Remedies

Question 1

[REMEDIES] • 9 • Contracts • Legal Remedies • Available Legal Remedies •

Answer 1

The following legal remedies are available for contract breaches: (1) expectation damages (compensatory damages); (2) reliance damages; (3) consequential damages; (4) incidental damages; AND (5) restitution damages. Punitive damages are generally NOT available for breach of contract actions UNLESS a misrepresentation occurred during contract formation that arises to the level of fraud.

Question 2

[REMEDIES] • 6 • Contracts • Legal Remedies • Expectation Damages (Compensatory) •

Answer 2

Expectation damages (also known as compensatory damages) arise directly from the breach, and are an attempt to put the non-breaching party in the same position it would have been in but for the breach. To recover, the damages must be (1) caused by the defendant (actual cause); (2) foreseeable (proximate cause); (3) certain (damages cannot be too speculative); AND (4) unavoidable (the plaintiff must take reasonable steps to mitigate his losses).

Question 3

[REMEDIES] • 3 • Contracts • Legal Remedies • Reliance Damages •

Answer 3

Reliance damages attempt to put the non-breaching party in the position it would have been if the contract never existed. Reliance damages are available when a plaintiff acted in reliance on the defendants agreement to perform under a contract, AND the plaintiffs reliance was foreseeable. If expectation damages are too speculative, the court may award reliance damages instead.

Question 4

[REMEDIES] • 4 • Contracts • Legal Remedies • Consequential Damages •

Answer 4

Consequential damages arise indirectly from the breach, and are awarded because of the injured partys special circumstances. To recover, the damages must be (1) reasonably foreseeable at the time the contract was formed; (2) arise from the plaintiffs special circumstances ; AND (3) the defendant must have had reason to know of the plaintiffs special circumstances.

Question 5

[REMEDIES] • 4 • Contracts • Legal Remedies • Incidental Damages •

Answer 5

Incidental damages are the reasonable costs incurred for dealing with a breach (i.e. costs of returning non-conforming goods).

Question 6

[REMEDIES] • 4 • Contracts • Legal Remedies • Restitution Damages •

Answer 6

Restitution is available when a plaintiff shows that the defendant has been unjustly enriched. Damages will be awarded based on the value of the benefit conferred upon the defendant. A plaintiff CANNOT recover both expectation and restitution damages.

Question 7

[REMEDIES] • 1 • Contracts • Legal Remedies • Damages in Contracts for the Sale of Land •

Answer 7

For a breach of a contract for the sale of land , the buyer may recover: (1) any amount paid ; (2) the difference between the fair market value of the land at the time of the breach and the contract price ; (3) expenses incurred in investigating title and preparing necessary paperwork ; (4) expenses incurred in preparing to occupy the land; (5) possible consequential damages ; AND (6) interest. The seller may recover ONLY IF the property is NOT resold for a higher price than the contract price. The sellers damages are (1) the excess , if any, of the contract price over the lands fair market value at the time of the breach; AND (2) possible consequential damages.

Question 8

[REMEDIES] • 1 • Contracts • Legal Remedies • UCC Damages and Right to Cover •

Answer 8

In a contract for the sale of goods , if the seller breaches and does NOT deliver the goods, the buyer may (1) recover the difference between the contract price and the fair market value of the goods at the time of the breach; OR (2) cover by buying the same goods; the buyer will then recover the difference between the cost to cover and the contract price.

Question 9

[REMEDIES] • 3 • Contracts • Legal Remedies • Quasi-Contract and Unjust Enrichment •

Answer 9

A quasi-contract is a contract implied by law, and is used to prevent the unjust enrichment of the defendant. A quasi-contract will be created if (1) the plaintiff confers a benefit upon the defendant; (2) the plaintiff had a reasonable expectation he would be compensated for the benefit; (3) the defendant requested the benefit (express or implied); AND (4) the defendant would be unjustly enriched if not forced to compensate the plaintiff. Only restitution or reliance damages may be awarded under a quasi-contract.

Question 10

[REMEDIES] • 1 • Contracts • Equitable Remedies • Reformation •

Answer 10

Reformation allows a contract to be changed to conform to the parties original intent. It is available if a valid contract exists , but there was a misrepresentation OR mutual mistake of a material fact (a unilateral mistake is sufficient if the non-mistaken party had reason to know of the mistake). A contract will NOT be reformed if a valid equitable defense applies.

