1.Power Services, Inc. ("PSI") provides operating and maintenance services to electric power plants.Its contract with a particular power plant provides that, if PSI fails to provide adequate services and the power plant has to shut down as a result, PSI will pay the plant owner a fixed amount of $20,000 per day for the duration of the shutdown.The power plant shut down is likely to cause losses of tens of millions of dollars per day from a loss of output. This is an example of liquidated damages.

A)True

B)False

2.The manufacturer of a talking doll encounters a sudden shortage of computer chips from its suppliers that are necessary for the doll to operate, and informs its customer that the manufacturer will not be able to deliver in time for the Christmas season as required under its contract.This is an example of anticipatory breach/repudiation.

A)True

B)False

3.Andrew is employed as the chief executive officer of a large public company in Silicon Valley, for a salary of $1,000,000 per year on a five -year contract. His employer terminates Andrew with one year left on the contract. Andrew seeks alternative senior management jobs but, due to an economic downturn, cannot find anything comparable for over one year.The only job offer he obtained during the year was a commissioned sales position that was expected to pay him up to $100,000 per year, and he didn't take that job offer. Which of the following hold true in this scenario?

A)Andrew can sue his prior employer and recover $1,000,000

B)Andrew can only sue to receive nominal damages because he didn't take the alternative job offer

C)Andrew's prior employer must pay Andrew $900,000

D)Andrew cannot take any legal action against his prior employer because he's already been paid $4 million and that's enough

4.A manufacturer in Vietnam makes clothing products for Macy's Department Stores under contracts that specify various delivery dates, prices, etc. Macy's files for bankruptcy protection.The manufacturer ______

A)must continue production and ship outstanding orders to Macy's or it will be found in breach.

B)may halt production and shipments until it gets reasonable assurance it will be paid in full on remaining outstanding orders.

C)may continue production to use up bulk fabric and other supplies it has on hand, and sell the finished goods to a different buyer if that would minimize the loss it will suffer from the bankruptcy of Macy's.

D)both (B) and (C) are available to the manufacturer as remedies

5.Suzanne is a sculptor and potter who agrees to make tea sets for a retail specialty shop. The agreement states that Suzanne must deliver 10 tea sets and that the shop would pay $100 per set. However, Suzanne manages to deliver only six tea sets and the shop needs to buy the other four sets from another supplier for $600 in total for the four sets. How much money can the shop recover from Suzanne?

A)$1,000

B)$600

C)$200

D)$400

6.Mattel entered into an agreement with a manufacturer in China for 300,000 Barbie & Ken dolls for delivery by Oct. 15thfor sale during the holiday season.The shipment is delivered on October 14, but half of the dolls do not have the hair color or types of clothing as specified in the contract. Mattel may___________

A)reject the non-conforming portion of the shipment and cancel that part of the contract

B)buy dolls from another supplier to replace the non-conforming ones and recover any higher costs as damages

C)sell the non-conforming dolls and apply proceeds toward recovery of its losses

D)any of the above