Remedies Flashcards
CL Damages
Include:
- Expectation Damages
- Reliance Damages
- Restitution
- Liquidated Damages
Expectation Damages
-Attempt to put the non-breaching party in the position they would have been in if performance had occurred.
Formula for Expectation Damages
Loss of value of the breaching party’s performance + any foreseeable incidental and consequential costs generated by breach – any payments received from the breaching party – any costs saved as a result of the breach
Limitations on Expectation Damages
Include:
- where expectation damages cannot be calculated with reasonable certainty (e.g. new company with no profit history)
- where damages are unforeseeable (e.g. when buyer makes deal not known by seller); and
- where damages can be mitigated
Hadley Rule
Claims that a breaching party is liable for general damages (those that naturally flow from breach) but not for special or consequential damages unless breaching party knew or had reason to know that consequential damages would result from breach.
Reliance Damages
Damages that will restore the aggrieved party to the position they were in prior to the K. Are only available when expectation damages are not available (when they are uncertain or speculative).
Measure of Reliance Damages
Expenditures made in preparation for performance or in actually performing – loss which the breaching party can prove the aggrieved party would have suffered even if the K had been fully performed.
Restitution
- When a party chooses to recover the value of the benefits conferred on the breaching party by the aggrieved party during the course of the K (alt. to expectation damages)
- Available to both breaching and aggrieved parties.
Ways of Measuring Restitution
Include:
- the reasonable value of the benefit conferred upon the breaching party (measured by the market value of the services rendered ,not the K price); or
- the extent to which the breaching party’s property has increased in value based upon the aggrieved party’s performance
Restitution v. Completion
If the aggrieved party has fully performed under the K, then the aggrieved party is limited to expectation damages
Liquidated Damages
Parties are free to include among the terms of their K a liquidated damages clause (freedom of K)
Enforceability of Liquidated Damages Clauses
A clause is valid and enforceable unless it is a penalty.
Test for Determining if the Liquidated Damages Clause Is a Penalty (3-Prongs)
- 1) Did the parties intend for the clause to operate as a liquidated damages clause or as a penalty?
- 2) Was the clause reasonable at the time of K in relation to the anticipated harm?
- 3) Was the clause reasonable in relation to the harm and losses that actually occurred due to the breach?
- some courts will not require both 2) and 3) if one of them is present
What Happens When a Court Finds that a Liquidated Damages is a Penalty?
A court will strike it from the K. Damages will be enforced in accordance with default rules.
Monetary Damages Under the UCC: Seller’s Remedies
The seller can cancel the K and withhold delivery & recover $ damages.
UCC: Seller’s Remedies for Delivered Goods: Action for the Price
If some or all of the goods have been delivered and accepted, the seller is entitled to collect the K price for those goods.
UCC: Seller’s Remedies for Undelivered Goods
- If seller resales –> K price – resale price
- If seller does not resell –> K price – market price
- Incidental damages (costs associated with getting stuck with goods the seller thought he had sold as well as the costs of resale)
Damages for Lost Volume Sellers
Are entitled to the profit they would have made on the lost sale rather than relegating them to to contract - market or contract - resale.
What Lost Volume Sellers Must be Able to Show
Seller must be able to show:
- that he could have made the sale to both the breaching buyer and resale buyer
- that it would have profitable for the seller to make both sales; and
- that he probably would have made the additional sale to the resale buyer even absent the buyer’s breach
UCC: Buyer’s Remedies
A buyer can either recover damages or seek specific performance
UCC: Buyer’s Remedies if He Covers
(Contract v. cover)- the difference between the K price and cover price.
UCC: Buyer’s Remedies if He Does Not Cover
(K v. market)- the difference between K price and market price.
UCC: Buyer’s Remedies Whether or Not He Covers
The buyer is free to seek incidental damages and consequential damages (but damages will be reduced by an amount reflecting expenses avoided because of the breach).
UCC: Buyer’s Remedies When He Receives Nonconforming Goods (Difference in Value Damages)
value of goods contracted for – value of goods received
Punitive Damages
Are not generally recoverable as an element of damages in a breach of contract action unless the conduct constituting breach is also a tort for which punitive damages may be recovered (willful, wanton, or malicious conduct).
Mitigate
Generally, Ps have a duty to mitigate damages.
Duty to Mitigate for Employment Ks
-An aggrieved employee need only make reasonable efforts to secure a position that is reasonably equivalent to the job lost and, accordingly, need not accept substitute work that is a different field, or offers significantly lower pay or less desirable terms and conditions of employment than those of the lost job.
Equitable Remedies
Include:
- Injunction
- Specific Performance
- Rescission
- Reformation
- Quiet title actions
- Partition proceedings
Specific Performance
SP is an extraordinary remedy that is available to order a breaching party’s performance only where a $ award would be inadequate to grant relief to the aggrieved party.
Cases Where Specific Performance is Generally Available
- Unique objects
- Real property
Relevant Factors to Granting Specific Performance
- Whether the aggrieved party has clean hands (has dealt fairly and in good faith with the breaching party)
- Whether the terms of the K in question are sufficiently definite
- Whether performance by the aggrieved party can be reasonably assured
- Whether the terms of the K are fair; and
- Whether SP would be in the public interest
Cases Where Specific Performance Is Not Available
- Ks for personal services
- Ks requiring ongoing cooperation between parties (discouraged)
Specific Performance for UCC Ks
- UCC states that:
- SP if goods are unique or in “other proper circumstances”
- SP is available even if ongoing cooperation would be required between the parties
Negative Injunctions
Orders by the court prohibiting the breaching party from taking particular action. Subject to same restrictions as SP.
Availability of Negative Injunctions Against Former Employees
Depends on whether one is seeking mid-term or post-employment relief
Midterm Relief
When an employee is under K for a specified period of time and the employee breaches the K by departing before the end of that period.
Enforceability of Midterm Relief
Are available if former employee’s services are unique or extraordinary.
Post-Employment Relief
Enforcement of employment K provisions that prohibit post-employment competition against employer.
Enforceability of Post-Employment Relief (3 Factors)
- most courts require a significant business justification for enforcing post-employment restraints
- most jurisdictions limit the scope of the enforcement of noncompetes to reasonable duration and geo. restrictions; and
- most courts will issue a negative injunction against a competing employee only if the employment K contains an express non-competition agreement (unless there is a risk of disclosure of trade secrets)
Rescission
Cancels the K. Both parties are placed back where they were before the K was executed.
When Rescission of K Is Available (CMFDIF)
- Consent of both Parties
- Mistake
- Fraud, misrepresentations, and nondisclosures
- Duress or undue influence
- Illegality
- Failure of consideration
Restitution: When It is Available Even If There is No Breach of K.
- Benefits conferred under a failed K
- Benefits conferred by a breaching party
- Emergency benefits conferred by a health care provider; and
- Benefits conferred by mistake
General Unjust Enrichment (When there is No Express K)
A party that confers benefits on another may recover their value where it is unjust for the recipient to retain the benefits without paying.
Two Recurring Situations Where Recovery Has Been Held Appropriate
- Medical services provided by a medical prof.
- Benefits conferred by mistake to one who availed himself of the benefits at issue
Officious Intermeddler
A person who bestows benefits without request by the benefitting party is considered an “officious intermeddler” not entitled to any recovery (except for medical care prof. providing emergency health care to a patient unable to consent.
Provisions Limiting or Excluding Damages
Are enforceable unless they are unconscionable. Under the UCC, limitation of consequential damages for personal injury in the case of consumer goods is prima facie unconscionable.
