Contract Remedies Flashcards
Topic: Legal Damages
Appropriate when parties have a valid K, D breaches K, and P is injured for breach and seeks money damages for loss.
Types of damages
- Compensatory damages
- Consequential damages
- Incidental damages
- Reliance damages
- Liquidated damages
- Nominal damages
- Punitive damages
Compensatory damages
Seek to compensate for the value of the benefit P expected to receive.
Measure: P’s injury stemming from K nonperformance.
Limitations on compensatory damages
- Causation
- Foreseeability
- Certainty
- 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.
Consequential damages
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.
Limitations on consequential damages
- Causation
- Foreseeability
- Certainty
- Unavoidability (cover)
Foreseeability in consequential damages
There must be
communication of information such that the consequential damages are foreseeable to the defendant at the time of contracting.
Incidental damages
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).
Reliance damages
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.
When can reliance damages substitute for compensatory damages?
When compensatory damages are difficult to calculate, such as lost profits for a new business.
Topic: Legal Restitution
Appropriate when the D derived a benefit and it would be unfair to allow the D to keep that benefit without compensating the P.
Quasi-contract (money restitution)
No legally binding K, but D derived a benefit, requiring payment to P.
Measure: value of benefit retained by D.
What are the 3 ways where quasi-contract can arise?
- No attempt to K (e.g., emergency services)
- Unenforceable K (e.g., illegal K, SoF failure, etc.)
- Breached K
Replevin
Allows the recovery, before trial, of a specific chattel
(personal property) wrongfully taken from the plaintiff, who has
the right to possession.
Ejectment
Used to recover specific real property from which the plaintiff, who has the right to possession, was wrongfully excluded.
Topic: Equitable Remedies
Only available when the remedy at law,
money damages, is inadequate.
What are the two equitable remedies specific to contractS?
- Rescission
- Reformation
Rescission
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.
Reformation
Permits a contract to be rewritten by the court to reflect the parties true agreement when:
- Parties had a meeting of the minds and
- K as written doesn’t reflect the parties’ agreement because of an error
ONLY AVAILABLE TO THE WRONGED PARTY.
Do injunctions apply in contract remedies as well?
Yes.
- TROs
- Preliminary Injunctions
- Specific performance (permanent injunction in K)
Specific Performance
Permanent injunction in contracts where court orders D to perform on the K as promised.
Specific Performance: Requirements
- K valid and terms sufficiently definite and certain
- K conditions imposed on P are satisfied.
- Inadequate legal remedy
- Mutuality of performance
- Feasibility of enforcement: cannot be too difficult for court to enforce
- No defenses
Defenses to specific performance
- Laches
- Unclean hands
- 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
