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PFTB 2022S > Contracts VI--Remedies > Flashcards

Contracts VI--Remedies Flashcards

1
Q

If a buyer receives goods that do not conform to the contract, what action can the buyer take to reject the goods

A

If a buyer rightfully rejects goods because they do not conform to the contract, one of her options is simply to cancel the contract.

Contracts VI–Remedies

Contracts>Remedies (A.2.a.1)
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2
Q

If a buyer has made at least part payment of the purchase price of gods that have been identified under a contract and the seller has not delivered the goods, under what circumstances may the buyer replevy the goods from the seller?

A

(1) The seller becomes insolvent within 10 days after receiving the buyer’s first payment; or (2) the goods were purchased for personal, family, or household purposes.

In either case, the buyer must tender any unpaid portion of the purchase price to the seller. [UCC § 2-502]

Contracts VI–Remedies

Contracts>Remedies (A.2.a.2.a)
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3
Q

Under what circumstances may a buyer replevy undelivered, identified goods from the seller?

A

The buyer may replevy undelivered, identified goods from the seller if the buyer, after reasonable effort, is unable to secure adequate substitute goods (i.e., cover). [UCC § 2-716(3)]

Contracts VI–Remedies

Contracts>UCC definitions (A.2.a.2.b)
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4
Q

What is a Breach of Warranty?

A

At common law, the rule was caveat emptor– let the buyer beware. Once goods were accepted, the sellers obligations were discharged. However, as we have seen, today seller’s give warranties as to the condition of the goods that apply even after acceptance. Failure to live up to these warranties constitutes a breach of warranty, for which a remedy is available.

Contracts VI–Remedies

Contracts>Breach of Warranty (V.E)
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5
Q

Why is specific performance always available for land sale contracts?

A

Specific performance is always available for land sale contracts because all land is considered to be unique. It is also available for goods that are rare or unique at the time performance is due (e.g. rare paintings, gasoline in short supply because of oil embargoes, etc.).

Contracts VI–Remedies

Contracts>Nonmonetary Remedies (VI.A.1.a)
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6
Q

Why is specific performance not available for service contracts?

A

Specific performance is not available for breach of a contract to provide services, even if the services are rare or unique. This is because of problems of enforcement (it would be difficult for the court to supervise the performance) and because the courts feel it is tantamount to involuntary servitude which is prohibited by the Constitution.

Contracts VI–Remedies

Contracts>Nonmonetary Remedies (VI.A.1.b)
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7
Q

When is specific performance available as a remedy for breach of contract?

A

If the legal remedy is inadequate, the nonbreaching party may seek specific performance, which is essentially an order from the court to the breaching party to perform or face contempt of court charges.

Contracts VI–Remedies

Contracts>Nonmonetary Remedies (VI.A.1)
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8
Q

When are monetary damages for breach of contract generally inadequate?

A

The legal remedy (damages) generally is inadequate when the matter of the contract is rare or unique. The rationale is that if the matter is rare or unique, damages will not put the nonbreaching party in as good a position as performance would have, because even with the damages the nonbreaching party would not be able to purchase substitute performance.

Contracts VI–Remedies

Contracts>Nonmonetary Remedies (VI.A.1)
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9
Q

What are the two broad branches of remedies available in breach of contract situations?

A

Monetary and Nonmonetary

Contracts VI–Remedies

Contracts>Nonmonetary Remedies (VI.A)
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10
Q

What is the primary nonmonetary remedy for breach of contract (for exam purposes)?

A

Specific Performance

Contracts VI–Remedies

Contracts>Nonmonetary Remedies (VI.A)
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11
Q

Fill in the blank: Aside from specific performance, Article 2 has a number of other specific nonmonetary remedies for certain situation involving contracts for the ____ __ ____.

A

Sale of Goods

Contracts VI–Remedies

Contracts>Nonmonetary Remedies (VI.A)
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12
Q

Laches

A

arises when a party delays in bringing an equitable
action and the delay prejudices the defendant. mere delay itself is not a
ground for this defense.

Contracts VI–Remedies

Contracts> Equitable Defenses Available
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13
Q

Unclean Hands

A

arises when the party seeking specific performance is
guilty of some wrongdoing in the transaction being sued upon

the wrongdoing must be related to the transaction being sued upon; it is not sufficient that the plaintiff has defrauded other persons in similar transactions.

