Remedies

Question 1

Expectation Damages

Answer 1

The goal of expectation damages is to put the non-breaching party in the same economic position that it would be in if the contract had been performed as promised. Expectation damages are measured by comparing the value of the performance without the breach to the value of the performance with the breach.

Question 2

Reliance Damages

Answer 2

Reliance damages are damages that the non-breaching party incurs in reasonable reliance upon the promise that the other party would perform. The goal of reliance damages is to put the non-breaching party in the same economic position that it would be in if the contract had never been created. A party cannot recover both reliance and compensatory damages, they must choose one of the other.

Question 3

Restitution

Answer 3

The goal of restitution is to prevent unjust enrichment. Restitution gives the plaintiff an amount equal to the economic benefit that the plaintiff has conferred on the defendant.

Question 4

Recission

Answer 4

Rescission is the cancelling of a contract so as to restore the parties to the positions they had before the contract was made. Parties may seek to rescind a contract for a variety of reasons, such as mutual mistake, fraud, misrepresentation, or even unilateral mistake if the other party knew or should have known about the mistake. Rescission can also occur by the mutual agreement.

Question 5

What is the remedy of reformation? When does it usually come up and what are the requirements?

Answer 5

Reformation occurs when a court modifies a written K that fails to reflect the intent of the contracting parties.

• Mutual Mistake. A court may reform a written K due to mutual mistake if
  
  • (1) there was a prior agreement
  • (2) the parties agreed to put the prior agreement in writing and
  • (3) there is a difference between the prior agreement and the writing due to the mistake

Question 6

Specific Performance

Answer 6

Specific Performance is when the non-breaching party asks a court to order the breaching party to perform the contract. Specific performance is typically limited to contracts involving real estate and sale of unique goods. It is not a remedy available for contracts involving services. For a court to mandate specific performance:

• (1) there must be a valid contract
• (2) the terms of the contract must be certain/clear enough to allow a court to make an order
• (3) the non-breaching party has satisfied any conditions
• (4) money damages are inadequate
• (5) it is feasible for the court to enforce and supervise the breaching party’s performance AND
• (6) no defenses exist

Question 7

What defenses are available to D when P is seeking Specific Performance?

Answer 7

• Contract based defenses: D can assert a defense to formation or enforcement of the K, such as failure to comply with SoF, fraud or misrepresentation by P, and unilateral mistake by D (if P knew or should have known of D’s mistake)
• Equitable defenses: a court will not grant specific performance if D can assert laches – P waited an unreasonably long time to seek specific performance and the delay resulted in prejudice to D or unclean hands – P engaged in unethical or immoral acts relating to the K

Question 8

Temporary Restraining Order (TRO)

Answer 8

a TRO is an injunction for a short time, typically not lasting longer than 14 days, unless the court extends it for good cause. Its purpose is to maintain the status quo until there is an opportunity to hold a hearing for a preliminary injunction. A TRO has immediate effect and it may be issued ex parte – without notice to the defendant. If issued ex parte, the applicant must explain under oath that if the TRO is not issued, the applicant will suffer immediate and irreparable harm if they are forced to wait until the other side is heard.

Question 9

Preliminary Injunction (PI)

Answer 9

A preliminary injunction is a provisional remedy designed to maintain the status quo pending trial. Unlike a TRO, a preliminary injunction cannot be issued unless the defendant has been given notice and an opportunity to be heard. To obtain a PI, P must show that (1) they will suffer irreparable harm if the injunction is not granted, (2) a likelihood of success on the merits, and (3) the balancing of the equities (the hardships) weighs in P’s favor

Question 10

Nominal Damages

Answer 10

If P established the elements of a cause of action, but the harm or loss is slight, P may be awarded a small/trivial, or nominal, amount of money

Question 11

Consequential damages

Answer 11

Damages that are reasonably foreseeable consequences of the breach

To be recoverable, consequential damages have to be reasonably foreseeable to both parties when K was formed

Question 12

Incidental damages

Answer 12

Arise from non-breaching party’s attempt to mitigate loss

Compensation for commercially reasonable expenses (having to rent out a refrigerator, extra warehouse space, etc)