Remedies Flashcards
Compensatory
intended to compensate plaintiff (P) for legally recognized harm/injury;
award seeks to place P in same position he would have been in had he not been harmed by
defendant’s (D) tortious behavior or breach of contract
Reliance
P can recover expenditures related to performance of contract; Damages cannot
exceed contract price
Restitutionary
if there is total breach of the contract by D, damages measured by benefit conferred on D by P
Liquidated
Liquidated—agreed upon during formation of contract - enforced if amount is reasonable in
light of anticipated loss at contract formation or actual loss caused by breach
- Unreasonable amount is unenforceable and seen as a penalty
- Agreement to accept arbitrator’s decision re remedies generally enforceable
Incidental
reliance-type reasonable expenses incurred in a transaction that are recoverable
without special proof
Consequential damages (contracts)
consequential damages that arise naturally from
the breach, were within the contemplation of the parties at contract formation, or were
otherwise foreseeable are recoverable
Monetary Damages
Rule: The default remedy in contract law is monetary damages, which include:
- Expectation damages (puts the non-breaching party in the position they would have been in had the contract been fully performed),
- Consequential damages (losses resulting from the breach that were foreseeable at contract formation),
- Incidental damages (costs incurred to mitigate the breach), and
-Reliance damages (compensates for costs incurred in reliance on the contract).
Expectation Damages
Rule: Expectation damages seek to put the non-breaching party in the position they would have been in had the contract been fully performed.
Formula:
Contract price – cost of cover + incidental damages + foreseeable consequential damages – costs saved by non-performance.
Consequential Damages
Rule: Consequential damages compensate for foreseeable losses that result from a breach but are not directly part of the contract.
- The damages must be foreseeable at the time of contract formation.
- They must be causally linked to the breach and proven with reasonable certainty.
Incidental Damages
Rule: Incidental damages are costs incurred to mitigate the breach or secure substitute performance.
Mitigation of Damages
Rule: A non-breaching party has a duty to mitigate damages by taking reasonable steps to find replacement work or cover for losses.
If the party fails to mitigate, damages will be reduced as if mitigation occurred.
Lost-Volume Seller Doctrine
Rule: A lost-volume seller does not have to reduce damages by replacement work if they could have performed both contracts simultaneously.
Applies mainly to goods sellers, but can apply to service providers who had capacity to complete both jobs.
Reliance Damages
Rule: Reliance damages compensate the non-breaching party for expenses incurred in reliance on the contract.
Used when expectation damages are too speculative.
Cannot exceed expectation damages.
Restitutionary Damages
Rule: Restitutionary damages prevent unjust enrichment by compensating the non-breaching party for the value of the benefit conferred on the breaching party.
Calculated based on market value of services rendered rather than contract price.
Punitive Damages in Contract Law
Rule: Punitive damages are not awarded for breach of contract, even for willful breaches, unless the breach also involves an independent tort.
Specific Performance
Rule: Specific performance is an equitable remedy requiring actual performance of the contract. It is granted when:
- There is a valid, enforceable contract with clear and definite terms.
- The non-breaching party has fully performed, is ready to perform, or is excused.
- Legal remedies (money damages) are inadequate.
- Performance is feasible.
- There are no defenses.
Feasibility of Specific Performance
Rule: Courts will not grant specific performance if:
- It requires excessive supervision.
- The contract involves personal services.
- Money damages are adequate to compensate the non-breaching party.
Defenses to Specific Performance
Rule: A defendant may avoid specific performance by raising:
Statute of Frauds (if the contract is unenforceable due to lack of writing),
Unclean Hands (if the plaintiff also engaged in misconduct),
Laches (if the plaintiff unreasonably delayed seeking relief).
