Damages Flashcards
When is specific performance generally available?
ONLY for:
- real property: each property is unique
- sale of goods: if unique and rare
- covenants not to compete (if money damages are inadequate)
NOT for service contracts
Common law: What is the general rule for damages?
Expectation damages (put parties in position they would be if contract had been properly performed)
Punitive damages typically not allowed in contracts
UCC: If a seller delivers goods but is not paid, can the seller get goods back?
Generally, he has to settle for money damages, unless seller misrepresented its solvency to seller in writing within three months before delivery (can reclaim at any time if so)
UCC and Common Law: When are liquidated damages allowed?
If damages are difficult to estimate or prove:
Common law: damage amount reasonable at time of contracting
UCC: damage amount reasonable at time of contracting or time of breach
Damages cannot act as penalty
UCC: What are Buyer’s Damages (i.e. seller breaches)
- buyer covers in good faith
Cover price - contract price
- buyer doesn’t cover in good faith or doesn’t cover at all
market price - contract price
- if buyer keeps non-conforming goods
value as promised - value as delivered
What are seller’s damages (i.e. buyer breaches)?
- seller resells in good faith
contract price - resell price
- seller does not resell in good faith or does not try to resell at all
contract price - resell price
- if seller cannot resell at all
entire contract price
- if high volume dealer
lost profits
What are incidental, consequential, and avoidable damages?
Incidental: cost to injured buyer/seller of transporting goods/caring for goods after a breach and arranging for a substitute transaction
Consequential: damages reasonably foreseeable at time of contract and known to breaching party
Avoidable: injured party cannot recover for damages he could have avoided with reasonable effort (e.g. seeking a comparable job in comparable city)
UCC: What is entrustment?
Owner who entrusts goods to a merchant who deals in goods of the kind has no rights against a bona fide purchaser. But can sue for conversion.
Ex.: Micheal takes watch to jeweler for repair. Jeweler accidentally sells it to a bona fide purchaser.
What are reliance damages?
if plaintiff’s expectation damages are too speculative, put plaintiff in position he would have been in had contract never been formed
What is standard measure of damages in contract for sale of land?
Contract price - fair market value of the land
What is standard measure of damages in employment contracts?
Breach by Employer: full contract price - amount employee made or would have made by taking similar position
Breach by Employee: cost of replacing the employee (including any wage differential) - amounts owed to employee for work done
At-will employment: no breach because it can be terminated at any point
What are the standard measure of damages in construction contracts
Breach by owner before completion: expected profit + costs expended
Breach by owner after completion: contract price
Breach by builder: costs of completion + damages from delay - restitution for benefit conferred by builder
What is reformation?
Contract is rewritten to make it conform to the intent of the parties
- mutual mistake
- misrepresentation
What is the statute of limitations under the UCC?
4 years
Begins at time of accrual of the cause of action (e.g. when breach occurs)
For breach of warranty, time begins at delivery of goods.
What are the damages under an installment contract limited to?
Only the amount of damages contained in the installment, unless there is an acceleration clause.
