Contracts--Equitable Remedies

Question 1

List the Main Equitable Remedies for Contracts

Answer 1

1. Recission 2. Reformation 3. Specific Performance

Question 2

Reformation

Answer 2

Reformation allows a contract to be changed to conform to the parties’ original intent. It is available if: 1. a valid contract exists, but there was a misrepresentation; OR 2. mutual mistake of a material fact (a unilateral mistake is sufficient if the non-mistaken party had reason to know of the mistake).

Question 3

Reformation–Limitation

Answer 3

A contract will NOT be reformed if a valid equitable defense applies (i.e. unclean hands, laches). Parol evidence is admissible to prove the misrepresentation or mistake.

Question 4

Rescission

Answer 4

Rescission treats the original contract as cancelled. Recission is available if there was a problem with the formation of the contract (i.e. a defense to formation, fraud, misrepresentation). A plaintiff MAY sue for both damages and rescission at the same time (but an election of remedies may bar rescission if damages are sought first).

Question 5

Rescission–Limitation

Answer 5

A contract will NOT be rescinded if:

(a) a valid equitable defense applies; OR
(b) the plaintiff sued for damages under the contract in a prior action.

Question 6

Specific Performance–Availability

Answer 6

Specific performance is an available remedy when:

(1) a valid contract exists with clear and definite terms;
(2) the plaintiff has performed under the contract or is ready, willing, and able to perform;
(3) legal remedies are inadequate (i.e. rare/unique item, contracts involving the sale of land, as legal remedies are inadequate because land is unique);
(4) enforcement is feasible for the court (it is NOT feasible to enforce personal service contracts or where land/person is outside the court’s jurisdiction); AND
(5) no valid equitable or contractual defenses exist.

Question 7

Specific Performance–Mutuality

Answer 7

Under the common law doctrine of mutuality, both parties must have been able to request specific performance.

However, in many jurisdictions the requirement for mutuality is met if one party can sufficiently assure performance.