Contract Remedies

Question 1

3 types of overall remedies for K

Answer 1

Legal (damages, consequential, punies), Restitution, equitable (specific performance, rescission, reformation)

Question 2

Legal remedy is called: what are the req’ts?

Answer 2

Damages (compensatory, consequential, nominal) 4 req’ts: 1) causation, 2) Foreseeability (at time of formation) 3) certainty, 4) mitigation

Question 3

consequential damages: common fact patterns?

Answer 3

Available for related damages foreseeable at the time of formation
The lost reputation fact pattern is a favorite (your rep is worth something)

Question 4

liquidated damages fact pattern analysis:

Answer 4

Used to limit damages recoverable.
Valid IF: at type of K formation if damages are really difficult to ascertain AND this was a reasonable forecast of what damages would be (if excessive-penalty, invalid).
IF VALID: only liquidated amount available
IF INVALID: only actual damages available

Question 5

Punitive damages:

Answer 5

NO PUNIES IN K CASES; if it is WILLFUL conduct, could be fraud

Question 6

Clause provides for EITHER actual damages or liquidated?

Answer 6

INVALID CLAUSE, P gets ACTUAL compensatory damages

Question 7

Contract Restitutionary fact pattern: how does it occur?

Answer 7

Look for K failing after P has part performance. 2 ways this occurs: 1) K is unenforceable or 2) K is breached

Question 8

UNENFORCEABLE K: 1) Can P get restitution damages for property/money given to D?
2) can P get property back?

Answer 8

1) YES value of the benefit (if value of services is GREATER than the K rate, you can get the GREATER. it is the VALUE not K amount)
2) YES can get prop back if is UNIQUE or D is insolvent

Question 9

BREACHED CONTRACTS: If P is the non-breacher

If P is breaching party?

Answer 9

P get can restitution damages for VALUE or property back if unique/insolvent D.

Traditional view: no money back; modern view: recovery allowed BUT NOT more than K rate, and reduced by damages suffered by non-breacher

Question 10

Equitable Remedy: checklist:

Answer 10

Specific performance: CHA CHA IS FAIRLY DIFFICULT:
(C)ontract is Valid
(C)onditions of Plaintiff Satisfied
(I)nadequate Legal Remedy
(F)easibility of Enforcement
(D)efenses

Question 11

Specific Performance STEP ONE: (CHA) Contract is Valid

Answer 11

P must be able to show K is valid, remember it must be certain and definite terms

Question 12

Specific Performance STEP TWO: (CHA) Conditions of P must be satisfied

Answer 12

Plaintiff must be able to show her contract conditions have been fulfilled (already performed, ready and able to perform, or excused from performing).
Typical fact pattern: Seller delivers less than agreed consideration: Seller is P=minor breach can enforce, major no enforcement. Buyer is P=can enforce minor/major breaches, NOT VERY MAJOR (NOTE COURT LOWERS PURCHASE PRICE WITH ENFORCEMENT “ABATEMENT”)

Question 13

Time is of the essence fact patterns definition? factors for forfeiture?

Answer 13

When buyer pays seller late when there is a clause specifying importance of timing: Triggers clause, Seller
wants to keep both the land and any performance rendered to date.
Factors for forfeiture: Loss to seller is small, Tardiness is de minimus, Waiver(seller accepted late payments before), buyer would suffer hardship. ALMOST ALWAYS AWARD SPECIFIC PERFORMANCE (if not granted, court should give restitutionary relief (return buyer’s money))

Question 14

Specific Performance Step THREE: (IS) Inadequate Legal Remedy Alternative

Answer 14

Money damages are 1) too speculative 2)Defendant insolvent 3) Multiple suits necessary 4) thing bargained for is unique.
ALL LAND IS UNIQUE, so buyer AND seller can force specific performance. Personal property not unique unless rare/one of a kind (or if personal significance to buyer) or circumstances make it unique (like oil suddenly disappears, look at TIME OF LITIGATION not K formation)

Question 15

Specific Performance Step FOUR: (FAIRLY) Feasibility of Enforcement. (personal service K, covenants not to compete analysis)

Answer 15

Personal services K not enforceable. Covenants not to compete ARE enforceable if services unique and scope (geographic/duration) is reasonable

Question 16

Specific Performance Step FIVE: (DIFFICULT) Defenses

Answer 16

Unclean Hands, Laches, Unconscionability (at time of K formation), Mistake, Misrepresentation, SOF

Question 17

Overcoming SOF problem through?

Answer 17

Valuable Part performance: (look for combination of Payment in whole/part, possession, valuable improvement, valuable services

Question 18

Rescission: “equitable remedy” reasons:

Answer 18

Look for grounds for rescission: TIME OF FORMATION:(i) Mistake (ii) Misrepresentation (iii) Coercion (iv) Undue
influence (v) Lack of capacity (vi) Failure of consideration (vii) Illegality.

Question 19

Rescission: Mistake

Answer 19

Mutual Mistake: Rescission granted if it was material fact/term of K. If Collateral Issue rescission denied
Unilateral Mistake: No rescission unless one party should have known/did know of the mistake
Modern trend: If mistaken party would suffer undue hardship if no rescission then they could rescind it

Question 20

Rescission: Misrepresentation

Answer 20

Must show they actually relied on the misrepresentation

Question 21

Election of remedies: Choosing to sue for damages first vs. rescission first:

Answer 21

If you choose damages first, you can’t ask for rescission later, but if you ask for rescission first, you can ask for damages

Question 22

Rescission and restitution working together:

Answer 22

If P who’s entitled to rescission has previously rendered performance on the K, she can get compensated for it (restitution)

Question 23

Reformation analysis:

Answer 23

Step 1: Must have valid K, Step 2: was there grounds for reformation? (Mistake? - mutual mistake reformation granted, unilateral reformation is granted IF other party KNEW (No ‘should have known’ part for reformation)
Misrepresentation=reformation granted, rewrite will reflect expressed intent of the parties.
Step 3: any defenses? (unclean hands, laches

Question 24

Rescission Pneumonic:

Answer 24

Good Dog: Grounds for Rescission, Defenses

Question 25

Reformation Pneumonic

Answer 25

Very Good Dog: Valid K, Grounds for Rescission, Defenses

Question 26

Specific K fact pattern Possibilities and their relief:

1) P is injured:
2) D derived a benefit:
3) P wants property returned
4) P wants K performed
5) P wants K destroyed
6) P wants K rewritten

Answer 26

1) Compensatory (direct, expectation, consequential, reputation) NO PUNIES
2) Restitutionary remedies (return value of services provided
3) Look for unique property or insolvent D
4) Specific Performance = CHA CHA IS FAIRLY DIFFICULT
5) Rescission = Good Dog
6) Reformation = Very Good Dog