Remedies

Question 1

expectation damages

Answer 1

are meant to put the non-breaching party in the same position it would have been in but for the breach

Question 2

expectation damages recovery

Answer 2

to recover, damages must be:
1. caused by breaching party (actual cause),
2. foreseeable (proximate cause),
3. certain (NOT speculative), AND
4. unavoidable (reasonable steps were taken to mitigate damages)

NOTE: an award of damages MUST account & deduct for any costs the injured party avoided because of the breach

Question 3

expectation damages formual
(Restatement Second)

Answer 3

expectation damages =
compensatory damages (direct loss) +
consequential & incidental damages (other/indirect loss) -
costs or loss avoided (by not having to perform and mitigation)

Question 4

consequential damages

Answer 4

arise indirectly from the breach (eg lost profits)
- MAY be limited or excluded by agreement UNLESS it’s unconscionable

Question 5

consequential damages recovery

Answer 5

to recover, damages must be:
1. reasonably forseeable @ time of K formation,
2. arise from P’s special circumstances that D knew of (or had reason to know of), AND
3. reasonably certain (NOT speculative)

Question 6

incidental damages

Answer 6

are the reasonable costs or expenses incurred as a result of a breach
- Examples: cost to return, store, inspect, or care for non-conforming goods

Question 7

reliance damages

Answer 7

expenditures made in reliance of K
are meant to put the non-breaching party in the position it would have been if the K never existed

NOTE: if expectation damages are too speculative, a court MAY award reliance damages instead

Question 8

reliance damages recovery

Answer 8

are available when:
1. P acted in reliance on D’s agreement to perform under a K, AND
2. P’s reliance was foreseeable

Question 9

restitution damages

Answer 9

awarded to prevent unjust enrichment
is available when one party confers a benefit onto another party (even IF there is NO enforceable K)
- damages = value of benefit conferred
- a party CANNOT recover BOTH expectation and restitution damages

it’s either there was a K or NOT

Question 10

punitive damages

Answer 10

meant to punish a wrongdoing party
- are generally NOT available in K actions BUT may be awarded in K action w/ corresponding tort claims (eg, fraud)

NO punitive damages in K law

Question 11

liquidated damages

Answer 11

a liquidated damage clause will be enforced if:
1. damages amount is difficult to estimate @ time the K was formed, AND
2. the amount is reasonable to the actual damages suffered

NOTE:
- Valid: if the liquidated damages clause is VALID, then only that amount is valid
- Invalid: if the clause is invalid, then actual damages are available

Question 12

specific performance

Answer 12

is ONLY allowed if monetary damages are inadequate to compensate an injured party
- NOT awarded for personal service Ks but injunctive releif may be awarded (aka no working for competitors)

Question 13

specific performance recovery

Answer 13

is an available remedy when:
1. a valid K exists (with clear & definite terms),
2. P has performed OR is ready, willing, & able to perform,
3. legal remedies are inadequate (eg, rare/unique item, sale of land),
4. enforcement is feasible for the court (NOT feasible for personal service Ks or where land/person is outside court’s jx)
5. NO valid equitable or contractual defenses exist, AND
6. P can sufficiently/adequately assure performance

Question 14

recission

Answer 14

treates the OG K as cancelled
- available when there is a problem w/ K formation

A K will NOT be rescinded if:
1. there is a valid equitable defense, OR
2. P sued for damages under the K in a prior action

NOTE: a party may sue for both damages and recission @ the same time BUT an election of remedies may bar recission if damages are sought first

Question 15

reformation

Answer 15

allows a K to be changed to conform to the parties’ OG intent

Question 16

reformation recovery

Answer 16

is an available remedy when:
1. a valid K exists but there was a misrepresentation, OR
2. mutual mistake of a material fact (a unilateral mistake is sufficient if the non-mistaken party had reason to know of the mistake)

NOTE: reformation is NOT allowed if a valid equitable defense applies (eg, unclean hands, laches)

Question 17

waste doctrine

Answer 17

when an award for cost of completion is wasteful, a court may award damages for dimunition in value (the difference in value of the property/land)
- this may be awarded instead of expectation damages

Question 18

waste doctrine applicability

Answer 18

waste doctrine applies if:
1. contractor performs in good faith, but defects exist, AND
2. remedying the defects would entail economic waste (the cost of completion greatly exceeds the value of the completed work)

NOTE: normally seen in the construction contract context

Question 19

mitigation of damages

Answer 19

a party MUST take reasonable steps to mitigate losses
- if a party fails to do so, the court will reduce the total damages by the amount that could have been avoided

NOTE: affirmative steps to avoid loss are NOT required if they involve undue risk, burden, or humiliation