Remedies

Question 1

Expectation damages

Answer 1

THIS IS THE STARTING POINT - default award

Basic idea: get PLN to the position they would be if contract performed

\+ Loss of value of performance
\+ incidental costs 
- payments received from breaching party
- costs saved by breach
= expectation damages

Limitations on amount:

• can’t be calculated with reasonable certainty
• damages caused were unforeseeable
• duty to mitigate

Question 2

Reliance damages

Answer 2

Basic idea: restore PLN to position they were in PRIOR to contract

+ expenditures made in prep for performance or while performing
- any loss DFT can prove PLN would have suffered even if full performance
= reliance damages

usually used when expectation damages are too uncertain/speculative

Question 3

Restitution damages

Answer 3

Value of benefits conferred upon the other party

Court can use either:

• reasonable value or cost of benefits OR
• extent to which other party’s property gained value because of performance

Available if PLN has part performed but NOT fully performed

Usually asked for when it would exceed expectation damages

Question 4

Liquidated damages provisions

Answer 4

Enforceable if court finds it validly designed to provide compensation for a breach

Unenforceable if court finds it a penalty designed to punish a breach - if so, use default rules

Two prong test (EITHER prong can uphold):

• was clause reasonable at time of contracting re: anticipated harm?
• was clause reasonable re: actual harm and losses resulting from this breach?

Question 5

Monetary damages under the UCC

Answer 5

Seller remedies: were goods accepted? if not, did seller resell?

• if goods accepted by buyer, remedy is contract price
• if not, price is contract price minus resale price (if resold) or market price (if not)
• if supply exceeds the demand for the good, remedy is profit on lost sale

Buyer remedies: did buyer cover (buy replacement goods)?
- if buyer covers (in good faith), remedy is diff b/t contract price and cover price
- if buyer does not, remedy is diff b/t contract price and market price
- if buyer ACCEPTED NONCOFORMING GOODS: diff b/t value contracted for and value
received

Incidental damages: either party can recover cost of breach (storage/transportation costs)

Consequential damages: BUYER can recover reasonably foreseeable consequential damages (e.g. lost profits due to delay). not seller

Question 6

Equitable remedies

Answer 6

Specific performance
- “extraordinary” remedy forcing party to perform
- generally only available when damages inadequate (purchase of unique objects/land) and
when capable of immediate performance (no long term, NO personal services)
- UCC: unable to find reasonable substitutes. ok in longer term output/requirements cases

Negative injunctions
- most common in employment setting, barring competition
- MID TERM: negative injunctions available to prevent competition if employee’s services
are unique/extraordinary (pro athletes, entertainers, etc)
- POST TERM: need a covenant not to compete. validity factors: 1) business justification, 2)
scope reasonable in duration/geography, 3) express provision

Question 7

Misc remedies

Answer 7

Promissory estoppel: expectation or reliance damages, either by jx or case-by-case

Restitution/unjust enrichment (as DISTINCT CAUSE OF ACTION)
- benefits conferred under a “failed” contract
- benefits conferred BY breaching party (minus damages caused by breach)
- benefits conferred with NO CONTRACT: commonly, medical services or benefits
conferred on nonparty by mistake. No recovery for “officious intermeddlers” who give
benefits without any request