Introductory Business Law CLEP Prep Practice Exam

What is the legal consequence that arises when a contract is breached?

1. Damages

2. Negligence

3. Liability

4. Fraud

The correct answer is: Damages

When a contract is breached, it means that one party has failed to fulfill their obligation as stated in the contract. The legal consequence that arises from this is typically damages, which is a sum of money that the breaching party must pay to the other party to compensate for any losses or harm caused by the breach. This is the most common consequence for contract breaches, as it is meant to make the non-breaching party whole again. The other options are incorrect because they do not directly relate to contract breaches. Negligence is a failure to exercise reasonable care, which could potentially lead to a breach of contract, but it is not the legal consequence of a breach. Liability refers to being legally responsible for something, but it is not a specific consequence for a contract breach. Fraud is intentionally deceiving someone for personal gain, which may occur in a breach of contract situation, but it is