AZ Bar Contracts and Commercial Law 3

Question 1

Expectation damages in a breach of contract case aim to put the non-breaching party:

Accepted Answer

In the position they would have been in had the contract been performed

Answer

Expectation damages, the standard contract remedy, are designed to give the non-breaching party the benefit of the bargain—the position they would have occupied had the contract been fully performed.

Question 2

The duty to mitigate requires that after a breach, the non-breaching party:

Accepted Answer

Take reasonable steps to minimize its losses

Answer

Contract law requires the non-breaching party to take reasonable steps to mitigate (reduce) its damages after a breach; damages that could have been avoided through reasonable efforts are not recoverable.

Question 3

A novation discharges the original contract by:

Accepted Answer

Substituting a new party or a new obligation for the old one with the consent of all parties

Answer

A novation replaces the original contract or a party to it with a new obligation or party, discharging the original obligation by agreement of all parties.

Question 4

An assignment of contract rights:

Accepted Answer

Transfers the assignor's rights to the assignee, extinguishing them in the assignor

Answer

An assignment transfers the assignor's contractual rights to the assignee; the assignor's rights are extinguished and the assignee steps into the assignor's shoes.

Question 5

Mutual mistake as a defense to contract enforcement requires:

Accepted Answer

A mistake about a basic assumption on which the contract was made that materially affects the agreed exchange, with neither party bearing the risk

Answer

Mutual mistake allows rescission when both parties share a mistake about a basic assumption, the mistake materially affects the exchange, and neither party bears the risk of the mistake.

AZ Bar - Arizona Bar Exam Practice Test

AZ Bar - Arizona Bar Exam Practice Test

AZ Bar Contracts and Commercial Law 3