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Contracts [IN PROGRESS] > Remedies > Flashcards

Remedies Flashcards

1
Q

Off the contract

A

Quasi-contract (vague, illegal, impossibility or frustration of purpose, π breached)

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2
Q

On the contract

A

breach

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3
Q

Specific performance

A

Order the parties perform the contract

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4
Q

Injunction

A

requiring a party to refrain from acting

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5
Q

Equitable remedies

A

specific performance & injunctions

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6
Q

Limitations on equitable remedies

A

Damages must be inadequate to protect and remedy the injured party

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7
Q

Loveless v. Diehl

A

land is sufficiently unique to compel specific performance

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8
Q

Cannot get specific performance for

A

personal services, but can get
injunctions where the loss will cause a large detriment and the skills
are unique or extraordinary

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9
Q

Courts will not generally allow an injunction where the person

A

will not have reasonable means of making a living

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10
Q

Reliance

A

Compensate the injured party for all damages incurred while relying on the contract

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11
Q

Restitution

A

Plaintiff can recover any benefit conferred to the other party

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12
Q

Expectation damages

A

Full enforcement of the contract – seek to put the injured party in the position they would have been in had the contract been performed

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13
Q

Limitations on Recoverable Damages

A

Foreseeability, Certainty, Avoidability

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14
Q

Foreseeability

A

(Hadley v. Baxendale)

Damages must either
1. Arise as the natural consequences of a breach or
2. Where the defendant knew or had reason to know of remote consequences that would occur from breach
a. Minority of courts hold the Tacit Agreement test which requires assent to the extra consequences

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15
Q

§351

A

1) Damages are not recoverable for loss that the party in breach did not have reason to foresee as a probable result of the breach when the contract was made.
(2) Loss may be foreseeable as a probable result of a breach because it follows from the breach
(a) in the ordinary course of events, or
(b) as a result of special circumstances . . . that the party in breach had reason to know.
(3) A court may limit damages for foreseeable loss by excluding recovery for loss of profits, by allowing recovery only for loss incurred in reliance, or otherwise if it concludes that . . . justice so requires . . . .

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16
Q

Neri v. Retail Marine Corp.

A

Can recover lost profits where there was the capability to perform multiple contracts and one customer breached
1. Can apply to services and goods contracts

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17
Q

Rockingham County v. Luten Bridge Co.

A

Mitigation

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18
Q

Damages must be calculable with

A

reasonable certainty (Dempsey)

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19
Q

Assign v Delegate

A

Assign → assign all rights to another party
Delegation → someone has been given the duty to perform the contract
(Original contract still poses liability if breached)

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20
Q

Where there is a breach of contract, and no defense prevails, the most common remedy is

A

to award legal damages in the form of expectation damages.

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21
Q

Expectation damages award a plaintiff

A

the difference in the value that was expected under a contract less what they have receive

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22
Q

Hawkins v. McGee

A

holding a botched surgical procedure entitled the plaintiff to the difference in value between the promised outcome and what they received

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23
Q

§ 347

A

Measure of Damages in General
the injured party has a right to damages based on his expectation interest as measured by

the loss in the value to him of the other party’s performance caused by its failure or deficiency,
plus any other loss, including incidental or consequential loss, caused by the breach,
less
any cost or other loss that he has avoided by not having to perform.

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24
Q

Sullivan v. O’Connor

A

Where expectation damages are not available, a non-breaching party may recover for expenditures spent in reliance and as a result of a contract

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25
Q

Nurse v. Barns

A

Damages are not limited to the value of the consideration.

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26
Q

J.O. Hooker v. Roberts.

A

Breaching parties are generally not liable for costs that would have been incurred anyway had the contract been performed

  • No storage costs when party did not incur additional expenses for storage
  • Administrative costs when paying an employee to work on the contract
  • Lost profits (including reasonable profit margin)
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27
Q

KGM Harvesting v. Fresh Network

A

Buyer may recover the difference between the cost of cover and the K price

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28
Q

Is KGM universally followed

A

Mostly (e.g. confirmed by Texpar Energy v Murphy Oil) BUT

Others limit plaintiffs to actual lost profits (e.g. Allied Canners v. Victor)

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29
Q

UCC §2-712

A

Gives an aggrieved buyer the right to cover
(reasonable purchase of goods in substitution)

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30
Q

Why did common law & UCC use “fair market value” / “market prices” to measure damages?

