Chpt 13: Breach Flashcards
What happens when a term of a contract is breached?
- The non-breaching party can make claims to damages
- If the breach undermines a substantial part or the whole contract, then the contract can be discharges
Can the non-breaching party choose to continue the contract even after a dischargeable breach is made?
Yes
What happens if the non-breaching party has already received benefits?
Cannot discharge but can still sue for damages
How an breaches occur?
- A party rejects obligations
- A party acts in a way that makes performance of promises impossible
- Failure to fulfill or fall short of promises
What is express repudiation?
When a promisee expressly tells a promisor she does not plan on fulfilling her promises.
In the case of express repudiation, the promisor can sue for damages and the contract can be considered immediately terminated.
If Mitch tells Kyle in advance that he doesn’t plan on fulfilling his promises, what can Kyle do?
- Immediately terminate the contract
- Force the performance
What happens if a promisor is negligent and can no longer fulfill promises made in a contract?
A willful or negligent act that destroys the ability to fulfill a promise is considered a breach of contract/repudiation
If a contract requires performance in installments, and the performance thus far is defective, at what point is performance is considered repudiation?
1) If there is a good reason to think deficient performance will continue
2) If either the expected or actual deficiency an important relative to the whole performance promised
What is the doctrine of substantial performance?
Contract holds if defective performance is minor, but promisee can still get damages
Why are exemption clauses good?
- Allocate risks to help parties know what to ensure
- Allow suppliers to charge lower prices
- Exemption clauses offer total defense
- Standard form contract users get awesome exemption clauses
How do courts decide whether or not to enforce an exemption clause?
Analytical Approach:
1) Determine whether the clause covers the approach in question
2) Determine whether the clause was unconscionable at the time of contracting - that is, was there an imbalance in bargaining power or result
3) Determine if there is a strong public policy reason not to enforce
What are the types of remedies (besides discharging the contract) for a breach of contract?
1) Damages
2) Equitable remedies - specific performance
3) Quantum meruit
What is the purpose of remedy through damages?
Put the injured party in position he would have been in if contract was properly completed
What are the pre-requisites to be awarded damages?
1) Damages need to be a result of a breach of contract - the defendant needs to know of importance if special
2) Injured party needs to mitigate losses as much as possible
What are the types of damages?
1) Expectation - Damages awarded based on expected benefits/profits/OC
2) Consequential damages - Foreseeable secondary losses
3) General Damages - Estimated amount of intangible injury (mental anguish, emotional scarring etc…)
4) Reliance damages - Costs of expenditures and wasted effort in preparation for performance
5) Punitive Damages - Punishment for bad behavior
