Contract Remedies

Question 1

Equitable Remedies

Answer 1

TRO
Preliminary Injunction
Specific Performance
Contract reformation
Contract Recission

Equitable Remedies can be cut off by a sale to a BFP for value who does not have notice of the contract between buyer and seller.

Every parcel of land is considered unique so the legal remedy is not adequate because it will not necessarily enable the non breaching party to purchase the proeprty bargained for.

Question 2

Legal Remedies

Answer 2

Damages
Restitutionary Damages

Question 3

TRO

Answer 3

Temporary Restraining Order:
* Emergency order imposed to maintain the status quo until an adversarila hearing may be held on a motion for a preliminary injunction.

Moving Party must prove:
1. that they will suffer irreparable injury before a preliminary injunction can be obtained
2. that the injury outweighs the injury that would be suffered by the other party if the TRO were granted
3. a likelihood that they will excide on the merits of their underlying claim.

Notice: TRO can be granted without notice to the nonmoving party if the moving party can make a strong showing as to why notice and an adversairal hearing should not be required.

Question 4

Preliminary Injunction

Answer 4

A court may order a preliinary injunction to maintain the status quo until a trial on the merits can be held.

1. motion for imposition of a preliminary injunction requires proof that absent the injunction, the moving party will suffer irreparable injury before the end of a trial on the merits of the underlying case
2. showing of liklihood of sucess on the merits
3. Granted only after an adversarial hearing and notice must be provided to D.

Question 5

Specific Performance

Answer 5

to obtain and order for specific performancee the non breaching party must show: VIP’ED
* a valid contract exists
* legal remedy is inadequate (uniqueness point - land or rare, personal significance, specific circumstances- at time of litigation)
* they performed/are ready and able to perform
* enforcement is feasible (A. land in court’s jurisdiction or B. personal jurisdicion over parties – party can be held in contempt to persuade them to perform).
* No defenses available (SLUUM - laches, unclean hands, unconscionability, Mistake/mistrepresentation, statute of frauds- unless valuable part performance in reliance on K.)

Question 6

Mutual Mistake

Answer 6

K can be set aside for mutual mistake if: (1) mistake concerns a basic assuption on which the K is made, (2) mistake has a material effect on the agreed-upon exchange, (3) party seeking avoidance did not assume risk of mistake.

BUT SEE REFORMATION

Question 7

Reformation

Answer 7

Reformation equitable remedy by which a court can modify or alter a written instrument to make it conform to the parties previous understanding/agreement.

Reformation is appropriate when there is a valid prior agreement and the writing fails to conform the the partis’ agreement as a result of mistake or fraud.

Question 8

Anticipatory Repudiation

Answer 8

• when a promisor, prior to the time of performance unequivocally conveys they will not perform at the set time.
• applies only where bilateral contract with executionary duties on both sides.
• non repudiating party can treat anticipatory repudiation as a total breach and sue immediately for damages (or wait until time of performance and sue).

Question 9

Land Sale Damages - Non equitable

Answer 9

• when buyer sues seller for breach of a land sale K, damages are measured either by out of pocket loss or by benefit of the bargain.
• under modern benefit of the bargain rule, buyer can recover the difference between the K price and the fair market value of the land.
• Under common law rule they were limited to recovery of their out of pocket expenses including down paymenr, title search, escrow expenses etc…
• When seller sued buyer for breach of K selelr recovers the difference beteween the market value and the contract price plus consequential damages

Question 10

Checklist for Granting Specific Performance

Answer 10

1. Valid contract
2. Breach of Contract/Anticipatory repudiation
3. Terms of K definate and certain?
4. Are Legal Remedies inadequate? Damages speculative/small, Multiplicity of suits, irreparable injury, unique chattel, land
5. is specific performance feasible (property or person in court’s jurisdiction?, too much supervision required by court, is negative injunction appropriate?)
6. Defenses ? (laches, unclean hands, freedom of speech, harship)

Question 11

Compensatory Damages

Answer 11

• Awards of money to protect the plaintff’s expectation interest.
• both direct (flow directly from the harm) and consequential (related damage that was foreseeable) damages
• foreseeability - tested at teim of contract formation
• certainty - past proof, future damages must have good evidence to support
  unavoidable - P cannot recover damages that reasonably ocould have been mitigated.

Question 12

Liquidated Damages Clause

Answer 12

At time of K formation:
1. actual damages extremely difficult to ascertain AND
2. amount stipulated was reasonable forcast of actual harm.

Otherwise, penalty and proven actual damages govern.

Question 13

Contract Damages : Nominal

Answer 13

when no actual injury is sustained.

Question 14

Contract Damages: Punitive

Answer 14

Not available in contract but if conduct is willful look to see if you can prove fraud.

