Contract Remedies Flashcards
Compensatory Damages
Definition: provide compensation for breach = direct damages flowing from breach
Expectation Damages = type of compensatory damages measured by benefit of the bargain
Consequential Damages = indirect consequences of breach foreseable at time of formation based on party’s communication of basic circumtances
Punitive Damages
None Available in Contract
Liquidated Damages
Allowed if:
1. Damages difficult to ascertain at time of formation
2. Liquidated Damages are reasonable forecast of what damages would be (excessive = penalty)
If Liquidated Damages Clause Invalid
P can still obtain Actual Damages
Clause Giving Choice between Liquidated Damages and Actual Damages?
Invalid –> P receives actual damages
Attorney’s Fees
No
Quasi Contract in Restitution if:
- Unenforceable Contract
- P conferred a benefit on D
- D accepts the benefit
- D’s retention of the benefit without compensation to P would be unjust under the circumstances
Where P breaches a Quasi-Contract
Can still receive remedy but cannot be greater than the contract rate
Specific Performance Requirements
1.Valid Contract between the parties that is certain and definite
- P has fulfilled or is ready to perform its conditions
- Legal Remedy Inadequate
- Enforcement is feasible
- No viable defenses
Inadequacy of Money Damages in Contract
- Damages speculative
- D is insolvent
- Will lead to multiplicity of suits
- Bargaining for item is **unique **
Real Property: always unique
Personal Property: not unique unless either (i) rare; (ii) of personal significance; or (iii) unique due to special circumstances at time of formation
Delivery of Wrong Amount of Land and Specific Performance
Where P Delivers: yes unless major and P cannot cure
Where P Buys: yes unless very major
Time is of the Essence and Specific Performance
Principle: Equity abhors forfeitures
Factor Test:
1. Whether loss to seller is small
2. whether buyer’s tardiness in making payment is de minimis
3. Whether seller accepted late payments in past
4. Whether buyer would suffer undue hardship
Defenses to Specific Performance
- Unconscionability = grossly inadequate / disprportionate hardship
- Laches
- Unclean Hands
- Hardship
- Mistakes/Misrepresentation
- Statute of Frauds + Part Performance
Rescission
**Legal Rescission: ** P gives prompt notice and gives back anything received under contract
Equitable Rescission: Equitable voiding of the contract through court intervention base on general issues of formation
NOTE: Negligence is not a ground for rescission
Defenses to Rescission
- Laches
- Unclean Hands
- P elects to sue for damages first
- Estoppel
Reformation Definition and Requirements
Definition: Equitable modification of a written instrument to reflect the parties’ original understanding
Requirements
1. Valid Contract –> was there a meeting of the minds?
2. Valid Grounds for Reformation: (i) mutual mistake of fact; (ii) unilateral mistake by P of which D had actual knowledge; (iii) Mistake of law; (iv) fraud or misrepresentation
Construction Contracts –> Owner Breaches
*Wholly Executory Contracts *= lost profits
*Fully Performed Contracts *= contract price
*Partially performed contract *= contract price - cost of completion
*Owner Repudiation after partial performance *= rescind + value of work already completed
Construction Contracts – Builder Breaches
Substantial performance: Cost of resoration (absent economic waste)
Builder Abandons: Cost of completion - payments due + compensatoin for delay
Replevin in Contract
UCC allows a buyer to replevy undelivered, identified goods if, after reasonable effort buyer is unable to secure adequate substitute
-Inadequate Remedy where no guarantee that Sheriff wiil be successful in stealing the car
Incidental Damages
Under UCC, incidental damages = expenses reasonably incurred incident to seller’s (cost of custody, transportation, care etc.) incident to seller’s breach
