MindTap: Worksheet 13.3: Damages & Equitable Remedies for Contract Breach

Match the terms on the left with the appropriate definition on the right.

Punitive damages: Damages intended to punish wrongdoing

Compensatory damages: Damages that compensate the party for the loss of the bargain

Nominal damages: A small monetary award granted when no actual economic harm has been done

Consequential damages: Special damages that are a foreseeable result from a party's breach of contract, but not a normal expectation of a breach

Compensatory damages replace what was lost because of what the breaching party did and for this reason are often said to "make the person whole."

True

The standard measure of compensatory damages can be stated as:

the difference between the promised performance and the actual performance.

Generally, compensatory damages for breach of contract are reduced by any loss that the innocent party has avoided.

True

Sometimes, the buyer of goods breaches a contract before the seller produces the goods. If that is the case, the seller can receive _____ as compensatory damages.

lost profits

In most states, when a seller of real estate breaches a contract and sells the land to someone else, the measure of compensatory damages is:

the difference between the market price and the contract price.

In a construction contract, if the owner breaches before construction begins, the contractor can receive _____. If the owner breaches during construction, the contractor can recover _____ incurred. If the owner breaches after construction is completed, the contractor can receive the _____.

profits; profits plus costs; contract price plus interest

In a construction contract, when the contractor breaches, the damages are measured as

the cost of completion

Punitive damages are rarely awarded in contract cases.

True

One dollar is a common amount for nominal damages.

True

Match the term with its correct definition.

Liquidated damages: An amount in the contract that sets forth a reasonable estimate of damages

Mitigation: Minimization of damages by the plaintiff

Penalty: An amount in the contract that sets forth a punishment for breach

The enforceability of a liquidated damages clause normally requires two things: 1) When the contact was entered into, it was apparent that the damages would be _____ to estimate in the event of a breach; 2) The amount set was _____.

difficult; reasonable

Match the terms with their appropriate definitions.

Restitution: An equitable remedy where a person is returned to his or her original position

Reformation: An equitable remedy to correct a contract to accurately reflect the true intentions of the parties

Specific performance: An equitable remedy where a court orders one party to complete its obligations under the contract

Rescission: An equitable remedy to "undo" a contract

Contracts for the sale of goods only qualify for specific performance if the goods are unique.

True