Damages for K Flashcards
Purpose of damages in K law
Compensate plaintiff based on expectation, not punish defendant.
Calculate K damages based on protection of P’s expectations by?
$ value of performance w/o breach minus the $ value of performance w/ breach = damages (= shortfall of performance value due to breach)
UCC Art 2 breach calculus generally calculated by? Three relevant facts?
contract damages policy of putting the innocent party where it would have been had the contract been performed, i.e., expectation. There are three relevant facts: (1) who breached, (2) who has the goods, and (3) was there a later “replacement” deal.
Damages for seller’s breach for Art 2 sale of goods IF THE BUYER KEEPS THE GOODS
[Fair market value if perfect – fair market value as delivered] or [cost of repair].
Damages for seller’s breach for Art 2 sale of goods IF THE SELLER KEEPS THE GOODS
[market price at time of discovery of the breach – contract price] or [reasonable replacement price – contract price].
Damagers for buyer’s breach under UCC Art 2 sale of goods?
K price. Buyer must pay what he owes.
Sale of goods with buyer breach, but seller has the goods –> damages = ? EXCEPTION TO NORMAL RULE = ?
[contract price – resale unless seller cannot resell in which case the seller can recover the contract price]. Damages generally zero if you resell for originally expected sales value.
EXCEPTION = LOST PROFITS FOR VOLUME SELLER–> If buyer breaches and doesn’t buy an item from SELLER’S REGULAR INVENTORY, even if seller sells same item for full K price thereafter, seller can recover its PROVABLE LOST PROFIT on the non-sale to breaching buyer –> answer is NOT zero dollars and NOT full K price.
What are incidental damages in K law? Are they recoverable?
Incidental damages are ALWAYS recoverable (whether foreseeable or not). Incidental costs are costs incurred in dealing with the breach such as costs of storing rejected goods in a sale of goods or finding a replacement in a services contract – always recoverable.
What are foreseeable CONSEQUENTIAL DAMAGES?
Consequential damages are the kind of loss that is special to this plaintiff. Consequential damages are limited to damages arising from P’s special circumstances and recovery of consequential damages is limited to situations in which D HAD REASON TO KNOW OF these special circumstances at the time of the contract. D MUST KNOW SPECIAL INFO FOR CONSEQUENTIAL DAMAGES.
Subtract avoidable damages when….
AVOIDABLE DAMAGES IS A DEFENSE. You cannot recover for damages that COULD HAVE BEEN AVOIDED W/O UNDUE BURDEN ON P. Burden of PLEADINGS AND PROOF ON DEFENDANT.
Subtract damages that can’t be established with reasonable certainty. What is not reasonable certainty re damages?
Look for fact pattern involving a services contract and plaintiff engaged in NEW business or a NEW business activity. Consider reliance recovery as an alternative to expectation. E.g., if you spend on prep for new business in reliance, you can recover that.
Fact pattern w/ liquidated damages looks like what? What is test for permissible liquidated damages. When are liquidated damages presumptively invalid?
Look for contract provision fixing amount of damages. Issue will be WHETHER LIQUIDATED DAMAGES ARE VALID: concern is whether provision is too high – a penalty. Tests are (1) damages were difficult to forecast at time contract was made and (2) provision is a REASONABLE FORECAST. If there’s a single set number (not flexible, not a formula), that’s PRESUMPTIVELY INVALID B/C IT’S A PENALTY.
