Chapter 18: Contract Remedies

Question 1

Compensatory damages

Answer 1

contract damages placing the injured party in a position as good as the one he would have held had the other party
performed; equals loss of value minus loss avoided by injured party plus incidental damages plus consequential
damages

Question 2

Loss of value

Answer 2

Value of promised performance minus value of actual performance

Question 3

Cost avoided

Answer 3

Loss or costs the injured party avoids by not having to perform

Question 4

Incidental damages

Answer 4

Damages arising directly out of breach of contract

Question 5

Consequential damages

Answer 5

Damages not arising directly out of a breach but as a foreseeable result of the breach.

Question 6

Reliance damages

Answer 6

Contract damages placing the injured party in as good a position as he would have been in had the contract not been made.

Question 7

Nominal damages

Answer 7

A small sum awarded when a contract has been breached but the loss is negligible or unproved

Question 8

Punitive damages

Answer 8

Are generally not recoverable for breach of contract

Question 9

Liquidated damages

Answer 9

Reasonable damages agreed to in advance by the parties to a contract

Question 10

Foreseeable damages

Answer 10

Loss that the party in breach had reason to anticipate when the contract was made.

Question 11

Certainty of damages

Answer 11

Damages are not recoverable beyond an amount that can be established with reasonable certainty

Question 12

Mitigation of damages

Answer 12

The injured party may not recover damages for loss he could have avoided by reasonable effort.

Question 13

Reformation

Answer 13

Equitable remedy correcting a written contract to conform with the original intent of the contracting parties.

Question 14

Specific performance

Answer 14

Court decree ordering a breaching party to render promised performance

Question 15

Injunction

Answer 15

Court order prohibiting a party from doing a specific act.

Question 16

Restitution

Answer 16

Restoration of the injured party to the position he was in before the contract was made.

Question 17

Party injured by breach

Answer 17

May recover in restitution if the other party totally breaches the contract by non-performance or repudiation.

Question 18

Party in default

Answer 18

May recover in restitution any benefit conferred in excess of the loss caused by that party’s breach.

Question 19

Statute of frauds

Answer 19

When a contract is unenforceable because of the statute of frauds, a party may recover in restitution the benefits conferred on the other party and performance of the contract.

Question 20

Voidable contracts

Answer 20

A party who has rightfully avoided a contract is entitled to restitution for any benefit conferred on the other party but generally must return any benefit that he has received under the contract.

Question 21

Election of remedies

Answer 21

If remedies are not inconsistent, a party injured by a breach of contract may seek more than one remedy.

Question 22

Loss of power of avoidance

Answer 22

a party with the power to avoid a contract may lose that power by (1) affirming
the contract, (2) delaying unreasonably in exercising the power of avoidance, or
(3) being subordinated to the intervening rights of third parties

Question 23

Out-of-pocket damages

Answer 23

Difference between the value received and the value given.

Question 24

Benefit of the bargain damages

Answer 24

Difference between the value received and the value of the fraudulent party’s performance as represented.