Damages, Remedies, Breach and Nonperformance

Question 1

The issue is whether the non-breaching party is entitled to “Expectation Damages?”

Answer 1

Put the non-breaching party in the position it would have been in had the contract been performed.
Sometimes it’s the market value and the contract price of what was promised.

Question 2

Reliance or Restitution is possible when?

Answer 2

Where he is out the cost of parts, and has conferred a benefit on the other party. Certainty: the party must prove to a reasonable certainty the amount he has pent in reliance or the reasonable value of the benefit he has conferred.

Question 3

The issue is how the court would calculate damages in this instance.

Answer 3

Direct Damages (within the contract) PLUS Incidental (curing the breach) OR Consequential (foreseeable) LESS any avoided costs

Question 4

The issue is what will the court consider Direct Losses

Answer 4

Caused by failure or deficiency of the contract. It is foreseeable, if the contract is breached these will arise.

Question 5

What will the court find is the Incidental Damages

Answer 5

Cost of reacting to a breach, such as the cost of finding a substitute supplier.

Question 6

The issue is whether Consequential Damages are appropriate in this case.

Answer 6

Recoverable only if the non-breaching party can prove that a reasonable person in the shoes of the breaching party would have known at the time of making the contract that the loss would likely result from breach, which are foreseeable at the time of contract.

Question 7

The issue is whether there is an Cost Avoided that can be deducted from the “expected damages”?

Answer 7

Include money a party would have had to spend doing the contract that he doesn’t have to complete anymore.

Question 8

The issue is whether there are any limitations to Calculating Damages?

Answer 8

1. foreseeability
2. reasonable certainty
3. causation
4. mitigation

Question 9

Foreseeability Limitation to Calculating Damages

Answer 9

Unforeseeable consequential damages are not recoverable unless the breaching party had some reason to know about the possibility of these damages.

Question 10

Consequential Damages

Answer 10

Unique or special to that particular plaintiff

Question 11

Reasonable Certainty Limitation on Calculating Damages.

Answer 11

Occurs when it has proven with reasonable certainty with evidence

Question 12

Causation as it relates to calculating damages

Answer 12

Plaintiff to prove that he breach was the substantial cause of the loss.

Question 13

Mitigation Doctrine

Answer 13

Non-breaching party must take reasonable steps to reduce damage from breach, the mitigation efforts should be reasonably similar to the original contract.

Question 14

What is the result if the party fails to mitigate?

Answer 14

The law will calculate damages as if you did mitigate or the defendant has to prove mitigation failure.

Question 15

A party is not entitled to remedy. . .

Answer 15

Unless there is a breach of contract.

Question 16

Liquidated Damages

Answer 16

Terms located in the contract that specifies the agreed-upon outcome of a breach of contract.

Question 17

How do you determine if a liquidation clause is enforceable?

Answer 17

1. A party must determine whether damages are difficult to estimate at the time the contract was made.
2. Whether the amount stated is reasonable in light of either estimated damages or actual damages.
3. If the court determines that liquidated damages are void, then it would assess if money damages are adequate.

Question 18

Fact that affect the adequacy of damages.

Answer 18

1. Difficulty of proving damages with reasonable certainty.
2. Difficulty procuring a suitable substitute performance by means of money awarded as damages
3. Likelihood that an ward of damages could be collected
4. If the court can fashion remedy
5. If enforcement is a burden on the court.
6. If specific performance will result in inequality to the breaching party
7. If specific performance rewards the non-breaching party for unfair dealing
8. If the specific performance conflicts with public policy
9. court deems money damages as inadequate, and thus grants equitable relief.
10. If money damages are adequate then monetary relief is granted

Question 19

Equitable Relief - Specific Performance

Answer 19

Court Granted Remedy that allows a party to act or refrain from acting in a particular manner including three remedy types.
Must demonstrate that the promisor would be unjustly benefited and the promisee would be unjustly harmed if relief is not imposed by the court.

Question 20

Specific Performance

Answer 20

The promisor must perform the contracted performance.

Question 21

Injunction

Answer 21

A mandate to stop performing a particular action

Question 22

Restitution

Answer 22

The restoration of a party by giving back the item or value of what has been lost.

Question 23

Specific Performance - UCC

Answer 23

A Victim of breach may seek specific performance to show that money damages would be inadequate because the undelivered goods, cannot as a practical matter be replaced through a substitute transaction.

Question 24

When should specific performance not be granted.

Answer 24

Harsh, Oppressive, Reward unfair or violate conduct.
Courts do not grant specific performance for personal contracts.

Question 25

Anticipatory Repudiation

Answer 25

Definite and unequivocal manifestation of intention not to perform when performance is due.

Question 26

What can the aggrieved party do upon repudiation

Answer 26

1. Nothing, wait for performance time
2. Seek Assurances
3. Cancel the contract
4. Bring suit
5. urge retraction

Question 27

Upon Repudiation, what can the aggrieved party due under UCC?

