K remedies Flashcards
CONTRACT REMEDIES
Legal remedies:
-Compensatory/Expectation damages
-Consequential damages
-Reliance damages
-Incidental damages
-Liquidated damages
Restitution remedies:
-Quasi K (restitution damages)
-Replevin (chattel)
-Ejectment (real property)
Equitable remedies:
-Rescission
-Reformation
-Specific Performance
-Interlocutory injunctions (TROs and PIs)
-Permanent Injunctions
Available legal remedies in contract:
Legal remedies are largely substitutionary and result in judgments for money to compensate for loss or injury
The following legal remedies are available for contract breaches:
1) expectation damages (compensatory damages)
2) consequential damages
3) reliance damages
4) incidental damages
5) liquidated damages
Expectation/Compensatory damages:
The general measure of damages for a breach of contract are expectation damages. Expectation damages arise directly from the breach and are an attempt to put the non-breaching party in the same position it would have been in but for the breach; that is, they protect the injured party’s bargained-for-expectation under the contract. They provide a monetary substitute for the promised but undelivered promise and are measured as the amount to place the injured party in as good a financial position as they would have been had the breaching party performed.
To recover, damages must be: 1) caused by the defendant; 2) foreseeable (at the time of contract formation, which is the operative time in which the parties have assumed their respective obligations and determined the nature of the performance reasonable contemplated); 3) certain (not too speculative); and 4) unavoidable (mitigate damages)
Consequential damages:
Consequential damages arise indirectly from the breach and are awarded because of the injured party’s special circumstances (e.g., lost profits). To recover, the damages must be: 1) reasonably foreseeable at the time of contract formation; 2) arise from plaintiff’s special circumstances that the defendant knew or had reason to know of; and reasonably certain (the damages cannot be speculative). An award of damages must account for and deduct for any costs the injured party avoided because of the breach. They may be limited or excluded by agreement unless the limitation/exclusion is unconscionable.
**this is going to be a foreseeability issue - lost damages
Reliance damages:
Reliance damages and expectancy damages are alternatives; only one may be awarded. The non-breaching party may seek damages for expenses incurred in reliance upon performance of contractual duties. Plaintiffs seek reliance damages when they cannot recover expectancy damages when, for example, expectancy damages cannot be proven with reasonable certainty.
Incidental damages:
Incidental damages are the reasonable costs incurred as a result of the breach of contract; these are the costs of returning non-conforming goods, caring/storing non-conforming goods, or any other reasonable expenses incident to the delay or breach.
Liquidated damages:
parties to a contract may decide to liquidate or specify the amount of damages payable to the non-breaching party in the event of a material breach of contract; a liquidated damages provision will be upheld if: 1) it does not act like a penalty; 2) the stipulated amount is a reasonable forecast of damages at the time of formation; and 3) damages were extremely difficult to ascertain at the time of formation.
Restitution - quasi K:
Restitution serves to prevent unjust enrichment of a party who has received a benefit that in equity and good conscience should not be retained. It focuses on the gain unjustly retained by the defendant rather than the loss to the plaintiff. Quasi K requires: 1) a benefit conferred upon D by P; 2) appreciation of D of such benefit; 3) acceptance and retention by D of such benefit without payment of value thereof.
How does quasi K arise?
Three ways:
1) no attempt to K: P can recover the value of benefit unjustly retained by defendant (think: emergency services)
2) unenforceable K: P can recover value of benefit unjustly retained by D (think: illegal K, SoF failure)
3) breached K, but recovery depends on P’s status.
-If P is NB party, P can recover the value of the benefit conferred, or the plaintiff can get his property back
-If P is in breach, majority rule says no recovery
Available equitable remedies in contract:
-Rescission
-Reformation
-Specific performance
-Injunctive relief
Rescission:
Rescission permits a party to invalidate a contract and restores the parties to the position e/ would be in if the bargain had not been entered into. It is available if there was a problem with the formation of the contract resulting from fraud, duress, mutual mistake, unilateral mistake, or material misrepresentation.
Reformation:
Reformation permits a contract to be rewritten by the court to reflect the parties’ true agreement when a valid contract exists, but there was a misrepresentation or mutual mistake of material fact.
Specific Performance:
Specific performance is sought when one party seeks to enforce a contract. It is an available remedy when: 1) a valid contract exists with clear and definite terms; 2) the non-breaching party has met all conditions required, meaning she has already performed, is ready, willing and able to perform, or is excused from performing; 3) the legal remedy is inadequate; 4) court supervision is feasible.
Where there is an imminent likelihood of irreparable harm relating to SP, consider analyzing injunctive relief as well
Defenses to SP include laches, clean hands, and any underlying contract defenses, since there must be a valid contract for SP
Contract remedies available for personal property contracts
Legal remedies:
Damages and specific performance (if chattel is unique or damages are highly speculative)
Contract remedies available for personal service Ks
Legal remedies:
-compensatory damages for employer breach: wrongfully terminates; damages is the total wages due or promised minus the amount earned or that could have been earned (employer must prove similar suitable work available in the locale)
-compensatory damages for employee breach: wrongfully quits; damages is the cost of obtaining services equivalent to those promised
Restitution:
-employer breaches: employee may elect and sue for reasonable value of services rendered
-employee breaches: employer may rescind and seek restitution of wages paid but not earned; employee who materially breaches may be able to recover the value of the benefit conferred subject to an offset for employer’s damages
Equitable remedies:
-If services are unique, legal remedy would be inadequate; but a court would nevertheless refuse to grant SP because it is not easy to enforce
-covenants not to compete are enforceable if restriction is reasonable as to geographical scope and duration
Contracts to buy and sell real property:
Damages:
Restitution:
Specific performance or partial performance with abatement in some cases if full performance cannot be completed
Construction contracts:
damages when owner breaches:
-if contract is wholly executory (not yet performed), damages are measured by builder’s lost profits
-if contract is fully performed, damages are the K price plus interest
-if contract is partially performed, damages are measured by deducting from the K price the cost of completing the contract OR by deducting from the K price the total cost of performance and adding the cost of partial performance
Damages when builder breaches:
-if builder has substantially performed, damages are the cost of repair or replacement to meet K terms, or the difference in building’s value as built and its value had it been constructed per the contract terms
-if building has abandoned K and is in material breach, damages are measured by what the owner must pay to have construction completed, less anything owed the builder, plus compensation for delay
Restitution:
-where owner repudiates/refuses the contract after partial performance, builder may elect to rescind K and sue in quasi K for value of benefit conferred, even if above K price
-where builder has materially breached K, courts generally permit restitution
Specific performance: modern courts decree SP when no adequate remedy at law
