Contract (Equitable Damages)

Question 1

Specific performance

Answer 1

Mandatory decree or injunction that orders a contracting party to perform that which they have promised to perform under the K.

Question 2

Requirements for specific performance

Answer 2

1. valid contract
2. plaintiff must show that he is ready and able to perform
3. inadequacy of legal remedy (i.e., subject matter of lit. is unique)
4. feasibility of enforcement (i.e., show that D is subject to personal jurisdiction)
5. no defenses

Question 3

Can a seller as plaintiff specifically enforce a K to purchase land if the defect is minor?

Answer 3

Yes, but not if it is a major defect (unless they can cure before closing)

Question 4

Can a buyer as plaintiff specifically enforce the contract if the defect is major?

Answer 4

Yes, but they cannot do so if the defect is very major.

Question 5

Inadequacy of legal remedy

Answer 5

The legal remedy must be inadequate. Reasons for inadequacy of money damages vary, but typically include:
1. damages are too speculative
2. the defendant is insolvent
3. multiple suits are necessary
4. subject of K is unique

Question 6

Does a valid liquidated damages clause preclude the granting of specific performance?

Answer 6

No, unless it is construed as a true alternative to performance (that is, giving the party the option of performing or paying the stipulated amount)

Question 7

Defenses to specific performance

Answer 7

1. unclean hands
2. laches
3. unconscionability
4. hardship*

*to prevail on a defense of hardship, the defendant must show that there was inadequacy in consideration, marked inequality between the parties, and unfair advantage exercised by the plaintiff. It is usually no defense that the subject matter of the K is found to be worth more than the agreed price at the time set for performance.

Question 8

Rescission

Answer 8

Rescission cancels the contract where it results from mistake, fraud, or duress, or where the K is materially breached.

Usually accompanied by restitution of benefits conferred.

Can be equitable or legal

Question 9

Grounds for rescission

Answer 9

1. illegality
2. impossibility
3. lack of capacity
4. mistake*
5. misrepresentation*

*most common on the Bar

Question 10

For which types of mistake do courts grant recission?

Answer 10

Recission is granted for mutual mistake.

No relief is granted for collateral or immaterial mistakes.

Recission is not offered for unilateral mistakes, unless the other party knew or should have known of the mistake,

Question 11

Misrepresentation

Answer 11

Plaintiff can seek rescission upon a showing of actual reliance on a material misrepresentation of fact.

Question 12

Defenses to recision

Answer 12

1. unclean hands
2. laches
3. negligence of plaintiff
4. election of remedies*

• plaintiff first seeks damages, binding election occurs at the commencement of the action; if plaitniff first seeks to rescind, no binding election occurs until entry of judgment.

Question 13

Reformation

Answer 13

An equitable remedy for modifying a written instrument to reflect the parties original understanding.

Requires a valid original contract.

Question 14

The underlying ground for reformation is that…

Answer 14

…the writing does not confrom to the parties valid prior agreement because of mistake of fraud. If the mistake relates to entering into the agreement in the first place, the case must be analyzed under recission.

Question 15

Reformation for mistake of fact

Answer 15

Reformation is proper if both parties mistakenly believed the writing conformed to their agreement.

May be granted for unilateral mistake if non-mistaken party knew of the mistake.

Question 16

Reformation for mistake of law

Answer 16

Reformation is proper to correct a written instrument because of mistake in the legal meaning of a term used to incorporate the underlying agreement.

Question 17

Defenses to reformation

Answer 17

1. laches
2. unclean hands
3. sale of subject matter to BFP
4. parol evidence

Parole evidence, SoF, and negligence are NOT defense but they should be included in the answer anyway

Question 18

How to reform a contract because of mistake

Answer 18

There must be:
1. an agreement between the parties
2. an agreement to put the agreement in writing
3. a variance between the original agreement and the writing

Question 19

Statute of Frauds

Reformation defense

Answer 19

On Essay: bring up SoF and explain what it is and why it is applicable. Then, state that “the statute of frauds does not apply to reformation actions, unless the reformation would add land to the contract without complying with the SoF.”

Then, if applicable, bring up part performance and equitable estoppel.

Question 20

Parol evidence

Reformation defense

Answer 20

On Essay: bring up parol evidence and define it, but then explain that the parol evidence rule is not applied to reformation actions because, if it was, no contracts could ever be modified for mistake or misrepresentation. This is because the parol ev. rule would bar the evidence of the origina lagreement.