Contracts (legal + equitable) Flashcards
What are the available legal remedies for contract breaches?
- Expectation damages (compensatory damages)
- Reliance damages
- Consequential damages
- Incidental damages
- Restitution damages
Punitive damages are generally not available in a breach of contract action but may be awarded in cases involving corresponding tort claims like fraud.
What is the purpose of expectation damages?
To put the non-breaching party in the same position it would have been in but for the breach
Expectation damages arise directly from the breach.
What must be proven to recover expectation damages?
- Caused by the defendant (actual cause)
- Foreseeable (proximate cause)
- Certain (not speculative)
- Unavoidable (plaintiff must mitigate losses)
Award must account for and deduct any costs the injured party avoided because of the breach.
What are reliance damages?
Expenditures made by a party in reliance on a contract, aiming to restore the party to the position it would have been if the contract never existed
Reliance damages are available when the plaintiff acted in reliance on the defendant’s agreement and the reliance was foreseeable.
What defines consequential damages?
Damages that arise indirectly from the breach due to the injured party’s special circumstances
To recover, damages must be foreseeable at the time of contract formation, arise from known special circumstances, and be reasonably certain.
What are incidental damages?
Reasonable costs incurred as a result of a breach of contract
Examples include costs of returning non-conforming goods.
What is restitution in the context of contract law?
Damages awarded to prevent unjust enrichment based on the value of the benefit conferred
A party cannot recover both expectation and restitution damages.
Under what conditions will liquidated damages be enforced?
- Amount of damages is difficult to estimate at the time the contract was formed
- Amount is reasonable to the actual damages suffered
If the liquidated damages clause is valid, only that amount is valid; if invalid, actual damages are available.
What can a buyer recover for a breach of contract concerning the sale of land?
- Any amount paid
- Difference between fair market value and contract price
- Expenses incurred in investigating title
- Expenses incurred in preparing to occupy the land
- Possible consequential damages
- Interest
The seller normally recovers the earnest money deposit as liquidated damages.
What remedies does a buyer have under the UCC when goods are not received?
- Cancel the contract
- Recover any amount paid (refund)
- Recover either Cover Damages or Market Damages
- Recover Incidental and Consequential damages
Cover Damages are the difference between the contract price and substitute goods price; Market Damages are the difference between market price and contract price.
What are the seller’s remedies under the UCC when a buyer breaches a contract?
- Withhold delivery of the goods
- Cancel the contract
- Recover cover damages
- Recover market damages
- Recover lost profits if a lost volume seller
- Stop delivery of goods in possession of a carrier
- Stop delivery of large shipments when buyer breaches
- Replevy identified goods in certain instances
Seller is entitled to recover incidental damages, which include any commercially reasonable costs incurred from the breach.
What is a quasi-contract?
A contract implied by law to prevent unjust enrichment
Created if the plaintiff confers a benefit, expected compensation, the defendant requested the benefit, and the defendant would be unjustly enriched if not compensated.
What does reformation allow in contract law?
Changing a contract to conform to the parties’ original intent
Available if a valid contract exists with misrepresentation or mutual mistake.
What is rescission in contract law?
Cancellation of the original contract due to a problem with its formation
Available if there is a defense to formation, fraud, or misrepresentation.
Under what conditions is specific performance available as a remedy?
- A valid contract exists with clear terms
- Plaintiff has performed or is ready to perform
- Legal remedies are inadequate
- Enforcement is feasible
- No valid equitable defenses exist
Under common law, both parties must have been able to request specific performance, but some jurisdictions allow for sufficient assurance of performance from one party.
