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Exam 12: Contractual Remedies

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Question 21

Multiple Choice

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Alpha Corp has sued Beta Inc for breach of contract.The judge imposed liability after applying a test that addressed issues concerning interpretation, unconscionability, and policy.The case must have dealt with

A) punitive damages.
B) unjust enrichment.
C) an exclusion clause.
D) liquidated damages.
E) an injunction

F) B) and D)
G) None of the above

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Question 22

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A court will award punitive damages only if the plaintiff is not entitled to expectation damages.

A) True
B) False

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Question 23

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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

Which of the following statements is TRUE?

Because of the need for commercial certainty, a court will award expectation damages only if the value of the plaintiff's loss can be calculated with precision.

The courts often award cost of cure damages in order to punish the defendant for acting outrageously.

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 is most likely to order Maya to pay Joshua

Judy organized a large fund-raising project for a charity.She believes that Craig contractually promised to participate in the project, but broke his promises.Judy and the charity did not lose anything as a result of the breach, but Judy intends to sue for symbolic purposes.If the dispute is resolved by a judge, Craig is most likely to be held liable for

The amount awarded as expectation damages may be affected by

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

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?

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 calculate the price 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 was sacrificing sacrificed that opportunity even before she signed the contract.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

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

Penelope contractually agreed to repair Don's roof with a specific type of tile for a price of $10 000.After she completed the job, Don noticed that she had not used the type of tile that was required by the contract.She had used a lower grade of tile.Consequently, Don's roof was worth $3000 less than he had expected.It will cost $5000 to remove the tiles that Penelope used and to put the proper type of tiles in their place.If a court awards cost of cure damages to Don, he will be required to use that money to actually replace the existing tiles with the tiles that he expected to receive under his contract with Penelope.

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 new to the business, very confident that he would perform exactly as required, and 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?

On June 1, Sergei contractually agreed to purchase a widget from Marisa.The total price was $15 000.Sergei paid $5000 immediately and promised to pay the remainder upon delivery.Although Marisa was required to deliver on July 15, she refused to do so.The market value of the widget was $15 000 on June 1, but $22 000 on July 15.Sergei is entitled to receive $12 000 in expectation damages.

On October 15, Madeleine contractually agreed to sell a widget to Hugh.The total price was $20 000.Hugh paid $4000 immediately and promised to pay the remainder upon delivery.Madeleine delivered the widget to Hugh on November 2, as required by the contract.He refused to accept it, however, because its market value had dropped from $20 000 to $10 000.Madeleine is entitled to receive $6000 in expectation damages.

Remington Construction created a contract with Royal Condominiums.Royal was to pay a total of $5 000 000; Remington was to build a fitness centre.Remington began its performance by pouring foundations at a cost of $250 000.Royal then breached the contract and refused to allow Remington back on the property.Which of the following is most likely to be TRUE?

"Compensation is normally not available for intangible losses.Recently, however, Canadian courts have begun to award compensation in such circumstances if one of the purposes of the contract was to protect the plaintiff's peace of mind.In one case, for instance, an elderly couple was awarded damages for the grief that they suffered after their beloved dog was suffocated in an airplane's cargo hold.The couple had stressed to the airline, at the outset, how much the dog meant to them." On the basis of such cases, it has been suggested that compensation is available for intangible losses if they are not too remote from the defendant's breach.Formulate an argument that supports that statement.

Which of the following statements is TRUE?