AK Bar Alaska Contracts and Commercial Law 2 — Questions and Answers
Question 1: The doctrine of substantial performance in contract law allows a party to recover when:
- They have completely performed all contractual obligations
- They have performed most obligations but with only minor deviations (Correct answer)
- They have intentionally breached a material term
- The other party has waived all performance requirements in writing
Correct answer: They have performed most obligations but with only minor deviations
Substantial performance allows a party who has mostly completed their obligations with only minor, non-material deviations to recover the contract price minus damages for the shortfall.
Question 2: Which remedy compels a party to perform their specific contractual obligations rather than paying money damages?
- Compensatory damages
- Consequential damages
- Specific performance (Correct answer)
- Liquidated damages
Correct answer: Specific performance
Specific performance is an equitable remedy that orders a party to actually perform their contractual duties, typically granted when monetary damages are inadequate to compensate the non-breaching party.
Question 3: Under the doctrine of anticipatory repudiation, a non-breaching party may:
- Only wait until the actual performance date to sue
- Immediately treat the contract as breached and seek remedies (Correct answer)
- Modify the contract terms unilaterally
- Recover punitive damages automatically
Correct answer: Immediately treat the contract as breached and seek remedies
When a party unequivocally repudiates a contract before the performance date, the non-breaching party may treat it as an immediate total breach and pursue all available remedies without waiting.
Question 4: Consequential damages in contract law are recoverable only if they were:
- Foreseeable at the time of contracting (Correct answer)
- The direct and immediate result of any breach
- Specifically enumerated in the contract
- Proven by expert testimony at trial
Correct answer: Foreseeable at the time of contracting
Under the Hadley v. Baxendale rule, consequential damages are recoverable only if they were foreseeable to the breaching party at the time the contract was formed.
Question 5: A force majeure clause in a contract typically:
- Increases a party's liability for all foreseeable events
- Excuses performance when extraordinary events beyond a party's control prevent it (Correct answer)
- Requires parties to renegotiate upon any unforeseen difficulty
- Automatically terminates the contract upon any delay in performance
Correct answer: Excuses performance when extraordinary events beyond a party's control prevent it
A force majeure clause excuses a party's performance when extraordinary events beyond their control, such as natural disasters, wars, or government actions, make performance impossible or commercially impracticable.
Question 6: The mitigation doctrine in contract law requires a non-breaching party to:
- Accept any substitute performance offered by the breaching party
- Take reasonable steps to minimize their damages after breach (Correct answer)
- Waive their right to damages upon learning of the breach
- Renegotiate the contract before filing suit
Correct answer: Take reasonable steps to minimize their damages after breach
The mitigation doctrine requires the non-breaching party to take reasonable steps to reduce their losses; failure to mitigate bars recovery for damages that could have been avoided.
Question 7: Liquidated damages clauses are enforceable in Alaska when:
- They are designed to punish the breaching party severely
- Damages were difficult to estimate and the amount is a reasonable forecast of actual harm (Correct answer)
- They exceed actual damages by at least 50%
- The parties agree to them after the breach occurs
Correct answer: Damages were difficult to estimate and the amount is a reasonable forecast of actual harm
Liquidated damages clauses are enforceable when actual damages were difficult to estimate at contract formation and the stipulated amount represents a reasonable forecast of compensatory damages, not a penalty.
AK Bar Alaska Contracts and Commercial Law 2
The doctrine of substantial performance in contract law allows a party to recover when: