Breach of Contract & Remedies

Question 1

Anticipatory repudiation

Answer 1

Anticipatory breach or repudiation occurs when promisor party indicates that it will not
perform prior to date that performance is due.

Question 2

Anticipatory repudiation - CL

Answer 2

Under common law, anticipatory repudiation occurs when promisor clearly and unequivocally indicates through words or acts that it will not perform.

Question 3

Anticipatory repudiation - CL (retraction)

Answer 3

Promisor party can retract its repudiation until/unless other party: (1) acts in reliance on repudiation; (2) accepts repudiation; or (3) has already filed action for breach of contract.

Question 4

Anticipatory repudiation - UCC

Answer 4

Under UCC, anticipatory repudiation occurs when buyer/seller (i) unequivocally refuses
to perform; or (ii) fails to provide timely adequate assurances. Either party can demand assurances in writing if it has reasonable grounds to be insecure about other party’s ability to perform and may suspend performance until it receives assurances. Failure to provide reasonable assurances within reasonable time (must not
exceed 30 days), can be treated as repudiation.

Question 5

Anticipatory repudiation - UCC (retraction)

Answer 5

Under UCC, anticipatory repudiation may be retracted until non-repudiating party (1) cancels contract, (2) materially changes position, or (3) otherwise indicated that he considers repudiation to be final.

Question 6

Anticipatory repudiation - UCC (non breaching party actions)

Answer 6

Non-breaching party can: (1) treat repudiation as breach of contract and sue immediately; (2) suspend its own performance and demand performance from promisor; (3) cancel contract; or (4) wait for date of performance, then sue for breach.

Question 7

Common Law: Material vs Minor breach

Answer 7

Material breach occurs when non-breaching party does not receive substantial
benefit of the bargain. Non-breaching party can withhold any promised performance and pursue remedies for breach.
Minor breach occurs when breaching party has substantially performed, but not fully
performed. Non-breaching party is entitled to pursue remedies for minor breach, but it still
must perform under contract.

Question 8

Expectation damages

Answer 8

Goal of expectation damages is to put non-breaching party in same economic position that it would be in if contract had not been performed. Expectation damages measured by comparing value of performance without breach (i.e., contract price for performance) with value of performance with breach (i.e., fair market value of performance). Expectation damages must be proven with reasonable certainty.

Question 9

Unforeseeable consequential damages

Answer 9

Unforeseeable consequential damages not recoverable unless breaching party had some reason to know about possibility of these unforeseeable damages.

Question 10

Consequential damages

Answer 10

Consequential damages are reasonably foreseeable damages other than expectation
damages that are related to breach of contract (e.g., loss of profit). To recover consequential damages, three elements must be met: (1) damages must be natural and probable consequences of breach
or contemplated by parties at time contract was formed, (2) plaintiff must show that damages were caused by defendant’s
breach; (3) plaintiff must prove dollar amount with reasonable certainty.

Question 11

Reliance damages

Answer 11

Goal of reliance damages is to put non-breaching party in same economic position that it would be in if contract had never been created. These are damages that non-breaching party incurs in reasonable reliance upon promise that other party would perform.

Question 12

Duty to mitigate damages

Answer 12

Non-breaching party has duty to avoid or mitigate its damages by taking reasonable
steps to seek replacements/substitutes for goods and/or services. Failure to take reasonable steps to mitigate damages will reduce damages recovered by non-breaching party.

Question 13

Restitution

Answer 13

Goal of restitution is to prevent unjust enrichment. Restitution damages based on reasonable value of benefit conferred on
other party.

Question 14

Restitution - Non-breaching party

Answer 14

A non-breaching party cannot seek restitution if it has performed all of its duties and only performance due from other party is payment under contract.

Question 15

Restitution - Breaching party

Answer 15

If party has not substantially performed, it will be in breach of contract, and cannot
recover under contract. However, if non-breaching party has benefited from breaching party’s performance, breaching party can recover for benefit conferred minus
damages non-breaching party is entitled to.

Question 16

Quasi-contract

Answer 16

If there is no enforceable contract, court may award restitution damages on basis of
quasi-contract if: (1) plaintiff conferred a measurable benefit on defendant; (2) plaintiff acted without gratuitous intent; and (3) it would be unfair to let defendant retain benefit.

Question 17

Specific performance

Answer 17

Under remedy of specific performance, non-breaching party can ask court to order
breaching party to perform contract. Specific performance is awarded only when monetary damages are considered inadequate to compensate injured party. Specific performance is not available for contracts of personal service.

Question 18

UCC - Failure to tender

Answer 18

Under UCC, buyer has several alternative remedies if seller fails to tender the goods - (1) buyer may recover market price minus contract price; (2) buyer may purchase similar goods elsewhere and recover replacement price minus contract price; (3) buyer may demand specific performance for unique goods or if buyer is unable to cover.

Question 19

UCC - Non-conforming tender

Answer 19

Buyer has right to accept or reject all or part of goods. Buyer has right to inspect goods before deciding whether to accept or reject. Payment does not constitute acceptance if there is no opportunity to inspect goods
before payment.

Question 20

UCC - Non-conforming tender - Rejection

Answer 20

A valid rejection requires that buyer give notice to seller within reasonable time, before acceptance. Seller has a right to cure a defective tender if time for performance under contract has not yet elapsed or seller had reasonable grounds to believe that buyer would accept despite
nonconformity.

Question 21

UCC - Seller’s remedies

Answer 21

If buyer wrongfully rejects tender of goods, seller is entitled to incidental damages as well as one of three alternative remedies: (1) collect damages of the contract price minus market price at time and place for tender, together with any incidental damages, less any expenses saved as result of buyer’s breach; (2) resell and sue for contract price minus resale price; or (3) recover price after rejection only if seller is unable to sell goods at reasonable price.