Contracts - Breach, Remedies, and Third-party Rights & Duties Flashcards
The non monetary remedies for breach of contract are
(1) specific performance
(2) injunction
(3) reformation
(4) reclamation
(5) good faith purchaser in entrustment
Specific performance is available as a remedy for
(1) contracts for sale of real estate (rule: ALL LAND IS UNIQUE)
(2) contracts for sale of UNIQUE goods like antiques, art, custom made goods (or other appropriate circumstances)
Courts are generally reluctant to grant specific performance because SP is appropriate only if
the legal remedy (money damages) is inadequate (the adequacy test).
An injunction might be available as a contract remedy for ______ contracts.
services.**E.g. the Eagles could get an injunction preventing T.O. from playing for another team (but cannot get specific performance requiring T.O. to play for them).
Under reformation, ______ will change the contract.
the court. On the bar, reformation is usually the wrong answer.
Reformation might be an appropriate remedy where there is
(1) a mistake in writing the agreement, like a clerical error; or
(2) fraudulent misrepresentation as to what is in the agreement
“Reclamation” is the
right of an unpaid seller to get his or her goods back.
In order for an unpaid seller to recover her goods in reclamation, the
(1) buyer must have been insolvent at the time it received the goods
(2) seller demanded the return of the goods within 10 days of buyer’s receipt**
(3) buyer still has the goods at the time of demand
**If before delivery buyer makes an affirmative representation of solvency, the 10-day rule becomes a “reasonable time” rule.
The good faith purchaser in entrustment rule applies where
an owner leaves her goods with a person who sells goods of that kind and that person wrongfully sells the goods to a good faith purchaser, the good faith purchaser’s purchase cuts off the rights of the original owner.**This is like the bonafide purchaser rule in property law.
The types of money damages for breach of contract are
(1) expectation damages
(2) reliance damages
(3) restitution
Expectation damages are intended to
put the plaintiff in the same economic position as if the contract had been performed.
Reliance damages are intended to
put the plaintiff in the same economic position as if the contract had never happened (this often takes the form of reimbursement for expenses up to this point)
Reliance damages are often appropriate in circumstances where
expectation damages are too difficult to calculate or too speculative or too uncertain.
Restitution damages are intended to
put the DEFENDANT in the same position as if the contract had never happened to prevent unjust enrichment.
The relevant measure when determining restitution damages is
the amount to which the defendant has been unjustly enriched.
If the seller of goods breaches and the buyer keeps the goods, the measure of damages is
the FMV of the goods had they been perfect minus the FMV of the goods as delivered.
If the seller of goods breaches and the seller keeps the goods, the measure of damages is
(1) the market price at the time of discovery of the breach minus the contract price; OR
(2) if buyer “covers” by buying replacement goods in good faith without reasonable delay, the actual replacement price minus the contract price
If the buyer of goods breaches and the buyer has the goods, the measure of damages is
the contract price.
If the buyer of goods breaches and the seller has the goods, the measure of damages is
(1) the contract price minus the market price at time and place of delivery; OR
(2) if seller has resold the goods, the contract price minus the resale price
(3) in some situations, provable lost profits
If the buyer of goods breaches and the goods are part of seller’s regular inventory (“off the rack”), the measure of damages is
the seller’s lost profits. This is called the lost volume seller rule.
A seller’s lost profits are the acceptable measure of damages only if
the buyer of goods breaches and the goods are part of seller’s regular inventory (“off the rack”). This is called the “lost volume seller rule”.
Costs incurred in dealing with breach are _____ recoverable and __________.
always; in addition to expectation/reliance/restitution damages. These are called “incidental damages.”
Consequential damages must be _______ in order to be recoverable.
(1) reasonably foreseeable by the defendant at the time of contract formation (almost like a notice requirement);
(2) unavoidable through reasonable efforts; and
(3) provable by reasonable certainty
Incidental damages (are/are not) required to be foreseeable.
are not.