19. Monetary Remedies

Question 1

What is required to obtain monetary remedies?

Answer 1

1) Reasonable certainty
- Lost profits (similar businesses in area/previously owned businesses)
- Not speculative

2) Not avoidable with reasonable effort
- Recoverable to such extent

Question 2

What is the purpose of compensatory damages?

Answer 2

Place non-breaching party in position had Defendant performed promise

Question 3

What are the types of compensatory damages?

Answer 3

Expectation damages

1) Substitute performance costs
2) Losses but for breach

Reliance damages

• Expectation damages cannot show certain profits had Defendant performed promise
• Cost of Plaintiff’s performance (Place Plaintiff in position had contract NEVER been formed)

Consequential damages

• Sale of goods contracts
• Reasonably foreseeable damages at time of contract + based on Plaintiff’s circumstances
• Generally lost profits (losses over and above expectation damages)
• Large companies (NOT new/startup companies - courts generally hesitant to award lost profits)

Incidental damages

• Included in consequential damages
• Seller’s incurred expenses due to Buyer’s breach (Storing/Shipping/Returning/Reselling)
• Buyer’s incurred expenses due to Seller’s breach (Inspection/Receipt/Transport)

Question 4

What is required for nominal damages?

Answer 4

1) Breach
2) NO actual loss

(Nominal damages are like token damages, e.g. $1)

Question 5

What is required for liquidated damages?

Answer 5

1) Breach damages difficult to estimate at time of contract

2) Reasonable amount
- Compare probable damages v LD amount
- NOT single number (e.g. $10,000)

3) NOT penalty clause

Question 6

Are punitive damages generally awarded?

Answer 6

No (generally)
- Punishes Defendant for wrongful conduct

Yes (if breach would also constitute tortious breach => Can recover punitive damages for the tortious breach, not contract breach)

Question 7

What is Buyer entitled to if Seller fails to deliver goods/Buyer rejects?

Answer 7

1) Either;
- Difference between Contract price vs Market price (when Buyer learns breach)
- Difference between Contract price vs Replacement price (Cover)

2) Incidental damages
3) Consequential damages
4) LESS expenses saved by Seller’s breach

Question 8

What is Buyer entitled to if Seller delivers non-conforming goods/Buyer accepts?

Answer 8

1) Difference between Non-conforming price vs Conforming price
- Buyer must notify defect to Seller within reasonable time
- Otherwise Buyer loses right to sue

2) Incidental damages
3) Consequential damages

Question 9

What is required for consequential damages in sale of goods?

Answer 9

1) Seller should have known Buyer’s requirements
- Buyer in business of reselling goods
- Buyer used goods in manufacturing

2) Subsequent loss could NOT be reasonably covered
- Unlike CD for compensatory damages

Question 10

What is Buyer entitled to if Seller anticipatorily breaches a sale of goods contract?

Answer 10

Difference between Contract price vs Market price (when Buyer learns breach)

NO consequential/incidental damages

Question 11

What is Seller entitled to if Seller delivers conforming goods and Buyer rejects/repudiates?

Answer 11

1) Difference between Contract price vs Market price (at delivery)

If NOT adequate;

• Difference between Contract price vs Resale price + Resell goods; and/or (if not adequate)
• Difference between Contract price vs Lost profits (Lost volume seller only - Unlimited supply where Seller can obtain all goods he can sell)

2) Incidental damages
3) LESS expenses saved by Seller’s breach

Question 12

What is Seller entitled to if Buyer failed to pay/rejected and not resaleable/risk of loss is on Buyer?

Answer 12

Contract price

Question 13

What remedy is available for breach of land sale contracts?

Answer 13

Contract price vs Fair market price

Question 14

What remedies are available for breach of employment contracts?

Answer 14

Employer’s breach
- Replacement cost vs Employee’s wages

Employee’s breach
- Contract price vs Employee’s profit from similar position (Employer must prove similar position exists)

Question 15

What remedies are available for breach of construction contracts?

