V =the clients value of performance; R = the clients reliance investment; and P =the contract price, payable on performance. Suppose that at the time the contact was made, the cost of performance to the builder is uncertain, but it was known that at the date of performance it will take one of the following values: C={$50,000; $70,000; $90,000; $110,000}.

For the next four questions, indicate whether the statement is true (T) or false (F):

It is efficient for the builder to perform if C=$50,000.

It is efficient for the builder to perform if C=$70,000.

It is efficient for the builder to perform if C=$90,000.

It is efficient for the builder to perform if C=$110,000.

Calculate the amount of expectation damages for this example. It is equal to:

1. $5,000
2. $25,000
3. $75,000
4. $100,000

Under expectation damages, the builder will breach the contract rather than perform if C equals

1. $50,000
2. $70,000
3. $90,000
4. $110,000

True (T) or False (F), the outcome in the previous question is efficient.