Contract Remedies Flashcards
Compensatory Damages (Contracts)
The object of compensatory damages in contracts are to place the party in substantially as good a position as he would have been had the contract been performed.
Nominal and Punitive not allowed; based on injury to the plaintiff. Requires 1) Causation, 2) Foreseeability (at time of contracting), 3) Certainty, and 4) Unavoidability/Mitigation (focus on plaintiff)
Consequential Damages (Contracts)
Available for related damages foreseeable at the time of contract (includes reputation damages)
Nominal Damages (contracts)
Not relevant
Punitive Damages (contracts)
Punitive damages are not recoverable in contracts claims
NOTE: Wilfull conduct may indicate a torts case where punitive damages are recoverable.
Liquidated Damages (contracts)
Requires that: 1) Damages were very difficult to ascertain at contract formation and 2) clause was a reasonable forecast of what they would be. If amount is excessive then it will serve as a penalty.
If valid then only the liquidated amount is available. If invalid only actual compensatory damages are available.
A clause providing for either damages or liquidated damages is unenforceable.
Does not preclude plaintiff from getting specific performance unless contract specifically says liquidated damages is the only amount.
Legal Remedies (Contracts)
Compensatory
Consequential
Liquidated Damages
Nominal & Punitive are normally not available.
Restitutionary Remedies (contracts)
Quasi Contract
Restitutionary Damages
Replevin
Quasi-Contract Restitutionary Damages
A contract imposed in equity where a contract should have been formed but was never realized. Courts apply quasi-contract when appropriate to create an obligation and avoid injustice or unjust enrichment.
Requires circumstances such that it would be inequitable for the defendant to retain the benefit without paying fair value for it.
Requires a showing of 1) P gave a benefit, 2) D had knowledge of the benefit, 3) D accepted and 4) circumstances are such that it would be inequitable for the defendant to retain the benefit without paying fair value for it.
The liability in a quasi-contract is equal to the value of the benefit conferred by the plaintiff. The value is the fair market value of the benefit and not necessarily the subjective value that the defendant enjoys.
Example: A roofing company fixes school roof AND with school’s knowledge does extra work outside of the original contract. The outside work will form a qausi-contract and a court will enforce resitution for labor.
Restitution Damages (contracts)
Depends on contract being unenforceable or because of breach.
Unenforceable: Mistake, lack of capacity, statute of frauds, illegality, misrepresentation. Receive damages for property/money/services rendered to the defendant. This is true even if the value of the services is greater than the contract rate.
Breach of contract:
Traditionally only applies where the plaintiff is a non-breaching party. Modernly it is allowed.
Damages: A monetary award not greater than the contract rate and reduced by any damages suffered by the defendant resulting from the breach (if applicable).
NO COmpensatory and Restitutionary Damages together. Discuss both damages but award the higher amount of the two.
Replevin
Plaintiff recovers possession of specific personal property. In contracts it is an action for the reposession of personal property whether wrongfully detained or taken by the defendant.
Plaintiff must establish: 1) right to possession, and 2) wrongful withholding by defendant.
To recover before trial must post bond but defendant can also defeat recover by posting re-delivery bond.
During time of detention P may be able to receive damages for lost use (compensatory) or benefit to defendant (restitution).
Specific Performance:
A mandatory decree ordering a contracting party to perform a promise under a contract. Plaintiff must show:
- An inadequate remedy at law
- A valid contract with definite and certain terms to enforce
- Satisfaction with the plaintiff’s contract conditions
- Mutuality of performance
(means specific performance) is available to either P or D could - Feasibility of Enforcement and
- No defenses
You probably don’t need to establish the contract formation elements. But get in and get out of formation if its a remedies essay
Contract Compensatory Damages Headings/Analysis
Expectancy
Reliance
Consequential
Liquidated Damages
Incidental
Duty to mitigate
All Equitable Contract Remedies
- Specific performance
- Rescission
- Reformation
- Quasi Contract
All Compensatory Damages (contracts)
- Expectancy
- Reliance
- Consequential
- Liquidated damages
- Incidental
- Duty to mitigate.
Always discuss expectancy, reliance, and consequential
Buyer’s Right of Replevin under UCC
The UCC provides a buyer with a right of replevin for goods identified to the contract if, after reasonable effort the buyer is unable to effect cover for such goods, or the circumstances reasonably indicate that such effort will be unavailing.
Unpaid seller’s right to reclaim goods
The UCC also protects a seller’s right to get back goods from buyer who has not paid for them.
Specific Performance - Valid Contract
A valid, enforceable contract with definite and certain terms.
Specific Performance - Inadequate Remedy at Law
A legal remedy is inadequate when money damages would be speculative, the harm is not yet ripe or in situations involving unique real or personal property.
Land is always considered unique.
