Remedies

Question 1

What is a suit on the contract?

Answer 1

Where the parties have formed a legally enforceable contract, and the defendant has breached the contract, the plaintiff will normally sue on the contract, and the court will use the contract to determine if there has been abreach and to calculate damages.

Question 2

What is a quasi-contract action?

Answer 2

In quasi-contract actions, one person will have recieved services, money, or property under circumstances where that person would be unjustly enriched if allowed to keep the same.

Question 3

When is a quasi-contract action available?

Answer 3

Quasi contract recovery may be available when there is a defect in formation of the contract, as an independent remedy or alternative measure of damages, or when the plaintiff breaches the contract.

Question 4

What is the general defintion for expectation damages?

Answer 4

Expectation damages aim to put a party in the position the party would have been in had the contract been fully performed. These can include reliance damages.

Question 5

In general, what are reliance damages?

Answer 5

Reliance damages aim to put a party in the position as if the contract had neever been entered into. This is a backup option in case the plaintiff cannot prove expectation damages.

Question 6

In general, what are restitution damages?

Answer 6

Restitution damages award a party daamges based on the value of a benefit conferred on a breaching party.

Question 7

In general, what are equitable remedies?

Answer 7

Eqiutable remedies grant relief where the damage remedy at law (money) is inadequate. These include specific performance, injunction, mandamus, and declaratory judgment actions.

Question 8

What is specific performance?

Answer 8

When the court orders someone to do/provide something that was bargained for

Question 9

What is an injunction?

Answer 9

When the court prohibits someone from doing something as required by the contract

Question 10

What is a mandamus?

Answer 10

When the court orders a public official to perform their duties

Question 11

What is a declaratory judgment action?

Answer 11

A ruling to interpret the rights of the parties

Question 12

What is the general formula for expectation damages?

Answer 12

The general formula for expectation damages is the difference between the value of what was promised and what was recieved, less whatever benefits, if any, the plaintiff received from not having to perform a contract

Question 13

Expectation damages

What can the plaintiff not collect?

Answer 13

Costs which were part of consideration

Question 14

Expectation damages

When is computation of damages cut off?

Answer 14

The computation of damages is cut off at the time the breach was discovered.

Question 15

Expectation Damages

What is the measure of damages for sale of personal property?

Answer 15

The measure of damages for the sale of personal property is the difference between the contract price and the market price at the time of the breach.

Question 16

Expectation Damages/Construction Contracts

What is the default measure of damages?

Answer 16

The value rule is the normal measure of expectation damages in contruction contracts and is the difference between the value of what was contracted for and what was received.

Question 17

Expectation Damages/Construction Contracts

When is cost of completion used to measure expectation damages?

Answer 17

In construction contracts, cost of completion is awarded if the defendant’s breach is intentional, of an important rather than incidental part of the contract, and completion wouldn’t involve tearing down anything that had already been built.

Question 18

Expectation Damages/Construction Contracts

What is the formula if the builder breaches and owner has to hire another builder?

Answer 18

The value if it had been completed, less the value as completed by the second builder, plus the amount the owner paid to both builders exceeds the contract price, plus any consequential damages from the delay.

Question 19

Expectation Damages/Construction Contracts

What is the formula if owner breaches and work has not been completed?

Answer 19

Reliance costs, less any salvage value, plus profit builder would have made, less any progress payments already made.

Question 20

The plaintiff may only recover losses established with . . .

Answer 20

reasonable certainty.

Question 21

Expectation Damages

Who cannot collect lost profit damages?

Answer 21

Lost profit damages are not appropriate for a non-breaching new business because of the lack of record of past performance.

Question 22

What are consequential damages?

Answer 22

Consequential damages are the expenses or other losses that the plaintiff never would have incurred but for the defendant’s breach.

Question 23

What are incidental damages?

Answer 23

Incidental damages are a subset of consequential damages: those incurred in ascertaining or trying to prevent breach or avoid damages.

Question 24

When are nominal damages awarded?

Answer 24

Nominal damages are awarded for breach of contract when the plaintiff has a valid cause of action against the defendant but actual damages have not been proven and cannot be presumed.

