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Question 1
Ben and Jerry's is a new ice cream company that is trying to get its business off the ground. They order expensive ice cream manufacturing machinery from Thermachines and sign contracts with Moo Juice Dairy Farm to supply them with milk. Thermachines fails to deliver the machinery and, because Ben and Jerry cannot meet their demands, their customers take their business elsewhere. As a result, Ben and Jerry go out of business three months after opening. If Ben and Jerry sue Thermachines for lost profits but the court cannot determine with reasonable certainty what those lost profits were, they will award Ben and Jerry:
Correct
Incorrect!
Correct
Incorrect!
Correct Nominal damages are basically token damages whose purpose is only to acknowledge that the injured party has been injured. Here, since the court cannot measure the amount of damages Ben and Jerry suffered, it is likely that nominal damages, of perhaps $1 will be awarded as a token acknowledgement that Ben and Jerry were harmed.
Incorrect! Nominal damages are basically token damages whose purpose is only to acknowledge that the injured party has been injured. Here, since the court cannot measure the amount of damages Ben and Jerry suffered, it is likely that nominal damages, of perhaps $1 will be awarded as a token acknowledgement that Ben and Jerry were harmed.
Correct
Incorrect!
Question 2
Ben and Jerry's is a new ice cream company that is trying to get its business off the ground. They order expensive ice cream manufacturing machinery from Thermachines and sign contracts with Moo Juice Dairy Farm to supply them with milk. Ben and Jerry and Thermachines agree that if Thermachines breaches the contract by failing to deliver the machinery, they will pay Ben and Jerry $75,000 in damages. Thermachines fails to deliver the machinery and, because Ben and Jerry cannot meet their demands, their customers take their business elsewhere. As a result, Ben and Jerry go out of business three months after opening. Thermachines refuses to pay the $75,000 and Ben and Jerry sue for breach. They will probably:
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Correct In order for a liquidated damages provision to be valid, it must meet two requirements. First, at the time the contract is made, actual damages must be difficult to calculate and, second, the amount of damages established in the contract must be a reasonable forecast of what damages would have been. Here, the amount of damages is difficult because Ben and Jerry's is a new business. That being the case, if the $75,000 is a reasonable forecast of what Ben and Jerry's damages would have been, the liquidated damages clause will be valid and D is the correct answer.
Incorrect! In order for a liquidated damages provision to be valid, it must meet two requirements. First, at the time the contract is made, actual damages must be difficult to calculate and, second, the amount of damages established in the contract must be a reasonable forecast of what damages would have been. Here, the amount of damages is difficult because Ben and Jerry's is a new business. That being the case, if the $75,000 is a reasonable forecast of what Ben and Jerry's damages would have been, the liquidated damages clause will be valid and D is the correct answer.