Remedies

Question 1

What types of nonmonetary and monetary remedies may P’s receive?

Answer 1

• specific performance
• compensatory/consequential/incidental
• nominal
• restitution
• rescission
• reformation

Question 2

When may a P seek specific performance of a K?

Answer 2

Generally, when the legal remedy is inadequate.

Available for:
- land
- rare/unique goods
- NOT services/employment
     BUT: may enjoin breaching employee from working for competitor during K if services are rare/unique 
- noncompete K's in some cases

Question 3

When will a court grant specific performance in case of a K not to compete?

Answer 3

When (a) services to be performed are unique and (b) covenant is reasonable. Reasonable meaning, (i) reasonably necessary to protect a legitimate interest of the person benefited + (ii) reasonable scope/duration + (iii) covenant must not harm public

Question 4

When P brings action seeking specific performance, D may assert the following equitable defenses re: request for specific performance:

Answer 4

• laches - P delayed bringing action which prejudiced D
• unclean hands - P is guilty of wrongdoing
• sale to bona fide purchaser - i.e. cannot give goods to P b/c sold

Question 5

What are a buyer’s nonmonetary remedies under UCC upon seller breach?

Answer 5

1. cancellation of K
2. Right to replevy (take) goods not delivered
   
   • if made part prepayment + seller not delivered AND either (a) seller becomes insolvent within 10 days after receiving buyers first payment OR (b) goods purchased for personal, family, household purposes (+ buyer must give rest of payment)
   • if goods undelivered + buyer unable to cover after reasonable efforts
3. specific performance for unique/rare goods

Question 6

What are the seller’s possible nonmonetary remedies under UCC when buyer breaches?

Answer 6

1. Right to withhold goods
2. Right to recover goods - if buyer has them + insolvent + demand made within 10 days after receipt; or if discovery buyer is solvent + can recover from carrier
3. Can force goods on buyer ONLY if seller unable to resell goods at reasonable price

Question 7

Generally what monetary damages are P’s entitled to?

Answer 7

Any damages proved with reasonable certainty + that could not have been mitigated with reasonable efforts.

P’s generally get compensatory damages – i.e. are put in place as if K had occurred. Which can include incidental and consequential damages.

Note: NOT punitive damages

Question 8

If damages (e.g. lost profits) are hard to prove, what type of damages may P elect to receive?

Answer 8

Reliance damages - i.e. costs of reliance on K, putting them in place as if K had never been entered into.

Question 9

what types of compensatory damages may P’s receive that are outside of the direct scope of the K?

Answer 9

Incidental and consequential damages.

Incidental - expenses reasonably incurred in prep of K (inspection, transportation, care, etc)

Consequential - losses that a reasonable person would foresee + the breacher knew/had reason to know of the circumstances giving rise to the losses
Note: in UCC, only buyer can recover consequentials
E.g., if merchant is in biz of resale/manufacturer seller is assumed to have known about that

Question 10

When is a liquidated damages clause valid?

Answer 10

Liquidated damages clause provides for specific types of damages in case of breach. They will be valid if:

(1) damages are difficult to estimate at time K was formed
(2) amount agreed upon is a reasonable forecast of compensatory damages - test is looking @ difference between amount probable at time of K formation and the amount in the clause - if its unreasonable then = unenforceable penalty

Note: if clause is valid, then P can get amount even if no loss actually suffered

Question 11

What are buyer’s monetary damages for seller breach under UCC?

Answer 11

No delivery/rejection/revocation, then Damages = the difference between the K price and either (a) market price or (b) cost of cover, i.e. replacing goods, + incidental + consequential damages, – expenses saved due to breach

(a) market price = @ time buyer learns of breach
(b) cover price – only if buyer makes reasonable K to cover in good faith without unreasonable delay

delivery of nonconforming goods, damages = difference in value of goods + incidental and consequentials

Note: buyer must have notified seller of defect in reasonable time

Question 12

What damages is a seller entitled to under UCC when buyer breaches?

