A novation occurs when a legal remedy is inadequate so a equitable remedy, like
ID: 2818103 • Letter: A
Question
A novation occurs when
a legal remedy is inadequate so a equitable remedy, like reformation of the contract, is the only fair alternative.
FedEx promises to deliver Fred's package to his customer Jim, overnight. Jim needs the package because it has the last part Jim needs to build his robot for Intel. Jim is under contract with Intel to complete the robot tomorrow, or else Jim has to pay liquidated damages of $500 for every day the robot is late (Intel plans to pay Jim about $50,000 for the completed robot). There is nothing in the agreement between Fred and FedEx limiting FedEx's liability for failing to deliver the package on time. The package is delivered one day late, so Jim is delayed by one day in getting the robot to Intel-and has to pay Intel $500. It cost FedEx charged Fred $50 to deliver the package. What is FedEx's $ liability for breaching the delivery contract (and failing to deliver overnight)?
one party is substituted for another party of an agreement (to which all parties agree on the substitution, reliving the substituted party from performingExplanation / Answer
Answer 1:
A novation occurs when
Correct answer is:
one party is substituted for another party of an agreement to which all parties agree on the substitution, reliving the substituted party from performing
Explanation:
Contractual obligation can be discharged through novation. Novation occurs when both the parties of an existing contract agrees to substitute a third party for one of original party. The substitued party is discharged from performance.
As such option 1 is correct. Options 2 and 3 are not correct explanation of novation and are incorrect.
Answer 2:
Correct answer is:
$500, the lost suffered by Jim as long as the loss suffered by Jim was foreseeable
Explanation:
FedEx promises to deliver Fred's package to his customer Jim, overnight. However, the contract does specify damages payable for breach of contract.
In this case equitable remedy is a fair alternative. Under equitable remedy the breaching party may be ordered for Specific performance, restitution or injunction. Restitution is reimbursement of loss or injury restoring the aggrieved party to former condition.
As due to delayed delivery, Jim has suffered loss of $500, Fedex's liability for breaching the delivery contract is $500
As such option 2 is correct.
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