Practice Quiz

Paralegal Exam Prep

Category - Contracts

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McManus Enterprises entered into a 2-year employment contract with McKinley to perform IT services with a salary of $300,000 per year. McKinley's duties required him to work long hours in a fast-paced, stressful environment. McKinley performed his duties well. However, after 6 months McManus Enterprises hired McCauley to perform the same IT job as McKinley for only $150,000 per year. McManus fired McKinley. McKinley, angry about being fired, sued McManus for breach. In the meantime, McKinley decided to take a break from working in IT and accepted a position at the local MacKenzie Hamburger fast food chain for $9.00 an hour. What limitation will there be on the amount that McKinley can recover from McManus?
  1. The amount that McKinley earns working at MacKenzie Hamburger Joint.
  2. The total amount that McKinley would have earned under the contract.
  3. The amount that McKinley could have reasonably earned by obtaining an IT position.
  4. The total amount that McKinley would have earned under the contract, plus punitive damages.
  5. The difference between the amount that McKinley would have earned under the contract and the amount that McCauley earns from McManus.
Explanation
Answer: C. The limitation on the amount that McKinley can recover from McManus is the amount that McKinley could have reasonably earned by obtaining an IT position. Where there is a breach related to an employment contract, the terminated, non-breaching employee has a duty to try to minimize his or her loss by trying to find comparable employment. The amount of recovery will be offset by the amount that McKinley could have earned had he made a reasonable effort to find an IT position instead of accepting a job at a fast food restaurant.
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