Chapter 10 Flashcards
What is a breach of contract
It is a failure to fulfill one’s obligations under a contract
what are damages
These are money claimed or paid to make up for some kind of harm done
What is a tort
A tort is an act that is NOT a breach that injury another and has civil liability
What is the dauber factor
The court function is a gate keeper.
they determine if an experts testimony constitute scientific knowledge and assist in the understanding of facts
vior dire
thi is when the opposing side will question the experts qualifications - you must prove you have sufficient skills
what must the injured party prove to win damages
1 - the other party was liable for the damages
2 - you suffered damages because of the actions
when are damages allowable
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
What are tort loss situations
theft/conversion of funds Trademark/patent infringement professional malpractice fraud defamation simple/gross negligence slander/libel
What are example of contract breaches
- 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
What is the difference between restitution and reliance damages
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
can there be differences between accountant opinions
yes - there is opinions, predictions but should be related to the facts
What is the out of pocket approach
California and New York - this is the difference between the actual value received and the actual value conveyed.
What is benefit of the bargain approach
damages include money invested, and also increased costs, lost profits, and decreased value of investment
What are the 5 factors of the benefit of the bargain approach M P P G D
1 - method 2 - damage period 3- definition fo profit 4 - growth rate 5 - discount rate m p p g d
What are the three the lost profit methods
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
When is before and after method good to use
more mature businesses
What is a study of losses
this happens when an economic loss takes place and damages need to be applied you make a study of losses
What are the economic framework of rte. lost profits
macroeconomic analysis
industry analysis
company-specific analysis
How do you measure the loss
- length of the loss period
- project lost recent
- measure profitability
- offsetting profits
- time value of money
What are the possible types of damages - P V C R C
lost profits lost value lost cashflow lost revenue extra costs
what does a defendant want to prove
the plaintiff suffered no damages
What is the art of the damages estimate
knowing how the accounting information is used in creating componenetnts of damages estimate
What are production or other cost increases
supply costs
labor costs shipping cots
advertising costs
other costs
customer ill will and future lost profits
how do you measure commercial loss
all of the complexities of business valuation
what is the recovery rule for:
agency contract
buyer of goods
breach of warranty
Fraud
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
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
Out of Pocket: 1.8M - 1.6M= 200K
benefit of the bargain: 2M - 1.6M = 400K
