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Business Law Chapter 18
Test Description: Good Luck!
Instructions: Answer all questions to get your test result.
1) A breach of contract entitled the nonbreaching party to sue for monetary damages.
A
true
B
false
2) Most parties settle their lawsuits for damages or other remedies prior to trial.
A
false
B
true
3) The four broad types of damages in contract law are conciliatory, consecutive, punctual, and nominative.
A
false
B
true
4) Compensatory damages compensate an injured party for damages arising directly from the loss of a bargain caused by a breach of contract.
A
false
B
true
5) Special damages are awarded for damage caused by special circumstances beyond a contract.
A
false
B
true
6) A person’s actions may cause a breach of contract or a tort, but not both.
A
false
B
true
7) The duty owed under the mitigation of damages doctrine depends on the nature of the contract.
A
false
B
true
8) A penalty provision specifies a certain amount to be paid in the event of a default or breach of contract.
A
true
B
false
9) Specific performance is the remedy customarily used when one party has breached a contract for the sale of goods.
A
false
B
true
10) The purpose of the doctrine of election of remedies is to permit double recovery.
A
true
B
false
11) A party seeking to recover in quasi contract must show that there was an actual contract or agreement between the parties.
A
true
B
false
12) A party who knowingly accepts defective performance of a contract waives the breach.
A
true
B
false
13) A contract may include a clause stating that no damages can be recovered for a certain type of breach.
A
false
B
true
14) Consumer Credit Union pays Derby $10,000 to design an ad campaign. The next day, Derby tells the credit union that he has accepted a job in Boston and cannot design the campaign. As compensatory damages, the credit union can recover
A
$0
B
$100,000
C
$10,000
D
$1,000
15) If Pure Oil Company wishes to receive punitive QuickBilt they will...
A
provide Pure with funds for its loss of the bargain.
B
provide Pure with funds for a foreseeable loss beyond the contract.
C
punish QuikBilt and deter others from similar acts.
D
establish, as a matter of principle, that QuikBilt acted wrongfully.
16) SFX Paintball and Truck/Trailer Delivery Corporation sign an agreement to pay $1,000 for any breaches that occur. Because damages can be difficult to estimate; the $1,000 is...
A
a liquidated damages clause.
B
a mitigation of damages clause.
C
a nominal damages clause.
D
a penalty clause.
17) Karif orally agrees to buy a unique collection of sports memorabilia for $1,000 from Jane and sends her $250 as a down payment. When Karif sends her the rest of the price, Jane refuses to ship the collection. Karif should seek
A
specific performance
B
specific performanc
C
damages
D
recission
18) Lester and Myrtle want to rescind their contract under which Lester sold an MP3 player for $40. To rescind the contract
A
Lester must return the $40 only.
B
the parties can keep the “benefits” of their bargain.
C
Myrtle must return the player only.
D
Lester must return the $40 and Myrtle must return the player.
19) An agreement states that a contract will be fulfilled in 3-Days. This was a typo and was supposed to read 30-Days. Amending a contract with an error like this is called a
A
damages
B
recission
C
reformation
D
specific performance
*select an answer for all questions
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