Question 11

[REMEDIES] • 2 • Contracts • Equitable Remedies • Rescission •

Answer 11

Rescission makes an original contract voidable and cancelled. It is available if there was a problem with the formation of the contract (consider possible defenses to formation). A contract will not be rescinded if a valid equitable defense applies OR the plaintiff first sued for damages under the contract (the plaintiff may sue for both at the same time).

Question 12

[REMEDIES] • 9 • Contracts • Equitable Remedies • Specific Performance •

Answer 12

Specific performance is an available remedy where: (1) a valid contract exists; (2) the plaintiff has satisfied his conditions under the contract; (3) legal remedies are inadequate (for contracts involving the sale of land, legal remedies are inadequate because land is unique); (4) enforcement is feasible for the court (it is NOT feasible to enforce service contracts, and attempting to do so would raise constitutional issues related to involuntary servitude); AND (5) no valid equitable or contractual defenses exist. Under the common law doctrine of mutuality , both parties must have been able to request specific performance. However, now the requirement for mutuality is met if one party can sufficiently assure performance.

Question 13

[REMEDIES] • 1 • Torts • Legal Remedies • Available Legal Remedies •

Answer 13

The following damages are available to remedy a tort: (1) expectation damages; (2) consequential damages; (3) nominal damages; (4) punitive damages; AND (5) restitution damages.

Question 14

[REMEDIES] • 2 • Torts • Legal Remedies • Compensatory Damages •

Answer 14

Compensatory damages attempt to put the injured party in the same position it would have been in but for the injury. To recover, the damages must be (1) caused by the defendant (actual cause); (2) foreseeable (proximate cause); (3) certain (damages cannot be too speculative); AND (4) unavoidable (the plaintiff must take reasonable steps to mitigate his losses).

However, non-economic losses resulting from a tort (i.e. pain and suffering) are NOT subject to the same certainty rules. Additionally, future earnings are available, and are calculated based on the difference in the persons earning ability before the injury and the persons earning ability after the injury ; it is NOT based on the persons actual past earnings.

A defendant is only liable for damages if his actions were the actual and proximate cause of the plaintiffs injury. To determine actual cause, consider the but for test. Actual cause exists if: but for the defendants conduct, the plaintiff would not have been injured. Proximate cause exists if the plaintiffs injury was a foreseeable result of the defendants conduct.

Question 15

[REMEDIES] • 2 • Torts • Legal Remedies • Nominal Damages •

Answer 15

Nominal damages are available when the plaintiff has NOT suffered an actual injury, but still wants to establish his rights. Nominal damages are not available where either damages or actual injury is an element to a cause of action.

Question 16

[REMEDIES] • 1 • Torts • Legal Remedies • Punitive Damages •

Answer 16

Punitive damages are awarded to punish the defendant , and are available if (1) the plaintiff was awarded actual damages (expectation or nominal damages); (2) the punitive damages are proportional to the actual damages; AND (3) the defendants conduct was more than negligent.

Question 17

[REMEDIES] • 3 • Torts • Legal Remedies • Restitution Damages •

Answer 17

Restitution is available when a plaintiff shows that the defendant has been unjustly enriched. Damages will be awarded based on the value of the benefit conferred upon the defendant.

Question 18

[REMEDIES] • 2 • Torts • Legal Remedies • Conversion Damages (Fair Market Value) •

Answer 18

When a plaintiff has suffered a conversion, he may recover possession of the property OR the fair market value of the property at the time of conversion. A plaintiff may also receive reasonable compensation for time spent trying to recover the property.

Question 19

[REMEDIES] • 2 • Torts • Legal Remedies • Trespass to Chattels • Actual Damages

Answer 19

In an action for trespass to chattels, damages awarded are the actual damages suffered, which may include the cost of repairs.

Question 20

[REMEDIES] • 1 • Torts • Legal Remedies • Trespass to Land • Cost of Repair and Diminution of Valu

Answer 20

In an action for trespass to land, damages are measured by the diminution in value of the property OR the cost to repair the property.

Question 21

[REMEDIES] • 1 • Equitable Remedies • Temporary Restraining Order (TRO) • •

Answer 21

A TRO is an emergency remedy used to maintain the status quo pending the outcome of the preliminary injunction , and is available when the plaintiff will suffer imminent and irreparable harm. It is issued after notice and hearing, OR ex parte with adequate showing of urgency. A TRO lasts 10 days.