Question 25

Are punitive damages recoverable?

Answer 25

Punitive damages are not recoverable for a breach of contract, unless the conduct constituting the breach is also a tort for which punitive damages are recoverable. Punitives must be proven by clear and convincing evidence.

Question 26

How do courts determine the amount of punitive damages?

Answer 26

Courts use a ratio to determine punitive damages. Generally, if the ratio gets to double digits, the court may not allow it. Higher ratios may be awarded if a defendant’s conduct is particularly reprehensive.

Question 27

What are factors affecting the amount of punitive damages? (3)

Answer 27

1. Plainitff’s costs of litigation
2. Financial condition of the defendant
3. Grossness of the conduct of the defendant

Question 28

When are reliance damages typically awarded?

Answer 28

Reliance damages (out of pocket expenses) are typically awarded in situations where lost profit is too speculative or uncertain and in claims for promissory estoppel.

Question 29

Reliance Damages

What about pre-contract expenditures?

Answer 29

The majority rule in the United States is that plaintiffs may not recover expenditures made prior to entering a contract.

Question 30

What is the basic formula for reliance damages?

Answer 30

Out of pocket losses, less any partial payments, less any availibility to avoid loss.

Question 31

Can reliance damages exceed the full contract price?

Answer 31

No

Question 32

Reliance Damages

What if the contract is a losing one?

Answer 32

Reliance damages may be reduced by any loss that the breaching party can prove with reasonable certainty the injured party would have suffered had the contract been performed.

Question 33

What are the elements for unjust enrichment? (3)

Answer 33

1. A benefit conferred upon the defendant by the plaintiff
2. The defendant’s knowledge of the benefit
3. The defendant’s acceptance or retention of the benefit making it inequitable for the defendant to reatin the benefit without payment of its value

Question 34

Restitution

When is a benefit not recoverable?

Answer 34

The benefit cannot be conferred as a gift without expectation of compensation or as a volunteer or intermeddler

Question 35

Restitution

If the benefit is of such a nature that it could returned to the plaintiff . . .

Answer 35

then that is the answer.

Question 36

Restitution

When will courts allow restitution based on improvements to another’s property?

Answer 36

When the plaintiff held possession of the property under color of title, adverse possession, or based on a good faith and reasonable belief that good title was possessed.

Question 37

Restitution

When is a person entitled to restitution for a benefit conferred without consent?

Answer 37

If the benefit was necessary to prevent theo ther from suffering serious bodily harm or pain, the person had no reason to know the other would not consent, and it was impossible for the other to give consent.

Question 38

Restitution

When can a subcontract maintain a claim for restitution against an owner?

Answer 38

If the subcontractor has exhausted all remedies against the general contractor and remains unpaid and the owner has not paid any other person (general contractor or other subcontractors)

Question 39

Restitution

What if the contract is an enforceable but losing contract?

Answer 39

Restitution for a breach of an enforceable contract allows a promisee to recover the value of services given to the defendant regardless of whether the contract was a losing one and unable to recover in a suit on the contract.

Question 40

Restitution

What is the measure of recovery for restitution?

Answer 40

The reasonable value for performance. While the contract price may be evidence of reasonable value of services, it does not measure the value of performance or limit recovery. May also be measured by the extent to which the other’s property has been increased in value or other interests advanced.

Question 41

Restitution

What if the breach is simply failure to pay?

Answer 41

If a plaintiff has completed performance and the defendant’s breach is simply the failure to pay, restitution is not the proper remedy. The claimant is limited by the contract price.

Question 42

Restitution

What if the breaching party seeks recovery?

Answer 42

A breaching party may be able to recover under restitution if he conferred a large benefit on the non-breaching party and no harm was caused by the breach. The breaching party cannot recover more than the contract price. Damages caused to the non-breaching party must be deducted.

Question 43

Equitable Remedies

When trying to obtain specific performance, consider whether . . .

Answer 43

The land or item at issue is considered unique

Question 44

Equitable remedies

What are the four factors used in weighing the need for specific performance?

