Question

Business Law class

46. A liquidated damages provision is valid, provided:

a. it is in writing;

b. it rewards only nominal damages;

c. it is not assignable;

d, it is not so high as to be a penalty.

47 A party to a contract has a duty to __________or reduce his/her damages.

a. mitigate;

b. litigate;

c. defer;

d. increase;

48. Foreseeable damages which flow from a party’s breach of contract, which the breaching party is aware of prior to the breach, are ______damages.

a. compensatory;

b. punitive;

c. consequential;

d. nominal.

49. Al-Awlaqi is a contractor who owns a crane. He has been hired by

Hammes to bring his crane to a construction site. The night before the project is to begin. Al-Awlaqi’s crane is destroyed in a storm. Regarding performance of the contract, he has the defense of:

a. commercial impracticability;

b. frustration of purpose;

c. impossibility;

d. Substantial performance.

50. Any deviation from full and complete performance is classified as a(n):

a. excuse;

b. deviation;

c. release;

d. breach.

Answer 1

46]

A provision for liquidated damages is required to be in writing to valid, and it is not so high as to be a penalty

This provision requires that damages are reasonable, and not nominal

47]

A party to a contract has a duty to mitigate or reduce his/her damages.

This means that the party cannot gain from negligence or avoidance of duty

48]

Foreseeable damages which flow from a party’s breach of contract, which the breaching party is aware of prior to the breach, are compenstatory damages.

Punitive damages are penalties

Consequential damages arise due to an action or non-action by a party

49]

The defence is of impossibility - due to the destruction of the crane, it is impossible to perform the contract

It is not commercial impracticality because the crane itself is destroyed