Contract Remedies - Damages

Question 1

Contract Remedies

Answer 1

1) Check for breach of K. Check what remedies are available to P.

Legal Remedies are damages:
- Compensatory Damages
- Restitutionary remedies (only occur after P has partially performed)

Equitable Remedies
- Specific performance (high frequency)
- Rescission
- Reformation

Question 2

Compensatory Damages

Answer 2

Based on injury to P. 4 reqs, same as torts:
1) Actual Cause
2) Proximate cause (foreseeability, tested at K formation)
3) Certainty
4) Mitigation

Direct damages vs. consequential damages
- Direct dmg flow inherently from the wrong. Look at expectation measure. Ex: hairy hand case. perfect hand = 10 - hairy hand worth 2 gives us 8 as damages
- Consequential damages (foreseeable at K formation. Indirect consequence of breach. If the nonbreacher explains oh yea here’s all the shit that will go wrong for me if you breach) then when the breacher breaches, the nonbreacher is entitled to his consequential damages since he warned the breacher they would happen.

Ex: lost reputation fact pattern: Real estate dev has dream parcel of land. Contractor says he’ll use good materials but instead uses shit. Dev will get direct damages since he’ll have to sell houses for less. Plus his reputation has been harmed because he was known for only high qual stuff originally. Will he get consequential damages for his reputation loss? Only if it was foreseeable at time of contracting. Depends on fact pattern.

Nominal damages allowed in a K

NO PUNITIVE DAMAGES IN K. But if D’s conduct is willful, see if you can characterize it as a fraud.L

Question 3

Liquidated Damages Clause

Answer 3

1) Damages must be DIFFICULT to ASCERTAIN

2) Liquidated damages are a REASONABLE FORECAST of what the damages would be, and NO PENALTIES ALLOWED

If it’s a valid clause, only liquidated damages available.

If it’s an invalid clause, you still give P actual damages.

Ex: the contract says P only gets liquidated damages or actual damages. Those are invalid. Throw it out and give actual compensatory damages.

Question 4

Restitutionary Remedies to Prevent Unjust Enrichment

Answer 4

When K fails after P has rendered partial or complete performance, there are 2 ways this could happen:
1) if K is unenforceable or
- from mistake, lack of capacity, etc, but P already did some performance.
2) K is breached

P can generally get restitutionary damages for the unjust enrichment (value of property given). For services, even if the full value of the services is more than the contract price, get the full value of service.

Question 5

Breached Contracts

Answer 5

If P is nonbreaching party, meaning D caused K to fail after P partially performed, ask same question: can P get restitutionary damages for property or money given to or services rendered for D. Yes, for the value of the benefit, even if greater than value of the K. The goal is to prevent unjust enrichment. Can P get property back? Yes if property is unique or D is insolvent.

if P is breaching party, ex: P puts 30k down on house but then defaults on mortgage. Question is can P get restitutionary damages/get their money back? No. Traditional rule is no. Modern view = recovery is allowed but cannot be greater than contract rate and is reduced by any damages suffered by D as a result of the breach.