Answer 44

1. reasonable certainty of the parties’ duties,
2. available remedy at law to purchase a substitute,
3. effect of public policy in enforcing the act or forbearance, and
4. difficulty in enforcement or supervision in proportion to the advantages gained by performance

Question 45

Equitable Remedies

When will courts not order specific performance? What will it do instead?

Answer 45

A court will not order specific performance for personal service contracts. Courts can order an injunction to prohibit a party from doing something pursuant to the original contract, but not to force a person to perform a pesonal service as required by contract.

Question 46

What is required for courts to award consequential damages?

Answer 46

Courts will not award consequential damages for breach unless (1) the damages arise naturally and were foreseeable or (2) were remote or unusual but the defendant had notice.

Question 47

How can parties make sure unforeseen consequential damages are compensated?

Answer 47

Parties may allocate the risk themselves by express agreement when letting the party know of the risk or by the parties agreeing that even unforeseen consequential damages shall be compensable.

Question 48

Consequential damages

What if the cause of the breach is not foreseeable?

Answer 48

Whether the cause of the breach itself is foreseeable is irrelevant.

Question 49

When is recovery for emotional disturbance allowed?

Answer 49

(1) If the breach also causes bodily harm or (2) the contract or the breach is of such a type that serious emotional disturbance was a particularly likely result

Question 50

What is the American Rule?

Answer 50

The American Rule is that attorney’s fees are not recoverable unless awarded by special statutes or contracted for in the agreement itself.

Question 51

Can avoidable damages be recovered?

Answer 51

Damages are not recoverable for loss that the injured party could have avoided without undue risk, burden, or humiliation.

Question 52

What if avoidance of damages was unsuccessful?

Answer 52

An injured party is not precluded from recovery if reasonable efforts to avoid loss were made but unsuccessful.

Question 53

What is a party that does not mitigate damages entitled to?

Answer 53

A party which does not mitigate damages is only entitled to costs incurred prior to repudiation plus the progits it would have received had the contract been completed.

Question 54

What if the non-breaching party refuses to mitigate?

Answer 54

If the non-breaching party refuses to mitigate, the law calculates damages as if there had been mitigation.

Question 55

Who bears the burden to prove mitigation failure?

Answer 55

The breaching party bears the burden to prove mitigation failure

Question 56

How does mitigation work in employment situations?

Answer 56

Before the employer can provide evidence to show that the employee did not mitigate by accepting or seeking other job opportunities, the employer must show that the opportunities were substantially similar to the employee’s previous job. Employee’s are not required to accept employment of a different or inferior kind.

Question 57

Mitigation/Employment

What happens if the employee does take lesser work?

Answer 57

It will reduce the amount recovered on the theory that it is money that the breach permitted the employee to earn that otherwise would not have been available. Exceptions may include jobs that are inferior but would be able to be completed during employment under the original employment contract.

Question 58

Will courts enforce contractual provisions stating there is no duty to mitigate?

Answer 58

No, as a matter of public policy.

Question 59

What are liquidated damages?

Answer 59

A liquidated damages clause is a provision in a contract that specifies the consequences of breach

Question 60

What is a penalty?

Answer 60

A penalty is a term fixing unreasonably large liquidated damages.

Question 61

When will liquidated damages clause not be enforced?

Answer 61

If they resemble penalties. Doubtful cases are resolved as penalties.

Question 62

When are liquidated damages clauses enforceable?

Answer 62

If the amount is reasonable in light of the anticipated or actual loss caused by the breach and when the contract is of a type in which setting damages would be difficult

Question 63

What is the idea of efficient breach?

Answer 63

The idea of efficient breach is to go ahead and breach if it is a better economic decision, but the breaching party may still have to pay damages if the non-breaching party’s remedy costs more than initially expected.

Question 64

How do a minority of jurisdictions handle liquidated damages clauses?

Answer 64

Some jurisdictions may hold that by entering into a liquidated damages provision, each party took a calculated risk and is bound by reasonable contractual provisions pertaining to liquidated damages.