Contracts VI–Remedies

Contracts> Equitable Defenses Available
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14
Q

Sale to a Bona Fide Purchaser

A

If the matter of a goods or land contract has already been sold to another who purchased for value and in good faith (i.e., a bona fide purchaser), the right to specific performance is cut off

Contracts VI–Remedies

Contracts> Equitable Defenses Available
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15
Q

when may a court enjoin a breaching employee from working for a competitor

A

a court may enjoin a breaching employee from working for a competitor
throughout the duration of the contract if the services contracted for are rare
or unique.

Contracts VI–Remedies

Contracts> Injunction as an Alternate Remedy
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16
Q

When will most courts grant an order of specific performance to enforce a contract not to compete?

A
  1. the services to be performed are unique (thus rendering money damages inadequate); and
  2. the covenant is reasonable

Contracts VI–Remedies

Contracts>Covenant Not to Compete
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17
Q

What factors must be satisfied to deem a covenant not to compete ‘reasonable’

A
  1. the covenant must be reasonably necessary to protect a legitimate interest of the person benefited by the covenant
  2. the covenant must be reasonable as to its geographic scope and duration; and
  3. the covenant must not harm the public

Contracts VI–Remedies

Contracts>Covenant Not to Compete
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18
Q

What are seller’s nonmonetary remedies?

A

Seller’s right to withhold goods, Seller’s right to recover goods, Seller’s ability to force goods on buyer limited.

Contracts VI–Remedies

Contracts- Remedies- Under Article 2- Seller’s Nonmonetary Remedies
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19
Q

What is buyer’s right to specific performance?

A

Right closely related to the buyer’s right to replevy is her right to specific performance ‘where the goods are unique or in other proper circumstances.’ [UCC §2-716(1)] The court may order specific performance even where the goods have not yet been identified to the contract by the seller. The comments to section 2-716 say that inability to cover is ‘strong evidence of other circumstances.’ Thus, buyers in inability-to-cover situations have their choice of replevin or specific performance remedies. Of course, a specific performance remedy is always discretionary with the court, and unclean hands, laches, etc., might bar an equity action but would not affect a replevin recovery. In any case, keep in mind that replevin will lie only for identified goods, while specific performance may be decreed even though the goods have not previously been identified.

Contracts VI–Remedies

Contracts- Remedies- Under Article 2-Buyer’s Nonmonetary Remedies
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20
Q

What is seller’s right to withhold goods?

A

If the buyer fails to make a payment due on or before delivery, the seller may withhold delivery of the goods. The seller may also withhold goods when the goods are sold on credit and, before the goods are delivered, the seller discovers that the buyer is insolvent. However, in such a case, the seller must deliver the goods if the buyer tenders cash for their payment. [UCC §2-702]

Contracts VI–Remedies

Contracts- Remedies- Under Article 2-Seller’s Nonmonetary Remedies
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21
Q

What are seller’s right to recover goods?

A

Right to recover from buyer on buyer’s insolvency, Right to recovery shipped or stored goods from Bailee

Contracts VI–Remedies

Contracts- Remedies- Under Article 2-Seller’s Nonmonetary Remedies
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22
Q

What is the right to recover from buyer on buyer’s insolvency?

A

If a seller learns that a buyer has received delivery of goods on credit while insolvent, the seller may reclaim the goods upon demand made within 10 days after the buyer’s receipt of the goods. However, the 10-day limitation does not apply if a misrepresentation of solvency has been made in writing to the particular seller within three months before delivery. Note that the seller’s right to reclaim the goods is to the rights of a buyer in the ordinary course or any other good faith purchaser. [UCC §2-702]

Contracts VI–Remedies

Contracts- Remedies- Under Article 2-Seller’s Nonmonetary Remedies
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23
Q

When does Seller have the right to recover shipped or stored goods from Bailee?

A

(1) On buyer’s insolvency, (2) On buyer’s breach, (3) When goods may not be stopped, (4) Obligation of carrier or Bailee

Contracts VI–Remedies

Contracts- Remedies- Under Article 2-Seller’s Nonmonetary Remedies
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24
Q

What happens on buyer’s insolvency?

