Q1: In the case of the liquidated damages, how are the damages calculated or decided?

Select one:

a.

On the basis of a pre-estimated amount of damages (estimated at the time of entering into the contract) to be awarded in the event of a breach of contract occurring.

b.

Damages are quantified by the courts followed by a breach.

c.

A pre-estimated amount that a party will need to pay should be a breach of the contract. The amount is set excessively high to encourage the performance and deter the breach.

d.

Damages are negotiated and agreed upon by the parties following the breach.

Q2:

XYZ Ltd contracts with Cross Ltd. to manufacture and supply 100 cases of a special cigar using a specific drug called SuperX. Cross Ltd agreed to pay the contract money, $10,000, to XYZ Ltd and paid $1,000 as advance but before the delivery takes place the Government introduced a law banning the manufacture and supply of SuperX resulting in frustration of the contract. Can Cross Ltd successfully claim the deposit of $1,000 back?

Select one:

a.

Yes, if Cross Ltd proves that there is a total failure of consideration by XYZ Ltd.

b.

No, the contract is frustrated.

c.

Yes, because it was a legal contract when it was made.

d.

No, money paid under frustrated contracted cannot be claimed back.