Contract Remedies Flashcards
Compensatory Damages
Contract compensatory damages must be causal (“but for”), foreseeable (as of the time of formation), certain, and unavoidable.
Determination of Certainty
Certainty with regard to established businesses can be determined using a profit history. Certainty is an issue with new businesses, since future profits are often speculative. Relevant factors in determining certainty are availability of the evidence, certainty of actual loss, and culpability of the defendant.
Determination of Unavoidability
A plaintiff must take reasonable steps to mitigate his or her loss.
Benefit of the Bargain Analysis
If contract is controlled by the UCC, discuss benefit of the bargain in terms of the UCC, including concept of cover (market price less contract price).
Consequential damages require the four-part analysis.
Reliance damages are only available if the benefit of the bargain damages are too speculative.
Liquidated Damages
Upheld if damages will be extremely difficult to ascertain and the stipulated amount is reasonable forecast of the damages.
Equitable Remedies
There are three significant contract equitable remedies: specific performance, rescission, and reformation.
Specific Performance
A party is entitled to specific performance when:
(1) there is a valid and enforceable contract, definite and certain;
(2) the party has met all the conditions required;
(3) the legal remedy is inadequate; and
(4) the remedy is feasible.
Rescission
Rescission is the undoing of a contract. It is a restitutionary remedy. The plaintiff effects a cancellation of the contract by prompt notice of the rescission and tender back of the consideration, or, more commonly, by a lawsuit in which the plaintiff seeks rescission and offers to tender back the consideration.
The grounds for rescission must have existed at the time of the making of the contract, making it voidable.
Mutual Mistake
Mutual mistake requires a mutual mistake as to a material fact. one that goes to the basis of the bargain.
Unilateral Mistake
The traditional and established rule is that a unilateral mistake
Misrepresentation
Misrepresentation requires:
(1) a false representation of a material fact or omission of a material fact;
(2) that the defendant knew was false or should have known was false, or made innocently; and
(3) reasonably relied upon by the plaintiff to his or her detriment.
Reformation
Reformation is the remedy by which the court alters or modifies a written instrument such as a contract or deed to make it conform to the parties’ previous understanding. It requires a valid prior agreement in the first place.
The grounds include a mutual mistake, unilateral mistake, and fraud.
