Remedies

Question 1

Nonmonetary remedies - generally

Answer 1

There are two broad branches of remedies available in breach of contract situations: non-monetary and monetary. The primary nonmonetary remedy for exam purposes is specific performance, the article 2 has a number of other specific non-monetary remedies for certain situations involving contracts of the sale of goods.

Question 2

Nonmonetary remedies - specific performance - generally

Answer 2

If the legal remedy that is, money damages, is an adequate the non-breaching party may seek specific performance, which is an order from the court to the breaching party to perform or face contempt of court charges. Watch for effect pattern in which a party is seeking to specifically enforce a contract containing a liquidated damages clause. Such a clause does not make the legal remedy adequate. Specific performance is only the answer about one percent of the time.

Question 3

Nonmonetary remedies - specific performance - land or rare or unique goods

Answer 3

Specific performance is always available for land sale contracts, because all land is unique. It is also available for goods that are rare or unique at the time performance is due. It is not available for breach of contract to provide services, even if the services are rare or unique. This is because of problems of enforcement, and because the courts feel it is tantamount to involuntary servitude, which is prohibited by the constitution. 

Question 4

Nonmonetary remedies - specific performance - injunction as alternate remedy

Answer 4

In contrast, a court may enjoying a breaching employee from working for a competitor throughout the duration of the contract if the service is contracted for our rare or unique. 

Question 5

Nonmonetary remedies - specific performance - covenant not to compete

Answer 5

Most courts will grant an order of specific performance to enforce a contract not to compete if: 1) the services to be performed are unique, thus rendering damages inadequate and 2) the covenant is reasonable.

To be reasonable:

The covenant must be reasonably necessary to protect a legitimate interest of the person benefited by the covenant (meaning an employer or the purchaser of the covenantor’s business)

The covenant must be reasonable as to its geographic, scope and duration (cannot be broader than the benefited person’s customer base and typically cannot be longer than one or two years)

The covenant must not harm the public.

Question 6

Nonmonetary remedies - specific performance - equitable defenses available

Answer 6

In addition to standard contract defenses, an action for specific performance is subject to the equitable defense of:

Laches: a claim that the plaintiff has delayed bringing the action and that the delay has prejudice that defendant

Unclean hands: a claim that the party seeking specific performance is guilty of wrongdoing in the transaction being sued upon

And

Sale to a bona fide purchaser: claimed that the subject matter has been sold to a person who purchased for value and in good faith.

Question 7

Nonmonetary remedies - Article 2 - Buyer’s nonmonetary remedies - cancellation

Answer 7

If a buyer rightfully rejects good because they do not conform to the contract, one of our options is simply to cancel the contract.

Question 8

Nonmonetary remedies - Article 2 - Buyer’s nonmonetary remedies - replevy identified goods on buyer’s prepayment

Answer 8

If a buyer has made at least part payment of the purchase price of goods that have been identified under a contract, and the seller has not delivered the goods, the buyer may replevy the goods from the seller in two circumstances:

The seller becomes insolvent within 10 days after receiving the buyers first payment

Or

The goods were purchased for personal, family, or household purposes.

In either case, the buyer must tender any unpaid portion of the purchase price to the seller.

Question 9

Nonmonetary remedies - Article 2 - Buyer’s nonmonetary remedies - replevy identified goods on buyer’s inability to cover

Answer 9

In addition, the buyer may replevy undelivered, identified goods from the seller, if the buyer, after a reasonable effort, is unable to secure adequate substitute goods (cover)

Question 10

Nonmonetary remedies - Article 2 - Buyer’s nonmonetary remedies - specific performance

Answer 10

All right, closely related to the buyers right to replevy is the right to specific performance where the goods are unique or other proper circumstances. The court may order specific performance, even with the goods have not yet been identified to the contract by the seller.

Question 11

Nonmonetary remedies - Article 2 - Seller’s nonmonetary remedies - right to recover goods -recover from buyer on buyer’s insolvency

Answer 11

If the buyer fails to make a payment due on or before delivery, the seller may withhold delivery of the goods. The seller may also withhold goods when the goods are sold on credit and, before the goods are delivered, the seller discovers that the buyer is insolvent. However, in such a case, the seller must deliver the goods if the buyer tenders cash for their payment.

