Remedies Flashcards
SPECIFIC PERFORMANCE / INJUNCTION
What is specific performance AND when is it available?
NOTE: NY Distinction
Specific performance is an equitable remedy
IT 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 (e.g. artwork or antiques); OR
(ii) there are “other proper circumstances” (e.g. an inability 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)
SELLER’S RECLAMATION
When can a seller reclaim goods that were NOT paid for?
SELLER’S RECLAMATION = Right of an unpaid seller to get its goods back
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; AND
(iii) Buyer still has goods at time of demand
EXCEPTION 2: If a buyer
(i) EXPRESSLY misrepresented its solvency; AND
(ii) seller makes a demand w/in REASONABLE AMOUNT OF TIME; AND
(iii) Buyer still has goods at time of demand
EXCEPTION 3: If a buyer
(i) misrepresented its solvency in WRITING w/in 3 MONTHS before delivery; Then
(ii) seller Seller can reclaim goods AT ANY TIME; BUT
(iii) Buyer still needs to have the goods at time of demand
PUNITIVE DAMAGES (TRICK QUESTION)
When are punitive damages available?
NEVER!! The purpose of K damages is to COMPENSATE, not PUNISH
LIQUIDATED DAMAGES
When will a liquidated damages clause be upheld?
A liquidated damages clause would be UPHELD IF:
(i) Damages were TOO DIFFICULT to estimate at time of contracting; AND
(ii) the liquidated damages are a REASONABLE forecast of probabledamages (CANNOT act as a penalty)
Reasonability:
under COMMON LAW, is measured relative to (ex ante) PROBABLE damages, and NOT (ex post) ACTUAL damages
under Art. 2/UCC, is measured relative to PROBABLE OR ACTUAL damages (more flexible)
Note: If liquidated damages cl is struck down, π will get actual damages
E.g. a fine of $100/day is more reasonable than a flat $20,000 as the latter is inflexibile and not based on extent of damages
Note: Liquidated Damages based on a formula more likely to be upheld than a flat out absolute dollar figure
EXPECTATION 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: COMMON LAW APPLIES MITIGATION - an injured party CANNOT recover damages he COULD have avoided (mitigation) w/ reasonable effort
EXPECTATION DAMAGES
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
CALCULATIONS
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]
Note: Price is used at the time of discovery of the breach
OR
[reasonable replacement price – K price]
Use whichever is greater
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 This is used in buyer KEEPS non-conforming goods
Seller’s damages:
1) Resale damages (default) = K price – resale price This is used 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 (even IF resells at same price, i.e. $0 resale damages)
ONLY use IF, π is a “lost volume dealer”
(i.e. can get virtually UNLTD supply of the good)
(e.g. a breach for “off the rack” regular inventory items that are then resold to other buyers in the store can still recover for the LOST PROFIT of the breach sale)
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
INCIDENTAL DAMAGES
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)
CONSEQUENTIAL DAMAGES
What are foreseeable consequential damages AND how are the calculated?
Guaranteed Bar Question and Possible ESSAY!
Consequential damages =
1) damages arising from circumstances that are special to THIS π; AND
2) MUST BE damages that were REASONABLY foreseeable to the breaching party (∆) at the time of the K. D needs to have reason to know of the special circumstances at the time of the contract
NOTE: consequential damages are ONLY available under common law; they are not available under Art. 2/UCC to a SELLER (UNLESS”loss volume dealer” where he’d get the lost profit)
Hadley v. Baxendale: the delivery ∆ and the π who needed the crankshaft delivered (∆ didn’t know that the package served an immediate purpose, so not foreseeable)
DAMAGES
GENERAL APPROACH TO DAMAGES
BOILER PLATE FOR DISCUSSION OF DAMAGES ON BAR EXAM
General Approach to Damages = Protection of Expectation
Expectation = people who contract expect that the other party WILL NOT breach
General Method:
1) Look for facts providing dollar value w/o breach
2) Look for facts providing dollar value w/breach
3) Compare the two to determine the amount of damages
NY Essay Boiler Plate Language:
“The many New York rules w.r.t. contract law damages are all based on compensating the plaintiff. This compensation is based on protecting this expectation by putting the plaintiff in the same position as if there had been no breach.”
AVOIDABLE DAMAGES
No recovery for damages that could have been avoided w/o undue burden on π
Burden of pleading and proof is on ∆
RELIANCE DAMAGES
Note: NY Distinction
Reliance can be considered as an alternative to expectation
Look for a services Contract and a π engaged in some sort of new business activity where is is too uncertain to predict the lost profit (i.e. the expectation damages)
e.g. spending $2,000 for promoting a reunion concert could allow recovery of the advertising even if the actual profits from the concert were too uncertain to allow for recovery
