K Remedies

Question 1

Compensatory

Answer 1

In K: require actual causation, foreseeability (at formation of K), certainty, and mitigation. Expectation damages look to the future. It puts the P in a place where he would have been had the breach not occurred.

Question 2

Consequential

Answer 2

Foreseeable at time of contract, related to the breach.

Question 3

Nominal

Answer 3

Available. awarded when there is no actual injury to the P and are designed to vindicate the P’s rights.

Question 4

Liquidated Damages

Answer 4

These are damages specified in the K. They are valid if 1) damages are very difficult to ascertain at the time of K formation; and 2) this was a reasonable forecast of what they would be. If the clause is valid only liquidated amount available. If invalid, only actual damages available. (Clauses providing either actual or liquidated damages are INVALID and only actual damages are available).

Question 5

Restitution

Answer 5

Available for the value of the benefit to the D. Benefits unjustly retained by the D when there is a void or unenforceable K, or where P chooses not to sue on the K, permitting recovery in quasi-K or quantum merit. Breaching party may sometimes recover even though she has breached.

Question 6

Replevin

Answer 6

Is available if the D is insolvent or the property is unique, allows recovery for specific property (or value at the time of trial) wrongfully taken plus damages for loss of use.

Question 7

Ejectment

Answer 7

Is available if the D is insolvent or the property is unique.

Question 8

Quasi-K

Answer 8

Is a legal restitutional remedy that is substitutional in nature. P is awarded a sum of money measured by the reasonable value of the D’s ill-gotten gain to avoid unjust enrichment.

Question 9

Constructive Trust

Answer 9

Are imposed on improperly acquired property to which D has title (v. possession) to avoid unjust enrichment.

The D serves as trustee and must return the property to the P.

1) If the D no longer has title to the property, then tracing is allowed so P can follow the property to whatever form it takes (as long as the trust res can be identified.)
2) Must be an inadequate legal remedy.
3) BFPs prevail over P.
4) P prevails over unsecured creditor.

Question 10

Equitable Lien

Answer 10

Are imposed on improperly acquired property to which D has title to avoid unjust enrichment.

The property is subject to an immediate court-ordered sale and P receives the proceeds.

If the proceeds are less than FMV of property when it was taken, P will also receive deficiency judgment.

An equitable restitutionary remedy that imposes a lien on D’s property to secure payment of debt owed to plaintiff because D misappropriated P’s property.

1) Must be a inadequate legal remedy;
2) Tracing allowed;
3) BFPs prevail over P;
4) P prevails over unsecured creditors.

Question 11

Unenforceable Ks [K fails after P performs]

Answer 11

Due to e.g., mistake, lack of capacity, SOF, illegality.
1)P can get restitutionary damages for property/money given to,or services rendered for D for the value of the benefit. (recovery may be greater than K rate)

2) P can get replevin to get back the property if it’s unique or D is insolvent.

Question 12

P is Non-Breaching Party

Answer 12

P can get restitutionary damages for property/money given to, or services rendered for D for the value of the benefit. (Recovery may be greater than K rate).

Hypo: P rendered legal servies for incorporating D’s new business, pursuant to an unenforceable K. D decides not to start the business and repudiates K.

Hypo: If value of services if GREATER than the K rate, can P recover it? Yes

Question 13

P is Breaching Party

Answer 13

Traditional view: No recovery.

Modern view: recovery allowed (cannot be greater than K rate and is reduced by any damages suffered by D as a result of the breach).

Question 14

Commingled Funds

Answer 14

Where the funds have been commingled with other funds, the victim may obtain a constructive trust or equitable lien only to extend of the lowest intermediate balance, unless it can be shown that D expressly intended that he would substitute (Replenishment theory).

Question 15

Specific Performance

Answer 15

[Coco Channel is Fucking Dope]

1) Valid K
2) K conditions of P must be satisfied: already performed, ready and able to perform or excused from performing
3) Inadequate legal remedy alternative: damages are speculative, D is insolvent, multiple suits are necessary, thing bargained for is unique (All land is unique. Personal property is not unique unless one of a kind or very rare, personal significance, or circumstances make chattel unique. Tested at time of litigation, not K formation)
4) Mutuality of obligation: old test whether specific performance was mutually available at the time of K, new test: whether P’s performance obligations can be secured to the court’s satisfaction.
5) Feasibility of enforcement: ability to supervise and/or enforce the K. Personal services K not specifically enforceable (involuntary servitude).

Question 16

Defenses to Specific Performance

Answer 16

Equitable:
1) Laches- the effect of passing of time;
2) Unclean hands- P must come into equity w/ “clean hands” must be related to the transaction in the suit;
OR 3) Unconscionability

Contract:

1) Mistake
2) Misrepresentation
3) SOF (exception, oral K for land is enforceable if P has rendered valuable part performance, payment, possession, improvements, AND in reliance on the K).

Question 17

Deficiencies Fact Pattern

Answer 17

The P-seller:

1) Can enforce the K if the defect is minor
2) Cannot enforce the K if the defect is major, unless the seller can cure before closing.

The P-buyer:

1) Can enforce the K even if the defect is major
2) Cannot, however, enforce the K if the defect is very major.

If SP is granted even though a defect still remains, the court will abate the purchase price to account for the deficiency.

Question 18

Time of the Essence Clause

Answer 18

Fact pattern: (land sale K, express time of essence clause, forfeiture provision, partial performance, e.g., down payment or installment payment, buyer makes a late payment, buyer brings suit for SP)

Where the buyer does not meet the K condition of timely performance, the court will look to avoid the harsh result of a forfeiture by considering the following factors, the loss to the seller is:

1) small
2) tardiness is de minimis
3) waiver (seller has accepted late payments in the past),
4) buyer would suffer undue hardship

[ON THE BAR EXAM- you should almost always award specific performance (SP)].

Under the modern trend, P would receive restitutionary relief if SP not granted.

Question 19

Equitable Conversion

Answer 19

If the land sale K is specifically enforceable, an equitable conversion occurred upon execution – B and S’s property interests switch. Thus, B has real property interest and S has personal property interest. Note, sale to BFP cut off right to SP.

Question 20

Covenants not to compete

Answer 20

Enforceability:

1) covenant must protect legitimate interest of person in whose favor it runs (service must be unique) AND
2) Covenant reasonable in geographical and durational scope

Question 21

Rescission

Answer 21

[GOOD DOG]
Occurs where the original K is considered voidable and rescinded. It requires:
1) grounds for recession, and
2) there are no valid defenses (unclean hands, laches, negligence is not a good defense).

Question 22

Grounds for Rescission

Answer 22

1) Mutual mistake- rescission granted; collateral mistake (going to quality, desirability, or fitness of property for a particular purpose) – recession denied.
2) Unilateral mistake - rescission denied, unless 1) mom-mistaken party knows or should have known of the mistake. Modern grand exception: if mistaken party would suffer undue hardship if the there is no rescission.
3) Misrepresentation: rescission granted if P shows she actually relied upon the misrepresentation.
4) Other formation defenses: coercion, undue influence, lack of capacity, failure of consideration, illegality.

Question 23

Rescission Defenses

Answer 23

Laches & unclean hands

Question 24

Reformation

Answer 24

[VERY GOOD DOG]

Changes the written agreement to conform with the parties original understanding. It requires:
1) a valid K (free from any defects)

2) ground for reformation, and (mutual mistake- reformation granted; unilateral mistake- reformation denied unless non-mistaken party KNOWS of the mistake; misrepresentation-reformation granted)
3) no defenses (Laches & unclean hands)