FYLSX Contract Breach and Remedies 2 — Questions and Answers
Question 1: Which doctrine allows a court to award expectation damages even when they are difficult to calculate with certainty?
- The certainty doctrine requires dismissal of speculative claims
- Courts may award nominal damages as a substitute
- Courts use the best available evidence to estimate damages with reasonable certainty (Correct answer)
- The jury must deny damages if the exact amount is unknown
Correct answer: Courts use the best available evidence to estimate damages with reasonable certainty
Courts apply the reasonable certainty standard, permitting recovery based on the best available evidence even when the precise amount cannot be proven with mathematical exactitude.
Question 2: Seller breaches a contract to deliver goods. Buyer covers by purchasing substitute goods at a higher price. What is Buyer's primary remedy under UCC Article 2?
- The difference between contract price and market price at time of breach
- The cover price minus the contract price, plus incidental and consequential damages (Correct answer)
- Only the incidental costs of finding substitute goods
- The full cover price without any deduction for the contract price
Correct answer: The cover price minus the contract price, plus incidental and consequential damages
Under UCC §2-712, the buyer who covers may recover the difference between the cost of cover and the contract price, plus incidental and consequential damages.
Question 3: A party commits an anticipatory repudiation. What options does the non-breaching party have?
- Only wait until the performance date to sue
- Only accept the repudiation and sue immediately
- Either treat the repudiation as a breach and sue immediately, or wait for the performance date (Correct answer)
- Only seek specific performance
Correct answer: Either treat the repudiation as a breach and sue immediately, or wait for the performance date
Upon anticipatory repudiation, the non-breaching party may elect to treat it as an immediate breach and sue at once, or wait until the time for performance and sue then.
Question 4: Under the doctrine of substantial performance, which of the following is true?
- The performing party is entitled to full contract price with no deduction
- The performing party may recover the contract price minus the cost to cure the defect (Correct answer)
- The performing party forfeits all compensation because performance was not perfect
- Only material breaches trigger the substantial performance doctrine
Correct answer: The performing party may recover the contract price minus the cost to cure the defect
A party who substantially performs is entitled to the contract price reduced by the cost to cure the minor deficiency, preventing unjust forfeiture.
Question 5: What is the purpose of liquidated damages clauses in contracts?
- To penalize the breaching party beyond actual harm suffered
- To pre-estimate damages when actual damages would be difficult to calculate and the amount is reasonable (Correct answer)
- To waive all damages upon breach
- To allow the non-breaching party to demand specific performance
Correct answer: To pre-estimate damages when actual damages would be difficult to calculate and the amount is reasonable
Liquidated damages clauses are enforceable when they represent a reasonable pre-estimate of actual harm and actual damages would be difficult to ascertain.
Question 6: Which of the following best describes 'mitigation of damages' in contract law?
- The breaching party must reduce the amount owed by performing in good faith after breach
- The non-breaching party must take reasonable steps to reduce losses after breach (Correct answer)
- Courts automatically reduce damage awards by 50% in all breach cases
- Mitigation only applies in employment contract disputes
Correct answer: The non-breaching party must take reasonable steps to reduce losses after breach
The non-breaching party has a duty to take reasonable steps to avoid or minimize losses flowing from the breach; failure to do so reduces the recovery.
Question 7: When is specific performance available as a remedy for breach of contract?
- Whenever the non-breaching party requests it
- Only in real property contracts
- When monetary damages are inadequate, typically because the subject matter is unique (Correct answer)
- Only when the contract expressly provides for it
Correct answer: When monetary damages are inadequate, typically because the subject matter is unique
Specific performance is an equitable remedy granted when money damages are inadequate, most commonly for unique goods, real property, or irreplaceable items.
FYLSX Contract Breach and Remedies 2
Which doctrine allows a court to award expectation damages even when they are difficult to calculate with certainty?