Chapter 12: Contractual Remedies Flashcards
Damages
An award of money that is intended to cure a wrongful event, such as a breach of contract.
Instead of receiving the exact thing they would have received under the contract, damages typically award…
Money.
Expectation Damages
Represent the monetary value of the benefit that the plaintiff expected to receive under the contract.
___ damages are forward-looking, while ___ damages are backward-looking.
Expectation, compensatory.
Why are backward-looking damages easily justified?
Because they allow the plaintiff to recover the value of something they previously enjoyed.
Why are forward-looking damages not as easily justified as backward-looking damages?
Because they allow the plaintiff to recover the value of something that they never preciously enjoyed but merely expected to receive under their contract.
How are expectation damages calculated?
Expected benefits under the contract minus the costs under the contract.
How can expectation value be calculated when the market value of something often fluctuates?
The expectation value is calculated at the time. No one knows what to expect when a contract is created, as it is a gamble.
You order a bale of cotton. The price agreed upon was $75. However, I fail to deliver, and the market price is $100. To fulfill your expectation, how much do I have to pay?
$25 if you have not yet paid, $100 if you have paid.
You order a bale of cotton. The price agreed upon was $75. However, I fail to deliver. The market price has fell to $50. To fulfill your expectation, how much do I have to pay?
None. You cannot recover expectation damages, as your expectation is a loss.
Expectation damages is essentially the difference between what the plaintiff ___ to have at the end of the contract, and what the plaintiff ___ had.
Expected, actually.
Can a court award expectation damages in a case where someone sues because they did not win a beauty contest due to a breach of contract?
Even though you cannot say with certainty that the plaintiff would’ve won, if the courts deem it to be reasonable, they can award expectation damages.
Difference between Cost of Cure and Loss of Value:
- Cost of Cure is how much it would cost to restore the thing to pre-contractual state.
- Loss of Value is how much the thing would be worth if repaired.
Which is more commonly awarded, Cost of Cure of Loss of Value?
Cost of Cure.
Courts are more likely to grant Cost of Cure if…
- Plaintiff has a legitimate interest in having work done.
- If the plaintiff has already spent money curing the defendant’s defective performance.
When would Cost of Cure not be granted, and Loss of Value be granted instead?
When the difference between the Cost of Cure and the benefits of that cure is unreasonably large.
A farmer signs a contract allowing a company to mine on his land that stipulated the land would be levelled after. The company breached the contract. The farmer sues. Would Cost of Cure or Loss of Value be granted in this case?
Cost of Cure.
Intangible Loss
A loss that does not have any apparent economic value.
Pecuniary Losses
Losses that have monetary value.
Do courts traditionally award damages for intangible losses? What about recently?
Traditionally no, recently beginning to do so.
Remote
A loss is remote if it would be unfair to hold the defendant legally responsible for it.
What is the test for remoteness of a loss?
- Liability may be imposed of a reasonable person would have known that the plaintiff’s loss might result from a breach.
- Liability may be imposed if the defendant actually knew that the plaintiff’s loss might result from the breach.
Mitigation
Occurs when the plaintiff takes steps to minimize losses flowing from the defendant’s breach.
Is a business owner expected to take exceptional steps to mitigate a loss?
No, just reasonable steps.
Is the plaintiff required to mitigate?
No, but failing to do so is a poor business decision because you are unable to recover damages for losses you could have mitigated.
Damages are denied only to the extent that the plaintiff unreasonable failed to mitigate. True or false?
True.
Can you recover costs of mitigation?
Yes.
Reliance Damages
Represent the monetary value of the expenses and opportunities that the plaintiff wasted under a contract.
Reliance damages differ from expectation damages in that…
Expectation damages says “give me what I would have gotten if the contract was performed” while reliance damages says “give me what I lost by attempting to fulfill this contract.”
Reliance damages look ___.
Backward.
Expectation damages look ___.
Forward.