Answer 27

1. Suspend its own performance
2. Demand adequate assurances in writing
3. Cancel contract with party that does not provide adequate assurance in a reasonable time not to exceed 30 days.

Question 28

Breach

Answer 28

Failure to perform when performance is due
Anything less than satisfactory performance
Non-Breaching party entitled to remedy.

Question 29

The issue is whether there is a total or partial Material Breach?

Answer 29

Contract law distinguishes between partial and total material breach to decide whether parties are released from the obligation to perform.
Total breach results in cancellation of the contract. When the victim of the breach cancels the contract, it has no more obligations under the contract, neither to perform nor to accommodate the breaching party’s attempt to cure. Partial breach remains in the contract relationship but suspension of performance may have occurred due to a material breach.

Question 30

Substantial Performance

Answer 30

There is a breach of contract, but the non-breaching party is still obligated to perform any subsequent obligations.

Question 31

What are the factors of material breach?

Answer 31

1. Extent the non-breaching party deprived of benefit of the bargain.
2. Extent the non-breaching party may be adequately compensated for the benefit that he is deprived.
3. Likelihood of cure
4. Extent with which P will suffer forfeiture if Non-Breaching Party canceled the contract.
5. The extent to which Breaching Party acted willful or malicious.

Question 32

Excuses due to changed circumstances

Answer 32

1. Impossibility
2. Impracticability
3. Death, Incapacitation, Frustration of purpose

Question 33

Defense of Mistake

Answer 33

A party must show that the mistake was shared by one or both parties at the time of formation of the contract regarding the basic assumption as to nature/subject matter not value that has a material effect on agreed exchange, the contract is voidable if he does not bear the risk of the mistake.
If the mistake is held by only one party, then its voidable by him if he does not bear the risk of the mistake AND unconscionable or the other party had reason to know of the mistake or his fault caused the mistake.

Question 34

Defense of Mistake

Answer 34

A party must show that the mistake was shared by one or both parties at the time of formation of the contract regarding the basic assumption as to nature/subject matter not value that has a material effect on agreed exchange, the contract is voidable if he does not bear the risk of the mistake.
If the mistake is held by only one party, then its voidable by him if he does not bear the risk of the mistake AND unconscionable or the other party had reason to know of the mistake or his fault caused the mistake.

Question 34

Defense of Mistake

Answer 34

A party must show that the mistake was shared by one or both parties at the time of formation of the contract regarding the basic assumption as to nature/subject matter not value that has a material effect on agreed exchange, the contract is voidable if he does not bear the risk of the mistake.
If the mistake is held by only one party, then its voidable by him if he does not bear the risk of the mistake AND unconscionable or the other party had reason to know of the mistake or his fault caused the mistake.

Question 35

Defense of Duress

Answer 35

Arises when a party unfairly coerced another into entering or modifying a contract. To prevail

Question 36

Whether a party is owed contract Damages.

Answer 36

In an action for breach of contract, the breaching party “is justly responsible for damages flowing naturally from the breach” These expectation damages should give the plaintiff whatever value he or she would have obtained from the breached contract. Direct Damages (within the contract) PLUS Incidental (curing the breach) OR Consequential (foreseeable) LESS any avoided costs. In some cases the plaintiff can recover for “consequential damages” or “special damages”. These damages are based on the benefits the contract can produce or losses that may be caused by it absence. The classic test for whether a plaintiff may recover consequential damages is base on a foreseeability test. A defendant is liable for losses that were foreseeable at the time of contracting, regardless of whether the defendant actually contemplated or foresaw the loss. This foreseeability standard is more stringent than “proximate cause” in tort law; the lost must have been foreseeable as the probable result of breach, not merely as a possibility. The test for whether there were “special circumstances, beyond the ordinary course of events, that the party in breach had reason to know when he made the contract, absent such circumstance the breaching party is liable only for general damages. Damages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty. The issue is whether there is sufficient evidence to establish cost/profits quoted; whether there is a reasonably accurate and fair basis for computation. Another issue is whether there is a enforceable liquidated damages provision. A liquidated damages provision specifies a dollar amount or formula to determine a dollar amount that the breach party must pay to a non -breaching party. Un reasonable amounts are unenforceable. Liquidated damage provisions in a commercial contract between sophisticated parties are presumptively reasonable and the party challenging the clause bears the burden of proving it unreasonableness. The issue is whether the plaintiff can impose punitive damages? A non-breaching party can recover punitive damages when the defendant’s conduct was malicious, fraudulent, oppressive or committed recklessly with a wanton disregard for the plaintiff’s rights.

Question 37

Whether specific performance is appropriate as a contractual remedy?

Answer 37

Specific performance or an injunction will not be ordered if damages would be adequate to protect the expectation interest of the injured party. “In determining whether the remedy in damages would be adequate, the following circumstances are significant:
(a)the difficulty of proving damages with reasonable certainty,
(b)the difficulty of procuring a suitable substitute performance by means of money awarded as damages, and
(c)the likelihood that an award of damages could not be collected”