Remedies

Question 1

3 types of remedies (interests):

Answer 1

(1) Expectation Interest (our focus) – Income you would have received if the contract had been performed GOAL = make you as good as you would have been
(2) Reliance Interest – Money you spent not in fulfillment but in reliance on contract GOAL = make you as good as you were prior
(2) Restitution Interest – Money you spent/services performed in fulfillment of your end of contract GOAL = make you as good as you were prior

Question 2

The one case we need to know

Answer 2

Hadley vs Baxendale – Baxendale negligently delivered crank, resulting in a one week delay; Hadley sued for the lost profits for the week the crank was down  analysis: was it foreseeable? So when doing a foreseeability analysis for damages, mention Hadley v Baxendale where there are “special damages” or “consequential damages” – this was a case where only consequential damages were awarded. If Baxendale had reason to foresee these damages, then maybe “special damages” awarded

Question 3

The Expectation Interest Analysis

Answer 3

(1) But-for cause
(2) Foreseeability -.
Foreseeability Analysis:
§351 Was this the foreseeable “probable result” of the breach when the contract was made: Two ways to analyze under §351(2)(a)-(b)
(a) ordinary course of events
(b) reason to know of special circumstance

Question 4

Limitations on foreseeability under the common law

Answer 4

Limitation - Line drawing – for example if you breach contract #1 with me and you make a new one and #2 breaches as well.. you are not liable for a person breaching the subsequent contract. Even though it is “but-for” cause it is not foreseeable

§351(3) – Court may limit damages “as justice requires” to avoid “disproportionate compensation”

Question 5

CISG Foreseeability Analysis

Answer 5

CISG see foreseeability as an analysis of a possible result (not probable result as UCC) – thus this means “special damages” are more likely

Question 6

Buyers remedy under UCC

Answer 6

Incidental vs Consequential Damages

Question 7

Incidental Damages

Answer 7

UCC concept - These are goods; thus, reasonable damages from reshipping/transport etc of a second batch from another seller (AKA your cost to cover)

Question 8

Consequential Damages

Answer 8

UCC concept - Loss resulting from requirements that (1) seller knew about (maybe you knew without this I would be out money) and (2) could not be reasonably avoided with cover

Question 9

Types of cover under the UCC

Answer 9

Cover vs Hypothetical Cover

Question 10

Cover under the UCC

Answer 10

Buying a replacement when you fail to send goods (in order to mitigate damages) - must be commercially reasonable

Question 11

Hypothetical cover under the UCC

Answer 11

you do nothing and you get market value of goods

Question 12

Damages for non-conforming goods

Answer 12

§2-714 If you have sent me 10 gizmos but 2 are defective, the damages are (1) any loss from a normal course of events (2) may also get consequential or incidental damages (aka reasonable cover costs AND if foreseeable and unable to be covered, other consequential damages)

Question 13

Seller’s Remedies under UCC

Answer 13

Seller can withhold goods, stop delivery many things (w/in UCC 2-703  but what about resale? If the buyer refuses to accept goods (that are perfectly fine) then you can sue for sales price.

Question 14

Seller’s remedies - consequential damages

Answer 14

consequential damages do not exist under UCC, they only bargained for the sales price

Question 15

The “Lost Volume” seller problem

Answer 15

Typically you only get the sale price, this is an issue for middlemen (as an example) Ford Car Dealer. Every car is the same price. The profit is the same price. The incidental damages after cover would always be $0. So cannot compute easily. You use §2-708(2)  Here the damages would just be the anticipated profit.

Question 16

Limitations to Damages

Answer 16

“Reasonable Certainty” limitation of expectation damages– if you cannot compute damages with reasonable certainty (AKA too speculative) , a court will not enforce them

Emotional Distress – VERY difficult to get emotional damages from breach of contract claim – typically would be public shaming or something (example 1 – public shaming like the hotel example 2 - improper storage of the deceased)

Question 17

Mitigation in UCC and Restatement

Answer 17

In Restatement §350  If you could avoid the loss without undue risk, burden, or humiliation then you have a “duty” to mitigate – where if you fail to it will ONLY impact your damages.
In UCC – Already seen under cover, you cannot (as buyer) sue if you did not cover. Otherwise damages are limited (for hypothetical cover)

Question 18

Liquidating Damages

Answer 18

AKA putting a clause in that avoids court by saying: “if breach, XYZ are damages.” Courts are fine but must be reasonable under §356 and §2-2-708(1) – if too low or just right, they will allow; if over the compensatory damages, watch out

Question 19

Calculating Damages - 2 types

Answer 19

Default: Cost to complete – Ex) 100k K to build house – should take 90k to build, 10k profit. When 50k of work done owner wrongly fires. Cost of completion is 50k of expenses + 10k of profit. What if builder breaches after 50k work is done and pays another company 60k to finish? Whatever it takes to get them to 100k. So 50 to original company 60 to new company, original company owes the difference of 10k

Less used: Diminution of Value (Think Reading pipe ex) the calculation is the amount the price decreased because of the breach. In Reading pipe example is was essentially $0.
When is Diminution of Value Test used? When the cost to complete is very high OR the breach is not material

Question 20

Calculations for three types of interests

Answer 20

Restitution calculation – Under Restatement, restitution for any benefit conferred (note no subtraction based on bad contract)
Expectation calculation – Under Restatement, damages include the loss in value caused, incidental or consequential loss, less less any loss that would have occurred
Reliance interest – Expenditures less any losses