Question 12

Nonmonetary remedies - Article 2 - Seller’s nonmonetary remedies - right to withhold goods

Answer 12

If a seller learns that a buyer has received delivery of goods on credit while insolvent, the seller may reclaim the goods upon demand made within 10 days after the buyers seat of the goods. However, the 10 day limitation does not apply if a misrepresentation of solvency has been made in writing to the particular seller within three months before delivery.

Question 13

Nonmonetary remedies - Article 2 - Seller’s nonmonetary remedies - recover shipped or stored goods from bailee - on buyer’s insolvency

Answer 13

The seller may stop delivery of goods in the possession of a carrier or other Bailee if they discover that the buyer is insolvent. Of course, the seller must deliver the goods if the buyer tenders cash for their payment. 

Question 14

Nonmonetary remedies - Article 2 - Seller’s nonmonetary remedies - recover shipped or stored goods from bailee - on buyer’s breach

Answer 14

The southern may stop delivery of Carload, truckload, planeload, or larger shipment of goods if the buyer breaches the contract or the seller has a right to withhold performance pending receipt of assurances. 

Question 15

Nonmonetary remedies - Article 2 - Seller’s nonmonetary remedies - recover shipped or stored goods from bailee - on buyer’s breach - force goods on buyer

Answer 15

The sellers ability to force goods on a buyer is limited to an action for price when the seller is unable to resell the goods to others at a reasonable price.

Question 16

Nonmonetary remedies - Article 2 - Seller’s nonmonetary remedies - right to demand assurances

Answer 16

Actions are circumstances that increase the risk of non-performance by a party to the contract, but don’t clearly indicate that performance will not be forthcoming, may not be treated immediately as an anticipatory repudiation. Instead, if there are reasonable grounds for insecurity with respect to a parties performance, the other party made demand in writing assurances that the performance will be forthcoming at the proper time.

Until they receive assurances, the party may suspend their own performance. If the proper assurances are not given within a reasonable time, usually within 30 days after justified demand for assurances, they may then treat the contract as repudiated. What constitutes an adequate assurance depends on the facts of the case.

Question 17

Monetary remedies - generally

Answer 17

Damages can be recovered only to the extent that they can be proved with reasonable certainty and could not be avoided with reasonable effort.

Question 18

Monetary remedies - Types of damages - compensatory - generally

Answer 18

The usual goal of damages for breach of contract is to put the non-breaching party in the position they would’ve been had the promise been performed, so far as money can do this.

Question 19

Monetary remedies - Types of damages - compensatory - expectation damages

Answer 19

In most cases, the plaintiff standard measure of damages will be based on an expectation measure. That is, sufficient damages for them to buy a substitute performance. This is also known as benefit of the bargain damages.

The value of what was expected minus the value that was actually received.

Question 20

Monetary remedies - Types of damages - compensatory - reliance damages

Answer 20

If the plaintiff expectation damages are too speculative to measure, for example, the plaintiff cannot show with sufficient certainty that profits they would’ve made if the defendant had perform the contract, the plaintiff may elect to recover those damages that they suffered based on the reason over reliance on the contract.

Reliance damages award the plaintiff the cost of their performance. That is theyre designed to put the plaintiff in the position that they would have been in had the contract never been formed. 

Question 21

Monetary remedies - Types of damages - compensatory - incidental damages

Answer 21

Compensatory damages may also include incidental damages. Incidental damages are most commonly associated with contracts for the sale of goods and typically include expenses, reasonably incurred by a buyer and inspection, receipt, transportation, care, and custody of goods rightfully rejected, and other expenses reasonably incident to the sellers breach, and by the seller in storing, shipping, returning, and reselling the goods as a result of the buyers breach. 

Question 22

Monetary remedies - Types of damages - compensatory - consequential damages

Answer 22

Consequential damages are special damages and reflect losses over and above standard expectation damages. They arise because of the non-breaching parties, particular circumstances, and most often they consist of lost profits.

These damages may be recovered. Only, at the time the contract was made, a reasonable person would’ve seen the damages as a probable result of the breach. For sea ability is the key issue for consequential damages. To recover consequential damages, the breaching party must have known or had recent to know of the special circumstances giving rise to the damages.

Note that in contracts for the sale of goods, only a buyer may recover consequential damages.

