Breach of Contract and Remedies Flashcards

Question

What are reliance damages? How are reliance damages different from recovery through restitution? When a party recovers reliance damages, what other kinds of damages can they not recover?

Answer 1

Reasonable out-of-pocket expenses incurred by non-breaching party due to reliance on other party's promise to perform. Unlike with a restitutionary recovery, with reliance damages, there is no requirement that the defendant benefit from the plaintiff’s expenditures. Party cannot recover both reliance and expectation damages

Answer 2

Specific performance is an equitable remedy possible when damages are an inadequate remedy Factors considered in determining whether damages are adequate -> difficulty of proving damages with reasonable certainty -> hardship to D -> balance of the equities -> wishes and understandings of the parties -> practicality of enforcement AND -> mutuality of agreement

Answer 3

Specific performance usually granted in the following situations: -> Real property - specific performance granted because real property is considered unique -> UCC - specific performance may be granted to the buyer when goods are rare or unique Specific performance usually not granted in the following situation: -> courts rarely grant specific enforcement of contracts for personal services -> EXCEPTION - courts MAY enforce non-compete clause

Answer 4

Equitable defenses may be raised by breaching party -> laches - prejudicial delay in bringing the action -> unclean hands - non breaching party guilty of some wrongdoing in the transaction

Answer 5

-> Cancel K -> Recovery of payments -> Recover damages -> Cover -> Specific performance - for unique goods -> Replevin

Answer 6

If breach of installment K goes to entire K, THEN can cancel entire installment K.

Answer 7

Recovery of payments -> upon cancellation, buyer entitled to recover payments made for goods. On rightful rejection or justifiable revocation of acceptance -> a buyer also has a security interest in goods in his possession

Answer 8

Recover damages = market price - K price + incidental damages + consequential damages

Answer 9

Cover - buyer -> may purchase similar goods elsewhere AND -> recover damages = replacement price - K price

Answer 10

Specific performance - for unique goods

Answer 11

When the buyer has made at least partial payment for identified goods, the buyer can obtain the undelivered goods from the seller if: -> The seller becomes insolvent within 10 days of receiving the first payment from the buyer; OR -> The goods were for family, personal, or household purposes, and the seller has repudiated or failed to deliver the goods as required by the contract. BUT -> to obtain the REST of the goods, the buyer must tender any unpaid portion of the price to the seller. Buyer’s inability to cover - The buyer can also obtain identified, undelivered goods from the seller if: -> the buyer is unable to effect cover; -> the circumstances reasonably indicate that reasonable effort to obtain cover will be unavailing; OR -> the goods have been shipped under reservation, and satisfaction of the security interest in the goods has been made or tendered.

Answer 12

Buyer has right to accept or reject all art part of the goods (and the right to inspect before making that decision)

Answer 13

Rejection - buyer can reject goods if -> he gives notice to seller within reasonable time AND -> before acceptance, Buyer is then entitled to -> a return of any payments made OR -> to seek same remedies as if no tender was made.

Answer 14

Acceptance - buyer accepts goods by -> expressly stating acceptance, -> using the goods, OR -> failing to reject the goods To recover damages after acceptance, buyer must give seller timely notice of breach. Damages = value of goods if there was a conforming tender - value of nonconforming goods Usually cost of replacement or repair of nonconforming goods. Other types of damages the buyer can seek: -> consequential damages -> incidental damages

Answer 15

Right to cure - seller has right to cure defective tender IF -> time of performance under K has not yet elapsed OR -> seller had reasonable grounds to believe that buyer would accept despite the nonconformity.

Answer 16

Seller has right to price under the following situations: -> seller may recover the full price if buyer has accepted goods; -> conforming goods are destroyed or lost AFTER risk has shifted to buyer; OR -> goods have been identified and the buyer fails to pay the price, AND the seller is unable to sell the goods at a reasonable price after a reasonable effort or circumstances indicate such an effort will not yield a sale

Answer 17

When -> an insolvent buyer receives goods ON CREDIT, -> AND the seller learns that the buyer is insolvent, -> the seller MAY reclaim the goods, -> provided a demand is made WITHIN 10 days after the buyer’s receipt of the goods. This 10-day limitation DOES NOT apply if the buyer has misrepresented solvency to the seller in WRITING within THREE months BEFORE DELIVERY. -> Otherwise, the seller cannot base a right to reclaim goods on the buyer’s fraudulent or innocent misrepresentation of solvency or of intent to pay. If exercised, precludes all other remedies with respect to the reclaimed goods. Pre-delivery insolvency: -> As a condition for the seller to reclaim goods from a buyer, the buyer must have received the goods on credit while insolvent. -> If the buyer becomes insolvent AFTER DELIVERY, then the seller MAY NOT RECLAIM the goods.

Answer 18

A seller can stop the goods in transit because of the buyer’s breach or when the buyer is insolvent. Limitations with regard to this right when buyer is in breach -> Goods can be stopped in transit only if shipped in large-sized (e.g., carload, truckload) lots. Compare buyer’s breach: When a buyer is insolvent, the seller can stop goods in transit, regardless of the size of the shipment. The seller cannot stop goods in transit when the: -> buyer has received the goods; -> carrier or warehouseman has acknowledged the buyer’s rights; -> goods have been reshipped by the carrier; OR -> title has been given to or negotiated with the buyer.

Answer 19

Seller has three remedies -> collect damages (damages = K price - market price) -> resell the goods (must give notice to buyer if seller will do private sale of goods) -> recover the price (if the seller is unable to sell goods at a reasonable price after reasonable efforts) AND -> incidental damages (e.g. storage and shipping) A seller can recover lost profits when they are a "volume seller." -> Although they can resell the goods at the same price as the contract price, they have lost the opportunity to sell them in the first instance when the buyer breached or repudiated.

Answer 20

Unidentified goods -> if goods are damaged or destroyed and there is no breach, risk of loss is on seller until he satisfies delivery obligations (and then risk shifts to buyer). Shipment K -> risk of loss passes to buyer when the seller gives possession of the goods to the carrier and makes proper contract for their shipment. Destination K -> risk of loss passes to buyer when the seller tenders the goods at the place specified in the K Identified goods -> seller is excused if goods are totally destroyed through no fault of the seller prior to the risk of loss being shifted to the buyer

Answer 21

Seller's breach -> if seller delivers nonconforming goods, risk of loss remains on the seller until buyer accepts OR there is cure. Buyer's breach -> if buyer breaches or repudiates after goods have been identified BUT before risk of loss shifts, then risk immediately shifts to buyer (to extent of lack of insurance coverage by seller)

Answer 22

Statute of limitations is 4 years after cause of action accrues Generally, cause of action accrues when breach occurs, regardless of whether aggrieved party knows Parties may reduce four-year limitations period to not less than one year, but they may not extend it