Contracts Remedies Part 2 Flashcards
Buyers’ and Sellers’ Damages under Art 2 UCC
Buying replacement goods is called “cover” and is the most common form of buyer’s damages. Giving aggrieved party the diff between K price and substitute goods. But there’s no actual cover requirement.
Boat example: you as buyer expected boat for 20k but the next closest is 25k. You could just get 5k as damages, between market price and contract price. Plus incidental damages of having mechanic check it out and tourney entry fee as consequential damages.
What if the buyer reneged? “BENEFIT OF THE BARGAIN DAMAGES” Seller finally sells for 15k to 3rd party. Seller is entitled to diff between K price and resale price provided it was a commercially reasonable good faith sale. So 5k again. Resale of goods is most common recovery method for seller.
What if the seller is a boat dealer? (Merchants’ Sales Volume)
The boat dealer could have sold 2 boats, not just 1. He could have sold 1 to you and then also 1 that ended up being the resale. So losing the profit on the second sale, losing the would-be profit he would have made on the sale is recoverable too.
Warranty Damages under Art 2 UCC
Warranties = express and implied promises by seller about the goods sold
Damages don’t have to be all or nothing. Buyer may want to keep them and get money for the breach (difference in value between worth in actual state vs. as promised)
Warranty damages = recovering the difference in value between what the thing would have been as warranted vs. its value as delivered
Cure = demanding the merchant/seller send goods that actually conform
In dealing with nonconforming goods under UCC but buyer still wants to keep the goods, think about warranty damages
3 Limitations on Damages
Damages must be:
1) Reasonably certain. Damages cannot be speculative. Doesn’t have to be absolute certainty.
2) Foreseeable. Damages that arise in the natural course of events of a breach. Every breaching party is on the hook for natural course of events of a breach. If apple seller failed to deliver to buyer apple pie store, it would be reasonably foreseeable. But this also applies to stuff you as seller have special knowledge of, with consequential damages.
3) Unavoidable. Duty to mitigate. Nonbreaching party cannot recover damages that would have been avoided with reasonable effort. Example: employer breaches your employment K. You must look for reasonable comparable job you could take. If you could have avoided damages, you have to. These are “comparable”. That’s the rub. The employer can’t expect you to take a job that is not “comparable”. Can’t expect you to move away from the area either.
Mitigation on sale of goods: under Art 2 the duty to mitigate generally does NOT apply. No obligation for injured buyer to cover or buy substitute goods. No obligation of injured seller to resell the goods. The nonbreaching party is entitled to damages whether they try to mitigate by covering or not.
Construction Contracts Remedies
Breach By Owner:
1) Breach Before Construction = builder entitled to PROFITS
2) Breach During Construction = builder entitled to PROFIT + COSTS incurred to date. Also seen as Lost Profit + Cost Incurred - what builder was already paid = answer
3) Breach After Construction = contract price plus interest
Breach by Builder:
1) Breach Before Construction = owner owed cost of completion plus reasonable compensation for delays
2) Breach During Construction = owner is entitled to cost of completion plus reasonable compensation for any delay. If completion would involve waste though, the measure of damages will be the diff between the value of what the owner WOULD HAVE received if the builder had properly performed the K and the value of what the owner ACTUALLY received.
3) Breach by Late Performance = owner has right to damages for loss incurred by not being able to use it (OPPORTUNITY COST). If that is NOT foreseeable or easily determined, owner gets ONLY INTEREST on building as capital investment.
