Chapter 10

Question 1

What is a breach of contract

Answer 1

It is a failure to fulfill one’s obligations under a contract

Question 2

what are damages

Answer 2

These are money claimed or paid to make up for some kind of harm done

Question 3

What is a tort

Answer 3

A tort is an act that is NOT a breach that injury another and has civil liability

Question 4

What is the dauber factor

Answer 4

The court function is a gate keeper.

they determine if an experts testimony constitute scientific knowledge and assist in the understanding of facts

Question 5

vior dire

Answer 5

thi is when the opposing side will question the experts qualifications - you must prove you have sufficient skills

Question 6

what must the injured party prove to win damages

Answer 6

1 - the other party was liable for the damages

2 - you suffered damages because of the actions

Question 7

when are damages allowable

Answer 7

1 - there is evidence to establish the lost profits with reasonable certainty
2 - the lost profits were cause by defendant
3 - the lost profits were reasonably foreseeable

Question 8

What are tort loss situations

Answer 8

theft/conversion of funds
Trademark/patent infringement 
professional malpractice
fraud
defamation
simple/gross negligence
slander/libel

Question 9

What are example of contract breaches

Answer 9

• employment contract
• insurance contract
• failure to pay or provide services
• broken covenant to compete
• stock sales
• sales of a business
• construction contact
• real estate contracts

Question 10

What is the difference between restitution and reliance damages

Answer 10

restitution happens when a defendant is enriched at the expense of the defendant.

Reliance - this is when there was fraud. the intent tis that damages restore the plaintiff as if nothing had happened

Question 11

can there be differences between accountant opinions

Answer 11

yes - there is opinions, predictions but should be related to the facts

Question 12

What is the out of pocket approach

Answer 12

California and New York - this is the difference between the actual value received and the actual value conveyed.

Question 13

What is benefit of the bargain approach

Answer 13

damages include money invested, and also increased costs, lost profits, and decreased value of investment

Question 14

What are the 5 factors of the benefit of the bargain approach M P P G D

Answer 14

1 - method
2 - damage period
3- definition fo profit
4 - growth rate
5 - discount rate
m p p g d

Question 15

What are the three the lost profit methods

Answer 15

1 - before and after 9 sales and growth before and after act (

2- Yardstick - compare to other companies

3 - But for method - difference between estimated and actual profit

4 - direct method - you have an agreement that tells you have to calculate lost profit

6 combination method - combo of the above

Question 16

When is before and after method good to use

Answer 16

more mature businesses

Question 17

What is a study of losses

Answer 17

this happens when an economic loss takes place and damages need to be applied you make a study of losses

Question 18

What are the economic framework of rte. lost profits

Answer 18

macroeconomic analysis
industry analysis
company-specific analysis

Question 19

How do you measure the loss

Answer 19

• length of the loss period
• project lost recent
• measure profitability
• offsetting profits
• time value of money

Question 20

What are the possible types of damages - P V C R C

Answer 20

lost profits 
lost value 
lost cashflow
lost revenue
extra costs

Question 21

what does a defendant want to prove

Answer 21

the plaintiff suffered no damages

Question 22

What is the art of the damages estimate

Answer 22

knowing how the accounting information is used in creating componenetnts of damages estimate

Question 23

What are production or other cost increases

Answer 23

supply costs
labor costs shipping cots
advertising costs
other costs

customer ill will and future lost profits

Question 24

how do you measure commercial loss

Answer 24

all of the complexities of business valuation

Question 25

what is the recovery rule for:

agency contract
buyer of goods
breach of warranty
Fraud

Answer 25

agency contract - lost profit

buyer of goods - difference between purchase priced market value + incidental damages - expenses saved

breach of warranty - the difference between the value of goods accepted and the value if it had been warranted
Fraud - out of pocket or benefits of the bargain

Question 26

Example: D sells S an asset with alleged value of $2M for $1.8M. The asset has a market value of 1.6 M - calculate fraud damages with out of pocket and benefit of the bargain

Answer 26

Out of Pocket: 1.8M - 1.6M= 200K

benefit of the bargain: 2M - 1.6M = 400K