A

The seller may stop delivery of goods in the possession of a carrier or other bailee when he discovers the buyer to be insolvent. Of course, the seller must deliver the goods if the buyer tenders cash for their payment. [UCC §2-705(1)]

Contracts VI–Remedies

Contracts- Remedies- Under Article 2-Seller’s Nonmonetary Remedies
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25
What happens on buyer's breach?
The seller may stop delivery of carload, truckload, planeload, or larger shipments of goods when the buyer breaches the contract or when the seller has a right to withhold performance pending receipt of assurances. (See c., infra, on the right to demand assurances.) [UCC §2-705(1)] Contracts VI--Remedies Contracts- Remedies- Under Article 2-Seller's Nonmonetary Remedies .
26
What are Compensatory Damages?
The purpose of contract damages is to give compensation for the breach-I.e., to put the nonbreaching party in the position she would have been in had the promise been performed so fat as money can do this. The most common measure of this is value of the breaching party’s performance that was lost (expectation damages), plus incidental and consequential damages, less any loss or cost saved by not having to perform. [Restatement (Second) of Contracts section 347] Contracts VI--Remedies Contract> Monetary Remedy - Damages (VI.B.1.a) .
27
Monetary Remedy - Damages
The most frequent sought remedy for breach of contract is an action at law for damages. Damages can be recovered only to the extent they can be proved with reasonable certainty and could not be avoided with reasonable effort. In cases of willful breach, courts are more likely to be flexible in determining the plaintiff's damages alternatives. Contracts VI--Remedies Contract> Monetary Remedy - Damages (VI.B) .
28
When Goods May Not be Stopped?
The seller may stop delivery of the goods to the buyer until the buyer receives: (i) the goods or a negotiable document of title covering the goods; or (ii) an acknowledgment from a bailee other than the carrier that it is holding the goods for the buyer. [UCC section 2-705(2)] Contracts VI--Remedies Contract> Non Monetary Remedies (VI.A.2.b.2.b.3) .
29
What are the Obligations of Carrier or Bailee?
The seller's notification must come in time to give the person in possession a reasonable time to stop delivery. If a negotiable document covers the goods, the carrier or bailee is not obligated to obey a stop order until the document is surrendered. Contracts VI--Remedies Contract> Non Monetary Remedies (VI.A.2.b.2.b.4) .
30
When is a Seller's Ability to Force Goods on Buyer Limited?
The seller's ability to force goods on a buyer is limited to an action for price when the seller is unable to resell the goods to others at a reasonable price. (See B.2.b.2) Contracts VI--Remedies Contract> Non Monetary Remedies (VI.A.2.b.3) .
31
When may a party have the Right to Demand Assurances?
Under Article 2, actions or circumstances that increase the risk of non performance by a party to the contract but do not clearly indicate that performance will not be forthcoming, may not be treated immediately as an anticipatory repudiation. Instead, if there are reasonable grounds for insecurity with respect to the other party's performance, a party may demand assurances that the performance will be forthcoming at the proper time, The demand for assurances must be made in writing. Until the party receives adequate assurances, he may suspend his own performance. [UCC section 2-609] If the proper assurances are not given within a reasonable time (i.e., within 30 days after a justified demand for assurances), he may then treat the contract as repudiated. Contracts VI--Remedies Contract> Non Monetary Remedies (VI.A.2.c) .
32
What is the certainty rule?
The plaintiff must prove that the losses suffered were certain in their nature and not speculative. Traditionally, if the breaching party prevented the nonbreaching party from setting up a new business, courts would not award lost profits from the prospective business as damages, because they were too speculative. However, modern courts may allow lost profits as damages if they can be made more certain by observing similar businesses in the area or other businesses previously owned by the same party. Contracts VI--Remedies Contracts>Certainty Rule (page 83) .
33
What are consequential damages?
Consequential damages are special damages and reflect losses over and above standard expectation damages. These damages result from the nonbreaching party's particular circumstances. Usually consequential damages are lost profits resulting from the breach. These damages may be recovered on if at the time the contract was made, a reasonable person would have foreseen the damages as a probable result of a breach. Foreseeability is the key issue for consequential damages. To recover consequential damages, the plaintiff must show that the breaching party knew or had reason to know of the special circumstances giving rise to the damages. Contracts VI--Remedies Contracts>Consequential Damages (page 82) .
34
What are expectation damages/ | Standard measure of damages?