Question 15

Contract Damages: Interest and Attorneys’ fees

Answer 15

Prejudgment interest awards in contract are statutory and usually are granted only as to liquidated sums. Attorney’s fess are recoverable if provided by statute or contract.

Question 16

Restitutionary Remedy - Quasi Contract

Answer 16

Unjust gain received pursuant to an unenforcable or breached contract
Breach:
* traditional view breaching party gets nothing modern veiw recovery is allowed but damges cannot exceed K rate and they are redduced by any damages suffered by D bc of breach.

Unenforceable:
recovery depends on nature of the benefit conferred:
* specific restitution for tangible porperty, goods or services then value thereof even in excess of contract rate except for impossibility where K rate is the maximum.

Question 17

Specific Performance: Deficiencies (land)

Answer 17

Seller cannot deliver the agreed upon consideration (quantity of land)

Seller as Plaintiff: they can specifically enforce K if defect is minor but not if defect is major unless can cure before closing

Buyer as Plaintiff: can specifically enforce even if defect is major
but cannot enforce if it is VERY MAJOR

Include sentence that hte court will abatte the purchase price to account for the defect in consideration

Question 18

Dpecific Performance: Time is of the Essence (land)

Answer 18

Buyer who will not meet the contract condition of timely performance
* buyer partially performed but forfeiture provision and late payment - buyer brings suit for specific performance
* equity abhors forfeitures. Court will look at following factors to try to avoid buyer losing money and land:
* whether hte loss to seller is msall
* whether the buyers tardiness in making the payment is de minimis
* whether seller accepted late payments in the past, whether the buyer would suffer undue hardship.

Question 19

Recission

Answer 19

Cancels the K where it results from mistake, fraud, or duress or where materially breached.

usually accompanied by restitution (legal - action of the parties, equitable - by court)

Question 20

Recission - Mistake

Answer 20

Mistake in formationof the K
* mutual mistake affecting the basis of the bargain (nature of the subject matter) but not for collateral or immaterial mistakes
* unilateral mistakes - traditional rule was no unless the other party knew/should have known of mistake. modern trend is to grant relief for basis of the bargain mistakes where hardship to the mistaken party outweighs the detriment to the other party’s expectations (some may grant without showing of hardship).

Question 21

Recission- Misrepresentation

Answer 21

only on actual reliance on a material misrepresentaiton of fact.

Question 22

Recission : Defenses

Answer 22

• negligence of P - not great based on mutual mistake
• election of remedies - action for damages affirms K, and if sought first will bar subsequent suit to rescined - unless for goods then can be sought in the alternative)
• choice of substantive rights - affirmation of contract with knowledge of facts justifying rescission
• availability - if P entitled to recission previously rendered performance they can ge compensated for it or get property back via restitution

Question 23

Reformation: Mistake of Fact/Law

Answer 23

Mistake of Fact- mutual mistake that writing conformed to agreement, or unilateral if non mistaken party knows of mistake (but not should have known)

Mistake of Law - if mistake in legal meaning of a term used to incorporate the underlying agreement

Question 24

Reformation: Fraud and Misrepresentation

Answer 24

Fraudulently represented as incorporating the priro agreement of the parties may be reformed

MIsrepresentation - rewritten to reflect parties expressed intent

Question 25

Reformation: Defenses

Answer 25

• parol evidence rule not a defense
• statute of frauds not a defense under majority view, minority view permits reduction but not addition of land conveyed by written instrument
• negligence by P is not a defense

Question 26

Construction Contracts: Owner Breach

Answer 26

wholly executory- B recovers lost profits
completed: contract price
Partial performance: contract price less cost of completion

Question 27

Construction Contracts: builder breach

Answer 27

Substantially performed: cost of restoration unless economic waste then limited to diminution in value
Material Breach - owner gets cost of completion less payments due plus compensation for delay.

Question 28

Construction Contracts: Restitution

Answer 28

If owner breaches - builder can rescind and recover balue of work already completed
Builder breaches - owner not entitled to restitution

Question 29

Personal services Contracts: Damages

Answer 29

• employee breach then employer recovers costs of replacement less work done
• employer breaches - employee gets wages due or promised less avoidable damages (can be tortious).

Question 30

Personal Service Contracts: restitution

Answer 30

Employer breaches - reasonable value of services rendered (even in excess of contract rate)

Employee breaches - restitution of paid but unearned wages, breaching employee can recover value of services rendered up to the contract rate with a deduction for employer damages.

Question 31

Personal Services Contracts: Specific Performance

Answer 31

enforced via negative covenants:
full time or exclusive services, inadequacy of damages must be shown (unique services)

Independent significance of covenant required by some courts (employer harm beyond that caused by breach of the affirmative covenant)

Feasibility - just enjoins from accepting other employement (no supervision necessary)

Conditions to the employee’s performance must be satisfied - employer furnished place to work and promised wages (ready and able to perform).

Defensees - can be disssovled if employer not willing and able to perform.