Answer 15

Owner’s breach before construction => Builder’s remedies
- Expected profit

Owner’s breach during construction => Builder’s remedies

1) Expected profit
2) Costs expended

Owner’s breach after completion => Builder’s remedies

1) Contract price
2) Interest

Builder’s breach => Owner’s remedies

1) Completion costs
2) Delay damages (reasonable)
3) LESS benefit conferred by Builder’s breach (avoid unjust enrichment)

Builder’s breach (completion involves undue economic waste) => Owner’s remedies
- [Potential value of building if Builder properly completed] - [Owner’s actual received amount]

Question 16

What is required for recovering avoidable damages (mitigating losses) (common law)?

Answer 16

General

• Avoid incurring losses after notice of breach
• Avoid incurring further expenses/costs
• Reasonably reduce losses by ‘equivalent’ substitute performance at fair price

Employment contract (Employer's breach)
- Reduce Employee's wages from comparable job

Construction/Manufacturing contract
- NOT continue completion (UNLESS completing would decrease damages, rather than increase)

Question 17

What can you recover for breach of instalment contracts?

Answer 17

Acceleration clause
- Entire price

No acceleration clause
- Payment for late instalment payment only

Question 18

What is restitution?

Answer 18

Prevents unjust enrichment by non-breaching party

• Benefit conferred on another
• NO gratuitous intent
• Additional remedy to rescission

Question 19

What restitution is recoverable for breach of contract?

Answer 19

Non-breaching party’s failure to fully perform

‘Losing’ contract
- ‘Actual’ value of goods/services > Contract price

Plaintiff’s breach but Plaintiff can still recover;
- Contract price LESS damages

Buyer’s breach + Buyer prepaid in advance + Liquidated Damages Clause but Buyer can still recover (Sale of goods, Art 2);

• LD amount => Seller
• Excess => Buyer

Buyer’s breach + Buyer prepaid in advance but Buyer can still recover (Sale of goods, Art 2);

• 20% of purchase price OR $500 (whichever is less) => Seller
• Balance => Buyer

Question 20

What restitution is recoverable for an unenforceable contract?

Answer 20

Quasi-contract remedy

1) P conferred benefit on D
2) P had reasonable expectation of compensation
3) D knew/had reason to know of such expectation
4) D should not be compensated (avoid unjust enrichment)

Question 21

When is rescission available?

Answer 21

1) Defence
- Unilateral/Mutual mistake
- Misrep (fact/law)
- Duress/Undue influence
- Illegality
- Incapacity
- Failure of consideration

2) Before/At time of contract

Question 22

When is reformation available?

Answer 22

Mistake

1) Agreement between parties
2) Agreement to put agreement in writing
3) Variance between original + writing (Clear + convincing evidence)

Misrep

• Related to content/legal effect of record
• NOT related to subject matter/fact

Question 23

What exceptions prevent rescission?

Answer 23

Equitable defences

• Laches
• Unclean hands

Question 24

What exceptions prevent reformation?

Answer 24

Equitable defences

• Laches
• Unclean hands

Sale to BFP (TP)
- Rights would be unfairly affected

Question 25

Does Parol Evidence Rule or Statute of Frauds apply to reformation?

Answer 25

No

Question 26

What type of contract does restitution apply towards?

Answer 26

Sale of goods (Article 2 UCC)

NOT services/real estate (common law)

Question 27

When may expectation damages not be awarded?

Answer 27

NOT reasonably foreseeable/ascertainable

Capable of mitigation

Cost of performance > Market value of performance

Question 28

When are damages available for breach of employment contract?

Answer 28

Fixed contract

• Fixed duration => Party can NOT breach any time
• Breaching party must mitigate damages (find alternate employment in same area + same industry)

NOT at-will contract

• NO fixed duration => Party can breach any time
• NO breach