Remedies Flashcards
Expectation Damages
Default award
an amount that restores party to position they would be
had the contract been fully performed.
Monetary Damages available at Common Law - Interests Protected
List
Expectation Interests
Reliance Interests
Restitutionary Interests
Calculation of Expectation Damages
Loss of Value for Breach \+ incidental and consequential costs from breach - Payments from breaching party - Costs saved from breach = Expectation Damages
Situations limiting the recovery of expectation damages
- cost of performance greatly exceeds the value of performance. Peevyhouse v. Garland Coal & Mining Co
- Cannot calculate ED with reasonable certainty - Lost profits new business.
- Unforeseeable damages
- mitigation of damages
Reliance Damages
Damages that restore party to position prior to contract.
Measure of Reliance Damages
Actual out of pocket expense in preparation or actual performance.
LESS
provable losses non-breaching party will suffer if fully performed.
Where Reliance Damages are available
If expectation damages not available
because they are uncertain or speculative.
Restitutionary Damage Interest
value of benefits conferred on the other party.
not benefits conferred on other parties.
Measure of Restitutionary Damages
Reasonable value of benefit conferred
OR
increased in value of property from the performance rendered.
Court may award either in its discretion and as justice requires
When will a party elect to recover Restitutionary damages
When it exceeds amount recoverable from expectation interest
such as the loss of a contract.
Limits on Restitutionary damages
available for partial performance
NOT if party has fully performed.
Liquidated Damages Clause
Parties can provide for damages in the event of a breach.
enforceable if provision is to compensate for breach
not a penalty or punishment for breach.
3 Prong Test for Liquidated Damages Provisions
- intend to act as liquidated damages provision or a penalty?
- reasonable at the time of contract relative to anticipated harm?
Key - will anticipated harm be difficult to prove? - reasonable in relation to harm Actually caused by breach?
LD provision passes anticipated harm prong,
but fails the actual harm prong.
What result?
Majority-Minority Rule
Majority - clause is enforceable, if not a penalty.
Minority will not enforce the clause and deem it a penalty.
A clause that is a penalty, is stricken.
damages recoverable will follow default rules of remedies/damages
sellers right to recover will depend, under the UCC, on…
Are goods are delivered and accepted
If so, sellers remedy is to the contract price.
Remedy for Seller
goods not delivered and accepted
because buyer has wrongfully rejected or repudiated.
Seller Resold:
damages = difference between selling price and contract price.
Not Resold
damages = difference between contract price and market price.
Lost Volume Sellers - Defined
One whose supply of goods exceeds demand.
Recovery available to Volume Seller
profit they would have made on lost sale.
to recover lost profits a volume seller must show
- could make sale to both the breaching buyer and resale buyer.
- Would profit from both sales
- Would make additional sale regardless of buyers breach.
Incidental Damages available to seller under the UCC
costs associated with getting stuck and trying to resell goods
LESS
expenses AVOIDED as a result of the breach.
regardless whether he actually resells the goods
What determines availability of BUYERS remedies under the UCC.
Whether buyer has covered - purchased replacement goods.
buyer covered -
DAMAGES = COVER PRICE - CONTRACT PRICE
If not -
DAMAGES = COVER PRICE - MARKET PRICE
additional damages a BUYER can recover under UCC
Incidental and consequential damages
Incidental damages = cost of securing cover
Consequential damages = peculiar costs to buyer because of a need or use for goods including lost profits.
Foreseeability REQUIRED
Damages are reduced by expenses avoided because of breach.
Specific Performance
Extraordinary remedy where breaching party is ordered to perform. available where damages is considered inadequate.
available for unique objects, works of art, heirlooms, and real property.
not available in contract for services
Equity Considerations for Specific Performance
- Aggrieved party’s clean hands?
- are terms fair?
- are they sufficiently definite?
- Can performance be reasonably assured.
- Is specific performance is in the public interest
When is Specific Performance NOT available
- Personal services contracts
2. Contracts involving ongoing cooperation between the parties
Specific Performance under the UCC
Liberalized Uniqueness Requirement -
SP for buyer who has adequately searched but cant find reasonable substitutes and is unable to cover sellers breach
Liberalized ‘capable of immediate performance’ -
SP allowed in output and requirements contracts involving ongoing relationships and cooperation.
Negative Injunctions
party seeks to prohibit some particular action.
often found in the employment setting.
Availability of Negative Injunction in a mid-term employment contract
available for a breach for departing prior to completion where
Services are Unique or extraordinary.
contractual provision establishing exclusive employment during the period will be implied by most courts
Negative Injunction Factors in non compete agreements
- significant business justification for post employment restraint.
- Scope is reasonable in duration and geographical reach.
- is express provision in the contract. It WILL NOT be implied.
Interests recoverable in promissory estoppel.
- Expectation damages
- Reliance Damages
- Courts may tailor remedy to the injustice at issue
Recovery of Benefits conferred under a failed contract
restitution damages if contract failed, short of breach,
for value of benefits conferred.
General Rule - person conferring benefits without request
officious intermeddler - no recovery because no opportunity to decline
Doctors and healthcare providers are excepted when providing emergency medical care
Factors:
restitution for benefits conferred by mistake
- Blameworthiness of the error
- Was recipient was aware of error in time to prevent it.
- Did recipient avail himself of benefits at issue.
Agreed to Remedies - List 2
Liquidation Damages
Provisions limiting or excluding damages
Types of exclusive remedy provisions
- Provisions that limit the measure of damages available
- Provide exclusive remedies - to repair or replace goods
Provisions are enforceable unless unconsionable or
fail their essential purpose.
Provisions purporting to limit consequential damages for personal injury are prima facie unconsionable.
Categories where specific performance is available
Unique objects
Real property
Situations where specific performance is not available
Personal services contract
Contracts requiring ongoing cooperation
Restitution damages a breaching party is entitled to
value of the benefits conferred
less offset for damages caused by breach
Limits on consequential damages for personal injury on consumer goods are…
Prima facie unconscionable
