Remedies Flashcards
If the legal remedy (i.e., money damages) is inadequate, the nonbreaching party may seek _______.
specific performance
What is specific performance?
an order from the court to the breaching party to perform or face contempt of court charges.
(1) Specific performance is _______ available for land sale contracts, because _______.
(2) Specific performance for is available for goods that are _______ or _______ at the time performance is due.
(1) always; all land is unique
(2) rare; unique
Specific performance is _______ available for breach of a contract to provide services, because of _______ and because _______.
(1) never
(2) problems of enforcement (it would be difficult for the court to supervise)
(3) the courts feel it is tantamount to involuntary servitude, which is unconstitutional
A court may _______ a breaching employee from working for a competitor throughout the duration of the contract if the services contracted for are _______ or _______.
(1) enjoin
(2) rare
(3) unique
Most courts will grant an order of specific performance to enforce a contract not to compete if:
(1) The services to be performed are unique (thus rendering money damages inadequate); AND
(2) The covenant is reasonable
For purposes of specific performance for services, to be reasonable:
(1) The covenant must be reasonably necessary to protect a legitimate interest of the person benefitted by the covenant (i.e., an employer or the purchaser of the covenantor’s business);
(2) The covenant must be reasonable as to its geographic scope and duration (i.e., it cannot be broader than the benefitted person’s customer base and typically cannot be longer than one or two years); AND
(3) The covenant must not harm the public
Name and define the 3 equitable defenses against specific performance.
(1) Laches - a claim that the plaintiff has delayed bringing the action and that the delay has prejudiced the defendant;
(2) Unclean hands - a claim that the party seeking specific performance is guilty of wrongdoing in the transaction being sued upon; AND
(3) Sale to a bona fide purchaser - a claim that the subject matter has been sold to a person who purchased for value and in good faith
What are the 3 nonmonetary remedies for buyers under the UCC?
(1) Cancellation
(2) Buyer’s right to replevy identified goods
(3) Buyer’s right to specific performance
What is a buyer’s remedy of cancellation?
If a buyer rightfully rejects goods because they do not conform to the contract, one of her options is simply to cancel the contract.
What is the right to replevy?
The right to seize goods
If a buyer has made at least partial payment of the purchase price of goods that have been identified under a contract, and the seller has not delivered the goods, the buyer may replevy the goods from the seller in two circumstances:
(1) The seller becomes insolvent within 10 days after receiving the buyer’s first payment; or
(2) The goods were purchased for personal, family, or household purposes
In either case, the buyer must tender any unpaid portion of the purchase price to the seller.
The buyer may replevy undelivered, identified goods from the seller if the buyer, after reasonable effort, is unable to secure _______.
adequate substitute goods
Under the UCC, if the goods contracted for are unique (or in other proper circumstances), the court may order _______ even where the goods have not yet been identified to the contract by the seller.
specific performance
What are the 4 nonmonetary remedies for sellers under the UCC?
(1) Right to withhold goods
(2) Right to recover goods
(3) Ability to force goods on buyer
(4) Right to demand assurances
Under the UCC, if the buyer fails to make a payment due on or before delivery, the seller may _______.
withhold delivery of the goods
Under the UCC, the seller may withhold goods when the goods are sold on credit and, before the goods are delivered, the seller discovers that the buyer is _______.
insolvent
Under the UCC, if a seller learns that a buyer has received delivery of goods on credit while insolvent, the seller may _______.
reclaim the goods upon demand made within 10 days after the buyer’s receipt of the goods
EXCEPTION: The 10-day limitation does not apply if a misrepresentation of solvency has been made in writing to the particular seller within 3 months before delivery.
Under the UCC, the seller’s ability to force goods on a buyer is limited to _______ when the seller is unable to resell the goods to others at a reasonable price.
an action for price
The usual goal of compensatory damages for breach of contract is to:
put the nonbreaching party in the position they would have been in had the promise been performed.
What are the main categories (and sub-categories) of monetary damages?
(1) Compensatory (i.e., expectation, reliance, incidental, and consequential)
(2) Punitive
(3) Nominal (token)
(4) Liquidated
What are expectation damages?
Sufficient damages for the nonbreaching party to buy a substitute performance
This is the standard measure for damages for breach of contract.
What are reliance damages? When are they awarded?
Reliance damages award the plaintiff the cost of their performance (i.e., they are designed to put the plaintiff in the position they would have been in had the contract never been formed).
If the plaintiff’s expectation damages are too speculative to measure, the plaintiff may elect to recover those damages they suffered based on their reasonable reliance on the contract.
What are incidental damages?
Incidental damages are most commonly associated with contracts for the sale of goods and typically include:
(1) expenses reasonably incurred by a buyer in inspection, receipt, transportation, care, and custody of goods rightfully rejected and other expenses reasonably incident to the seller’s breach, and
(2) by the seller in storing, shipping, returning, and reselling the goods as a result of the buyer’s breach
What are consequential damages? When are they awarded?
Consequential damages are special damages and reflect losses over and above standard expectation damages, typically arising because of the nonbreaching party’s particular circumstances, and most often consisting of lost profits.
Consequential damages may be recovered only if, at the time the contract was made, a reasonable person would have foreseen the damages as a probable result.
To recover consequential damages:
(1) The breaching party must have:
(2) The plaintiff must prove that:
(1) known or had reason to know of the special circumstances giving rise to the damages
(2) the losses suffered were certain in their nature and not speculative
True or false: Punitive damages are regularly awarded in contract cases.
False. Punitive damages are generally NOT awarded in contract cases.
What are nominal damages?
Nominal (token) damages (e.g., $1) may be awarded when a breach is shown but no actual loss is proven.
What are liquidated damages?
Damages agreed upon by parties to a contract before breach occurs stipulating what damages are to be paid in the event of a breach.
Liquidated damages must be in an amount that is reasonable in view of the actual or anticipated harm caused by the breach.
What are the requirements for enforcement of a liquidated damages clause?
(1) Damages for contractual breach are difficult to estimate or ascertain at the time the contract is formed; AND
(2) The amount agreed on is a reasonable forecast of compensatory damages in the case of breach
What is the test for reasonableness in the context of liquidated damages?
Comparison between the amount of damages prospectively probable at the time of contract formation and the liquidated damages figure.