Remedies

Question 1

Rescission (Equitable Remedy)

Answer 1

Rescission is the unmaking of a contract to put the parties in their original positions. A court will only grant rescission if there are grounds to seek it and there are no defenses to granting it.

Grounds for rescission include fraud/misrepresentation and mistake.

Question 2

Doctrine of Mutual Mistake of Fact

Answer 2

Under the doctrine of mutual mistake of fact, a contract may be invalidated where both parties are mistaken about a material fact that is a basic assumption of the contract.

Question 3

Doctrine of Unilateral Mistake

Answer 3

Under the doctrine of unilateral mistake, a contract may be invalidated where one party is mistaken about a material fact underlying the contract, and the other party knew or had reason to know of the mistake.

Question 4

Fraud/Misrepresentation

Answer 4

A contract may be invalid on the basis of fraud/misrepresentation when (1) a party made a false statement of past or present fact, (2) the statement of fact was either fraudulent or material to the contract, and (3) the other party reasonably relied on the statement when entering in the contract.

Question 5

Laches

Answer 5

Laches is the unreasonable delay in pursuing an equitable remedy in which the party was aware or should have been aware, that caused prejudice to the other party.

Question 6

Unclean Hands

Answer 6

Unclean hands is a defense to an equitable remedy when the party who seeks equitable relief himself engaged in serious misconduct in close relation to the claim.

Question 7

Contract Formation

Answer 7

A valid contract requires an offer, acceptance, and consideration, and there must be no applicable defense to formation.

Question 8

Anticipatory Repudiation (Common Law)

Answer 8

Under common law, when the other party’s words, actions, or circumstances make it unequivocally clear that they are unwilling to perform, the aggrieved party may (i) treat is as a breach and sue immediately, (ii) ignore repudiation and demand performance, or (iii) ignore repudiation and suspend performance if increased damages would result from continued performance.

Question 9

Expectation Damages

Answer 9

Expectation damages put the non-breaching party in the place they would have been had the other party fully performed their obligations under the contract.

They are calculated by comparing the value of performance without breach (what was promised) with the market value of performance with breach (what was received) less any amount saved by the non-breaching party.

Question 10

Consequential Damages

Answer 10

Consequential damages are reasonably foreseeable losses to a non-breaching party that go beyond expectation damages, such as loss of profits. In addition to foreseeability, the plaintiff must show causation and reasonable certainty.

These damages are foreseeable if they were the natural and probable consequences of breach or contemplated by the parties at the time the contract was made.

Question 11

Reliance Damages

Answer 11

In lieu of expectation damages, reliance damages may be recovered if a non-breaching party incurs expenses in reasonable reliance upon the other party’s promise. They are limited to the original contract price.

Question 12

Duty to Mitigate (Contracts)

Answer 12

A party to a contract must take steps to reasonably avoid or mitigate damages to the extent possible. Damages will be reduced by the amount that could have been reasonably mitigated.

Question 13

Restitution

Answer 13

When a defendant is unjustly enriched by a plaintiff and other remedies are inadequate, restitution generally allows the plaintiff to recover on the benefit conferred by the plaintiff upon the defendant.

Restitution based money damages are measured by the reasonable value of the benefit conferred, the cost to the plaintiff in conferring the benefit, the increase in the defendant’s wealth, or the price fixed in the agreement.

Question 14

Specific Performance

Answer 14

Specific performance is a contractual remedy by which a party to a contract is compelled by court order to perform their promise. For specific performance to be ordered, a plaintiff must establish (1) a valid contract, (2) the terms of the contract are definite and certain, (3) the conditions for defendant’s performance are satisfied, (4) money damages are inadequate, (5) court enforcement and supervision is feasible, and (6) no defenses exist.

Question 15

Specific Performance: Conditions Satisfied: Repudiation

Answer 15

Anticipatory repudiation allows the non-repudiating party to immediately demand performance, satisfying conditions requiring the other party’s performance.

Question 16

Temporary Restraining Order (TRO)

Answer 16

A TRO is a short term temporary injunction, which may be obtained ex parte. Its primary purpose is to preserve the status quo until a preliminary injunction hearing can be held.

To obtain a TRO, the plaintiff must establish (1) they would suffer irreparable harm if the injunction is not issues, (2) their hardship’s if the injunction is not issued will be significantly greater than the defendant or third party’s hardships if it is issued, and (3) there is a likelihood that the plaintiff will succeed on the merits of their claim.

Question 17

TRO: Irreparable Harm

Answer 17

To establish irreparable harm, a plaintiff is usually required to legal remedies would be inadequate.

Money damages are inadequate if the property to be transferred is unique, and land is always considered unique.

Question 18

Preliminary Injunction

Answer 18

A preliminary injunction maintains the status quo until there is a final judgment by the court. A preliminary injunction requires the defendant be given notice and an opportunity to be heard before it is granted.

To obtain a preliminary injunction, the plaintiff must establish (1) they would suffer irreparable harm if the injunction is not issued, (2) their hardships if it is not issued will be significantly greater than the defendant or third party’s hardships if it is granted, and (3) there is a likelihood the plaintiff will succeed on the merits of their claim.

Question 19

Reformation

Answer 19

Reformation is an equitable remedy wherein the court rewrites an agreement to reflect the parties’ true intent at the time of formation. It requires a showing of a valid contract, proper grounds to request it, and there not be any defenses to granting it.

Question 20

Grounds for Reformation

Answer 20

1. Mutual Mistake: If both parties are mistaken as to the content or effect of a writing, the court may rewrite the contract to reflect the parties intended agreement.
2. Unilateral Mistake: If one party is mistaken as to the content or effect of a writing, reformation will be allowed if the other party knew of the mistake and either fraudulently induced the mistake or does nothing to correct the mistake.

Question 21

Expectation Damages: Breach of Land Sale Contract

Answer 21

When a seller breaches a real property contract, the buyer is entitled to recover the difference between the contract price and the market value as of the date of the breach of contract.

Question 22

Reliance Damages: Breach of Land Sale Contract

Answer 22

Reliance damages are meant to put the parties in the same position as if the contract had never been formed. In land sale contracts, reliance damages include any down payment or money paid to the seller.

Normally only given when expectation damages are too speculative.