Damages Flashcards
Expectation Damages
Expectation damages are those damages that put the non-breaching party in the same position he would have been in had the breach not occurred.
In general, a party who substantially performed her contractual obligations can recover the contract price minus any amount that it will cost the other party to obtain the promised full performance.
Reliance Damages
Reliance damages are based on the out-of-pocket expenses incurred by the nonbreaching party. Reliance damages put the party in the same position as if the contract were never formed.
They are an elected alternative to expectation damages.
Restitution
When a defendant is unjustly enriched by the plaintiff, restitution generally allows the plaintiff to recover on the benefit conferred by the plaintiff upon the defendant.
They are an elected alternative to expectation damages.
Specific Performance
Requires:
1) Valid K
2) Clear and Definitive Terms
3) Money Damages inadequate
4) Mutuality of Performance
5) Feasibility
6) No defenses
What are clear and definitive terms re: SP?
The contract must be valid and the terms must be sufficiently certain for the court to award SP.
When are money damages inadequate re: SP?
The legal remedy is inadequate when the subject matter is rare or unique.
What is mutuality of performance re: SP?
Mutuality requires that the party seeking SP has already fully performed or can show that he is ready, willing, and able to perform.
What are the defenses to SP?
Unclean Hands: When the party who seeks equitable relief himself engages in serious misconduct in close relation to the claim.
Laches: Where party who seeks equitiable relief has taken so long to bring suit, it results in unfair prejudice to the opposing party.
Incidental Damages
Incidental damages may be awarded to the non-breaching party as compensation for commercially reasonable expenses incurred as a result of the other party’s breach.
This typically includes the cost of warehousing, transportation, inspection, and the like.
What is the duty to mitigate?
A party to a contract must take steps to reasonably avoid or mitigate damages to the extent possible.
Damages will be reduced by the amount that could have reasonably been mitigated.
Expectation Damages: UCC Cover
Under the UCC, after a breach by the seller, the buyer may procure substitute goods, and “cover” by making in good faith and without unreasonable delay any reasonable purchase of substitute goods, which is measured by the difference between the contract price and the cost of cover.
Consequential Damages
Consequential damages are damages that naturally flow from the breach. Must demonstrate:
1) Foreseeable
2) Reasonably Certain
3) Causation
When are limits on consequential damages impermissible?
When the limitation is unconscionable.
For example, saying that other remedies are excluded is generally unconscionable, if the other remedy does not resolve the defect or problem.
