Money/Legal Remedies

Question 1

Expectation Damages

Answer 1

Expectation damages puts a non-breaching party in a place they would have been had the other party fully performed their obligations under contract.

Calculated:

Value of Performance without Breach - Market Value of Performance with Breach - amount saved by Non-Breaching Party

Question 2

How are expectation damages calculated under the loss of bargain measure?

Answer 2

Under the “loss of bargain” measure, which is contract based, the buyer is entitled to the difference between the value of what she was promised and the market value of what she received.

Question 3

How are expectation damages calculated under the out of pocket measure?

Answer 3

Under the “out of pocket” measure, which is tort based, the buyer is entitled to the difference between the amount that she paid and the market value of what she received.

This measure seeks to compensate the buyer for the loss suffered.

Question 4

What are Consequential Damages?

Answer 4

Consequential damages are reasonably foreseeable losses to a nonbreaching party that go beyond expectation damages, such as loss of profits.

1) Foreseeability

2) Causation

3) Feasible Calculations of Losses

Question 5

What are Incidental Damages?

Answer 5

Incidental damages may be awarded to the non-breaching party as compensation for commercially reasonable expenses incurred as a result of the other party’s breach.

This typically includes the cost of warehousing, transportation, inspection, and the like.

Question 6

What are Reliance Damages?

Answer 6

In lieu of expectation damages, reliance damages may be recovered if a non-breaching party incurs expenses in reasonable reliance upon the promise that the other party would fulfil.

Typically, reliance damages are only available when the plaintiff cannot prove a profit would have been made on the contract, or when the contract would have produced a loss.

Question 7

What is the Duty to Mitigate?

Answer 7

A party to a contract must take steps to reasonably avoid or mitigate damages to the extent possible. Damages will be reduced by the amount that could have reasonably been mitigated or avoided.

A plaintiff is not prevented from recovering damages simply because his reasonable efforts to avoid harm or loss are unsuccessful.

Question 8

What are Restitution Damages?

Answer 8

When a defendant is unjustly enriched by a plaintiff, restitution generally allows the plaintiff to recover on the benefit conferred by the plaintiff upon the defendant.

Generally, this benefit may be measured by either

1) The reasonable value of the plaintiff’s services

2) The cost to the plaintiff in conferring the benefit

3) The increase in the defendant’s wealth from having received that benefit

4) The price fixed in the agreement between the plaintiff and defendant.