Damages in Contract Cases

Question 1

What are the legal remedies for Contracts

Answer 1

1. Expectation damages 2. Reliance damages 3. Restitution damages 4. Incidental Damages (only for UCC) 5. Consequential Damages 6. Liquidated Damages

Question 2

Define expectation damages

Answer 2

Damages that arise directly from the breach and is an attempt to put the non breaching party in the same position it would be in but for the breach

Question 3

what is required in order to recover expectation damages

Answer 3

1. breach must have been caused by the D 2. breach must have been foreseeable 3. must be able to calculate damages with CERTAINTY 4. unavoidable- P must take reasonable steps to mitigate the loss.

Question 4

when do consequential damages arise?

Answer 4

Damages that arise indirectly from the breach and are awarded because of the injured party’s special circumstances.

Question 5

Define consequential damages

Answer 5

they are any other damages which are a FORESEEABLE CONSEQUENCES of the breach.

Question 6

What is required in order for consequential damage could arise

Answer 6

1. damages must be reasonable foreseeable (foreseeable consequence) by the breaching party 2. at the time of K formation 3. and will arise from P’s special circumstances that the D knew 4. certain

Question 7

when would Incidental Damages arise

Answer 7

only in cases involving the UCC (sale of goods)

Question 8

Define incidental damages

Answer 8

They are reasonable cost incurred involving the goods involved as the result of the breach of K- i.e., cost of returning the nonconforming goods. They are a subset of consequential damages.

Question 9

when is Restitution Damage awarded?

Answer 9

it is awarded to prevent unjust enrichment and is available when one party confers a benefit onto the other. Damages = are based on the value of benefits conferred.

Question 10

What are reliance damages

Answer 10

The expenditures made by a party in reliance of the K AND are an attempt to put the non-BP int he position it would have been if the K had NEVER EXISTED.

Question 11

When are reliance damages available

Answer 11

Available when 1. P acted in reliance on the D’s agreement to perform AND 2. the P’s reliance was FORESEEABLE

Question 12

What are liquidated damages?

Answer 12

The liquidated damages clause establishes what the penalty will be in the event of a breach

Question 13

What are the two requirements for liquidated damages and what happens if they are not met?

Answer 13

1. Liquidated Damages clause is enforced if the amnt of damages is difficult to estimate at the time the K is formed AND 2. the parties must make a reasonable attempt to forecast what those damages might be if these requirements are NOT met then the court will find it to be a PENALTY clause and not enforce it.

Question 14

What type of damages can you recover if you suffer and injury, if you don’t, and what’s the third option?

Answer 14

1. If you suffer any injury= you can recover compensatory damages OR 2. if you DON’T suffer any injury = you can recover nominal damages (CANNOT RECOVER BOTH) 3. IF you recover either compensatory OR nominal damages then you can tack on and MAY recover punitive damages (it is completely discretionary)

Question 15

What are the 6 general damages that can be recovered in a breach of land sale K?

Answer 15

1. any amount paid 2. the diff btwn the FMV at the time of BREACH and the K price 3. Expenses incurred in investigating title and preparing the necessary paperwork 4. expenses incurred in preparing to occupy the land 5. possible consequential damages; and 6. interest

Question 16

if the SELLER breaches a contract that involves the sale of real estate, What is the remedy for the Buyer?

Answer 16

the measure of damages is the difference btwn the contract price AND the FMV of the property at the time of BREACH

Question 17

if the BUYER breaches a contract that involves the sale of real estate, What is the remedy for the seller?

Answer 17

the measure of damages is the difference btwn the contract price AND the FMV of the property at the time the BUYER’S PERFORMANCE WAS DUE

Question 18

in contracts involving sale of real estate, when would the seller or the buyer be unable to recover?

Answer 18

Where the market price is the same or lower than the K price

Question 19

What is the FIRST standard measure fo damages when the K involving sale of good is breached by the BUYER?

Answer 19

1. the seller can recover “market damageS”- standard measure of damages is the K price minus the market price [so remedy only if the K price exceeds the market price] OR

Question 20

What is the SECOND standard measure fo damages when the K involving sale of good is breached by the BUYER?