In most cases, the plaintiff's standard measure of damages will be based on an 'expectation' measure, I.e. sufficient damages for her to buy a substitute performance. This is also known as 'benefit of the bargain' damages. Contracts VI--Remedies Contracts>Expectation Damages/Standard Measure of Damages? (page 82) .
35
What are incidental damages?
Compensatory damages may also include incidental damages. Incidental damages are most commonly associated with contracts for the sale of goods and typically include expenses reasonably incurred by a buyer in inspection, receipt, transportation, care, and custody of goods rightfully rejected and other expenses reasonably incident to the seller's breach, and by the seller in storing, shipping, returning, and reselling the goods as a result of the buyer's breach. Contracts VI--Remedies Contracts>Incidental Damage (page 83) .
36
What are nominal damages?
Nominal damages (as known as token damages (eg $1)) may be awarded where a breach is shown but actual loss is proven. Contracts VI--Remedies Contracts>Nominal Damages (page 83) .
37
What are punitive damages? And are they typically awarded?
These are awarded to punish a defendant for wrongful conduct. However, they are not generally awarded in contract cases. Contracts VI--Remedies Contracts>Punitive Damages (page 83) .
38
What are reliance damages?
If the plaintiff's expectation damages will be too speculative to measure, the plaintiff may elect to recover those damages she has suffered based on her reasonable reliance on the contract. Reliance damages award the plaintiff the cost of her performance (I.e. they are designed to put the plaintiff in the position she would have been in had the contract never been formed. Contracts VI--Remedies Contracts>Reliance Damage Measures (page 82) .
39
Seller Anticipatorily Breaches Contract - what damages?
Under section 2-713, the measure of damages when the seller anticipatorily breaches the contract is the difference between the market price at the time the buyer learned of the breach and the contract price. Contracts VI--Remedies Contracts>Remedies>Monetary Remedy-Damages>Contracts for Sale of Goods>Buyer's Damages>Seller Anticipatorily Breaches Contract (IV.B.2.a.3) .
40
What is the buyer's notice requirement?
To recover damages for any defect as to accepted goods, the buyer must, within a reasonable time after she discovers or should have discovered the defect, notify the seller of the defect. If she does not notify the seller within a reasonable time, she loses her right to sue. 'Reasonable time' is, of course, a flexible standard. Contracts VI--Remedies Contracts>Remedies>Monetary Remedy-Damages>Contracts for Sale of Goods>Buyer's Damages>Seller Delivers Nonconforming Goods that Buyer Accepts>Notice Requirement (IV.B.2.a.2) .
41
When can the buyer get warranty damages?
If the buyer accepts goods that breach one of the seller’s warranties, the buyer may recover as damages 'loss resulting in the normal course of events from the breach.' The basic measure of damages in such a case is the difference between the value of the goods as delivered and the value they would have had if they had been according to contract, plus incidental and consequen- tial damages. [UCC §2-714] Contracts VI--Remedies Contracts>Remedies>Monetary Remedy-Damages>Contracts for Sale of Goods>Buyer's Damages>Seller Delivers Nonconforming Goods that Buyer Accepts>Warranty Damages (IV.B.2.a.2) .
42
What are the buyer's damages when the seller does not deliver or buyer rejects goods or revokes acceptance?
The buyer’s basic damages where the seller does not deliver or the buyer properly rejects or revokes her acceptance of tendered goods consist of the difference between the contract price and either the market price or the cost of buying replacement goods (i.e., cover), plus incidental and consequential damages (see above), if any, less expenses saved as a result of the seller’s breach. In the case of a seller’s anticipatory repudiation, the buyer’s damages are measured as of the time she learns of the breach. Contracts VI--Remedies Contracts>Remedies>Monetary Remedy-Damages>Contracts for Sale of Goods>Buyer's Damages>Seller Does Not Deliver or Buyer Rejects Goods or Revokes Acceptance (IV.B.2.a.1) .
43
When will the buyer get cover as damages?
Cover is the usual measure of damages for a buyer. Typically, if a buyer is not sent the goods contracted for, he will go out into the marketplace to buy replacement goods. If the buyer chooses the cover measure (i.e., difference between contract price and cost of buying replacement goods), the buyer must make a reasonable contract for substitute goods in good faith and without unreasonable delay. [UCC §2-712] Example: Seller and Buyer have a contract for the sale of 10,000 widgets at $1 per widget. Seller does not deliver. At the time and place for determining market price, the average price of widgets is $1.05. However, Buyer made a replacement contract within a reasonable time and in good faith at a price of $1.07. Buyer can recover $700 based on her replacement costs. If, on the other hand, Buyer could have bought substitute widgets for $1.03 while the general market price was $1.05, but she chose not to cover, she could recover $500 based on the difference between contract and market prices, rather than being limited to her cover costs. Contracts VI--Remedies Contracts>Remedies>Monetary Remedy-Damages>Contracts for Sale of Goods>Buyer's Damages>Seller Does Not Deliver or Buyer Rejects Goods or Revokes Acceptance>Difference Between Contract Price and Cost of Replacement Goods— 'Cover' (IV.B.2.a.1.b) .
