $3,000.
c. $500.
d. $2,500.
53. A small damage amount fixed without regard to the amount of loss is known as:
a. reliance damages.
b. out–of-pocket damages.
c. nominal damages.
d. incidental damages.
54. Carolyn agrees to sell Marianne an antique handmade lace tablecloth for $1,500. When Carolyn discovers that her
cousin wants it too, she breaks the contract with Marianne. Marianne can ask the court to order:
a. nominal damages.
b. specific performance.
c. restitution.
d. equitable rescission.
55. Bartow signed a contract to coach baseball for Washington High for a period of three years. After two years he is
offered and accepts an assistant coach position at State University. Contract law will not allow Washington High to
ask for:
a. specific performance.
b. payment of compensatory damages.
c. an injunction.
d. liquidated damages.
56. Vladimir entered into a contract to buy Daniel’s collection of rare stamps. Vladimir mailed payment of $10,000 for
the stamps to Daniel, but now Daniel tells Vladimir, “I’ll never part with these stamps.” Are the remedies of
restitution and specific performance available to Vladimir?
a. Restitution: Yes; Specific Performance: Yes
b. Restitution: Yes; Specific Performance: No
c. Restitution: No; Specific Performance: Yes
d. Restitution: No; Specific Performance: No
57. Lynne agrees to buy Harriette’s farm for $100,000 and puts $20,000 down. Then Lynne learns she is allergic to hay
and repudiates the contract. If Harriette can sell the farm one month later for $90,000, she may:
a. keep Lynne‘s $20,000.
b. keep $10,000 of Lynne’s down payment.
c. not keep any of the down payment money.
d. sue for specific performance.
58. Howard needs a truck to pull a 2,000–pound trailer. Gordon tells Howard, “My truck will pull a 2,000–pound trailer
with ease.” Relying on Gordon‘s statement, Howard buys the truck, but it will not pull a 2,000-pound trailer. If
Gordon did not intend to deceive and Howard sues for nonfraudulent misrepresentation, he can recover:
a. punitive damages, but not out-of-pocket damages.
b. out–of-pocket and consequential damages, but not punitive damages.
c. out-of-pocket damages plus punitive damages.
d. nominal damages, because Howard should have known the capacity of the truck.
59. Harry said to Marge, “I have a ring once owned by Marilyn Monroe. Would you like to buy it for $500?” Marge pays
for the ring, but the next day a friend tells her that Harry had recently purchased the ring at a local department store.
Marge enjoys wearing the ring and wears it constantly for twelve months. Finally, she goes to Harry and says, “Here
is the ring you lied about. Give me my $500.” Most likely Marge will:
a. get her money back since Harry’s representation was fraudulent.
b. not get her money back since she should have investigated the facts about the ring more carefully.
c. get her money back since she is a good faith purchaser of merchandise.
d. not get her money back since she has affirmed the contract by taking an unduly long time to disaffirm.
60. Busby contracts to build a house for Connell. Busby finishes approximately half of the house and quits. Connell files
suit against Busby. Which remedy is not available to her?
a. Compensatory damages
b. Specific performance
c. Special damages
d. Incidental damages
61. What Article of the UCC governs sales of goods?
a. 1
b. 2
c. 3
d. None of these.
62. Bob’s brother, Steve, planned to visit over Labor Day weekend. Together they planned to build a deck in Bob’s
backyard. Bob ordered the lumber, concrete, nails, and other supplies to be delivered on Friday. He also contracted
to rent a saw for the weekend (Sat., Sun., and Mon.) at a cost of $20 a day. When he went to pick up the saw, the
store had rented it to someone else. He drove all over town trying to borrow another, but he could only get one for
Sunday, Monday, and Tuesday at a cost of $50 per day. Because they couldn’t work on Saturday without a saw,
Bob had to hire Mac at a cost of $80 to work with him on Tuesday and, of course, Bob had to take off from work.
Calculate the damages to which Bob is entitled from the rental company. Explain.
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63. Explain consequential damages. Give an example.
64. Answer the following:
a. When will a court specifically enforce a contract?
b. Under what circumstances will a court specifically enforce a contract involving personal
services?
c. What remedy did the court award in the Madison Square Garden case? Why did the court
award this remedy?
65. When will a court enforce a liquidated damage clause? When will a court refuse to enforce one?
66. What interests of an injured party are protected by contract remedies?
67. Define incidental damages and give an example.
68. Explain three limitations on monetary damages.