Remedies

Question 1

What is anticipatory repudiation?

Answer 1

Anticipatory breach or repudiation occurs when a promisor party indicates that it will not
perform prior to the date that performance is due

Question 2

When does anticipatory repudiation occur at CL?

Answer 2

The repudiation must be clear and unequivocal, may be by conduct or words, and, if a statement, must be made to the promisee or a third-party beneficiary or assignee of the promise.

Question 3

When does anticipatory repudiation occur under UCC?

Answer 3

1. buyer/seller unequivocally refuses to perform
2. if there are reasonable grounds for insecurity about the other side’s performance, nonbreaching party can demand adequate assurance of performance. If the other party fails to respond within a reasonable time, you can treat this as repudiation.

Question 4

What are your remedies for anticipatory repudiation?

Answer 4

1. Treat the repudiation as a breach and sue for damages.

BUT: if you u have completed the entire performance and are only waiting for payment, you cannot sue early.

2. Ignore the repudiation and demand performance

Question 5

Can a party retract its repudiation?

Answer 5

Yes, if other side has not:

• commenced a lawsuit, OR
• acted in reliance on the repudiation and materially changed its position

Question 6

List the types of money damages

Answer 6

Expectation damages
Reliance damages
Restitution damages
Liquid damages

Question 7

Expectation Damages

Answer 7

• normal way to calculate damages in Ks
• goal: put the party in the same economic position it would have been HAD THE K BEEN PERFORMED as promised
• = value of performance without the breach - value of the performance with the breach

Question 8

Three limitations on calculation of expectation damages

Answer 8

1. EDs must be proven with reasonable certainty. If unproven business venture, may be too difficult to prove lost profits.
2. Unforeseeable consequential damages are not recoverable unless the breaching party had some reason to know about the possibility of these special damages at the time of contracting (Hadley Rule).

General damages: loss incurred from a breach, includes incidental damages (cost of storing rejected goods, finding a new buyer, finding a replacement vendor)

Consequential damages = losses that are unique to the π.

2. Mitigation: a breached-against party must take reasonable steps to reduce damages from the breach. If party does not mitigate, the law will calculate damages as if the party did mitigate. ∆ bears burden of proving mitigation failure. Mitigation efforts must be reasonably similar to original K.

Question 9

What are expectations damages for volume sellers?

Answer 9

In general, if paying party breaches, then seller has to mitigate by reselling goods to another person.

If a seller qualifies as a lost volume seller, they can collect lost volume profit. Seller must show that it could have supplied to both the breaching party and to the mitigating-resale party if the breached hadn’t occurred.

Example: sell two shirts 5/each. cost is 2. Lost volume profit on 1 shirt = 3. Can collect 3.

Question 10

What are expectation damages for incomplete performance?

Answer 10

If paying party breaches, builder cannot finish job because doing so would be running up the damages.

Instead, builder recovers using this formula:

ED = K price - amount already paid to nonbreacher - amount that would be needed to finish the job by nonbreacher.

Question 11

How should damages be calculated if the cost to complete will dramatically overcompensate (economic waste) the ∆?

Answer 11

If the breaching party acted innocently and unintentionally breached, calculate damages using DMV (diminution in MV).

DMV = how much lower is the market value of what π got versus what π wanted. Can be 0 DMV.

Question 12

What are reliance damages?

Answer 12

• goal: put a party in the same economic position that it would have been in had the K NEVER BEEN CREATED in the first place.
• ask: what loss has the π incurred that would never have taken place but for the breached K.
• Cannot recover both reliance and expectation damages.

Question 13

What are restitution damages?

Answer 13

• goal: give the πan amount equal to the economic benefit that the π conferred upon the ∆

Question 14

What are liquidated damages?

Answer 14

• the damages are stated in the K as an explicitly negotiated amount due upon breach
• liquidated damages are only enforceable if:
• the amount of liquidated damages was reasonable at the time of contracting, AND
• actual damages from breach would be uncertain and difficult to prove

Question 15

What are punitive damages?

Answer 15

• Punitive damages are almost never allowed in contract law.
• Don’t worry about these unless you see a breach that also seems like a tort (e.g., fraud or some
  other very extreme situation).

Question 16

What is specific performance? Under CL v UCC?

Answer 16

• Equitable relief (SP) is only awarded when monetary damages are inadequate for some reason.

CL:
- SP is presumptively available for real estate transactions.
- SP is presumptively unavailable for service Ks
- rarely, injunction prohibiting breaching party from performing similar services for a competitor for a reasonable time is available (Lumley doctrine)

UCC:
- SP only available for unique goods (art, custom-made)

Question 17

What is the right of reclamation remedy?

Answer 17

Situation: unpaid seller tries to reclaim goods sold on credit to insolvent buyer.

To assert this remedy:

1. buyer is insolvent at time of receipt of the goods,
2. seller demands return of goods within 10 days of receipt (or within a reasonable time if the buyer misrepresented his solvency to the seller in writing within three months before delivery), AND
3. buyer still has the goods

Question 18

Elements of specific performance

Answer 18

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 nonbreaching party has satisfied any conditions precedent (or the condition has
   been excused), so the breaching party’s performance is now due.
4. Money damages are inadequate. (items involved are unique: land, art, old cars)
5. It is feasible for the court to enforce and supervise the breaching party’s performance.

• Courts will not require people to perform service contracts (e.g., employment)
  because it is not feasible to enforce/supervise a person’s service and forcing a
  person to work can rise to the level of indentured servitude under the Thirteenth
  Amendment.