Contract-Remedy Flashcards
Risk of loss: buyer or seller?
Exception
Generally on seller until he satisfies delivery obligations.
© if someone breaches and damage occurs in transit, the breaching party bears the risk of loss
Risk of loss: shipment K
RoL on seller until seller surrenders goods to the carrier and make proper shipment K with them.
Risk of loss: destination K
destination K: RoL on seller until goods get to the destination
Risk of loss: special goods (identified goods)
if totally destroyed through no fault of seller: excused.
Divisible/installment K definition
A divisible or installment contract is one in which the various units of performance are divisible into distinct parts
Divisible/installment K: recovery
Recovery is limited to the amount promised for the segment of the contract performed.
Buyer right to reject a single nonconforming tender of an installment K
Buyer cannot reject a single nonconforming tender of an installment K unless ∑
(a) nonconformity substantially impairs the value of that shipment and
(b) cannot be cured.
cannot be cured: even if seller promises to cure, if seller doesn’t adequately cure, cannot be cured.
Buyer right to reject an installment K due to a single nonconforming tender
Buyer cannot reject the entire installment K unless the single nonconformity substantially impair the value of the entire K.
Anticipatory repudiation in general
occurs when a party unequivocally says it will not perform before the performance is due
Upon anticipatory repudiation, the other party can do one of the following 4.
(1) Cancel K
(2) suspend performance and demand performance
(3) treat repudiation as breach and sue immediately
(4) wait til performance due date and sue
© aggrieved party must wait until performance is due before filing suit when all the obligations have been performed and the only thing left is payment.
Anticipatory repudiation under UCC occurs when
(1) party unequivocally repudiates before performance is due; OR
(2) party fails to give reasonable assurances within 30 days after written demand
Demand for assurance must be…
Can a party suspend performance after demanding assurance?
must be based on reasonable ground for insecurities. © if reasonable ground to believe that a party will not perform b/c of impracticability, can’t treat failure to give assurance as as repudiation
After demanding assurance, a party can suspend performance until assurance received.
Retraction of repudiation
A party can retract repudiation, unless
(1) other party acts in reliance or
(2) other accepted the repudiation as final; or
(3) other sued for breach.
Expectation damages: definition
General measure of damages in breach of K.
Damages directly resulting from the breach. seeks to put P in the same position as if K had been performed.
Expectation damages: requirement
To be recoverable, expectation damages must be calculable with reasonable certainty.
Measure of expectation damages: general
Loss in value + other loss - cost avoided - loss avoided
e.g. If D failed to pay under K, damages: profits that P would have earned ($20,000), plus any costs incurred by P ($80,000), less the amount of any payments made by D to P ($0) and any materials purchased by P used on another job or sold to a third party
Measure of expectation damages: loss in value
value of performance promised under K - market value of performance
what was promised - what was received
Measure of expectation damages: other loss
consequential and incidental
Diminution in value award
Exception
available instead of expectation damages, if if award of expectation damages would result in economic waste.
© expectation damages if
(a) breach is willful and
(b) only the completion of K will give the nonparty benefit of the bargain
Economic waste
occurs when the amount of damages owed is disproportional to any economic benefit gained as a result.
Measure of buyer’s damages for UCC breach of warranty
the value of good accepted - the value of the good if it had been as warranted (e.g. generally cost of repair)
© If repaired but failed to restore, can recover the repair cost in addition.
Consequential damages: generally
Reasonably foreseeable losses that arise out of special circumstances unique to the party.
(e.g. loss of profit)
Consequential damages: requirement
To be recoverable, consequential damages must be ∑3:
(a) reasonably foreseeable (or D knew of the possibility of unforeseeable consequential damages);
(b) calculable with reasonable certainty; and
(c) causal link between breach and damage.
Restitution damages: definition
allows P to recover on the benefits conferred by P on D.
allows recovery even if there is no K —P can recover restitution under quasi-K or unenforceable K (like voidable Ks, SoF violation, excused K)
Measure of restitution damages
reasonable value of D obtaining the benefit from another source.
P can recover more than K price
Restitution damages for breaching party who didn’t substantially perform
Exceptions
Available even if breaching party didn’t substantially perform (i.e. materially breaching party).
© Exceptions:
(1) Willful breach,
(2) UCC (special rule for defaulting buyer),
(3) enforceable liquidation clause that allow recipient to retain the breaching party’s performance (e.g., a down payment on the purchase price).
Restitution damages for nonbreaching party
Exception
P can recover under quasi-K or unenforceable K (like voidable Ks, SoF violation, excused K)
© Nonbreaching party can’t seek restitution if he performed completely and the only thing left is D’s payment for that performance.
Specific performance as a remedy
available if monetary damages are inadequate (e.g. unique/identified goods)
Measure of recovery in misrepresentation cases
“benefit of the bargain” rule:
actual value received - value that would have been received if the misrepresentation were true
Seller right to reclaim
When a buyer receives goods on credit, and the seller learns that the buyer is insolvent, the seller may reclaim the goods, provided a demand for goods is made within 10 days after the buyer’s receipt of the goods
TLDR: if buyer insolvent, make demand within 10 days after buyer receipt
Damages under UCC for defaulting buyers:
A defaulting buyer can get a refund, minus
(1) enforceable liquidated damage or
(2) the smaller of 20% of purchase price or $500
Liquidated damages:
must be reasonable in relation to actual damages suffered.
not necessary to be reasonable in relation to damages that could’ve been anticipated at the time of contract.Q2386
Reliance damages:
allows P to recover expenses made in reasonable reliance upon promise to perform. e.g. promissory estoppel.
Installment K under the UCC
definition
rule for payment
one in which the goods are to be delivered in multiple shipments, and each shipment is to be separately accepted by the buyer. Parties cannot vary or contract out of this definition under the code.
Payment by the buyer is due upon each delivery, unless the price cannot be apportioned
Enforceability of remedy limitations in K provisions:
unenforceable if
(1) failure of essential purpose or
(2) unconscionable.
e.g. limiting consequential damages due to personal injury = unconscionable.
Restitution damages for breaching party who substantially performed
can recover restitution for the reasonable value of work performed.
Reasonable value of work performed is measured by the cost of obtaining comparable performance
