I Chapter 15

Question 1

Damages in Law

Answer 1

Compensatory
Consequential
Incidental
Punitive
Nominal

Question 2

Compensatory

Answer 2

cover direct losses and costs

Question 3

Consequential

Answer 3

cover indirect & foreseeable losses/lost profit

Question 4

Incidental

Answer 4

cover storage, care, transport costs due to breach

Question 5

Punitive

Answer 5

to punish

Question 6

Nominal

Answer 6

symbolic

Question 7

Mitigation of Damages

Answer 7

Parties are expected and obligated to do all they can to reasonably mitigate their damages if they want to recover their losses.

Question 8

Mitigation Damages

Answer 8

The damages that still exist after one tries to mitigate

Question 9

Mitigation of Damages

Answer 9

The actual effort to try to mitigate one’s damages.

Ex: Suppose that above B refuses to buy the 10 suits and A was forced to sell them to X for $ 800 each. A would have suffered mitigation damages of 10 suits x $ 200 loss on each suit = $ 2,000

Question 10

Liquidated Damages Clause

Answer 10

Provision in a K which tries to pre-set or pre-determine damages.Such provisions will only be enforced if:

It was apparent from the start that damages would be difficult to estimate or determine ( complex K or issues involved etc)

The provision is a reasonable estimate and not extreme ( penalty or punishment)

Question 11

Liquidated Damages Clauses are often used in the construction industry

Answer 11

because damages are difficult to reasonably predict or estimate there.

Ex: A and B enter a K for 10 bikes at $ 1,000 each bike. Their K involves a provision which reads “ In the event of breach the breaching party must pay $ 50,000”. Such a provision would not be enforced because damages were never going to be tough to estimate ( simple K) plus the amount of the provision is extreme ( 5 times what the K is worth !).

Question 12

Damages in Equity

Answer 12

money not enough…..fairness

Question 13

Rescission and Restitution

Answer 13

first is to undo the K as discussed before/ second is needed as part of rescission which is to place parties in original position

Question 14

Specific Performance

Answer 14

Court order to perform…..cannot be used for service Ks ( slavery) and must involve unique items ( not easily replaceable by similar items elsewhere etc)

Question 15

Injunction

Answer 15

Court order to stop doing something….cannot be extreme or unreasonable and must be confined to what the K was about.

Ex 1 : A agrees to sell B a rare painting, sell 100 pounds of gum to Y, and sing at X’s club. If A refuses to all three, only B can seek specific performance because a unique item is involved. Y cannot seek specific performance because gum is not unique and Y can seek elsewhere and sue for any damages remaining later. X cannot seek specific performance because singing is a service.

Question 16

Unjust enrichment

Answer 16

A party should not get what it has not earned

Question 17

Quantum Merui

Answer 17

A party should get what it has earned…………………..these both are “legal cousins” and often go together.

Ex: A agrees to sing 3 shows at B’s club and stops after 2 shows. A is entitled to payment for 2 shows minus damages according to quantum meruit and unjust enrichment to B if B did not have to pay for the 2 shows A did sing ( A sang for free?)