Question 23

Monetary remedies - Types of damages - compensatory - certainty rule

Answer 23

The plaintiff must prove that the losses suffered were certain in their nature and not speculative. Traditionally, if the breaching party prevented the non-breaching party from setting up a new business, courts would not award loss profits from the prospective business as damages, because they were too speculative.however, modern courts may allow lost profits as damages if they can be made more certain by observing certain similar businesses in the area or other businesses previously owned by the same party.

Question 24

Monetary remedies - Types of damages - punitive

Answer 24

Punitive damages are generally not awarded in contract cases.

Question 25

Monetary remedies - Types of damages - nominal

Answer 25

Nominal damages may be awarded when a breach is shown but no actual loss is proven. 

Question 26

Monetary remedies - Types of damages - liquidated damages - generally

Answer 26

The parties to a contract may stipulate what damages are to be paid in the event of a breach. These liquidated damages must be in an amount that is reasonable in view of the actual or anticipated harm caused by the breach. 

Question 27

Monetary remedies - Types of damages - liquidated damages - requirements for enforcement

Answer 27

Liquidated damages clauses will be enforceable if the following two requirements are met:

Damages for contractual breach or difficult to estimate or ascertain at the time the contract is formed

And

The amount agreed on is a reasonable forecast of compensatory damages in the case of breach. The test for reasonable is a comparison between the amount of damages, perspectively probable at the time of contract formation and the liquidated damages figure. If the liquidated damages amount is unreasonable, the courts will constr this as a penalty and will not enforce the provision. A single lump sum payment is probably a penalty.

Question 28

Monetary remedies - Types of damages - liquidated damages - recoverable even if no actual damages

Answer 28

If the requirements for the liquidated damages clause is met, the plaintiff will receive the liquidated damages amount. Most courts hold this is so even if no actual money or pecuniary damages have been suffered.

Question 29

Monetary remedies - Art 2 - Buyer’s damages - seller does not deliver or buyer rejects/revokes

Answer 29

If the seller doesn’t deliver, or the buyer properly objects, the goods or revokes acceptance of the goods, the buyers basic damages consist of the difference between the contract price and either: the market price or the cost of buying replacement goods, plus incidental, and consequential damages if any, less expenses saved as a result of the sellers breach.

Question 30

Monetary remedies - Art 2 - Buyer’s damages - seller does not deliver or buyer rejects/revokes - Cover

Answer 30

If the buyer chooses the cover measure, meaning the difference between the contract price and the cost of buying replacement goods, the buyer must make a reasonable contract for substitute goods in good faith without unreasonable delay. 

Question 31

Monetary remedies - Art 2 - Buyer’s damages - seller does not deliver or buyer rejects/revokes - Market price for cover

Answer 31

If the buyer measures damages by the difference between a contract price and the market price, market price usually is determined as of the time the buyer learns of the breach and at the place of tender.

Remember, the buyers damages are measured at the time they learn of the breach, while the sellers damages are measured as of the time for delivery.

Question 32

Monetary remedies - Art 2 - Buyer’s damages - seller delivers nonconforming goods that buyer accepts - warranty damages

Answer 32

If the buyer accepts goods that breach, one of the sellers warranties, the buyer may recover as damages loss, resulting in the normal course of events from the breach. The basic measure of damages in this case is the difference between the value of the goods as delivered and the value they would have had if they had been according to the contract, plus incidental and consequential damages.

Goods value if they were perfect minus the value when they were actually delivered

Question 33

Monetary remedies - Art 2 - Buyer’s damages - seller delivers nonconforming goods that buyer accepts - notice requirement

Answer 33

To recover damages for any defect as to accepted goods, the buyer must, with a reasonable time after they discover, or should have discovered the defect, notify the seller of the defect. If they do not notify the seller within a reasonable time, they lose their right to sue. Reasonable time is a flexible standard.

Question 34

Monetary remedies - Art 2 - Buyer’s damages - seller anticipatorily breaches contract

Answer 34

The measure of damages when the seller anticipatorily breaches the contract is the the difference between the market price at the time the buyer learned of the breach and the contract price.

Question 35

Monetary remedies - Art 2 - Buyer’s damages - consequential damages

Answer 35

A seller is liable for consequential damages are rising from their breach if: 1) they had reason to know of the buyers general or particular requirements, and 2) the subsequent loss resulting from those could not be reasonably prevented by cover.