Answer 12

Buyer refuses to accept conforming goods, then damages = incidentals + one of the following:

(a) difference between K price and cover price (if resells)
(b) difference between market price and K price (at time of delivery) 
(c) lost profits, i.e. difference between K price and cost to seller (if seller is lost volume seller, i.e. could have made additional sales) 

Buyer accepts goods or goods destroyed, damages = K price

Question 13

What are damages in sale of land K’s? Employment K’s?

Answer 13

Sale of land, damages = difference between K price and market value of land

Employment:
breach by employer, then EE gets full K price
Breach by EE, then ER gets cost of replacing EE

Question 14

What damages are given in a construction K?

Answer 14

If breach by owner, builder gets K price + incidentals

If breach by builder, owner gets cost of completion + compensation for delay

Question 15

What happens when payment in installation K is not paid?

Answer 15

This is partial breach, party only entitled to missed payment.

Question 16

How does the rule of mitigation work in (a) employment Ks, (b) manufacturing K’s, (c) construction K’s, and (d) UCC K’s

Answer 16

(a) employment - if ER can prove comparable job in same locale was available, then can reduce damages by wages could have earned
(b) manufacturer under duty to mitigate by not continuing work after break
(c) builder has no duty to mitigate by finding other work but does to not continue work
(d) UCC - no duty of mitigation,

Question 17

What are restitution damages? In what types of actions may restitution be given as damages?

Answer 17

Restitution = value of benefit conferred (can also be measured by detriment suffered by P)

Both when a K has been breached (and, e.g., losing K), and when a court finds a K invalid/unenforceable but party is able to sue under unjust enrichment theory.

When there is no K or unenforceable K then action = K implied in law, quasi contract, or quantum meruit

Question 18

In what cases may restitution be awarded when there was a valid K and K was breached?

Answer 18

• when nonbreaching party hasn’t fully performed (if they have need to sue under K)
  
  • likely desirable in losing K’s, i.e. when K price < actual value
  • note: when P breaches + partially performs, can get restitution but it will be limited to K price minus losses incurred

Note: if breaching party tries to recover after partial performance, go thru: substantial performance, divisibility, then restitution in that order.

Question 19

When may P get restitution when K is unenforceable/no K?

Answer 19

• K unenforceable (quasi K) - may get restitution when there was unjust enrichment (see below)
• no K involved (quasi K) - available if:
  
  • P conferred benefit
  • with reasonable expectation of being compensated
  • D knew/had reason to know of P expectation
  • D would be unjustly enriched if they were to retain benefit

Question 20

What is rescission? On what grounds may a K be rescinded?

Answer 20

Rescission = original K considered voided, parties left as tho K never made. Ground for rescission must have occurred before or at time K was formed.

Ground for rescission are:

• mutual mistake of material fact
• unilateral mistake if other party knew/should have known re it
• unilateral mistake if mistaken party has extreme hardship that outweighs other party’s expectations under K
• misrepresentation of fact or law by either party re material factor relied on in negotiations
• other: duress, undue influence, illegality, lack of capacity, failure of consideration

Note: if P has paid money to D they get both restitution and rescission
Note: equitable defenses available for restitution too (laches, unclean hands, etc)

Question 21

When may a K be reformed due to mistake? due to misrepresentation?

Answer 21

Mistake: must be (1) agreement between parties (2) agreement to put it in writing (3) variance between original and writing.

Misrepresentation: misrepresentation must relate to the content or the legal effect of the record (re subject matter is NOT grounds for reformation - if that is the case, then remedy is rescission + damages)

Question 22

What is the statute of limitations under the UCC?

Answer 22

4 years - parties may shorten down to no less than one year, cannot lengthen.

Time starts when breach actually occurs

In breach of warranty cases, time starts upon delivery of goods. Except for express warranties - doesn’t start until buyer should have discovered breach.