6.3 REMEDIES Flashcards
WHO IS ENTITLED TO CONTRACT REMEDIES?
1) PARTIES TO THE CONTRACT (PRIVITY)
2) ASSIGNEE (THIRD PARTY RIGHTS)
3) BENEFICIARY RIGHTS (INTENDED + CREDITOR)
WHAT ARE THE TYPES OF REMEDIES?
COMPENSATORY “MONEY” DAMAGES - MEANT TO REIMBURSE AN INJURED PARTY FOR THE ECONOMIC LOSS SUFFERED BECAUSE OF AN ACCOUNTANT BREACH OF CONTRACT.
-CONSEQUENTIAL DAMAGES - INDIRECT AND ANTICIPATED LOSSES
-LIQUIDATED DAMAGES - PREDETERMINED LOSS AGREED BY BOTH PARTIES, IF LIQUIDATED DAMAGES ARE EXCESSIVE THEY ARE CONSIDERED PUNITIVE IN NATURE AND COURTS WILL NOT ENFORCE THEM.
-NOMINAL DAMAGES - TRIVIAL SUM
-SPECIFIC PERFORMANCE - COURT ORDERING SPECIFIC TRANSFER OF THE CONTRACT’S UNIQUE SUBJECT MATTER.
-PUNITIVE DAMAGES - ENRICH THE INJURED PARTY BEYOND THE ECONOMIC POSITION OF THE ORIGINAL TRANSACTION.
-RESCISSION THE ACT OF RESCINDING(VOID) A CONTRACT AND RESTORING PARTIES TO THEIR POSITIONS PRIOR TO THE CONTRACT
WHAT ARE THE FORMULAS FOR DAMAGES?
1) LIQUIDATED DAMAGES - PROVIDED (E.G., 5K FOR EVERY DAY A DELIVERY IS LATE) UNLESS DEEMED EXCESSIVE
2) COMPENSATORY DAMAGES = AMOUNT PAID - AMOUNT THAT SHOULD HAVE BEEN PAID + INCIDENTAL DAMAGES - DEPOSIT IF APPLICABLE
WHAT ARE THE UCC REMEDIES FOR SELLERS?
1) WITHHOLD DELIVERY
2) CANCEL/RESCIND
3) RESELL
4) FILE FOR BREACH
*COMPENSATORY DAMAGES CALCULATION
WHAT ARE THE UCC REMEDIES FOR BUYERS?
1) CANCEL/RESCIND
2) COVER “REASONABLE SUBSTITUTE”
3) FILE FOR BREACH
*COMPENSATORY DAMAGES CALCULATION
WHAT IS A WARRANTY?
WHEN GOODS ARE SOLD, THE SELLER MAKES CERTAIN PROMISES TO THE BUYER THAT THE BUYER CAN LEGALLY ENFORCE. THESE PROMISES ARE KNOWN AS WARRANTIES.
EXPRESS WARRANTY: SPECIFIC STATEMENT MADE BY THE SELLER THAT BECOME THE BASIS FOR THE BARGAIN.
IMPLIED WARRANTY: PROMISES THAT ARE PRESENT AS A MATTER OF LAW.
WHAT ARE THE SELLERS IMPLIED WARRANTY UNDER UCC?
UNDER IMPLIED TERMS A BREACH OF WARRANTY MUST BE BROUGHT WITHIN THE STATUTE OF LIMITATIONS PERIOD AS MEASURED FROM THE TIME DELIVERY IS TENDERED.
A CAVEAT WITH MERCHANTIBILITY IS THAT IT CAN BE DISCLAIMED IF SELLER MENTIONS “AS IS” HOWEVER DISCLAIMER FOR PHYSICAL HARM IS NOT ALLOWED.
A CAVEAT WITH FITNESS FOR A PARTICULAR PURPOSE IS THAT THE SELLER MUST MAKE AN ORAL OR WRITTEN STATEMENT THAT THE GOODS CAN BE USED IN A PARTICULAR WAY THE BUYER INTENDS TO USE THEM.
WHAT ARE SELLERS EXPRESS WARRANTY UNDER UCC?
UNDER EXPRESS TERMS A BREACH OF WARRANTY MUST BE BROUGHT WITHIN THE STATUTE OF LIMITATIONS PERIOD AS MEASURED FROM THE TIME THE BREACH WAS DISCOVERED OR SHOULD HAVE BEEN DISCOVERED.
