Remedies

Question 1

Specific performance

Answer 1

A court order for a party to perform
-Because its an equitable remedy, its usually the wrong answer unless money damages (legal remedy) are inadequate (i.e., liquidated damages clause is not an adequate legal remedy)
-Always available for land sale contracts and rare/unique goods (not services)
>Alternative for service (employment) contract is an injunction

Question 2

Equitable Defenses to Specific Performance Action

Answer 2

Laches: P delayed bringing the action and that delay unfairly prejudiced D

Unclean hands: party seeking specific performance is guilty of wrongdoing in the transaction being sued upon

Sale to bona fide purchaser: sold to a person who purchased for value and in good faith

Question 3

Non monetary remedies under Article 2

Answer 3

Reclamation: a seller can claim its goods when:
-Seller learns the buyer was insolvent when it received goods; and
-Seller demands to reclaim the goods within 10 days after the buyer’s receipt of goods

Exception: 10-day limitation does not apply if the buyer misrepresented its solvency in writing to the seller within 3 months before delivery

Also known as “replevy”

Question 4

Types of monetary remedies

Answer 4

1. Compensatory damages
   -Expectation damages
   -Reliance damages
   -Incidental damages
   -Consequential damages
2. Punitive damages
3. Nominal damages
4. Liquidated damages

Question 5

Compensatory damages

Answer 5

Expectation damages: puts the non breaching party in the position they would have been in had the promise been performed (standard rule)

Reliance damages: if expectation damages are too speculative, return the plaintiff to its position as if the contract had never been formed

Incidental damages: the costs incidental to breach of contract (always recoverable)
-Do not have to be foreseeable

Consequential damages: reflect losses over and above standard expectation damages
-Recoverable if foreseeable at the time of formation
-In sale of goods contracts, only the buyer can recover consequential damages

Question 6

Punitive damages

Answer 6

Not awarded in contract cases

Question 7

Nominal damages

Answer 7

Token damages may be awarded when a breach is shown but no actual loss is proven (i.e., $1)

Question 8

Liquidated damages

Answer 8

Parties to a contract stipulate what damages are to be paid in the event of a breach

A court will uphold a liquidated damages clause when:
-Damages are difficult to estimate at the time of formation
-Damages are reasonable and NOT a penalty
>a single lump sum is an invalid penalty clause

Question 9

Buyer’s damages in sale of goods contracts (UCC)

Answer 9

Cover damages = difference between contract price and cost of replacement goods
-Buyer must make a reasonable contract for substitute goods in good faith and without unreasonable delay

Market damages = difference between contract price and market price
-Available when there is no cover price or the cover price is unreasonable
-Market price determined at time the buyer learns of the breach

Question 10

Seller delivers nonconforming goods that buyer accepts (UCC)

Answer 10

Loss in value damages = difference between value of the goods as delivered and the value they would have had if they had been according to the contract
-Plus incidental and consequential damages
-Buyer must give notice in a reasonable time after discovering defect

Question 11

Seller’s damages in sale of goods contracts (UCC)

Answer 11

Resale damages = difference between contract price and resale price

Market (benefit of bargain) damages = difference between contract price and market price
-Cannot resell goods (i.e., custom goods)

Lost profits damages = difference between contract price and cost of goods
-Only applicable to lost volume seller (unlimited supply - look out for dealer with inventory)
-Must be foreseeable (“be chatty” rule)

Action for price damages = contract price
-Only if the goods cannot be sold to others at any reasonable price or if the buyer has accepted the goods and not paid for them

Question 12

Avoidable damages (mitigation)

Answer 12

Damages that could have been avoided with reasonable effort are not recoverable
-Limited to similar or comparable subject matter (i.e., similar job in similar city)
-Party can recover expenses of mitigation
-Does not apply to sale of goods contracts
-A manufacturer or build under the duty to mitigate by not continuing work after the breach

Question 13

Restitution

Answer 13

Value of the benefit conferred (to prevent unjust enrichment)
-Quasi-contract remedy