44
Why is the difference between contract price and market price relevant?
If the buyer measures damages by the difference between contract price and market price, market price usually is determined as of the time the buyer learns of the breach and at the place of tender. [UCC §2-713] Note that the buyer’s damages are measured as of the time she learns of the breach, while the seller’s damages are measured as of the time for delivery. (See b.1)a), infra.) Contracts VI--Remedies Contracts>Remedies>Monetary Remedy-Damages>Contracts for Sale of Goods>Buyer's Damages>Seller Does Not Deliver or Buyer Rejects Goods or Revokes Acceptance>Difference Between Contract Price and Market Price (IV.B.2.a.1.a) .
45
What are goods for resale?
If the buyer is in the business of reselling the goods, the seller is deemed to have knowledge of the resale. Contracts VI--Remedies Contracts>Consequential Damages (IV.B.4.a) .
46
What are goods necesary for manufacturing?
If a seller knows that the goods he provides are to be used in the manufacturing process, he should konw that his breach would cause a disruption in production leading to a loss of profits. Contracts VI--Remedies Contracts>Consequential Damages (IV.B.4.b) .
47
What are consequential damages?
A seller is liable for consequential damages arising from his breach if (i) he had reason to konw of the buyer's general or particular requirements, and (ii) the subsequent loss resulting from those needs could not reasonably be prevented by cover. Particular needs must be made known to the seller, but general requirements usually need not be. [UCC 2-715(2)]. Contracts VI--Remedies Contracts>Consequential Damages (IV.B.4) .
48
When do you measure the difference between the contract price and the market price?
The market price is measured as of the time and at the place for delivery. Contracts VI--Remedies Contracts>Seller's Damages (IV.B.4.b.1.a) .
49
What are the seller's damages when the buyer refuses to accept goods or anticipatorily breaches contract?
The seller's basic damages when the buyer refuses to accept goods or repudiates are either the difference between the contract price and the market price or the difference between the contract price and the resale price of the particular goods, plus incidental (but not consequential damages), if any, less expenses saved as a result of the breach. If damages based on the difference between the contract and market price or resale price do not put the seller in as good a position as performance would have, then the seller may recover lost profits plus incidental damages [UCC 2-706, 2-708, 2-710]. In the case of a buyer's anticpatory breach, the seller's damages are measured as of the actual time for performance, uncless the suit comes to trial before the time of performance, in which case damages are measured as the time the seller learned of the breach. Contracts VI--Remedies Contracts>Seller's Damages (IV.B.4.b.1) .
50
What are the monetary damages for an employment contract when the employer breaches?
The standard measre of the employee's damages is the full contract price. Contracts VI--Remedies Contracts>Monetary Remedy Damages–Employment Contract (Breach by Employer) (VI B 4 a) .
51
What are the monetary damages for a contract for the sale of land?
The difference between the contract price and the fair market value of the land. Contracts VI--Remedies Contracts>Monetary Remedy Damages–Sale of Land (VI B 3) .
52
If an owner breaches in a construction contract after construction is completed, how are the builder's damages determined?
The builder is entitled to the full contract price plus interest. Contracts VI--Remedies Contracts>Remedies>Breach After Construction Completed (VI.5.a.3) .
53
If an owner breaches in a construction contract before construction started, how are the builder's damages determined?
The builder is entitled to the profits they would have derived from the contract. Contracts VI--Remedies Contracts>Remedies>Breach Before Construction Started (VI.5.a.1) .
54
If owner breaches in a construction contract, how are damages determined?
Damages from an owner's breach in a construction contract depends on when the breach occurred: before construction started, during construction, or after construction completed Contracts VI--Remedies Contracts>Remedies>Breach by Owner (VI.B.5.a) .
55
If an owner breaches in a construction contract during construction, how are the builder's damages determined?
The builder is entitled to any profit they would have derived from the contract plus any costs they have incurred to date. (Aka contract price minus cost of completion) Contracts VI--Remedies Contracts>Remedies>Breach During Construction (VI.5.a.2) .
56
Which parties could breach in a construction contract?
In construction contracts, the owner or builder could breach. Contracts VI--Remedies Contracts>Remedies>Construction Contracts (VI.B.5) .
