9. Damages

Question 1

STANDARD MONEY DAMAGES:

Answer 1

1. Expectation Damages
2. Reliance Damages
3. Consequential Damages
4. Incidental Damages

Question 2

STANDARD MONEY DAMAGES:

Expectation Damages

Answer 2

♣ Standard measure of money damages

Puts parties in economic position they would be if contract had been performed

Question 3

STANDARD MONEY DAMAGES:

Reliance Damages

Answer 3

Alternative measure used when expectation damages are too speculative.

• Designed to compensate P based on the value of her performance
• A party cannot recover both reliance and expectation damages.

Question 4

STANDARD MONEY DAMAGES:

Consequential Damages

Answer 4

♣ Foreseeable losses indirectly resulting from a breach (e.g. lost profits); recoverable if:
• 1. Damages are a foreseeable result of the breach and
• 2. When contract was formed, D had reason to know P would suffer special, unpreventable or unexpected damages in the event of a breach

♣ UCC: only buyers can recover

Question 5

STANDARD MONEY DAMAGES:

Incidental Damages

Answer 5

♣ Commercially reasonable expenses incurred by the non-breaching party in UCC contracts (e.g. costs of inspecting)

Question 6

NON-MONETARY REMEDIES:

Answer 6

1. Specific Performance
2. Rescission
3. Reformation
4. Reclamation

Question 7

NON-MONETARY REMEDIES:

Specific Performance

Answer 7

• Usually only for contracts involving real estate or unique goods
• For service contracts, injunctions preventing breach may be available (e.g. injunction enforcing non-compete clause)

Question 8

NON-MONETARY REMEDIES:

Rescission

Answer 8

• Cancellation of a contract
• Often arises where there is a mistake, misrepresentation, duress or some other defense to contract enforcement or formation

Question 9

NON-MONETARY REMEDIES:

Reformation

Answer 9

• Remedy whereby a contract is changed so that it reflects parties original intent

Question 10

NON-MONETARY REMEDIES:

Reclamation

Answer 10

• In UCC, Unpaid sellers may stop delivery or reclaim goods from an insolvent buyer
o Unpaid seller can never reclaim goods from subsequent buyers.

Question 11

Restitution

Answer 11

♣ Arises in quasi-contract

• Applies if there is no enforceable contract, but a party has been unjustly enriched
• Awarded based on value of the benefit wrongfully conferred
• Party cannot recover both expectation damages and restitution

Question 12

Liquidated Damages

Answer 12

♣ Agreed upon contract provision that stipulates specified damages upon occurence of a breach

♣ Requirements:
• 1. Damages are difficult to project at time of contract formation and
• 2. Provision is a reasonable estimate of actual damages

Question 13

Duty to Mitigate

Answer 13

♣ All parties must mitigate damages

♣ D bears the burden of showing P’s failure to mitigate

Question 14

DAMAGES UCC CONTRACTS:

Breach by seller & buyer keeps goods

Answer 14

Damages: fair market value of perfectly delivered goods minus FMV of the goods actually delivered.

Question 15

DAMAGES UCC CONTRACTS:

Breach by seller & seller keeps or buyer returns goods

Answer 15

♣ Damages: whichever is higher
• 1. FMV of goods at the time of breach minus contract price or
• 2. Buyer’s costs of covering/replacing goods minus contract price

Question 16

DAMAGES UCC CONTRACTS:

Breach by buyer & buyer has goods:

Answer 16

Damages: contract price

Question 17

DAMAGES UCC CONTRACTS:

Breach by buyer & seller has goods

Answer 17

♣ Damages: either
• 1. Contract price minus market price at the time of delivery or
• 2. Contract price minus resale price plus provable