Answer 20

2. the seller can also RESELL the item and then pursue damages, provided: a. the resale is done in GOOD FAITH b. the resale is done in a COMMERCIALLY REASONABLE MANNER; and c. the resale is done reasonably soon after the breach IF ALL OF THESE ARE MET then the seller may recover the [k price] minus [the resell price] OR

Question 21

What is the THIRD standard measure fo damages when the K involving sale of good is breached by the BUYER?

Answer 21

3. IF the seller is a LOST VOLUME SELLER then he can recover the LOST PROFIT

Question 22

when would a seller be considered to be a LOST VOLUME SELLER?

Answer 22

1. when the seller is in the business of selling goods of this kind and 2. seller has a fairly unlimited supply of this good 3. then every time the seller loses out on a sale the seller is entitled to the lost profits on that sale

Question 23

list all of remedies available to the seller when the K involves sale of good is breached by the BUYER?

Answer 23

1. withhold the goods 2. cancel 3. recover cover damages 4. recover market damages 5. recover lost profit 6. stop delivery of goods when seller discovers buyer is insolvent 7. stop delivery of truckloads when buyer breaches OR 8. replevy IDENTIFIED goods

Question 24

What is the standard measure fo damages when the K involving sale of good is breached by the SELLER?

Answer 24

1. Cover damages 2. market damages or 3. loss in value

Question 25

What is the standard measure for cover damages?

Answer 25

Buyer can recover the difference btwn[the K price] and the [price of the SUBSTITUTE GOOD] IF: 1. buyer bought REPLACEMENT goods 2. if done WITHOUT UNREASONABLE DELAY 3. if done IN GOOD FAITH and 4. if done FOR REASONABLE PRICE

Question 26

What is the standard measure for market damages?

Answer 26

difference btwn the K price and the market price - can be used if buyer does not cover at all or not in good faith

Question 27

What is the standard measure for Loss in Value?

Answer 27

difference btwn the value as promised and the value of the non-conforming goods - is used if the buyer KEEPS the nonconforming goods.

Question 28

involving employment K: what is the EMPLOYEE’S standard measure of damages ?

Answer 28

the employees standard measure of damages is the lost wages the employee would have earned had he not been fired.

Question 29

What is the EMPLOYEE’S standard measure of damages subject to?

Answer 29

it is subject to an AFFIRMATIVE DUTY TO MITIGATE the KEY RULE = the employee is NOT required to take on any job; but MUST take a SIMILAR job in a SIMILAR area

Question 30

involving employment K: what is the EMPLOYER’S standard measure of damages ?

Answer 30

The employer’s standard measure of damages is the cost of finding somebody else to do the job. If you have to pay more, the extra salary is recoverable from the breaching employee.

Question 31

If a construction contract on real estate is breached by the OWNER/PURCHASER what is the BUILDER’S standard measure of damages for the builder?

Answer 31

The builder’s standard of measure is the LOST PROFITS the builder expected to make on the job, together with the cost expended. [the profits the builder had expected to make AND the cost expended to date]

Question 32

What are the TWO questions we must ask if the builder breaches a construction k?

Answer 32

1. Whether the work had been completed 2. IF the work had been completed, then you must ask whether there were any problems with the work?

Question 33

If a construction contract on real estate is breached by the BUILDER what is the OWNER’S standard measure of damages for the builder IF THE WORK IS NOT YET COMPLETED?

Answer 33

the owner’s remedy IF the work is not yet completed is the ADDITIONAL COST to complete the work above the contract price. (so if K1 was for 100k and owner had to end up paying 25k more than 100k to hire a second builder- then the breaching builder 1 will have to pay the extra 25k)

Question 34

If a construction contract on real estate is breached by the BUILDER what is the OWNER’S standard measure of damages for the builder IF THE WORK IS COMPLETE BUT WITH DEFECTS?

Answer 34

If the builder or contractor completes the work BUT with defects, the OWNER may recover either: 1. the COST TO REPAIR minor defects or deficiencies [look at the cost to repair first] OR 2. the diff btwn the K price and the Value of the improved property [if the cost to repair is too expensive then the alternative is to award the owner the “diminution value caused by the imperfect performance by the builder”]