Damages Flashcards
Types of damages
GILS, not Punny
G - General
I - Incidental (costs of mitigating harm from breach)
L - Liquidated
S - Special (consequential)
No Punitive damages for K claims
Expectation damages
Put the parties in as good of a position as if the K was fully performed.
R2 §347
Expected profits - payments received + costs incurred - damages avoided
Consequential = FORESEEABLE to D, unique to P, and do NOT DIRECTLY FLOW from the breach
Hadley v. Baxendale - Lost profits due to waiting on part, but part maker did not know of urgency.
Reliance damages
Expenses P incurred in relying on K
R2 §349
When expectation damages are too speculative
E.g., Paying for advertising to sell truck when TV station refuses to air ad.
Restitution
FMV of benefit conferred or ↑ in value of D’s property, not to exceed K price
R2 §371 (measure of)
R2 §373 (rules for breach)
Goal is to prevent unjust enrichment
Equitable remedy
Court compels D to take or refrain from action.
Rare goods & real estate (monetary inadequate or too speculative)
NOT service Ks
Unclean Hands Latch Hard
Unclean hands - P has unclean hands, will not enforce
Latch - Laches - Unreasonable enforcement delay prejudices D.
Hard - Hardship - Enforcement would cause extreme and undue hardship to D.
Replevin (reclaim/repossession) - Good SIR
Good - applies to goods
S - Still has the goods (B does)
I - Insolvent (B is)
R - Reasonable time (S demands return w/in 10 days)
§2-702
Liquidated damages, and when are they enforceable?
Damages can only be liquidated under the following circumstances: when the court will put a QAP on damages:
Q -If an injury is “difficult to quantify” or “uncertain.”
A - The sum must be reasonable and include any actual or likely damages.
P - Cannot be a “penalty.”
Liquidated damages clauses will be voided if these stipulations are not met.
The damages should not be a penalty. Monetarily unequal to the harm done, penalties serve as a reason to not break the contract, and are allowed when the obligations of a contract were not fulfilled. The reason these payments are considered damages instead of penalties can be traced back to courts of equity, which attempted to deter parties from making Unconscionable bargains.
Yes, except where the contract specifically calls for payment before inspection, the UCC allows for inspection (remember, perfect tender under UCC, not substantial performance - buyer has a right to perfect tender). If the buyer refuses payment prior to inspection and the agreement calls for payment before inspection, there is a breach by the buyer (not repudiation).
Damages designated by parties to a contract for the injured party to collect as compensation upon breach (a pre-K “ESTIMATE”).
Divisible K damages
Each part considered SEPARATELY when determining damages.
UCC damages rules - S breach
§2-601 - S botches delivery, B can keep, reject or resell nonconforming goods and recover damages
§2-711 - No delivery or goods rejected, B claim full refund based on cover OR market price + incidental and consequential, less B expenses saved due to breach
§2-712 - Cover price = good faith substitution w/o delay - K price
§2-713 - Market price = ▲ market price at time B learns of breach and K price
§2-714 - Goods accepted, reasonable calculation due to breach including I + C
UCC damages rules - B breach
§2-706(1) - B breach, S can resell and recover ▲
§2-706(3) - But if resale is private, notice required to B
§2-706(2) - Lost volume S (§2-708), recover profits
§2-709 - B keeps or returns, S fails to resell, S recovers entire K price + I/C
Declaratory judgement
Court clarifies K w/o ordering anything
