Chapter 18: Prepare & Apply

Courts of equity will not grant specific performance of contracts:

• for a personal services contract.

• for the sale of real estate.

• for the sale of the original manuscript of a rare edition book.

• All of these are correct.

Answer explanation

Courts of equity will not grant specific performance for a personal services contract because it involves unique skills and cannot be enforced without violating personal rights. The other options are eligible for specific performance.

Compensatory damages are designed to place the injured party in a position as good as the one he would have been in had the other party performed, and are known as:

• mitigation damages.

• consequential damages.

• punitive damages.

• All of these are correct.

Answer explanation

Consequential damages are intended to compensate the injured party for losses that result from the failure of the other party to perform, effectively placing them in the position they would have been in had the contract been fulfilled.

A court of equity, at its discretion, may grant a(n) __________ to command the other party to refrain from doing a specific act.

• restitution.

• injunction.

• specific performance.

• All of these are correct.

Answer explanation

An injunction is a court order that commands a party to refrain from specific actions. Restitution and specific performance are different remedies, making 'injunction' the correct choice for this context.

A small sum of damages fixed without regard to the amount loss is known as:

• nominal damages.

• out-of-pocket damages.

• inconsequential damages.

• None of these are correct.

Answer explanation

Nominal damages are a small sum awarded when a legal wrong has occurred, regardless of the actual loss suffered. This distinguishes them from other types of damages that consider the extent of the loss.

At time, a written contract does not correctly state the agreement already made by the parties. When this occurs, either party may seek to have the court correct the writing to state the agreement actually made. This rewriting is known as:

• specific performance.

• injunction.

• reformation.

• rescission.

Answer explanation

This rewriting is known as reformation, which allows a court to correct a written contract to reflect the true agreement made by the parties, distinguishing it from other legal remedies like specific performance or rescission.

The breaching party is not liable for loss that was not __________ at the time of entering into the contract.

• mitigated

• out-of-pocket

• liquidated

• foreseeable

Answer explanation

The breaching party is not liable for losses that were not foreseeable at the time of entering into the contract. This means they cannot be held responsible for damages that could not have been predicted.

The parties may stipulate in their contract that a certain amount of __________ should be paid in case of a breach.

• nominal damages

• liquidated damages

• mitigated damages

• breach

Answer explanation

The correct choice is 'liquidated damages' because it refers to a predetermined amount specified in a contract to be paid in case of a breach, unlike nominal or mitigated damages which do not fit this context.

__________ damages are ordered in excess of actual loss and are imposed for the purpose of punishing the defendant.

• Nominal

• Consequential

• Punitive

• Compensatory

Answer explanation

Punitive damages are awarded beyond actual losses to punish the defendant for wrongdoing. They serve as a deterrent against similar conduct, distinguishing them from compensatory, consequential, and nominal damages.

An injured party who rescinds a contract after having performed services may recover the reasonable value of the performance rendered as:

• foreseeability.

• certainty.

• mitigation.

• restitution.

Answer explanation

The injured party can recover the reasonable value of services performed through restitution, which aims to restore the party to the position they were in before the contract, rather than focusing on foreseeability, certainty, or mitigation.

When the damages sustained by the plaintiff can be measured in monetary terms, specific performance will be:

• accompany an order for monetary damages.

• ordered.

• refused.

• All of these are correct.

Answer explanation

Specific performance is a remedy used when monetary damages are inadequate. If damages can be measured in monetary terms, specific performance will be refused, as the plaintiff can be compensated with money.