1. What is a “breach of contract”?
a) Failure to perform under a contract
b) Performing all obligations under the contract
c) Modifying the terms of the contract
d) Renewing the contract
Answer: a) Failure to perform under a contract
2. Which type of breach occurs when a party fails to perform a significant part of the contract?
a) Minor breach
b) Material breach
c) Partial breach
d) Fundamental breach
Answer: b) Material breach
3. What is the remedy for a breach of contract that aims to put the injured party in the position they would have been in if the contract had been performed?
a) Specific performance
b) Damages
c) Rescission
d) Restitution
Answer: b) Damages
4. What is “specific performance” in the context of contract remedies?
a) Financial compensation for damages
b) An order requiring the breaching party to fulfill their contractual obligations
c) The cancellation of the contract
d) A refund of the consideration
Answer: b) An order requiring the breaching party to fulfill their contractual obligations
5. What is “rescission” as a remedy for breach of contract?
a) Requiring performance of the contract
b) Monetary compensation for losses
c) Cancellation of the contract and returning the parties to their pre-contractual positions
d) Reduction of the contract terms
Answer: c) Cancellation of the contract and returning the parties to their pre-contractual positions
6. What type of damages are intended to compensate the injured party for losses that were foreseeable at the time the contract was made?
a) Consequential damages
b) Punitive damages
c) Nominal damages
d) Liquidated damages
Answer: a) Consequential damages
7. What are “liquidated damages”?
a) Compensation awarded for emotional distress
b) Damages predetermined and specified in the contract for a breach
c) Compensation for actual losses incurred
d) Damages awarded for punitive purposes
Answer: b) Damages predetermined and specified in the contract for a breach
8. What is the purpose of “nominal damages”?
a) To compensate for significant financial loss
b) To punish the breaching party
c) To recognize that a breach occurred but there was no substantial financial loss
d) To provide a large sum of money for emotional distress
Answer: c) To recognize that a breach occurred but there was no substantial financial loss
9. When can a party seek “restitution” as a remedy for breach of contract?
a) When they want to cancel the contract
b) When they want to return to their pre-contractual position by recovering benefits conferred
c) When they want the contract to be enforced as written
d) When they want to punish the breaching party
Answer: b) When they want to return to their pre-contractual position by recovering benefits conferred
10. In which situation might a party be awarded “punitive damages”?
a) For a minor breach with no financial loss
b) For a breach that caused significant financial harm
c) For a breach committed with intent to cause harm or fraud
d) For a breach with minimal impact
Answer: c) For a breach committed with intent to cause harm or fraud
11. What is “anticipatory breach” of contract?
a) A breach that occurs after the performance deadline has passed
b) A declaration by one party that they will not perform their contractual obligations before the performance is due
c) A minor delay in performance
d) A breach that occurs due to a force majeure event
Answer: b) A declaration by one party that they will not perform their contractual obligations before the performance is due
12. What should a party do if they anticipate a breach of contract by the other party?
a) Ignore the situation and wait for the breach
b) Seek a remedy for the breach
c) Take steps to mitigate their losses and seek a remedy
d) Immediately cancel the contract without notification
Answer: c) Take steps to mitigate their losses and seek a remedy
13. What is “mitigation of damages”?
a) The process of increasing damages awarded
b) The obligation of the injured party to take reasonable steps to reduce their losses
c) The reduction of the contract terms
d) The cancellation of the contract
Answer: b) The obligation of the injured party to take reasonable steps to reduce their losses
14. Which remedy involves a court order to perform specific acts required by the contract?
a) Damages
b) Rescission
c) Specific performance
d) Restitution
Answer: c) Specific performance
15. Can damages be awarded for emotional distress in breach of contract cases?
a) Yes, always
b) No, only for physical injuries
c) Yes, but only in cases involving personal contracts
d) No, damages are generally awarded for economic losses only
Answer: d) No, damages are generally awarded for economic losses only