Contract Damages

Question 1

Legal Damages

Answer 1

are applicable where the parties have a contract, the defendant is in breach, and the plaintiff has been injured by the breach and wants money to compensate for the loss.

Question 2

Types of Contract Damages

Answer 2

1. Expectation Damages
2. Consequential Damages
3. Incidental Damages
4. Reliance Damages
5. Liquidated Damages
6. Nominal Damages

Question 3

Expectation Damages (compensatory damages)

Answer 3

in contract compensate the plaintiff for the value the plaintiff expected to receive from the contract

Question 4

Consequential damages

Answer 4

seek to compensate for damages that are a direct and foreseeable consequence of the contract not being performed and are found in addition to expectation damages.

Question 5

Incidental Damages

Answer 5

include those reasonably incurred by buyer in rejecting nonconforming goods, or by a seller in reselling goods resulting from a buyer’s breach (e.g., storage, transportation costs)

Question 6

Reliance Damages

Answer 6

seek to put the plaintiff in the same position he would have been in had the contract never been made. The measure is the cost to the plaintiff of his performance.

Question 7

Damages

Answer 7

are stipulated to in a clause in the contract. A liquidated damages clause is proper when:

1. Damages are difficult to calculate; and
2. The stipulated amount in the liquidated damages clause bears a reasonable relationship to the anticipated loss.

Question 8

Nominal damages

Answer 8

Serve as a declaration that the contract has been breached, but plaintiff has not suffered a loss.

Question 9

Potential Limitations on Contract Damages

Answer 9

1. Causation
2. Foreseeability -reasonable person at the time of contract
3. Certainty: not overly speculative
4. Unavoidable- P has duty to mitigate
5. Liquidated damages clause that is valid will control and be the only measure of damages allowed for breach of the underlying contract

Question 10

Legal Restitution as Contract Remedy

Answer 10

is appropriate where the defendant has derived a benefit, or been unjustly enriched, and it would be unfair to allow the defendant to keep that benefit without compensating the plaintiff, or where the plaintiff wants his property back. The goal of restitution is to prevent unjust enrichment.

Question 11

Quasi-Contract (money restitution)

Answer 11

applies where there is no legally binding contract, but the defendant has derived a benefit and fairness requires payment to plaintiff.

Question 12

Ways Quasi-Contract can arise

Answer 12

1. No attempt to contract: The plaintiff can recover the value of the benefit unjustly retained by the defendant (e.g., emergency services)
2. Unenforceable contract: The plaintiff can recover the value of the benefit unjustly retained by defendant (e.g., contract illegal, SOF failure, etc.)
3. Breached contract: Recovery depends on status.
4. P is non-breacher: P can recover the value of the benefit conferred, or the P can get his property back.
5. P is in breach: The traditional rule provides no recovery. The modern trend allows recovery.

Question 13

Equitable Remedies in Contract

Answer 13

are only available when the remedy at law, money damages, is inadequate. The goal of equitable remedy is to prevent unjust enrichment. There are two equitable remedies in Contract:

1. Rescission
2. Reformation

Question 14

Rescission

Answer 14

permits a party to undo a bargain and restores the parties to the position each would have been if the bargain had not been entered into.

a. No meeting of the minds: There must be a contract formation problem resulting from fraud, duress, mistake, or a material misrepresentation
b. Defenses of laches and unclean hands are applicable.

Question 15

Reformation

Answer 15

rewrites the contract to reflect the parties’ true agreement where the written document does not accurately reflect the agreement. There must have been a valid contract in the first place.

a. Proper grounds for reformation include fraud, mistake, material misrepresentation (e.g., scrivener’s error)
b. Defense of laches and unclean hands are applicable.

Question 16

Specific Performance

Answer 16

is a permanent injunction in contract where the court orders the defendant to perform on the contract as promised.

Question 17

Requirements for Specific Performance

Answer 17

1. Contract is valid- terms sufficient and definite
2. Contract conditions imposed on the P are satisfied.
3. Inadequate legal remedy
4. Mutuality of Performance
5. Feasibility of Enforcement
6. No defenses
   {Chocolate Cheesecake Is My Favorite Dessert- valid Contract, contract Conditions satisfied, Inadequate legal remedy, Mutuality of performance, Feasibility of enforcement, and no Defenses}

Question 18

Mutuality of Performance

Answer 18

Both parties to the contract must be eligible to have performance under the contract ordered by the court. This is only at issue where one party could not be ordered to perform.