WHAT ARE INTENDED AND INCIDENTAL BENEFICIARIES?
AN INTENDED BENEFICIARY (RECEIVES BENEFIT BECAUSE THEY ARE SPECIFICALLY NAMED) HAS THE RIGHT TO ENFORCE THE CONTRACT WHILE THE INCIDENTAL BENEFICIARY DOES NOT.
THERE ARE TWO TYPES OF INTENDED BENEFICIARY,
1) DONEE BENEFICIARY: RECEIVES THE BENEFIT GRATUITOUSLY AND THEREFORE CAN ENFORCE THE CONTRACT ONLY AGAINST THE PARTY CHARGED WITH DELIVERING THE BENEFIT.
2) CREDITOR BENEFICIARY: RECEIVES THE BENEFIT AS SETTLEMENT OF A DEBT AND CAN ENFORCE THE CONTRACT AGAINST BOTH PARTIES.
WHAT IS THE TYPICAL START DATE FOR THE STATUTE OF LIMITATIONS TO BEGIN FOR A BREACH OF CONTRACT?
THE BREACH OF CONTRACT EVENT IS THE POINT AT WHICH THE SOL PERIOD BEGINS. THE PERIOD IS SET BY STATE LAW HOWEVER IT IS TYPICALLY 4 TO 6 YEARS
WHAT IS ASSIGNMENT WITH REGARDS TO CONTRACTS?
GENERALLY ANY CONTRACT RIGHT AND DUTY MAY BE ASSIGNED TO A THIRD PARTY. HOWEVER THEIR ARE CERTAIN REASONS IT MIGHT NOT BE ASSINGABLE.
1) EXPLICITLY MENTIONED IN THE CONTRACT
2) PROHIBITED BY LAW
3) MATERIALLY ALTERS RIGHTS AND RESPONSIBILITIES
WHEN IT COMES TO AN ASSIGNMENT OF RIGHTS THE NEW PERSON ASSIGNED (ASSIGNEE) BECOMES LIABLE ON THE CONTRACT, IN ADDITION THE INITIAL OBLIGOR (NOW THE ASSIGNOR) REMAINS LIABLE IF THE THE NEW PERSON ASSIGNED DOES NOT PERFORM HIS DUTIES. (I.E. BOTH OF THEM ARE LIABLE)
LET SAY THE INITAL OBLIGOR HAS A CONTRACT AND IS OBLIGATED TO BUILD A HOUSE, BUT NO LONGER CAN DO SO BECAUSE HIS TOOLS WERE STOLEN, THEREFORE HE ASSIGNS HIS RIGHTS TO A NEW PERSON. THE NEW PERSON IS NOW LIABLE TO BUILD THE HOUSE,
THE IMPORTANT THING TO KNOW IS THAT THE INITAL OBLIGOR REMAINS LIABLE EVEN THOUGH HE ASSIGNED HIS OBLIGATION, THE ONLY WAY TO REMOVE HIMSELF IS BY A NOVATION, WHERE ALL THREE PARTIES AGREE ABOUT THE SUBSTITUTION.
WHAT IS ANTICIPATORY REPUDIATION?
CONTRACT ARE USUALLY DISCHARGED BY PERFORMANCE, HOWEVER SOMETIME A DISCHARGE OCCURS BEFORE PERFORMANCE,
1) AGREEMENT/ CONSET
2) OPERATION OF LAW
3) MATERIAL BREACH
ANTICIPATORY REPUDIATION OCCURS WHEN A PARTY DECIDES/RENOUNCES THE DUTY TO PERFORM BEFORE HE IS OBLIGATED TO PERFORM. THE NON REPUDIATING PARTY (WRONGED PARTY) CAN CANCEL THE CONTRACT AND OR SUE FOR DAMAGES EITHER WHEN THE REPUDIATION IS MADE CLEAR ORWHEN THE PERFORMANCE WAS NOT MADE .
WHAT IS THE DUTY OWED BY THE NONBREACHING PARTY TO THE PARTY WHO BREACHES THE CONTRACT
MITIGATE/MINIMIZE DAMAGES, POSTBREACH DAMAGES THAT THE NON BREACHING PARTY COULD HAVE REASONABLY AVOIDED ARE NOT RECOVERABLE.