Particular needs must be made known to the seller, but general requirements usually need not be.

Question 36

Monetary remedies - Art 2 - Buyer’s damages - consequential damages - goods for resale

Answer 36

If the buyer is in the business of reselling the goods, the seller is deemed to have the knowledge of the resale. 

Question 37

Monetary remedies - Art 2 - Buyer’s damages - consequential damages - goods necessary for manufacturing

Answer 37

If a seller knows that the goods they provide are to be used in the manufacturing process, they should know that their breach would cause its disruption and production leading to the loss of profits.

Question 38

Monetary remedies - Art 2 - Seller’s damages - where buyer repudiates or refuses to accept conforming goods

Answer 38

The code provides three measures of damages for when the buyer wrongfully, repudiates or refuses to accept conforming goods. In addition to incidental damages, the seller can:

Resell the goods and recover the difference between the contract price and the resale price (most common)

Recover the difference between the market price (measured as of the time and the place of delivery) and contract price

If the above measures are in adequate because the seller could have made an additional sale, recover under a loss, profits measure the difference between the contract price and the cost to the seller. (Lost volume sellers - unlimited supply)

Question 39

Monetary remedies - Art 2 - Seller’s damages - where buyer accepted goods - action for price

Answer 39

If the buyer has accepted the goods and has not paid, or has not accepted the goods, and the seller is unable to resell them at any reasonable price, or if the goods have been lost or damaged at the time the risk of loss was on the buyer, the seller may maintain an action against the buyer for the full contract price.

Question 40

Monetary remedies - contracts for sale of land

Answer 40

The standard measure of damages for breach of land sale contracts is the difference between the contract price and the fair market value of the land.

Question 41

Monetary remedies - employment contracts - generally

Answer 41

In employment contracts, check to see whether the breach was by the employer or the employee.

Question 42

Monetary remedies - employment contracts - generally - breach by employer

Answer 42

Irrespective of when the breach occurs, before performance after part performance or after full performance, the standard measure of the employees damages is the full contract price, although such damages may be reduced if the employee fails to mitigate.

Question 43

Monetary remedies - employment contracts - generally - breach by employee

Answer 43

If an employee material breaches, an employment contract, the employer is entitled to recover the cost of replacing the employee. That is, the wages the employer must pay to replace the employee minus the breaching employees wages. The breaching employee may offset money owed for work done to date.

Question 44

Monetary remedies - employment contracts - generally - employment at will

Answer 44

When employment is at well, it may be terminated at any time for any reason. Thus termination of Atwell employment by either party does not result in breach. The position characterized as permanent creates an employment at will relationship. 

Question 45

Monetary remedies - construction contracts - restoration and economic waste

Answer 45

If a construction contract is breached by the owner, the builder will be entitled to profits that would have resulted from the contract plus any cost expended. If the contract is breached, after construction is completed, the measure is the full contract price plus interest.

If the contract is breached by the builder, the owner is entitled to the cost of completion plus reasonable compensation for the delay. Most course allow the builder to offset or recover for work. Perform date to avoid unjust in Richmond of the owner. If the breach is only late performance, the owner is entitled to damages incurred because of late performance.

Question 46

Monetary remedies - construction contracts - restoration and economic waste

Answer 46

Usually, when I’m building contract is not properly performed, the owner is entitled to the cost of fixing the defect. However, unless there’s special significance attached to use of a particular item and significance is communicated to the builder the court will not order a remedy that results and undo economic waste. Quart or split on the result when a party contracts restore property and will fully refuses to do so because it is much more costly than any diminution in value of the property.

Question 47

Monetary remedies - avoidable damages (mitigation) - generally

Answer 47

Under Common law, the non-breaching party cannot recover damages that could’ve been avoided with reasonable effort. They must refrain from piling up losses after they receive notice of the breach, and they must not incur further expenditures or cost, and they must make reasonable efforts to cut down their losses by procuring a substitute performance at a fair price. They will not be able to recover those damages otherwise. Generally, a party may recover the expenses of mitigation. 

