CONTRACT REMEDIES Flashcards
What are the 4 requirements for compensatory damages?
The 4 requirements
i) causation
(ii) forseeability (tested at time of formation
(iii) certainty
(iv) mitigation -
What are direct damages?
Those damages that flow inherently from the wrong.
What kind of compensatory damages are available in Contracts?
Direct damages and consequential damages
What is the most common contract measure for direct damages in contracts?
Expectation- Difference between what they got and what they expected to get
What are consequential damages available for?
Available for related damages foreseeable at the time of formation.
What kind of damages are also available?
Nominal damages
Are punitive damages available in contracts?
No, they are never allowed.
If you are in contracts and If defendant’s conduct is willful, you should always try to see if you can characterize it as what kind of case?
A fraud case
For liquidated damages clauses what is the 2 part test to see if they are valid
First look to see if damages are very difficult to ascertain at the time of contract formation. If yes, then it would be invalid.
Second look to see if it was a reasonable forecast of what damages would be. If the amount is excessive it would be a penalty and be invalid
What damages are available if the liquidated damages contract is found to be Valid? Invalid?
(i) If Valid: Only liquidated amount available
(ii) If Invalid: Only actual damages available.
What if there is a clause that says “that one can get either actual damages or liquidated damages”?
This is an invalid clause, delete it. Give them actual compensatory damages.
The contract is unenforceable due to, e.g., mistake, lack of capacity, statute of frauds, illegality, can plaintiff get restitutionary damages for property/money given to, or services rendered for, defendant? If so, how much?
Yes, they get restitutionary damages for the value of the benefit.
The contract is unenforceable due to, e.g., mistake, lack of capacity, statute of frauds, illegality, Can plaintiff get the personal property back? Under what circumstances?
Yes, if it is unique or defendant is insolvent.
Plaintiff sells store fixtures to Defendant for new store, pursuant to an unenforceable contract. Defendant decides not to open store and repudiates contract. What remedies can P get?
restitionary damages for the value of the benefit
Plaintiff renders services pursuant to an unenforceable contract. Their value is greater than the contract rate. Can Plaintiff recover it?
Yes, for the value of the services, even if greater than the contract rate.
Can plaintiff as the non-breaching party get restitutionary damages for property/money given to, or services rendered for, defendant?
Yes, for the value of the benefit
Note: Again, the value of the recovery may be greater than the contract rate.
Can plaintiff as the non-breaching party get the property back?
Yes, if it is unique or defendant is insolvent.
Contract for land, price = $100,000. Plaintiff, the breaching party, after paying 30% of the purchase price, defaults. Can plaintiff get any restitutionary damages? Under the traditional view? the modern view?
Traditional view: no recovery
Modern view: recovery is allowed, But Cannot be greater than contract rate and is reduced by any damages suffered by defendant as a result of the breach.
What is the definition of specific performance in contract?
Defendant is required to perform the contract.
What is the 5 part checklist for specific performance?
- Plaintiff must be able to show the contract is valid.
- Must be able to show her contract conditions have been fulfilled (already performed,ready and able to perform, or excused from performing).
- There is an inadequate legal remedy alternative
- Feasibility of enforcement
- Defenses
A seller as plaintiff can specifically enforce the contract if the defect is ____________
minor
A seller as plaintiff can enforce the contract if the defect is major, unless what?
unless the seller cures the defect by closing
A buyer as plaintiff Can enforce the contract even if the defect is ____________
major
Cannot, however, enforce the contract if the defect is __________
very major.
If you decide that specific performance should be granted even though a defect still remains, you must include a sentence noting what?
The court will lower the price to take into account the defect in consideration.
What words should you use for the lowering of the contract price?
Abatement in purchase price
What is the equitable maxim?
Equity abhors forfitures
What Factors Court Can Look at to Avoid the Harsh Result of a Forfeiture in a land sale contract with a forfeiture provision and a time is on the essence clause?
(1) Loss to seller is small.
(2) Tardiness is de minimis.
(3) Waiver (seller has accepted late payments in past).
(4) Buyer would suffer undue hardship.
On the bar exam you should almost always award what in land sale contracts?
Specific performance.
What should you include in your answer if you do award specific performance?
In your answer, you should note that under the modern trend courts would give plaintiff restitutionary relief if specific performance were not granted.
What is the basic alternative to specific performance?
Money damages
Why would money damages be inadequate?
(1) Damages are speculative.
(2) Defendant is insolvent.
(3) Multiple suits are necessary.
(4) The thing bargained for is unique.
What is the concept of uniqueness?
If the property is “unique,” then even if plaintiff received money damages, he could not simply go out and buy it. It would not be available.
What is always unique?
Land
What kind of property is generally not unique?
Personal property
What remedy is available for personal property loss?
Money Damages
What are the exceptions for when personal property is unique?
- One of a Kind or Very Rare
- Personal significance to the buyer
- circumstance makes chattel unique
Hypo: Doofus contracts to buy a Rembrandt painting from Bowater, who now refuses to transfer it. Specific performance?
