Damages

Question 1

Expectation Damages

Answer 1

Standard measure of money damages

• Puts the parties in the economic position they would have been in if the K had been performed (i.e., if the breach never occurred)

Note: When in doubt, look for the answer that most closely gives damaged party what she would have received absent the breach

Question 2

Reliance Damages

Answer 2

Alternative measure used when expectation damages are too speculative

• Designed to compensate P based on the value of her performance and put P in the position they would have been in had the K never been formed

Question 3

Consequential Damages

Answer 3

Forseeable losses indirectly resulting from a breach (e.g. lost profits); recoverable if:

1) DAMAGES ARE FORESEEABLE result of the breach; and

2) When K was formed, D had reason to know P would suffer special, unpreventable, or unexpected damages in the event of a breach

UCC - Only buyers can recover

Question 4

Incidental Damages

Answer 4

Commercially reasonable expenses incurred by the non-breaching party in UCC Ks (e.g. costs of inspecting returning, storing, reselling goods)

Question 5

Duty to Mitigate

Answer 5

P cannot recover reasonably avoidable damages, but can recover for costs of avoiding further damages

Question 6

When are non-monetary remedies available?

Answer 6

Certain non-monetary remedies (i.e. equiable relief) may be available if money damages are unavailable or inadequate

Question 7

Specific Performance

Answer 7

Usually only available for Ks involving real estate or unique goods (e.g. antiques, art)

• For service Ks, injunctions preventing breach may be available (e.g. injunction enforcing non-compete clause)

Question 8

Rescission

Answer 8

Cancellation of a K

• Purpose is to restore parties to their positions before K was made
• often arises where there is mistake, misrepresentation, duress, or some other defense to a K enforcement or formation

Question 9

Reformation

Answer 9

Remedy whereby a K is changed so that it reflects parties original intent

• can arise where there is a mistake in K formation such that the final K caries from a prior written agreement of parties
• Can also arise where K is inaccurate sue to some misrepresentation

Question 10

Reclamation

Answer 10

In UCC Ks, unpaid sellers may stop delivery or reclaim goods from an insolvent buyer

• Unpaid seller generally cannot reclaim goods from subsequent buyers

Question 11

Restitution Damages

Answer 11

Arise where a party has been unjustly enriched

• Awarded based on value of the benefit wrongfully conferred
• Party cannot recover both expectation damages and restitution damages

Question 12

Liquidated Damages - Definition

Answer 12

Agree upon K provisions that stipulate specified damages upon the occurrence of a breach

Question 13

Liquidated Damages - Requirements (2)

Answer 13

Liquidated damages provisions are valid only if:

1) Damages are difficult to project at time of K formation; and

2) The provision is a reasonable estimate of actual damages

Question 14

Duty to Mitigate

Answer 14

P cannot recover reasonably avoidable damages

• i.e P must refrain from incurring additional losses after receiving notice of breach
• P may recover for the cost of mitigation (i.e. cost to avoid incurring further damages)
• D bears the burden of showing P’s failure to mitigate

Question 15

Duty to Mitigate - Employment

Answer 15

P’s damages can be reduced if D can show a comparable job in the same locale was available to P

Question 16

Damages for UCC Contracts - Breach by Seller & Buyer Keeps Goods (Non-Acceptance)

Answer 16

Depends on if buyer accepts:

Damages = FMV of perfectly delivered goods minus FMV of the goods actually delivered

Question 17

Damages for UCC Contracts - Breach by Seller & Buyer Keeps Goods (Acceptance)

Answer 17

Depends on if buyer accepts:

Damages = difference in value between the goods as delivered and the goods as ordered

Question 18

Damages for UCC Contracts - Breach by Seller & Buyer Keeps Goods (Seller Delivers Superior Goods)

Answer 18

If seller delivers non-conforming but superior goods, buyer is not responsible for increased value of superior goods

Question 19

Damages for UCC Contracts - Breach by Seller & Seller Keeps or Buyer Returns Goods

Answer 19

Damages = whichever of the following is higher:

a) FMV of goods at the time of breach MINUS K price, or

b) Buyer’s cots of covering/replacing goods MINUS K price

Question 20

Damages for UCC Contracts - Breach by Buyer & Buyer has Goods

Answer 20

Damages = K price (arises if goods are; kept by buyer, destroyed after ROL passes to buyer, or returned and seller is unable to resell)

Question 21

Damages for UCC Contracts - Breach by Buyer & Seller Has Goods

Answer 21

Either

a) K price minus market price at the time of delivery, or

b) K price minus resale price plus provable lost profits

Question 22

Conversion

Answer 22

FMV of goods at the time of the conversion