Contract Remedies

Question 1

Topic: Legal Damages

Answer 1

Appropriate when parties have a valid K, D breaches K, and P is injured for breach and seeks money damages for loss.

Question 2

Types of damages

Answer 2

1. Compensatory damages
2. Consequential damages
3. Incidental damages
4. Reliance damages
5. Liquidated damages
6. Nominal damages
7. Punitive damages

Question 3

Compensatory damages

Answer 3

Seek to compensate for the value of the benefit P expected to receive.

Measure: P’s injury stemming from K nonperformance.

Question 4

Limitations on compensatory damages

Answer 4

1. Causation
2. Foreseeability
3. Certainty
4. Unavoidability (cover)

Note: a liquidated damages clause that is valid will control and be the only measure of damages allowed for breach of the underlying contract.

Question 5

Consequential damages

Answer 5

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 6

Limitations on consequential damages

Answer 6

1. Causation
2. Foreseeability
3. Certainty
4. Unavoidability (cover)

Question 7

Foreseeability in consequential damages

Answer 7

There must be
communication of information such that the consequential damages are foreseeable to the defendant at the time of contracting.

Question 8

Incidental damages

Answer 8

Costs reasonably incurred
when the other party is in breach, such as by a seller in reselling goods resulting from a buyer’s breach (e.g., storage, transportation costs).

Question 9

Reliance damages

Answer 9

Seek to put P in same position she would have been in had the K never been made.

Measure: by the losses incurred from P’s reliance on the K.

Question 10

When can reliance damages substitute for compensatory damages?

Answer 10

When compensatory damages are difficult to calculate, such as lost profits for a new business.

Question 11

Topic: Legal Restitution

Answer 11

Appropriate when the D derived a benefit and it would be unfair to allow the D to keep that benefit without compensating the P.

Question 12

Quasi-contract (money restitution)

Answer 12

No legally binding K, but D derived a benefit, requiring payment to P.

Measure: value of benefit retained by D.

Question 13

What are the 3 ways where quasi-contract can arise?

Answer 13

1. No attempt to K (e.g., emergency services)
2. Unenforceable K (e.g., illegal K, SoF failure, etc.)
3. Breached K

Question 14

Replevin

Answer 14

Allows the recovery, before trial, of a specific chattel
(personal property) wrongfully taken from the plaintiff, who has
the right to possession.

Question 15

Ejectment

Answer 15

Used to recover specific real property from which the plaintiff, who has the right to possession, was wrongfully excluded.

Question 16

Topic: Equitable Remedies

Answer 16

Only available when the remedy at law,
money damages, is inadequate.

Question 17

What are the two equitable remedies specific to contractS?

Answer 17

1. Rescission
2. Reformation

Question 18

Rescission

Answer 18

Permits a party to invalidate a contract and restores the parties to the position each would have been in if the bargain
had not been entered into.

Note: There must be a contract formation
problem resulting from fraud, duress, mutual mistake, unilateral mistake, or a material misrepresentation

ONLY AVAILABLE TO THE WRONGED PARTY.

Question 19

Reformation

Answer 19

Permits a contract to be rewritten by the court to reflect the parties true agreement when:

1. Parties had a meeting of the minds and
2. K as written doesn’t reflect the parties’ agreement because of an error

ONLY AVAILABLE TO THE WRONGED PARTY.

Question 20

Do injunctions apply in contract remedies as well?

Answer 20

Yes.

1. TROs
2. Preliminary Injunctions
3. Specific performance (permanent injunction in K)

Question 21

Specific Performance

Answer 21

Permanent injunction in contracts where court orders D to perform on the K as promised.

Question 22

Specific Performance: Requirements

Answer 22

1. K valid and terms sufficiently definite and certain
2. K conditions imposed on P are satisfied.
3. Inadequate legal remedy
4. Mutuality of performance
5. Feasibility of enforcement: cannot be too difficult for court to enforce
6. No defenses

Question 23

Defenses to specific performance

Answer 23

1. Laches
2. Unclean hands
3. Defenses to underlying K (e.g., lack of consideration, SoF, sale to a BFP)

Note: Any failure of the underlying contract can operate as a defense since a valid contract is a requirement for an injunction