Chapter 13 - Ready to study Flashcards

1
Q

*** What is a breach of contract? How may it occur?

A

> a breach arises where performance is incorrect, incomplete, performance is not in accordance with the contract, including failure to perform at all

FINII

> key Q > is it a minor breach or a major (fundamental) breach.

RIFS

A party to a contract may break it
> by expressly repudiating (rejecting) its obligations
> by acting in a way that makes it impossible to perform its promises, or
> by either failing to perform at all or tendering an actual performance that falls short of its promise.

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2
Q

What are the implications of a fundamental breach?

A

aka major breach: the aggrieved party has lost all or substantially all of the benefits of the contract such that what they are getting is substantially different from what they contracted for

> a breach of the whole contract or of an essential term so that the purpose of the contract is defeated.

if a breach is major the contract can end and sue for losses.

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3
Q

What are the implications of a minor breach?

A

> a breach of a non-essential term of a contract or of an essential term in a minor respect

> if is minor breach you still must go ahead. You are not entitled to reject the contract.

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4
Q

How are terms of a contract differentiated to establish how essential they are?

A

> condition is an essential term of a contract

> warranty is a non essential term of contact

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5
Q

What is express repudiation?

A

express repudiation

> where one party advises the other that they do not intend to perform

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6
Q

** What is an anticipatory breach?

A

> anticipatory breach (repudiate condition)
An express repudiation that occurs before the time agreed for performance

2 options:
1) treat the contract immediately at an end and sue for losses, or
2) insist on performance and sue when the time of the performance arrives and no performance is received.
There is risk in waiting is that is the contract comes to end from a frustrating event.

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7
Q

** What is substantial performance?

A

Performance that does not comply in some minor way with the requirements of the contract

The promisor is entitled to to enforce a contract when it has substantially performed; likely subject to a reduction for damages

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8
Q

*** What are exemption clauses? W

A

clauses in the contract which parties use to try and limit their liability in cases of the breach

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9
Q

*** What factors determine the enforce-ability of exemption clauses?

A

NAPUW

enforce-ability:
> negotiated or standard form?
if negotiated it is more likely to be enforceable

> notice of exemption clause
were parties made aware

> previous dealings
such as to show actual knowledge. if they have dealt before then more likely to be aware of clause

> exemption unusual
is the clause out of the ordinary?

> written and signed contract
much more likely to be enforced

exemption clauses cannot exempt illegal activity or criminal liability

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10
Q

What types of remedies are available to the injured party in a contract breach?

A

> damages
equitable remedies - specific performance, injunction, rescission
quantum meruit

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11
Q

What are damages? When damages are the remedy what is the purpose?

A

there will be assessment of damages
> damages: money award to compensate injured party for loss caused by other parties breach

purpose of damages is to try to place injured party in the same position as if the contract had been completed. ie. what have you been deprived of. not punishment, are to compensate for the breach

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12
Q

What are the prerequisites for award of damages?

A

> mitigation of damage > you cannot allow losses to accumulate
ie. what would a reasonable person do. courts can reduce award if not mitigated. ie. if you could have fully mitigated then you will get nothing

> remoteness of loss/consequential damages
: can only recover that which naturally arose due to the breach
: consequential does not flow from the contract itself.

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13
Q

How are damages measured?

A

ELN

what Principe of compensation applies
Expectation damages - may depend on market

> > > liquidated damages - terms in their contracts which indicate the amount of damages the party will be liable for is a breach occurs
example: charges if a breach of an event occurs then damages must be paid. ie. every time x occurs then $ must be paid. $ determined by reasonable pre-estimate.

> > > > nominal damages: establishes breach but was not actual loss. award of a nominal amount.
: have to prove that there was an actual loss.

> if it is not reasonable then it is considered a penalty. a penalty provision is not enforceable

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14
Q

What are the types of damages? (common law damages)

A

CPREG

expectation damages - an amount awarded for breach of contract, based on expected benefits or profits
> may be based on opportunity cost: the lost chance to make a similar contract with a different promisor

consequential damages - secondary losses incurred by the non-breaching party that were foreseeable at the time of contracting

general damages - an estimated amount for intangible injury that a court may award, over and above specifically proven losses for harm

Reliance damages - costs of expenditures and wasted effort reasonably made in preparation for performance
essential reliance > when money is spent to acquire performance
incidental reliance > example: you passed up an opportunity because you entered into the contract.

Punitive damages - rare. punishment is not for the purpose of contract damages

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15
Q

What is the concept of restitution?

A

principle of compensation

> restitution
prevents some unjust enrichment. could be a return of goods or something of value. Ie it would be unfair if deposit was kept

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16
Q

What is an equitable remedy?

A

Equitable remedies are discretionary - the court decides whether good reasons exist to go beyond the ordinary common law remedy of damages. The court must be satisfied that damages will not adequately compensate the loss; thereafter an equitable remedy is granted.

17
Q

What are the prerequisites for an equitable remedy?

A

must have:
> clean hands
> no undue delay
> cannot cause the other party undue hardship

18
Q

What are the equitable remedies that are available? (court of equity)

A

SIRQ

> specific performance: an order requiring a defendant to do a contracted-for act, usually to complete a transaction
only award if money is an inadequate remedy

> injunctions: a court order restraining a party from acting in a particular manner; in relation to contract, it prohibits a party from committing a breach.
2 types:
mandatory, prohibitive, and interlocutory

> Rescission: setting aside or rescinding a contract in order to restore the parties as nearly as possible to their pre-contract positions.

> Quantum Meruit: a a fair amount a person deserves to be paid for benefit conferred

19
Q

What is test for injunctions? **

A

SDM

1) is there a serious question to be tried?
2) damages cannot be an adequate remedy. ie. irreparable harm
3) must be just to do so on a balance of convenience. ie. who will suffer the greatest harm

20
Q

What are methods for enforcing a judgement?

A

> garnishment > have an asset paid. like a bank account. sheriff would go in and take it. or of payments, wages

> writ of seizure and sale: to sell an asset they own to pay.

> judgement debtor examination: examination to find out info about what assets they have so that it can be taken