57
What is employment at will?
Employment at will means employment can be terminated at any time for any reason. Termination of at-will employment does not result in a breach. Contracts VI--Remedies Contracts>Remedies>Employment Contracts (VI.B.4.c) .
58
When a party breaches a contract, under common law what can the non-breaching party recovery and what steps must they take?
Under the common law the non-breaching party once aware of the breach must take reasonable steps to mitigate the damage and losses potentially incurred. Only the expenses of mitigation may be recovered. Contracts VI--Remedies Contacts>Mitigation .
59
When an employer breaches what can the plaintiff recover if the employer has showed that comparable jobs exist in the area?
Plaintiff may only receive the difference. Contracts VI--Remedies Contacts>Mitigation .
60
In a manufacturing contract what duty does a manufacturer have after being made aware of a breach?
The. manufacturer carries a duty to not continue work Contracts VI--Remedies Contacts>Mitigation .
61
In construction contracts what duties does a builder have to mitigate?
A builder does not owe a duty to avoid the consequences of an owners breach, e.g. by securing other work, but does have a duty to mitigate by not continuing work after the breach. Contracts VI--Remedies Contacts>Mitigation .
62
Article 2 contract for a sale of goods, what duties of mitigation are there?
Generally, Under Article 2 mitigation does not apply. An injured buyer is not required to cover, and an injured seller is not required to resell. Market damages are available for the injured buyer or seller if they do not cover by buying or selling. Note that seller cannot bring suit against buyer for full contract price unless the goods cannot be resold for a reasonable price. Contracts VI--Remedies Contacts>Mitigation .
63
If there is a builder that breaches a contract what are the remedies for various stages of constructions for owner(e.g. before start date, during, after etc)
Before start date / construction has started--owner gets cost of completion and any delay damages. Breach during construction--owner gets cost of completion plus reasonable compensation for delay. But if competition involves undue economic waste then owner gets the difference in value between what they would have received versus what they did receive. If builder is late owner can recover lost use damages, but if they are hard to determine only interest on the value of the capital investment can be recovered. Contracts VI--Remedies Contract Breach .
64
What is Restoration / economic waste in the context of a builder
When work is not correctly the owner is entitled to the cost to fix the defect. But unless specific significance is attached to the use of a particular item, and that significance is articulated to the builder, the court will not order a remedy that will result in undue economic waste. e.g. wrong brand of copper pipes but pipes installed are comparable Contracts VI--Remedies Contract Breach .
65
When a contract has installments for payment does non-payment constitute a breach?
Partial breach. The aggrieved party may only recover what is lost without an acceleration clause. Contracts VI--Remedies Contracts Breach .
66
When a party breaches a contract, under common law what can the non-breaching party recovery and what steps must they take?
Under the common law the non-breaching party once aware of the breach must take reasonable steps to mitigate the damage and losses potentially incurred. Only the expenses of mitigation may be recovered. Contracts VI--Remedies Contracts>Mitigation .
67
When an employer breaches what can the plaintiff recover if the employer has showed that comparable jobs exist in the area?
Plaintiff may only receive the difference. Contracts VI--Remedies Contracts>Mitigation .
68
In a manufacturing contract what duty does a manufacturer have after being made aware of a breach?
The. manufacturer carries a duty to not continue work Contracts VI--Remedies Contracts>Mitigation .
69
In construction contracts what duties does a builder have to mitigate?
A builder does not owe a duty to avoid the consequences of an owners breach, e.g. by securing other work, but does have a duty to mitigate by not continuing work after the breach. Contracts VI--Remedies Contracts>Mitigation .
70
Article 2 contract for a sale of goods, what duties of mitigation are there?
Generally, Under Article 2 mitigation does not apply. An injured buyer is not required to cover, and an injured seller is not required to resell. Market damages are available for the injured buyer or seller if they do not cover by buying or selling. Note that seller cannot bring suit against buyer for full contract price unless the goods cannot be resold for a reasonable price. Contracts VI--Remedies Contracts>Mitigation .
71
Under the common law, the nonbreaching party ______ recover damages that could have been avoided with reasonable effort.
Under the common law, the nonbreaching party cannot recover damages that could have been avoided with reasonable effort. Contracts VI--Remedies Contracts>Remedies>MONETARY REMEDY>Avoidable Damages (Mitigation) .
72