Determined at time of trial - look for rare, personal significance.
Specific Performance - Mutuality of Performance
Means that the remedy of specific performance would have been available to the defendant as well as the plaintiff.
Specific Performance - Feasibility of performance
In order to decree specific performance of a contract, a court must enforce its decree and supervise it.
Specific Performance - Contracts for Personal Services
Courts will not enforce contracts for personal services since it is equivalent to involuntary servitude under the 13th Amendment. However, courts can enforce a contract for someone not to work (a covenant not to compete).
Legal defenses (Contracts)
All defenses to the formation of a contract:
Unclean Hands
Laches
Hardship
Mistake
Misrepresentation/Unfair Practices
Fraud
Statute of Frauds
Laches (Contracts)
A plaintiff may be denied relief when they have caused an unreasonable delay in asserting their rights and the delay will prejudice the defendant.
Unclean Hands
When the plaintiff has been guilty of some sort of misconduct in regards to the same transaction as to which they are presently suing the defendant.
Hardship (Contracts Defenses)
Hardship can be asserted when there is a ver serious inequity between the parties, often in the form of 1) Inadequate consideration and 2) uneven bargaining power.
Mistake (Contracts defenses)
A defendant will not be compelled to perform if his or her assent to the contract terms was obtained under the influence of mistake, misapprehension or surprise.
Misrepresentation / Unfair Practices
A defendant will not be compelled to perform if his or her assent was obtained by misrepresentation or unfair practices of the party to whom performance was otherwise due, or by any promise of such party that has not been sufficiently fulfilled.
Fraud
Fraud may serve as a defense to an action for specific performance even if it would not give rise to an independent cause of action for fraud.
Specific Performance Elements
The defendant must perform the contract if five requirements are met absent any defenses:
1) Inadequate Legal Remedy at Law
2) A valid contract
3) Definite and Certain terms to enforce
4) Plaintiff’s condition is satisfied
5) Mutuality of performance
6) feasibility of enforcement
Specific Performance - Any plaintiff’s conditions must be satisfied
The plaintiff must be able to show that his or her contract’s conditions have been fulfilled (satisfied or excused).
Specific Performance Defenses
Equitable Remedies:
Unclean Hands
Laches
or Unconscionable - Must be more than an unfair deal at the time of contract
Legal Remedies:
Mistake
Misrepresentation
Statute of Frauds
Specific Performance Defenses
Equitable Remedies:
Unclean Hands
Laches
or Unconscionable - Must be more than an unfair deal at the time of contract
Legal Remedies:
Mistake
Misrepresentation
Statute of Frauds
Recession:
Original contract is considered voidable and rescinded.
Election of Remedies
1. Sue for damages first: Cannot get rescission since the suit for damages serves to affirm the contract
2. If the plaintiff sues for rescisision first, then damages are allowed (P can sue for both and choose before judgement)
Rescission Analysis
- Determine if there is grounds for rescission
- Mistake, misrepresentation, undue influence, and other contract formation issues.
Mistake: Material fact then rescission is granted but not with mistake of a collateral fact.
Unilateral Mistake: Despite ordinary care enforcement is unconscionable and the other party can be returned to the status quo.
Fraud: Rescission is granted if P ACTUALLY relied on the misrepresentation or fraudulent facts.
Failure of Consideartion: It is the duty of the other party to see that their consideration doesn’t fail.
- Determine if there are any defenses:
- Tort defenses
- Negligence (not a good defense to prevent recession)
- Election of remedies
- Plaintiff has some performance on the contract and thus restitution is more proper.
Reformation Analysis:
Changes written agreement to conform with the parties original understanding.
1) IS there a valid contract (meeting of the minds)
2) Are there grounds for reformation?
- Mutual mistake - Granted
- unilateral mistake - Denied
- Fraud or non-mistaken party knows of mistake - Denied
- Misrepresentation- Granted
3) Are there valid defenses:
- Tort defenses
Non-defenses (won’t prevent reformation):
- Negligence of Plaintiff
- Statute of Frauds
- Parole Evidence Rule
“Very Good Dog”
Land Sale Contract Requirements
1) Parties, 2) Property Defined, 3) time for performance, and 4) purchase price.
Abatement of Purchase Price
In a land-sale contract, a purchase price can be abated, or reduced when tittle rendered is defective due to an encumbrance or unmarketable title, or a conveyance of less than promised.
Expectancy Damages
Expectation damages put the plaintiff in the place s/he would have been had the K not been breached.
Reliance
Reliance damages put the person in the place s/he would have been had the K not occurred. (What were the costs due to the reliance on the K).
Restitution
Restitution damages compensate the plaintiff for how much the defendant benefitted from the K (The amount the breaching party gained is the measure of recovery).
Incidental
Incidental damages are always recoverable. The costs incurred in finding replacement performance.