Yes, it is one of a kind, or very rare
I contract to buy from you my old purple felt-tip pen which I used to write my bar exam. Can I get it if you refuse to convey?
Yes, because it is of personal significance to the buyer.
OPEC decides to dramatically cut down oil production, causing severe gas shortages. Can buyer get specific performance of contract to purchase gasoline? What is the argument for both sides?
Yes. Circumstances have made getting that oil harder to get
When is uniqueness tested?
At the time of litigation, not time of contract formation
Does a a liquidated damages clause always make money damages adequate?
No, specific performance is still available
Are personal services contracts specifically enforceable?
No
Why are personal services contracts not specifically enforceable?
(1) Enforcement Problem
(2) Involuntary Servitude
under what circumstance is a covenant not to compete enforceable?
(1) The services are unique, and
(2) The scope of the agreeemnt (geographic & duration) is reasonable
What euitable defenses are available in contracts?
- unclean hands
- laches
- unconscionability
For unconcionability what must be true?
- it must look really bad at the time of contract formation
What are the available contract defenses?
1) MISTAKE
2) MISREPRESENTATION
3) STATUTE OF FRAUDS
How can the statute of frauds be excused in a contract for land case?
And 2 of the three taken together are enough to constitute part performance
(i) Payment
(ii) Possession
(iii) Valuable Improvements
What is sufficinet alone under the modern trend to constitute part performance in a land slae contract and excuse a statute of frauds defense?
valuable services is sufficient alone under the modern trend
What 5 things do you need to discuss for specific performance?
Cha Cha is Fairly Difficult
Contract is valid Condition of plaintiff satisfied Inadequate legal remedy Feasibility of enforcement Defenses
What is rescission?
The original contract is considered voidable and rescinded.
What is the two step analysis for recission?
- Determine if there are grounds for rescission
2. Determine if there are valid defenses
What are the grounds for rescission? What do they all relate to?
(i) Mistake
(ii) Misrepresentation
(iii) Coercion
(iv) Undue influence
(v) Lack of capacity
(vi) Failure of consideration
(vii) Illegality.
These all relate to contract formation
Can you grant rescission if there is a mutual mistake of a material fact?
Yes
Can you grant rescission if there is a mutual mistake of a collateral fact (going to quality, desirability, or fitness of property for a particular
purpose)?
No, rescission should be denied
Bowater and Doofus enter into a contract for the sale of a warehouse building which they both mistakenly believe is in good condition. In fact, it has major structural problems. Rescission?
Yes, it is a mutual mistake about a material fact.
Bowater enters into a sale contract with Doofus for a warehouse. Both believe its only use is as a warehouse. One week later, developer offers Doofus three times the sale price because he intends to convert it into expensive loft apartments. Rescission?
No, it is just a collateral fact mistake. Has to be for the contract’s purpose.
Can you grant rescission if there is a unilateral mistake of a material fact, generally?
Generally no, rescission denied.
Can you grant rescission if there is a unilateral mistake of a material fact, when one party knows or should have known of the other’s mistake?
Yes
Contractor submits a bid for a construction project, negligently leaving out a major cost item. The bid is far, far less than competing bids and is accepted. Rescission? Why?
Yes, here is would be the case that the bid is so low he should have known of the contractor’s mistake.
What is the modern trend exception for unilateral mistake of a material fact?
The mistaken party would suffer undue hardship if there is no rescission.
Can you grant rescission if there is a misrepresentation?
Yes.
What does the P need to prove to get a rescission for misrepresentation?
In order to get rescission based on misrepresentation grounds, the plaintiff must show that they have actually relied upon the misrepresentation.
What are the valid defenses to rescission?
- unclean hands
2. Lashes
What will not work as a defense to rescission?
Negligence
If Plaintiff Sues For Damages “First” is Rescission allowed? Why?
No, this is regarded as an affirmance of the contract
Plaintiff Sues For Rescission “First” are damages allowed?
Yes
What is reformation?
Changes written agreement to conform with the parties’ original understanding.
What is the 3 step analysis for reformation?
- Determine if there is a valid contract
- Determine if there are grounds for reformation
- Determine if there are valid defenses
Is reformation granted if there is mutual mistake?
Yes
Is reformation granted if there is unilateral mistake, generally?
No
What is the exception for when unilaterla mistake will still allow reformation, what is it called?
Where the non-mistaken party knows of the mistake in the contract. (This is regarded as fraud or inequitable conduct.)
Is reformation granted if there is misrepresentation?
Yes
What are the valid defenses to reformation?
What will not work?
Will work
Unclean hands
Lashes
NON-DEFENSES (Will Not Work)
(i) Negligence of Plaintiff
(ii) Statute of Frauds
(iv) Parol Evidence Rule.
What do you need to discuss for Recission?
Good Dog
Grounds for rescission
Defenses
What do you need to discuss for reformation?
Very Good Dog
Valid contract
Grounds for Reformation
Defences