A

Administrative ease

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31
Q

Using market values can be a problematic way to measure damages when

A

There isn’t a replacement market (Hawkins)

The thing can’t be priced in a market (unique; non-fungible) & too many markets

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32
Q

Efficient Breach

A

The breaching party intentionally decides not to uphold their end of the contract (voluntarily breaches the contract) because it is cheaper to pay damages
than to perform under the contract

33
Q

Groves v. John Wunder Co.

A

Damages for willful breach of a construction contract, even where there has been substantial performance are awarded as the cost of completing the failed performance

34
Q

Groves dissent

A
  • Cost of completion is grossly disproportionate (500%
    more than the actual value of the property)
  • Nothing to suggest here that the plaintiff really
    wanted this done (i.e., no subjective value)
35
Q

Peevyhouse v. Garland Coal Mining Co.

A

Regardless of any agreement of the parties, damages awarded for breach of an agreement to perform remedial work on property should normally be measured by the reasonable cost of performance of the work; but, when the contract provision breached is merely incidental to the main purpose in view and where the economic benefit which would result to the owner from full performance is grossly disproportionate to the cost of performance, damages should instead be limited to the diminution in value resulting to the premises because of the non-performance

36
Q

§ 348

A

Economic Waste Doctrine. If a breach results in defective or unfinished construction . . . [the non-breacher] may recover damages based on
(a) the diminution in the market price of the
property caused by the breach, or
(b) the reasonable cost of completing performance
or of remedying the defects if that cost is not clearly
disproportionate to the probable loss in value to him.

37
Q

Expectation damages can be measured either by

A

the cost of completion (“CoC”) or the diminution of market value (“DMV”)

38
Q

Usually, DMV > CoC. In that case, court awards

A

Cost of Completion

39
Q

If CoC > DMV, consider factors like

A
  • Is CoC grossly disproportionate?
  • Subjective vs. objective value?
  • Major breach (purpose of K)?
40
Q

Martinez v. Southern Pacific Transport

A

Damages from the loss of a machine’s use are a reasonably foreseeable result of delayed transport.

41
Q

Tacit Agreement Test

A

Requires that the defendant was given notice of special circumstances and assented to bearing the risk of those damages.

Minority Rule is rejected almost everywhere

42
Q

Default Rule on Attorney’s Fees

A

Not Recoverable
* But statutes and contracts
can provide otherwise!

43
Q

§352.

A

Damages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty.

44
Q

Why should the “uncertainty” of claimed damages provide a limitation on the recovery for breach of K?

A

Winston Cigarette

The consequence of giving unlimited discretion to a jury
would “bring ruin upon the party in default,” even though no such loss was contemplated.
* Parties can specify otherwise if they disagree (e.g. liquidated damages clause)

45
Q

Anglia Television v. Reed

A

A nonbreaching party may recover expenditures in lieu of lost profits, including those expenditures incurred both before and after the agreement was made.

46
Q

Security Stove v American Railway Express

A

When a defendant carrier has notice of peculiar circumstances surrounding a shipment that will result in unusual loss to the shipper in case of delay in delivery, the carrier is responsible for the actual damages sustained by the shipper from the carrier’s delay.

47
Q

§349

A

Consequences. Because doctrine is (§352.) usually affects lost profits/revenues per expectation, plaintiffs may switch their theory of remedy, opting instead to seek reliance-based damage

48
Q

§ 350. AVOIDABILITY DOCTRINE

A

(1) Except as stated in Subsection (2), damages are not
recoverable for loss that the injured party could have
avoided without undue risk, burden, or humiliation.
(2) The injured party is not precluded from recovery by the
rule stated in Subsection (1) to the extent that he has
made reasonable but unsuccessful efforts to avoid loss.

49
Q

Rockingham County v. Luten Bridge Co.

A

When a non-breaching party in a contract for services receives notice of another party’s breach, the non-breaching party must treat the contract as broken when notice is received, cease performance, and sue for any losses sustained from the breach as well as profits that would have been realized upon performance.

50
Q

Parker v. Twentieth Century Fox

A

While there is a general duty to mitigate losses, those efforts need only be reasonable
under the circumstances.

51
Q

Neri v. Retail Marine.

A

Can recover lost profits where there was the capability to perform
multiple contracts and one customer breached
1. Can apply to services and goods contracts

52
Q

A seller of goods or services can recover lost profits from a breaching buyer

A

if they are a lost volume vendor

53
Q

lost volume vendor

A

can supply the same goods or services to others simultaneously.

54
Q

Where the seller is forced to find another buyer, the original buyer’s breach could have

A

awarded the seller two contracts. As a result, the buyer is liable for the lost profits from their breach.

