Contract-Remedy

Question 1

Risk of loss: buyer or seller?

Exception

Answer 1

Generally on seller until he satisfies delivery obligations.

© if someone breaches and damage occurs in transit, the breaching party bears the risk of loss

Question 2

Risk of loss: shipment K

Answer 2

RoL on seller until seller surrenders goods to the carrier and make proper shipment K with them.

Question 3

Risk of loss: destination K

Answer 3

destination K: RoL on seller until goods get to the destination

Question 4

Risk of loss: special goods (identified goods)

Answer 4

if totally destroyed through no fault of seller: excused.

Question 5

Divisible/installment K definition

Answer 5

A divisible or installment contract is one in which the various units of performance are divisible into distinct parts

Question 6

Divisible/installment K: recovery

Answer 6

Recovery is limited to the amount promised for the segment of the contract performed.

Question 7

Buyer right to reject a single nonconforming tender of an installment K

Answer 7

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.

Question 8

Buyer right to reject an installment K due to a single nonconforming tender

Answer 8

Buyer cannot reject the entire installment K unless the single nonconformity substantially impair the value of the entire K.

Question 9

Anticipatory repudiation in general

Answer 9

occurs when a party unequivocally says it will not perform before the performance is due

Question 10

Upon anticipatory repudiation, the other party can do one of the following 4.

Answer 10

(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.

Question 11

Anticipatory repudiation under UCC occurs when

Answer 11

(1) party unequivocally repudiates before performance is due; OR
(2) party fails to give reasonable assurances within 30 days after written demand

Question 12

Demand for assurance must be…

Can a party suspend performance after demanding assurance?

Answer 12

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.

Question 13

Retraction of repudiation

Answer 13

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.

Question 14

Expectation damages: definition

Answer 14

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.

Question 15

Expectation damages: requirement

Answer 15

To be recoverable, expectation damages must be calculable with reasonable certainty.

Question 16

Measure of expectation damages: general

Answer 16

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

Question 17

Measure of expectation damages: loss in value

Answer 17

value of performance promised under K - market value of performance

what was promised - what was received

Question 18

Measure of expectation damages: other loss

Answer 18

consequential and incidental

Question 19

Diminution in value award

Exception

Answer 19

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

Question 20

Economic waste

Answer 20

occurs when the amount of damages owed is disproportional to any economic benefit gained as a result.

Question 21

Measure of buyer’s damages for UCC breach of warranty

Answer 21

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.

Question 22

Consequential damages: generally

Answer 22

Reasonably foreseeable losses that arise out of special circumstances unique to the party.
(e.g. loss of profit)

Question 23

Consequential damages: requirement

Answer 23

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.

Question 24

Restitution damages: definition

Answer 24

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)

Question 25

Measure of restitution damages

Answer 25

reasonable value of D obtaining the benefit from another source.

P can recover more than K price

Question 26

Restitution damages for breaching party who didn’t substantially perform

Exceptions

Answer 26

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).

Question 27

Restitution damages for nonbreaching party

Exception

Answer 27

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.

Question 28

Specific performance as a remedy

Answer 28

available if monetary damages are inadequate (e.g. unique/identified goods)

Question 29

Measure of recovery in misrepresentation cases

Answer 29

“benefit of the bargain” rule:

actual value received - value that would have been received if the misrepresentation were true

Question 30

Seller right to reclaim

Answer 30

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

Question 31

Damages under UCC for defaulting buyers:

Answer 31

A defaulting buyer can get a refund, minus

(1) enforceable liquidated damage or
(2) the smaller of 20% of purchase price or $500

Question 32

Liquidated damages:

Answer 32

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

Question 33

Reliance damages:

Answer 33

allows P to recover expenses made in reasonable reliance upon promise to perform. e.g. promissory estoppel.

Question 34

Installment K under the UCC

definition
rule for payment

Answer 34

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

Question 35

Enforceability of remedy limitations in K provisions:

Answer 35

unenforceable if

(1) failure of essential purpose or
(2) unconscionable.

e.g. limiting consequential damages due to personal injury = unconscionable.

Question 36

Restitution damages for breaching party who substantially performed

Answer 36

can recover restitution for the reasonable value of work performed.

Reasonable value of work performed is measured by the cost of obtaining comparable performance