When it comes to avoidable damages, the nonbreaching party has the duty to:
make a reasonable effort to cut their losses once the breach is discovered Contracts VI--Remedies Contracts>Remedies>MONETARY REMEDY>Avoidable Damages (Mitigation) .
73
A builder does not have the duty to ______ after an owner's breach
Continue work to avoid damages Contracts VI--Remedies Contracts>Remedies>MONETARY REMEDY>Construction Contracts .
74
What does an accelleration clause do?
Makes the entire amount due on any late payment on installment payments. Contracts VI--Remedies Contracts>Remedies>MONETARY REMEDY>Contracts Calling for Installment Payments .
75
If a payment on an installment payment contract it is a ___ breach.
Partial breach Contracts VI--Remedies Contracts>Remedies>MONETARY REMEDY>Contracts Calling for Installment Payments .
76
Under Article 2. An injured buyer is not required to ___, and an injured seller is not required to ___.
An injured buyer is not required to cover, and an injured seller is not required to resell. Contracts VI--Remedies Contracts>Remedies>MONETARY REMEDY>Contracts for Sale of Goods .
77
If the breaching employer can prove that a comparable job in the same locale wasavailable, then...
The breach for lost wages will be reduced by the wages that the plaintiff would have recieved by a comparable job. Contracts VI--Remedies Contracts>Remedies>MONETARY REMEDY>Employment Contracts .
78
in a contract to manufacture goods, if the person for whom the goods are being manufactured breaches, the manufacturer is under a duty to ______
mitigate by not continuing work after the breach. Contracts VI--Remedies Contracts>Remedies>MONETARY REMEDY>Manufacturing Contracts .
79
How is restitution generally measured?
Generally, the measure of restitution is the value of the benefit conferred. Though it is normally based on the benefit received by the defendant, recovery may also be measured by the detriment suffered by the plaintiff if the benefits are difficult to measure or the benefit measure would achieve an unfair result. Contracts VI--Remedies Contracts>Restitution: Measure of Damages (C.2) .
80
What is a 'losing' contract, and why are restitutionary | remedies popular in these circumstances?
A contract in which the actual value of the services or goods to be provided under the contract is higher than the contract price. Restitutionary remedies are often popular in these instances because normal contract expectation damages or reliance damages would be for a lesser amount. Contracts VI--Remedies Contracts>Restitution: Specific Applications (C.3.a.1) .
81
May a plaintiff seek restitution even if they are the | party who breached?
Under some circumstances, a plaintiff may seek restitution even though the plaintiff is the party who breached. If the breach was intention, some courts will not grant the breaching party restitution, but some modern courts will permit restitutionary recovery but limit it to the contract price minus damages incurred as a result of the breach. Contracts VI--Remedies Contracts>Restitution: Specific Applications (C.3.a.2) .
82
What restitution is available when a contract has been breached?
If the nonbreaching party has not fully performed, he may choose to cancel the contract and sue for restitution to prevent unjust enrichment. If the plaintiff has fully performed, he is limited to his damages under the contract. Contracts VI--Remedies Contracts>Restitution: Specific Applications (C.3.a) .
83
What are the three types of restitutionary actions | and when might they be relevant?
When a contract is unenforceable or no contract between the parties exists, an action to recover restitutionary damages is referred to as either (1) an implied in law contract, (2) an action in quasi-contract, or (3) an action for quantum meruit. Contracts VI--Remedies Contracts>Restitution: Terminology (C.1) .
84
In a contract for the sale of GOODS (UCC Article 2) can a buyer who pays a deposit and then breaches the contract recover any of that money?
Usually yes. A buyer of goods who pays part of the contract in advance/pays a deposit and then breaches the contract is usually able to recover some of that money to UCC §2-718 Contracts VI--Remedies Contracts>Remedies> Restitution (VI C3) .
85
If a buyer breaches a goods contract after paying a deposit, who keeps the deposit?
Generally, if the buyer breaches the seller can keep $500 or 20% of the deposit (whichever is LESS). This is the general offset provision. This only applies if the seller cannot prove greater actual damages. If there is a valid liquidated damages provision, the seller keeps that amount and returns only the portion of buyer's deposit that exceeds the liquidated damages, if any. Finally, the seller may be entitled to greater damages if they can prove actual and incidental damages in excess of the 'general offset provision' amount. Contracts VI--Remedies Contracts>Remedies> Restitution (VI C3) .
86
What Additional Relief is available in a Rescission?
If the plaintiff has paid money to the defendant, she is entitled to restitution in addition to rescission. Contracts VI--Remedies Contracts> Additional Relief (VI.D.3) .
87
What are the Defenses available in a Rescission?
