If there was inexcusable non-performance, what are the non-breaching party's remedies? Flashcards
Breach
any deviation from promised performance, no matter how slight
How does a party repudiate?
Unambiguous indication that breach will result when it becomes time to perform
When is retraction of repudiation allowed?
Until contract is due or
Until is relied upon
Effect of retraction of repudiation
Reimposes duty to perform
Types of nonmonetary remedies
- Specific performance
- Reformation
- Reclamation (UCC)
Specific performance
Courts force parties to complete contract
What kind of remedy is specific performance?
Equitable
What must be proven for specific performance to be used?
- Legal remedy is inadequate
- Courts will not be unduly burdens by enforcement of specific performance
- Contract must be certain and definite
Can specific performance be used in land sales?
Yes, often will be
Can specific performance be used in sale of goods?
Not usually
When can specific performance be used in a sale of goods?
Goods are unique or no cover contract is available
Can specific performance be used in personal services contracts?
No, violates 13th amendment and difficult burden for courts to enforce
Reformation
court will change/rewrite a contract so it says what parties thought it said
Uses of reformation
- Issues in writing (clerical errors, omissions)
2. Fraudulent misrepresentation about what was in contract upon which seller relied
Reclamation
right of unpaid seller to get her goods back (UCC)
Elements of reclamation
- credit sale
- buyer insolvent at time of delivery
- seller must demand goods back within 10 days of delivery
- buyer must still be in possession of goods
What damage is available when buyer has goods and buyer breaches? Measured?
Reclamation
Damages for defective goods
= contract price plus incidental damages minus expenses saved because of breach
What damages are available when buyer has goods and seller breaches? Measured?
Reclamation
Damages for repudiation, wrongful rejection/revocation
= value of promised goods minus value of accepted goods plus incidental and consequential damages
What are damages for lost volume seller?
Profit
What are damages for specialized goods?
Contract price
Types of monetary damages
- UCC (seller has goods)
- Expectation
- Reliance
- Nominal
- Liquidated
- Restitution
UCC damages when seller has goods and seller breaches
- Buyer covers: cover price minus contract price plus incidental and consequential damages minus expenses saved because of breach
- Buyer doesn’t cover: market value minus value of accepted goods plus incidental and consequential damages
- Equitable relief: specific performance for unique goods only
When is equitable relief available for seller with goods, and seller breaches?
Specific performance for unique goods only
Expectation damages
Put aggrieved party in position if contract had been performed
Expectation damages equation
= loss in value of bargain expected
+ other incidental/consequential loss
- loss avoided in not performing contract
What three factors are necessary for expectation damages?
- Reasonably certain
- Foreseeable
- Unavoidable
New business’s expectation damages (traditional/minority view)
Lost profits not recoverable
New business’ expectation damages (majority view)
Lost profits recoverable if proved with reasonable certainty
Incidental
Naturally arising = damages incurred in ascertaining and trying to prevent breach
What do incidental damages never include?
Attorney’s fees
What is required to recover consequential damages?
Damages were made foreseeable/known at time of contracting
Unavoidable
Duty to mitigate = damages are not collectable if could have been avoided without undue burden, risk or humiliation
Reliance damages
reimbursing for detriment incurred before contract was made
When are reliance damages used?
- Expectation measure is uncertain/speculative
2. Promissory estoppel (gift promise)
When are punitive damages allowed?
Only when conduct constituting breach is also a tort for which punitive damages are recoverable
Are punitive damages capped?
Yes, generally capped at single digit ratio
When are nominal damages used?
Definite breach caused uncertain or minimal economic loss
Liquidated damages
Parties remedy themselves in contract
When are liquidated damages not enforced?
When it’s actually a penalty
Test for whether clause is for liquidated damages (not penalty)
- Reasonable forecast of just compensation in light of anticipated or actual loss
- For harm that is difficult to measure
Restitution
quasi-contractual relief/quantum meruit
What is the purpose of restitution?
Prevents unjust relief
Elements of restitution
- Benefit conferred upon other party (not detrimental reliance)
- At express/implied request of party receiving benefit
- With reasonable expectation of compensation
- Where unjust enrichment results (core element)
What is the core element of restitution?
Unjust enrichment results
How is restitution measured?
Value of benefit conferred = value saved by not having to perform
UCC damages when seller has goods and buyer breaches
- If resold by seller: contract minus resale price plus incidental damages minus expenses saved because of breach
- If not resold by seller: contract price minus market value plus incidental damages minus expense saved because of breach
- Lost volume seller: lost profits because of breach plus incidental damages minus expenses saved because of breach
- Specialized goods: contract price
