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Contract Law Quiz 9
- Course
- PRL 174
- Institution
- Des Moines Area Community College
These are the questions and answers to quiz 9 in Contract Law.
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Rachel DebnerANSWER EACH QUESTION BY USING 5 OR MORE COMPLETE SENTENCES.
ANSWER EACH QUESTION USING YOUR OWN WORDS. YOU MAY USE QUOTED
MATERIALS TO SUPPORT YOUR ANSWERS BUT DO NOT USE QUOTED
MATERIAL AS A SUBSTIUTE FOR YOUR OWN ANALYSIS.
FACTS. Jill is the supplier of fresh ripe peaches to local markets in the city.
She enters into a contract with the Hi-Land Market to transport 10,000
peaches to several of its stores. The contract amount is $.50 per peach
($5,000). However, on the morning that Jill is scheduled to make deliveries
Hi-Land Market cancels the entire order breaching the contract.
SCENARIO 1. Jill uses reasonable efforts to preserve the peaches and find a
substitute buyer. However, Jill immediately determines there is no market for
the peaches and the entire lot spoils. She now has to pay City Compost
($500) to dispose of the peaches.
Question #1. Under these facts, what are Jill’s expectation damages?
The expectation damages can be calculated by using the price of the
contract, mitigation efforts, and soilage and disposal costs. Jill was to receive
$5,000 from Hi-Land Market ($0.50 per peach for 10,000 peaches). This is
the contract price. Because Jill used reasonable efforts to preserve the
peaches and did not find another buyer, she does not have mitigation
damages. Jill incurred an additional $500 to dispose of the spoiled peaches.
Her total expectation damages includes the lost profit from the breached
contract and any additional costs incurred due to the breach. Total
expectation damages = $5,000 + $500 = $5,500.
SCENARIO 2. Jill incurs refrigeration costs to preserve the peaches ($500)
until finally making arrangements to sell the entire lot to another outlet
(Sam’s Used Fruit). Sam drives a hard bargain and the purchase price for the
10,000 peaches is $.25 per peach ($2,500).
Question #2. Under these facts, what are Jill’s expectation damages?
The expectation damages can be calculated by using the price of the
contract, mitigation efforts, and preservation. The contract price with Hi-Land
Market is $5,000. Jill managed to sell the peaches for $2,500 to Sam’s Used
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