MENU
Terry's Toys is a Toy Manufacturer who has an agreement to provide Toys to an online re-tailer. The retailer has ordered 500 toys from Terry and Terry has incurred costs of 3000 manufacturing the toys. Halfway through production the retailer calls Terry to cancel the order. Terry reads through the contract and sees a liquidated damages clause of 1000. What should Terry do?
Suggested Answer: C
Get Premium L5M3 Questions
as Interactive Web-Based Practice Test or PDF
Real Exam Format
Detailed Explanations
Instant Access
Get Your Practice Test
DEF must deliver the pasta required by ABC is the correct answer. Specific performance is when the innocent party is rewarded by receiving what was initially negotiated - in this case the delivery of pasta. It's basically a posh way of saying that the court mandates you to do what the contract says. See p. 129 for information on Specific Performance.
34 comments · newest first
FL
Florinda
11 months ago
But what if the retailer just refuses to pay the liquidated damages?
TY
Tyra
11 months ago
Yeah, he should just stick to the contract and deliver the toys.
MA
Margarita
12 months ago
Wait, he has to pay 2000 out of pocket? That seems unfair!
PA
Paulina
12 months ago
I think the liquidated damages are set, so he can't change that.
HE
Herminia
1 year ago
Terry should definitely sue for the extra costs!
DE
Denise
1 year ago
I’m really torn between options C and D. I know contracts are binding, but I also remember something about having to cover losses.
CA
Carma
1 year ago
I feel like Terry should just deliver the toys since there’s a contract. But what if the retailer doesn’t want them anymore?
LO
Long
1 year ago
I think option B sounds familiar from a practice question we did. It mentioned suing for additional costs, but I’m not entirely confident that’s allowed here.
AD
Adria
1 year ago
I remember discussing liquidated damages in class, but I'm not sure if Terry can actually increase them in court. That seems tricky.
HA
Hayley
1 year ago
Hmm, I'm leaning towards option B. The additional $2,000 in costs that Terry incurred seems like a reasonable claim, even with the liquidated damages clause in place. I'll need to double-check the contract language, but that's my initial take.
EV
Evangelina
1 year ago
This seems straightforward to me. The contract has a liquidated damages clause, so Terry should just accept the $1,000 and move on. No need to overcomplicate things.
HE
Heike
1 year ago
I'm a bit confused on this one. The liquidated damages clause seems pretty clear, but I'm not sure if that's the only option. I'll need to think through the pros and cons of each choice before deciding.
BU
Bulah
1 year ago
Okay, so the key facts are that Terry has incurred $3,000 in manufacturing costs, and the contract has a liquidated damages clause of $1,000. I think the best option is to go with B and sue for the additional costs.
TU
Tuyet
1 year ago
Hmm, this seems like a tricky one. I'll need to carefully review the contract details and the liquidated damages clause to determine the best course of action.
LE
Leila
1 year ago
Haha, Option D - paying out of his own pocket? Terry should definitely not do that. What a bummer for him!
HU
Huey
1 year ago
C) Terry can deliver the toys as agreed as there is a contract in place
RO
Royal
1 year ago
B) Terry can sue the retailer for the additional costs incurred above the liquidated damages
LA
Latonia
1 year ago
A) Terry can apply to the court to increase the liquidated damages to 3000
JU
Justa
2 years ago
This is a tricky one. I can see the appeal of Option A, but increasing the liquidated damages might be a stretch. Hmm, tough call.
TA
Tamie
1 year ago
In that case, Terry might have to deliver the toys as agreed to fulfill the contract.
NO
Noah
1 year ago
But what if the court doesn't agree to increase the liquidated damages to cover the full cost?
MI
Mitzie
1 year ago
I think Terry should go with Option B and sue the retailer for the additional costs.
FE
Felice
2 years ago
I'm not sure, but I think Option B might be the best choice. Terry should try to recoup the additional costs incurred above the liquidated damages.
GO
Golda
1 year ago
Then Terry might have to deliver the toys as agreed and take the loss.
WI
Willetta
1 year ago
But what if the court doesn't allow Terry to increase the liquidated damages?
HE
Helaine
2 years ago
I think Terry should definitely sue the retailer for the extra costs.
CL
Claudia
2 years ago
Option C seems like the logical choice. If there's a contract in place, Terry should deliver the toys as agreed.
LO
Lorrie
1 year ago
That's true, but the contract is still in place.
CA
Casie
1 year ago
He can sue the retailer for the additional costs above the liquidated damages.
CA
Catarina
1 year ago
But what about the extra costs he incurred?
LA
Lai
2 years ago
I think Terry should deliver the toys as agreed.
VA
Valene
2 years ago
Terry can apply to the court to increase the liquidated damages.
LO
Louis
2 years ago
I think Terry should deliver the toys as agreed.
SI
Silva
2 years ago
Terry should sue the retailer for the additional costs.