Question 48

Monetary remedies - contracts calling for installment payments

Answer 48

If a contract calls for payments and installments and a payment is not made, there is only partial breach. The aggrieved party is limited to recovering only the missed payment, not the entire contract price. However, the contract may include an acceleration clause making the entire amount due on any late payment, in which case you agreed party may recover the entire amount.

Question 49

Monetary remedies - avoidable damages (mitigation) - employment contracts

Answer 49

If the breaching employer can prove that a comparable job in the same locale was available, then contract damages against the breaching employer, for lost wages will be reduced by the wages that the plaintiff whatever received from that comparable job. 

Question 50

Monetary remedies - avoidable damages (mitigation) - manufacturing contracts

Answer 50

Generally, in a contract to manufacture goods, if the person for whom the goods are being manufactured, breaches, the manufacturer is under a duty to mitigate by not continuing work after the breach. However, if the factor such that completion of the manufacturing project will decrease rather than increased damages, the manufacturer has a right to continue.

Question 51

Monetary remedies - avoidable damages (mitigation) - construction contracts

Answer 51

A builder does not owe a duty to avoid the consequences of an owners breach by securing other work, for example, but does have a duty to mitigate by not continuing to work after the breach. However, if completion will decrease damages, it will be allowed.

Question 52

Monetary remedies - avoidable damages (mitigation) - contracts for sale of goods

Answer 52

Under article 2, the rule of mitigation generally does not apply. An injured buyer is not required to cover, and an injured seller is not required to resell. Market damages are always available if the buyer does not cover with the seller does not resell. However, the seller generally cannot bring an action against the buyer for the full contract price unless the goods cannot be resolved at a reasonable price, or were damaged or lost when the risk of loss was on the buyer.

Question 53

Restitution - generally

Answer 53

As an alternative to other contract damages, restitution may be available in a contract type situation. Restitution is not really part of contract law, but rather a distinct concept. Restitution is based on preventing unjust in Richmond when one has conferred a benefit on another without gratuitous intent. Restitution can provide a remedy, not only when a contract exist and has been breached, but also when a contract is unenforceable, and in some cases with no contractual relationship exist at all between the parties. 

Question 54

Restitution - terminology

Answer 54

When a contract is unenforceable or no contract between the parties exists, an action to recover restitutionary damages, often is referred to as an action for an implied in law contract, an action in quasi contract, or an action for quantum meruit

Question 55

Restitution - measure of damages

Answer 55

Generally, the measure of restitution is the value of the benefit conferred. Although this is usually based on the benefit received by the defendant, recovery may also be measured by the detriment suffered by the plaintiff if the benefits are difficult to measure or the benefit measure would achieve an unfair result.

Question 56

Restitution - specific applications - when contract breached

Answer 56

When a contract has been breached and the non-breaching party hasn’t fully performed, they may choose to cancel the contract and see for restitution to prevent unjust enrichment. Note that if the plaintive has fully performed, they are limited to their damages under the contract. This may be less than they would’ve received and restitutionary action, because of restitutionary remedy isn’t limited to the contract price.

Question 57

Restitution - specific applications - when contract breached - “losing” contracts

Answer 57

A restitutionary remedy often is desirable in the case of a losing contract, meaning a contract in which the actual value of the services or goods to be provided under the contract is higher than the contract price. This is because normal contract, expectation, damages, or reliance damages would be for a lesser amount.

Question 58

Restitution - specific applications - when contract breached - breach by plaintiff

Answer 58

Under some circumstances, a plaintiff may seek restitution, even though the plaintive is the party who breached. If the breach was intentional, some courts won’t grant the breaching party restitution. Modern chords, however, will permit restitutionary recovery, but limited to the contract price less damages incurred as a result of the breach.

Question 59

Restitution - specific applications - when contract breached - restitution of advance payments or deposit if buyer or goods breaches

Answer 59

If the buyer has paid part of the purchase price in advance and then breaches the contract, they can usually recover some of the payment. Unless the seller can prove greater damages, they may keep advanced payments totaling 20% of the purchase price or $500 whichever is the last. The balance must be returned to the buyer. If there is a valid liquidated damages clause, the seller need refund only of the buyers payment over the amount of liquidated damages.

When there is a breaching party, attempting to collect on a partially performed contract, consider substantial performance, divisibility, and restitution in order.

