Contract Remedies

Question 1

Compensatory Damages

Answer 1

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

Question 2

Punitive Damages

Answer 2

None Available in Contract

Question 3

Liquidated Damages

Answer 3

Allowed if:
1. Damages difficult to ascertain at time of formation
2. Liquidated Damages are reasonable forecast of what damages would be (excessive = penalty)

Question 4

If Liquidated Damages Clause Invalid

Answer 4

P can still obtain Actual Damages

Question 5

Clause Giving Choice between Liquidated Damages and Actual Damages?

Answer 5

Invalid –> P receives actual damages

Question 6

Attorney’s Fees

Answer 6

No

Question 7

Quasi Contract in Restitution if:

Answer 7

1. Unenforceable Contract
2. P conferred a benefit on D
3. D accepts the benefit
4. D’s retention of the benefit without compensation to P would be unjust under the circumstances

Question 8

Where P breaches a Quasi-Contract

Answer 8

Can still receive remedy but cannot be greater than the contract rate

Question 9

Specific Performance Requirements

Answer 9

1.Valid Contract between the parties that is certain and definite

2. P has fulfilled or is ready to perform its conditions
3. Legal Remedy Inadequate
4. Enforcement is feasible
5. No viable defenses

Question 10

Inadequacy of Money Damages in Contract

Answer 10

1. Damages speculative
2. D is insolvent
3. Will lead to multiplicity of suits
4. 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

Question 11

Delivery of Wrong Amount of Land and Specific Performance

Answer 11

Where P Delivers: yes unless major and P cannot cure
Where P Buys: yes unless very major

Question 12

Time is of the Essence and Specific Performance

Answer 12

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

Question 13

Defenses to Specific Performance

Answer 13

1. Unconscionability = grossly inadequate / disprportionate hardship
2. Laches
3. Unclean Hands
4. Hardship
5. Mistakes/Misrepresentation
6. Statute of Frauds + Part Performance

Question 14

Rescission

Answer 14

**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

Question 15

Defenses to Rescission

Answer 15

1. Laches
2. Unclean Hands
3. P elects to sue for damages first
4. Estoppel

Question 16

Reformation Definition and Requirements

Answer 16

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

Question 17

Construction Contracts –> Owner Breaches

Answer 17

*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

Question 18

Construction Contracts – Builder Breaches

Answer 18

Substantial performance: Cost of resoration (absent economic waste)

Builder Abandons: Cost of completion - payments due + compensatoin for delay

Question 19

Replevin in Contract

Answer 19

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

Question 20

Incidental Damages

Answer 20

Under UCC, incidental damages = expenses reasonably incurred incident to seller’s (cost of custody, transportation, care etc.) incident to seller’s breach