Generally all equitable defenses (e.g., laches, unclean hands) are available in a rescission action. Note that the plaintiff’s negligence is not a defense. Contracts VI--Remedies Contracts> Defenses (VI.D.2) .
88
When do the Grounds for Rescission need to have occurred?
The grounds for rescission must have occurred either before or at the time the contract was entered into. Contracts VI--Remedies Contracts> Grounds (VI.D.1) .
89
What are the Grounds for a Rescission?
(a) Mutual mistake of a material fact; (b) Unilateral mistake if the other party knew or should have known of the mistake; (c) Unilateral mistake if hardship to the mistaken party is so extreme it outweighs the other party’s expectations under the contract; (d) Misrepresentation of fact or law by either party as to a material factor in the negotiations that was relied upon; or (e) Other grounds, such as duress, undue influence, illegality, lack of capacity, and failure of consideration. Contracts VI--Remedies Contracts> Grounds (VI.D.1) .
90
What are the Grounds for a Reformation?
Mistake and Misrepresentation Contracts VI--Remedies Contracts> Grounds (VI.E.1) .
91
What is a Reformation?
Reformation is the remedy whereby the writing setting forth the agreement between the parties is changed so that it conforms to the original intent of the parties Contracts VI--Remedies Contracts> Reformation (VI.E) .
92
What is a Rescission?
Rescission is a remedy whereby the original contract is considered voidable and rescinded. The parties are left as though a contract had never been made. Contracts VI--Remedies Contracts> Rescission (VI.D) .
93
3 things needed to reform a contract due to mistake
(i) an agreement between the parties, (ii) an agreement to put the agreement in writing, and (iii) a variance between the original agreement and the writing. Contracts VI--Remedies Contracts>Remedies (VI.E.1a) .
94
when can a plaintiff qualify for reformation when there has been a misrepresentation?
the misrepresentation must relate to the content or the legal effect OF THE RECORD, and the court will change the contract to reflect the EXPRESSED intent of the parties. Misrepresentations as to the matter of the agreement are not grounds for reformation because the court will not recreate the parties’ bargain Contracts VI--Remedies Contracts>Remedies (VI.E.1b) .
95
why is negligence not a bar for reformation?
because failure to read the record of the agreement does not preclude a party from obtaining reformation Contracts VI--Remedies Contracts>Remedies (VI.E.2) .
96
what is the clear and convincing evidence standard?
the variance between the antecedent agreement and the writing must be established by clear and convincing evidence Contracts VI--Remedies Contracts>Remedies (VI.E.3) .
97
do the parol evidence rule and SOF apply to reformation?
the parol evidence rule and the SOF do not apply in formation cases, and many courts will deny reformation if it would add land to the contract without complying with the SOF Contracts VI--Remedies Contracts>Remedies (VI.E.4) .
98
what defenses are there to reformation?
the existence of a bona fide purchaser for value is a defense: if the matter of the contract is sold to a bona fide purchaser, reformation will not be allowed; also, reformation is not permitted if the rights of third parties will be unfairly affected general equitable defenses are applicable also Contracts VI--Remedies Contracts>Remedies (VI.E.5) .
99
When does the statute of limitations period begin to run for a sales contract?
The statutory period begins to run when the cause of action accrues. The cause of action accrues when the party can bring suit (when the BREACH occurs). The statutory period begins to run regardless of whether the aggrieved party knows about the breach. Contracts VI--Remedies Contracts>Accrual of Action (VI.F.2) .
100
Can parties to a sales contract agree to a shorter than 4 year statute of limitation period?
Yes, parties may agree to a shorter period, but not less than a one year period. Contracts VI--Remedies Contracts>Agree to Shorter Period (VI.F.1) .
101
For a breach of warranty action, when does the statute of limitations period begin to run?
The BREACH occurs and the limitations period begins to run upon delivery of the goods. This is true even if the buyer does not discover the breach until much later. Contracts VI--Remedies Contracts>Breach of Warranty Actions (VI.F.3) .
102
When are implied warranties considered breached?
Because implied warranties cannot 'explicitly' extend to future performance, they are breached, if at all, upon delivery. Contracts VI--Remedies Contracts>Implied Warranties Breached on Delivery (VI.F.3.b) .
103
What is the statute of limitations for sales contracts?
4 year statute of limitations Contracts VI--Remedies Contracts>SOL Under UCC (VI.F) .
104
When does the statute of limitations period begin to run if there is an express warranty that explicitly extends to future performance of the goods?
The 4 year period does not begin to run until the buyer should have discovered the breach. Contracts VI--Remedies Contracts>Warranty Extends to Future Performance (VI.F.3.a) .

PFTB 2022S (23 decks)

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