Question 60

Restitution - specific applications - when contract unenforceable

Answer 60

Restitution may be available in a quasi contract situation when a contract was made, but it unenforceable and unjust enrichment otherwise would result. For example, a celebrity is higher to sign autographs and is paid, but that is before they perform. The other party has restitutionary action to recover the payment.

Question 61

Restitution - specific applications - when no contract involved

Answer 61

Restitution may also be available in a quasi contract action when there is no contractual relationship between the parties:

The point of has conferred a benefit on the defendant by rendering services or expending properties

The plaintive conferred the benefit with the reasonable expectation of being compensated for its value

That defined new or had reason to know of the plaintiffs expectation

And

The defendant would be unjustly enriched if they were allowed to retain the benefit without compensating the plaintiff. 

Question 62

Rescission - generally

Answer 62

Rescission is a remedy, whereby the original contract is considered voidable and rescinded. The parties are left as though the contract had never been made. The grounds for rescission must have occurred before or at the time the contract was formed.

Question 63

Rescission - grounds

Answer 63

Mutual mistake of a material fact

Unilateral mistake if the other party knew or should’ve known of the mistake

Unilateral mistake hardship by the mistake and party is so extreme. It outweighs the other parties expectations under the contract.

Misrepresentation or law as a material factor in the negotiations that was relied upon

Such as depress, undue, influence, legality, lack of capacity, and failure of consideration

Question 64

Rescission - additional relief

Answer 64

Generally, all equitable defenses, including laches and unclean hands are available in rescission action. Note that the plaintiff negligence is not a defense. 

Question 65

Rescission - defenses

Answer 65

If the plaintiff has paid money to the defendant, they are entitled to restitution in addition to rescission.

Question 66

Reformation - generally

Answer 66

Reformation is the remedy, whereby the writing setting for the agreement between the parties is changed so that it conforms to the original intent of the parties.

Question 67

Reformation - grounds - mistake

Answer 67

To reform a contract because of mistake, there must be an agreement between the parties, and agreement to put the agreement in writing, and a variance between the original agreement and the writing.

Question 68

Reformation -grounds - misrepresentation

Answer 68

If a writing is an accurate because of misrepresentation, the plaintive can choose between reformation and avoidance. The qualify for reformation, the misrepresentation must relate to the content or the legal effect of the record.

Misrepresentation as to the subject matter of the agreement aren’t ground for reformation. Rescission and damages are the proper remedy for that. 

Question 69

Reformation - negligence does not bar reformation

Answer 69

Failure to read the record of the agreement, doesn’t preclude a party from obtaining reformation. In nearly every case in which the record doesn’t reflect the agreement, either one or both parties have failed to read it.

Question 70

Reformation - Clear and convincing

Answer 70

The variance between the antecedent agreement and the writing must be established by clear convincing evidence.

Question 71

Reformation - PER and SOF do not apply

Answer 71

The parole evidence rule is an applied in reformation actions. Likewise, the majority rule is that the statute of fraud is not apply, but many courts will deny reformation if it would add land to the contract without complying with the statute of frauds.

Question 72

Reformation - defenses

Answer 72

In addition to the general equitable defenses, the existence of a bona fide purchaser for value is also a defense for reformation.

Similarly, reformation isn’t permitted if the rights of a third-party will be unfairly affected.

Question 73

SOL under UCC - generally

Answer 73

For sale contracts, the ECC provides for a four-year statute of limitations. The parties may shorten the period by agreement to no less than one year, but they cannot lengthen it.

Question 74

SOL under UCC - accrual of action

Answer 74

The statutory period begins to run when a party can bring suit. That is, when the breach occurs. The period begins to run regardless of whether they aggrieved party knows about the breach.

Question 75

SOL under UCC - breach of warranty actions - generally

Answer 75

For breach of warranty action, the breach occurs and the limitations begins to run upon delivery of the goods. This is true, even if the buyer doesn’t discover the breach until much later. 

Question 76

SOL under UCC - breach of warranty actions - warranty extends to future performance

Answer 76

If there is an express warranty that explicitly extends to future performance of the goods, the four year period doesn’t begin to run until the buyer should’ve discovered the breach. 

Question 77

SOL under UCC - breach of warranty actions - implied warranties breached on delivery

Answer 77

Because implied warranties cannot explicitly extend to future performance, they are breached if it all upon delivery.