JD Contract Law 2 — Questions and Answers
Question 1: What is the primary measure of damages for breach of contract?
- Punitive damages
- Expectation damages (Correct answer)
- Nominal damages
- Restitutionary damages
Correct answer: Expectation damages
Expectation damages aim to put the non-breaching party in the position they would have been in had the contract been performed, covering lost profits and other foreseeable losses.
Question 2: A contract clause that pre-estimates damages in the event of breach is called a:
- Penalty clause
- Liquidated damages clause (Correct answer)
- Exculpatory clause
- Force majeure clause
Correct answer: Liquidated damages clause
A liquidated damages clause is enforceable if the damages were difficult to estimate at contracting and the amount is a reasonable forecast of actual harm.
Question 3: Under the doctrine of 'anticipatory repudiation,' a non-breaching party may treat a contract as breached when the other party does what?
- Delays performance by one day
- Unambiguously declares intent not to perform before the performance date (Correct answer)
- Requests a contract modification
- Assigns their rights to a third party
Correct answer: Unambiguously declares intent not to perform before the performance date
Anticipatory repudiation occurs when a party clearly and unequivocally states before the performance date that they will not perform, entitling the other party to sue immediately.
Question 4: What is 'specific performance' as a contract remedy?
- Payment of a fixed statutory penalty
- Court order compelling a party to perform the contract (Correct answer)
- Return of consideration paid
- Cancellation of the contract
Correct answer: Court order compelling a party to perform the contract
Specific performance is an equitable remedy that orders the breaching party to actually perform their contractual obligations, typically granted when monetary damages are inadequate.
Question 5: Which defense excuses contract performance when an unforeseen event makes performance impossible?
- Frustration of purpose
- Impossibility (impracticability) (Correct answer)
- Mutual mistake
- Unconscionability
Correct answer: Impossibility (impracticability)
The doctrine of impossibility (or commercial impracticability under the UCC) excuses performance when an unforeseen supervening event makes performance objectively impossible or commercially unreasonable.
Question 6: When a third party has rights under a contract between two others, that third party is called:
- An assignee
- A delegatee
- A third-party beneficiary (Correct answer)
- A surety
Correct answer: A third-party beneficiary
A third-party beneficiary is someone who is not a party to the contract but who will benefit from its performance and may have the right to enforce it.
JD Contract Law 2
What is the primary measure of damages for breach of contract?