Breach of Contracts Flashcards
Breach of K
Minor Breach
Major Breach
- may result in discharge, not always
- Minor Breach: breach of nonessential terms (called warranty)
- Major Breach: breach of essential terms (called conditions)
How Breach Occurs
- Express Repudiation: declare intent to not perform - nonbreaching party can sue for damage or insist performance
- Anticipatory Breach - breach before performance is due and they knew it was happening - Rendering Performance Impossible - self induced frustration, K of personal performance (double booking, can be before or at time of performance)
- Failure to perform or rendering inadequate performance - occurs when performance is due, total or partial failure, inadequate performance
a) is there good reason to think that future performance will be inadequate?
b) is either expected/actual deficiency super important to the whole performance?
Doctrine of Substantial Performance
Duty of Honesty in Performance
Overperformance
- if one party does not do a good job but still did substantial work, the innocent party still has to do their side of the K
- being honest
- “lucky” recipient must return the extra - quasi-contract uses unjust enrichment and restitution
Exemption Clauses and Does it Apply?
- a clause that exempts party from liability for failing to perform, a complete defense
3 Defenses: Inadequate notice, non est factum, misrepresentation
- Interpretation of Exemption Clause, is the K clear? If not, drawing party must interpret it
- Unconscionable Clauses - is it fair?
- Public Policy and Public Interest - doe sit harm the public
Risk Allocation
Insurance helps, but if a Standard Form Contract is used, one party has more bargaining power over the customer
Remedies for Breach of K (3)
- Damages
- Equitable Remedies
- Quantum Meruit
Remedies for Breach of K - Damages
- injured party duties
- measurement of damages
- types of damages
- problems in measuring damages
Damages ($) - award to compensate injured party for loss
- compensatory in nature
- not punitive
- objective: place injured party in a position they were in before K
Injured Party Duties
- Mitigation of Damages - act reasonably
- Loss must flow from the Breach - has to be a reasonably foreseeable consequence from failure to perform
- if there were special circumstances that were communicated, damages would not be awarded
Measurement of Damages
- Liquidated Damages: already set out $ if breach does occur - if its an unreasonable amount, may qualify for penalty clause
- Nominal Damages: small sum of money to award to acknowledge breach of K, but no loss occurred, symbolic
Types of Damages
- Expectation Damages: expected loss of profits, opportunity cost
- Consequential Damages
- reasonably foreseeable damages that flow from breach - General Damages
- not quantifiable ex. suffering - Reliance Damages
- damage for wasted effort, no losses but time and effort
Problems in Measuring Damages
- General Damages include: mental anguish, wrongful dismissal for job, loss of enjoyment
Remedies for Breach of K - Equitable Remedies
- how to get an equitable remedy
- Specific performance
- injunctions
Courts of Equity
- when damages aren’t sufficient, can order a party to perform K
- ex. recision where you set aside a K
- ex. grandpas old car can’t be compensated
Discretionary in Nature
- plaintiff must be innocent
- action is in reasonable time
- no innocent party involved
- consideration must be commensurate with promise
- cannot violate principle of symmetry (if parties switched places, you could do the same for the other person)
Specific Performance = order requiring defendant to do a specified act
Injunctions
- court order restraining a party from acting in a particular manner - need a negative covenant
- interlocutory injunction is a temporary injunction
Remedies for Breach of K - Quantum Meruit
the amount a person merits to be paid for goods/services provided to person requesting, even if its part performance
Enforcing a Judgement
The Judgement: one party wins and other pays
a) Judgement Creditor: party that wins(JC)
b) Judgement Debtor (JD)
Steps to Enforcing a Judgement
- garnishment orders, continuously enforcing, follow up
- Judgement is registered with court
- Writ must be filed with sheriffs office - JC becomes the Execution Creditor (this authorizes sheriff to seize money from JD)
- Execution order must be made to the Sheriff
- Sheriff can levy execution of all execution creditors
Sheriffs Office: must pay out secured creditors first, takes % of sheriffs fees and difference is paid to execution creditors
Garnishment Orders: requires employer of debtor to retain a portion of their earnings and forward sum to creditor/sheriff
Continuously Enforcing: writs have to be renewed every 21 years
Follow up: examination in aid of execution - allowed annually where they interview the debtor to assess their assets and income