55
Q

§346

A

RIGHT TO NOMINAL DAMAGES.

1) The injured party has a right to damages for any breach by a party against whom the contract is enforceable unless the claim for damages has been suspended or discharged.
(2) If the breach caused no loss or if the amount of the loss is not proved under the rules stated in this Chapter, a small sum fixed without regard to amt. of loss will be awarded as nominal damages.

56
Q

Liquidated damages

A

specify a set amount of money as damages in the event of breach.

57
Q

(LDC) Courts will not enforce a provision that is

A

merely a penalty to the breaching party.

However, they must be either (1) reasonable as a prospective view of future losses or (2)
reasonable in light of actual damages sustained. Where neither prong is met, a liquidated damages provision will generally not be enforced. Kemble v. Farren.

58
Q

To determine whether a liquidated damages clause is valid, a court will

A

use a three-part test:
(1) was there intent for the clause to be a penalty,
(2) are actual or forecasted damages difficult to calculate, and
(3) is the provision a reasonable estimate of damages?
Wassenaar v. Towne Hotel.

59
Q

UCC § 2-718

A

(1) Damages for breach by either party may be liquidated in the agreement but only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is void as a penalty.

60
Q

Lake River Co v. Carborundum Co.

A

A contract provision that specifies a single unmodifiable sum to be paid as damages for all breaches of the contract, regardless of seriousness, is an unenforceable penalty clause.

61
Q

§ 356

A

Damages for breach . . . may be liquidated in the agreement but only at an amount that is reasonable in light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss.

A term fixing unreasonably large liquidated damages is unenforceable on grounds of public policy as a penalty.

62
Q

Default Rule for Contracts for Land

A

Specific Performance

63
Q

Default Rule for Sale of Goods

A

Monetary Damages

64
Q

UCC § 2-716

A

Specific performance may be ordered where the goods are unique or in other proper circumstances

65
Q

In cases involving equity, courts may

A

either compel action through specific performance, or prevent action through an injunction.

66
Q

Courts refrain from ordering specific performance unless

A

the subject of the contract is sufficiently unique (inc. unique goods, cases in which a legal remedy will not adequately compensate the plaintiff, or where the subject is rare and not easily obtainable)

67
Q

Presumptive form of relief for breach of contract

A

Monetary damages

BUT can be rebutted by showing damages would be inadequate, for example when the subject of the contract is unique

68
Q

Problems w/ Specific Performance of Personal Service Contracts

A
  • Moral (court-enforced slavery)
  • Practical (administration issues)
  • Consent Theory of Contract
    -How often would people agree to be jailed for breach?
    -If they did, isn’t that a penalty clause?
69
Q

The Case of Mary Clark

A

Moral problems w/ specific performance (court-enforced slavery)

70
Q

Lumley v. Wagner

A

injunction serves as an indirect method of coercing a person to perform a
personal services contract

71
Q

Dallas Cowboys Football Club v. Harris

A

an injunction is generally not available in personal services unless the person performing has unique and special characteristics and attributes that makes their talent rare and difficult to replace

72
Q

No specific performance if

A

K is for personal services (may be possible to get a negative injunction if
unique or exceptional)

73
Q

Restitution can be

A

a remedy (compensation for damages) or a cause of action (type of legal claim)

74
Q

Plaintiffs often rely on restitution

A

in quasi-contracts because courts will almost never award expectation damages.

75
Q

Restitution is available when

A

(1) There is a contract that has been “totally” breached or
repudiated; or

(2) There is no actual contract, but plaintiff deserves some type of
recovery (e.g. quasi-contracts)
> E.g., no attempt to ever form a contract, contract is unenforceable
because of duress, etc

76
Q

RESTATEMENT § 373(1)

A

If there is either: “a breach by nonperformance that gives rise to a claim for damages for total breach” or “a repudiation”

Then: “ . . . the injured party is entitled to restitution for any benefit that he has conferred on the other party by way of part performance or reliance. . .

77
Q

RESTATEMENT § 373(2)

A

The injured party has no right to restitution if he has performed all of his duties under the contract and no performance by the other side remains due other than payment of a definite sum of money for that performance.

78
Q

Bush v. Canfield

A

Restitution is an “off the contract” remedy sought to compensate a plaintiff where someone else has been unjustly enriched at their expense

79
Q

Attorney General v. Blake

A

Double agent case; legitimate interest to ensure no profit

Contracts [IN PROGRESS] (8 decks)

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