Breach and Remedies

Question 1

Breach Common Law

Answer 1

Material Breach:

1. Non breaching party does not receive substantial benefit of bargain
2. Allows non breaching party to withhold any promised performance and to pursue remedies for breach, including damages

Question 2

Breach UCC

Answer 2

In general, seller must strictly perform all obligations under K or be in breach
Material breach only applies to installment Ks or when parties stipulate it in K

Question 3

Anticipatory Repudiation

Common Law

Answer 3

1. Promisor repudiates before time of performance is due

Must be clear and Unequivocal.

Question 4

Anticipatory Repudiation Common Law

Non breaching Party’s Option

Answer 4

1. Treat repudiation as a breach; or
2. Ignore repudiation and demand performance of promisor, but suspend any performance by promisee if it would increase promisors damages
3. if date of performance has not passed and the only performance left is payment, must wait for actual breach before filing suit.

Question 5

Anticipatory Repudiation Common Law: Retraction

Answer 5

Can be retracted until:

1. Promisee acts in reliance on repudiation, accepts repudiation, or commences action for breach of K

Question 6

Anticipatory Repudiation

UCC

Answer 6

Occurs when there has been unequicocal refusal of buyer/seller to perform or when reasonable grounds for insecurity arise and the other party fails to provide adequate assurances within reasonable time (not over 30 days)

Question 7

Anticipatory Repudiation UCC Retraction

Answer 7

Permitted if other party has not canceled the K or materially changed position

Question 8

Prospective Inability to Perform

Answer 8

Party’s expectation of performance may be diminished by an event occurring after K formation
UCC:
Party may demand assurances if reasonable grounds to insecurity about other party’s inability to perform; may suspend performance until provided.
Demand must be in writing
Failure to provide adequate assurances within reasonable time treated as repudiation (limited to 30 days)

Question 9

Expectation Damages

Answer 9

Intended to put non breaching party in same economic position as if K had been performed
What is the situation the person is in now, compared to the situation they would have been in if the party performed

Question 10

Formula for Expectation Damages

Answer 10

Loss in value + other loss - cost avoided - loss avoided

Question 11

Limits of Expectation Damages

Answer 11

1. Must be proven with reasonable certainty
2. Mitigation: breached against party must take reasonable steps to reduce damages from breach, if they dont, law will calculate damages as if they did.
   D has burden of proving failure to mitigate.

Question 12

Consequential Damages

Answer 12

Damages that result from the breach, but arise out of special circumstances unique to the parties to the contract.
1. Must be reasonably foreseeable to breaching party
2. caused by breach;
3. Reasonably certain in value to be recovered
UCC: only buyers can seek consequential damages

Question 13

Incidental Damages

Answer 13

Compensation or commercially reasonable expenses incurred as a result of other party’s breach

Question 14

Lost Volume Profits

Answer 14

If the party breaches, then normally the selling party needs to mitigate by reselling the goods or services to someone else.
But if seller is a retailer who sells this type of product all the time, the seller might try to argue for LVP.

Question 15

Incomplete Performance (expectation damages)

Answer 15

If the party breaches in a partially completed building contract, the builder cannot continue to work on the job.
Adjust recovery to take account of the fact that the builder didnt need to finish the job:
Expectation damages = contract price - amt. already paid - amt that would be needed to finish job

Question 16

Economic Waste and diminution in market value damages

Answer 16

Sometimes cost to complete damages will dramatically overcompensate P so this is used
DMF:
1. How much lower is the market value of what you got v. what you wanted
2. The breaching party normally must have acted in an innocent and unintentional manner

Question 17

Reliance Damages

Answer 17

Goal: to put the party in the same economic position that it would be if the contract had never been created in the first place
Ask what loss has the P incurred that would never have taken place but for the breached contract.
Party cannot recover both expectation damages and reliance damages.

Question 18

Restitution Damage

Answer 18

Goal: to give the plaintiff an amount equal to the economic benefit that the plaintiff conferred on the defendant.
If P has not substantially performed and is in breach, P is not permitted to recover

Question 19

Liquidated Damages

Answer 19

Stated in the contract as an explicitly negotiated amount due upon breach.
Courts will enforce if:
1. The amount of LD was reasonable at time of contracting; and
2. Actual damages from breach would be uncertain in amount and difficult to prove

Question 20

Specific Performance

Answer 20

Equitable relief is exception; not norm
Awarded only when monetary damages are considered inadequate for some reason
Presumptively available for real estate transaction
Presumptively not allowed for contracts of personal services

Question 21

Specific Performance UCC

Answer 21

Available only for unique goods like art or custom made items