Breach of Contract and Remedies

Question 1

When may a non-breaching party pursue specific performance as a remedy?

Answer 1

When damages are an inadequate remedy, the non-breaching party can pursue specific performance.

Note: Legal remedies are often inadequate in contracts for land or other unique goods.

Question 2

If a shipment contract authorizes the seller to ship the goods by carrier, when does the risk of loss shift from the seller to the buyer?

Answer 2

Once the goods are delivered to the carrier.

Question 3

At what point can repudiation no longer be retracted?

Answer 3

Repudiation may be retracted until such time as the promisee;

(i) acts in reliance on the repudiation,
(ii) signifies acceptance of the repudiation, or
(iii) commences an action for breach of contract.

Question 4

When is a plaintiff entitled to restitutionary recovery, and how is it measured?

Answer 4

When a defendant is unjustly enriched by the plaintiff, restitution generally allows the plaintiff to recover on the benefit conferred by the plaintiff upon the defendant.

Generally, the benefit is measured by either (i) the reasonable value of the defendant obtaining that benefit from another source, or (ii) the increase in the defendant’s wealth from having received that benefit.

Question 5

When is the doctrine of anticipatory repudiation applicable, and in what manner must the repudiation be made?

Answer 5

The doctrine of anticipatory repudiation is applicable when a promisor repudiates a promise BEFORE the time for performance is due. The repudiation must be clear and unequivocal and may be by conduct or words.

Non-breaching party may treat as breach and sue or demand performance. However, when date has not yet passed, must wait.

Repudiation can be retracted unless; (1) acts in reliance; (2) signifies acceptance; or (3) commences litigation

When reasonable grounds for insecurity arise, can demand assurance within 30 days.

Question 6

What three factors does a court use to determine if restitutionary recovery is available in a quasi-contract situation?

Answer 6

A court may allow restitutionary recovery if:

1. The plaintiff has conferred a measurable benefit on the defendant;
2. The plaintiff acted without gratuitous intent; and
3. It would be unfair to let the defendant retain the benefit because either (i) the defendant had the opportunity to decline the benefit but knowingly accepted it, or (ii) the plaintiff had a reasonable excuse for not giving the defendant such opportunity.

Question 7

What is the formula for expectation damages?

Answer 7

Expectation Damages = loss in value + other loss - cost avoided - loss avoided

Question 8

If a destination contract authorizes the seller to ship the goods by carrier, when does the risk of loss shift from the seller to the buyer?

Answer 8

Once the goods are delivered to a particular place (specified in the contract)

Question 9

What are consequential damages?

Answer 9

Consequential damages arise out of special circumstances unique to the parties to the contract, rather than arising necessarily from the transaction itself.

Question 10

Under the common law, if the breach is material, what remedies can be sought by the non-breaching party?

Answer 10

The non-breaching party is able to withhold any promised performance and pursue remedies for breach, including damages.

Note: If the breach is minor, the non-breaching party may be able to recover damages, but that party also still must perform under the contract.

Question 11

Can a party both recover reliance and expectation damages?

Answer 11

No.

Question 12

What are liquidated damages?

Answer 12

Agreed upon damages.

Must be reasonable and actual damages are uncertain.

Question 13

What are incidental damages?

Answer 13

Reasonable expenses for care/custody of goods, transportation or inspection.

Question 14

What are expectation damages?

Answer 14

Intended to put the non-breaching party in same position as if the contract had been performed.

Must be calculated to a reasonable certainty. If too speculative, ma seek reliance damages instead.

• Construction: cost by other builder.
• Goods: Difference between contract price and cost to cover.

Question 15

What are a buyer’s remedies under the UCC?

Answer 15

Failure to Tender

• Cancel: installment only and if breach goes to entire contract.
• Recovery of payments
• Incidental and consequential damages.
• Damages (market-contract price)
• Cover

Nonconforming Tender
- Accept; reject in whole or part - right to inspect and right to cure. Must retain possession for reasonable time for seller.

Question 16

What are a seller’s remedies under the UCC?

Answer 16

Right to Reclaim if insolvent within 10 days.

Stop Transit: Only for large sized. Cannot if carried acknowledged buyers rights, reshipped by carrier or title given to buyer.

Resell

Incidental Damages.

Question 17

Does failure of a condition precedent give rise to damages?

Answer 17

No.