Remedies Flashcards
Types of monetary damages:
1) Expectation
2) Reliance
3) Restitutionary
4) Liquidated
Expectation damages are:
damages that will restore plaintiff to the position he would be in as if the K had been performed
The formula for expectation damages:
Loss of value of the breaching party’s performance
+ Any incidental and consequential costs generated by the breach
- Any payments received from the breaching party
- Any costs saved as a result of the breach
= Expectation damages of the aggrieved party
Situations where expectation damages are limited:
1) Cost of performance greatly exceeds the market value of performance
2) Expectation damages cannot be calculated because the damages are too uncertain
3) Damages are unforeseeable
4) Damages can be mitigated
Reliance damages are designed to:
Restore aggrieved party to position he was in before the contract
Reliance damages are measured by:
Any expenditures made in preparation for performance or actually performing
- (Minus) ANy loss which breaching party could prove the aggrieved party whould have suffered even if the K would have been fully performed
When are reliance damages available?
Where expectation damages not available because they are too uncertain or speculative
Restitutionary damages:
The value of benefits conferred on the other party in the transaction.
How to measure restitution damages:
1) Reasonable value or cost of the benefit conferred, OR
2) Extent to which the other party’s property has increased in value because of performance rendered
When is an aggrieved party likely to elect restitutionary damages?
1) When it would exceed the amount recoverable based on his expectation interest, and
2) Most likely to arise in a losing K.
Only available for partial but not full performance
Liquidated damages:
Is a contract provision designed to provide for damages of the parties’ own choosing.
Liquidated damages provisions will be enforceable when
1) Courts find it to be a valid clause designed to compensate for breach.
2) Cannot be a penalty for breach or it will be unenforceable
Three prongs of determining if liquidated damages provision is valid:
1) Did parties intend for it to be a liquidated damages clause or a penalty?
2) Was it reasonable at the time of making the contract in relation to anticipated harm?
3) Reasonable in relation to harm from breach that actually occurred?
UCC - Seller’s Remedies depends on
Whether goods have been delivered and accepted by the buyer.
UCC Seller’s Remedies - If delivered and accepted by the buyer
the K price is recoverable
UCC Seller’s Remedies - If the goods have not been delivered to and accepted by the buyer (because the buyer has wrongfully rejected or repudiated them):
If seller has resold - Damages are the difference between K price and Resale price.
If seller has not resold - Damages are the difference between K price and Market Price
What is a lost volume seller?
One whose supply of goods exceeds the demand for the same. In such a case, traditional seller remedies will not fully compensate the seller’s damages.
Lost volume sellers may recover:
The profit they would have made on the sale.
To recover lost profits, seller must show:
1) He could have made the sale to both the breaching buyer and resale buyer
2) Profitable to make both sales
3) Would have made profits off both sales
What are incidental damages?
Costs associated with getting stuck with the unsold goods as well as resale costs, but will be reduced by any amount reflecting expenses avoided on account of breach.
UCC - Buyer’s Remedies depends on:
whether buyer has covered (purchased replacement goods)
If a buyer covers:
he may recover the difference between K Price and Cover Price
If a buyer does not cover:
Difference between K Price and Market Price
If a buyer accepts nonconforming goods from the seller, he may receive:
the difference between Value of the goods contracted for and the value of the goods received
Types of Equitable Remedies:
1) Specific Performance
2) Negative Injunction
Specific Performance is appropriate when:
monetary remedy is inadequate, such as for:
1) Unique objects (works of art, precious heirloom)
2) Real Property
Specific Performance is not available for:
1) Ks for personal services
2) Ks for ongoing cooperation with the parties
When is specific performance available under the UCC?
1) Uniqueness requirement liberalized - when a buyer has adequately searched but is unable to find reasonable substitutes and was unable to cover breach by seller
2) allowed in output and requirements Ks (classic long-term Ks)
A negative injunction:
prohibits breaching party from taking particular action.
Other possible remedies:
1) Promissory Estoppel
2) Restitution and Unjust Enrichment
3) Agreed-To Remedies
The type of interest a party may recover under a claim of promissory estoppel could be (depending on JX):
1) expectation damages
2) reliance damages
3) tailor the remedy on case-by-case basis
Restitution and unjust enrichment can occur beyond a breach of K, including situations like:
1) benefits conferred under a failed K
2) benefits conferred by a breaching party
3) emergency benefits conferred by a health care professional
4) benefits conferred by mistake
Agreed-to remedies:
1) Liquidated damages
2) Provisions limiting or excluding damages