Question 22

[REMEDIES] • 2 • Equitable Remedies • Preliminary Injunction • •

Answer 22

A preliminary injunction maintains the status quo between the parties pending outcome of the litigation , and is available if the party will suffer irreparable harm before the hearing. To receive a preliminary injunction, the court must (1) consider the likelihood of the plaintiffs success on the merits; AND (2) balance the harm to the parties if the preliminary injunction is granted or denied. The plaintiff must also post a bond , which will be used to reimburse the defendant for any injury caused by the injunction IF the plaintiff does not succeed on the merits.

Question 23

[REMEDIES] • 2 • Equitable Remedies • Permanent Injunction • •

Answer 23

Permanent injunction is issued after a full trial on the merits, and requires the following: (1) inadequate legal remedies ; (2) a protectable personal or property interest (historically, this could only be a property interest, but now, any personal or property interest is sufficient); (3) feasibility of enforcement (not an issue with negative injunctions, but may be with mandatory injunctions); (4) a balancing of hardships to both parties (balance the benefit to the plaintiff versus the hardship to the defendant) UNLESS the defendants conduct is willful; AND (5) no valid equitable defenses. A negative injunction prohibits the defendant from doing something, while a mandatory injunction requires the defendant to do something.

Question 24

[REMEDIES] • 2 • Equitable Remedies • Equitable Lien • •

Answer 24

An equitable lien is available if a defendant wrongfully acquired title to property AND the defendant would be unjustly enriched if allowed to keep the property. The court will force the sale of the property, and the plaintiff will receive the proceeds. The plaintiff is entitled to a deficiency judgment if the proceeds are less than the value of the property at the time it was taken. A plaintiff may trace his property to other forms, but he is NOT entitled to any increase in the value of the property. However, a bona fide purchaser (BFP) is NOT be subject to an equitable lien.

Question 25

[REMEDIES] • 4 • Equitable Remedies • Constructive Trust • •

Answer 25

A constructive trust is an equitable remedy used to prevent unjust enrichment resulting from wrongful conduct, such as fraud, undue influence, or breach of a fiduciary duty. The trustees only obligation is to return the property to the intended beneficiary. A constructive trust is available if a defendant wrongfully acquired title to property AND the defendant would be unjustly enriched if allowed to keep the property. The court will require the defendant to hold the property as a trustee and then return it to the plaintiff. A plaintiff may trace his property to other forms and is entitled to any increase in value to the property. However, a bona fide purchaser (BFP) is NOT be subject to a constructive trust.

Question 26

[REMEDIES] • 1 • Equitable Remedies • Replevin • •

Answer 26

Replevin allows the recovery of specific personal property , and is available if the defendant is wrongfully withholding personal property that the plaintiff has a right to possess. A plaintiff may recover the property before trial if there is a preliminary judicial hearing AND the plaintiff posts bond.

Question 27

[REMEDIES] • 2 • Equitable Remedies • Ejectment • •

Answer 27

Ejectment allows the recovery of specific real property , and is available if (1) the defendant has actual possession of the property; (2) the defendant is wrongfully withholding the property; AND (3) the plaintiff has a right to possess the property.

Question 28

[REMEDIES] • 1 • Equitable Remedies • Purchase Money Resulting Trust • •

Answer 28

A purchase money resulting trust arises when one party provides consideration for the purchase of real property, but titles the property in a separate partys name. The party providing consideration is the beneficiary of the trust containing the real property, and the person holding title is the trustee.

Question 29

[REMEDIES] • 1 • Equitable Remedies • Pro Rata Resulting Trust • •

Answer 29

A pro rata resulting trust arises when one party provides only partial consideration for the purchase of real property, and the property is titled in a separate partys name. The party providing partial consideration is the beneficiary of the trust containing only the portion he provided toward the purchase, and the person holding title is the trustee.

Question 30

[REMEDIES] • 8 • Defenses • Laches • •

Answer 30

The defense of laches bars a plaintiffs recovery when (1) there is an unreasonable delay between when the plaintiff learned of the injury/breach and when the action was brought; AND (2) the defendant is prejudiced by the delay.

Question 31

[REMEDIES] • 8 • Defenses • Unclean Hands • •

Answer 31

The doctrine of unclean hands bars a plaintiffs recovery when a plaintiff is guilty of unethical , unlawful , or otherwise improper conduct related to the subject of the lawsuit.

Question 32

[REMEDIES] • 8 • Defenses • Mitigation of Damages • •

Answer 32

A plaintiff may NOT recover damages that could have been avoided. Accordingly, a party must take reasonable steps to mitigate his losses. If he fails to do so, the court will reduce the total damages by the amount that could have been avoided.