Remedies Flashcards
What is specific performance AND when is it available?
Specific performance is an equitable remedy is ONLY available when damages are INADEQUATE to compensate the injured party
Availability depends on type of K…
1) Real property: specific performance is the USUAL REMEDY b/c real property is considered unique (even though not really) NY DISTINCTION: if the vendor cannot deliver title b/c of a LATENT DEFECTthat he’s unaware of, then damages = down pmt + reasonable exps
2) Sale of Goods (Art. 2/UCC): specific performance is available ONLY IF the goods are (i) unique; OR (ii) there are “other proper circumstances” (e.g. an inabillity to buy substitute goods in the mkt)
3) Service Ks: specific performance is NOT AVAILABLE in service K, but injunctive relief may be (i.e. barring someone from doing something)
When can a seller reclaim goods that were NOT paid for?
General rule = NOT available under Art. 2/UCC
EXCEPTION 1: If a buyer (i) was insolvent WHEN it received the goods; AND (ii) seller makes a demand w/in 10 DAYS after buyer received them
EXCEPTION 2: Seller can reclaim goods AT ANY TIME if the buyer misrepresented its solvency in WRITING w/in 3 MONTHS before delivery
Note: there is no right to reclaim goods from an innocent third party
When are punitive damages available?
NEVER!! The purpose of K damages is to COMPENSATE, not PUNISH.
When will a liquidated damages clause be upheld?
The clause would be UPHELD IF: (i) it was DIFFICULT to estimate damages at the time of the contracting; AND (ii) the liquidated damages are a REASONABLE forecast probabledamages (CANNOT act as a penalty)
Reasonability COMMON LAW: is measured from perspective of (ex ante) PROBABLE damages, and NOT (ex post) ACTUAL damages Art. 2/UCC, is measured realtive to PROBABLE or ACTUAL damages (more flexible)
If liquidated damages cl is struck down, π will get actual damages
What are expectation damages AND how are the calculated under the common law?
Expectation damages put the injured party IN AS GOOD a position as full performance (i.e. the benefit of the bargain)
Expectation damages are the DEFAULT measure of damages
If expectation damages are too speculative (e.g. the profit level), then the π can get reliance damages for expenditures spent in reliance on the K (i.e. puts π in a position as if the K had NEVER existed)
NOTE: an injured party CANNOT recover damages he COULD have avoided (mitigation) w/ reasonable effort
What are expectation damages AND how are the calculated under Art. 2/UCC?
Expectation damages put the injured party IN AS GOOD a position as full performance (i.e. the benefit of the bargain)
Expectation damages are the DEFAULT measure of damages
CALCULATION
Buyer’s damages
1) Cover damages (default) = cover price – K price. Use this IF buyer covers in GOOD faith.
2) Mkt damages = mkt price – K price This is used if buyer DOESN’T cover at all OR does so in bad faith.
NOTE: there is NO rule of mandatory covering in the UCC (mitigation)
3) Loss in value = value as promised – value delivered. Is used if buyer KEEPS non-conforming goods.
Seller’s damages
1) Resale damages (default) = K price – resale price. Use IF seller resells in GOOD faith.
2) Mkt damages = K price – mkt price This is used if buyer DOESN’T resell at all OR does so in bad faith.
NOTE: there is NO rule of mandatory covering in the UCC (mitigation)
3) Lost profit (for volume dealer) = all the LOST profits from MISSED sale. ONLY use IF, π is a “lost volume dealer.”
NOTE: any ADDITIONAL profit made on the REPLACEMENT sale does NOT reduce the amt of profit damages owed to merchant from breaching buyer
4) K price = if seller CANNOT resell the goods (RARE!)
E.g. custom made goods that cannot be resold to anyone else
What are incidental damages AND how are the calculated?
Incidental damages = COST to the injured buyer/seller of transporting/caring for goods AFTER breach; AND of arranging a substitute trxn (e.g. a cover/resale)
What are consequential damages AND how are the calculated?
Consequential damages = damages special to THIS π that were REASONABLY foreseeable to the breaching party (∆) at the time of the K NOTE: consequential damages are ONLY available under common law; they are not available under Art. 2/UCC
