19. Monetary Remedies Flashcards
What is required to obtain monetary remedies?
1) Reasonable certainty
- Lost profits (similar businesses in area/previously owned businesses)
- Not speculative
2) Not avoidable with reasonable effort
- Recoverable to such extent
What is the purpose of compensatory damages?
Place non-breaching party in position had Defendant performed promise
What are the types of compensatory damages?
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)
What is required for nominal damages?
1) Breach
2) NO actual loss
(Nominal damages are like token damages, e.g. $1)
What is required for liquidated damages?
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
Are punitive damages generally awarded?
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)
What is Buyer entitled to if Seller fails to deliver goods/Buyer rejects?
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
What is Buyer entitled to if Seller delivers non-conforming goods/Buyer accepts?
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
What is required for consequential damages in sale of goods?
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
What is Buyer entitled to if Seller anticipatorily breaches a sale of goods contract?
Difference between Contract price vs Market price (when Buyer learns breach)
NO consequential/incidental damages
What is Seller entitled to if Seller delivers conforming goods and Buyer rejects/repudiates?
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
What is Seller entitled to if Buyer failed to pay/rejected and not resaleable/risk of loss is on Buyer?
Contract price
What remedy is available for breach of land sale contracts?
Contract price vs Fair market price
What remedies are available for breach of employment contracts?
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)
What remedies are available for breach of construction contracts?
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]
What is required for recovering avoidable damages (mitigating losses) (common law)?
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)
What can you recover for breach of instalment contracts?
Acceleration clause
- Entire price
No acceleration clause
- Payment for late instalment payment only
What is restitution?
Prevents unjust enrichment by non-breaching party
- Benefit conferred on another
- NO gratuitous intent
- Additional remedy to rescission
What restitution is recoverable for breach of contract?
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
What restitution is recoverable for an unenforceable contract?
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)
When is rescission available?
1) Defence
- Unilateral/Mutual mistake
- Misrep (fact/law)
- Duress/Undue influence
- Illegality
- Incapacity
- Failure of consideration
2) Before/At time of contract
When is reformation available?
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
What exceptions prevent rescission?
Equitable defences
- Laches
- Unclean hands
What exceptions prevent reformation?
Equitable defences
- Laches
- Unclean hands
Sale to BFP (TP)
- Rights would be unfairly affected
Does Parol Evidence Rule or Statute of Frauds apply to reformation?
No
What type of contract does restitution apply towards?
Sale of goods (Article 2 UCC)
NOT services/real estate (common law)
When may expectation damages not be awarded?
NOT reasonably foreseeable/ascertainable
Capable of mitigation
Cost of performance > Market value of performance
When are damages available for breach of employment contract?
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
