Fundamentals of Business law
Business law case study questions
- What is the difference between an assignment and a delegation?
Assignment is actually the transfer of all the rights under a particular contract to a specific third
party. The assignee takes over the rights of the assignor. Delegation is the actual transfer of
duties in a contract to a specific third party known as the delegate who takes over the duties of
- What rights can be assigned despite a contract clause expressly prohibiting assignment?
Generally all the rights in a contract can be assigned except in very special circumstances.
- How are most contracts discharged?
Most contracts are discharged by strict or complete performance. These is a situation where are
the parties to a contract have performed their obligation to the satisfaction of both parties or have
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done their part under the terms of the contract or agreement. The ways in which a contract can
come to an end is through agreement, bankruptcy or destruction of the subject matter i.e.
frustration of purpose.
- What is a contractual condition and how might a condition affect contractual obligation?
A contractual condition is a major component of the contract and its breach discharges the other
party from their contractual obligations.
- What’s the difference between compensatory damages and consequential damages? What are
nominal damages, and when do courts award nominal damages?
Compensatory damages are the remedies available to non breaching party in a contract for loss
of bargain. The court attempts to return the aggrieved party to the position he would have been
had the contract been performed. Consequential damages are those damages that result from
special conditions or circumstances that are relatively beyond the contract. The damages
basically flow from the results or circumstances of the breach. For an action of consequential
damages to succeed then the damages must be reasonably foreseeable result of the breach of
contract and the other party being sued must have known that a special circumstance exists and
can cause the aggrieved party to incur additional expenses on the breach. Nominal damages are
those damages that are small in amounts for instance payments amounting to one dollar and are
basically awarded because a breach has actually occurred but there is no real injury that the
plaintiff has suffered. (Cengage, 2012)
2What is the standard measure of compensatory damages when a contract is breached? How are
damages computed differently in construction contracts?
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The standard is the loss of bargain had the contract been performed to its conclusion. The loss of
benefit had the contract been performed. For instance the breach of contracts for sales the
measure would be the actual difference between the market price of the good and its contract
price. In construction contracts, the stage of construction of the contract and the party that’s
breaching the contract determines the compensatory damages
- Under what circumstances is the remedy of rescission and restitution available?
Rescission is a remedy that’s available when a contract has been cancelled and all the parties to
the contract need to be restored back to their initial or original position. Restitution is available
when a contract has been rescinded and the parties concerned must make restitution to respective
parties by returning each other’s possessions. It’s meant to prevent unjustified practices.
- When do courts grant specific performance as a remedy?
This remedy is available to parties in special situations and is only granted when the contracts
involved deal in unique items or land and when compensation in monetary terms would be
inadequate. It’s available when contracts for personal services are breached.
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Cengage (2012) The Fundamentals of Business Law, 9 th Edition.