Remedies

Question 1

Breach

Answer 1

Someone breaches a contract when he fails to perform a duty without a valid excuse

Question 2

Remedy

Answer 2

A method a court uses to compensate an injured party

Question 3

Injunction

Answer 3

An order forcing someone to do something, or refrain from doing something. Courts frequently grant injunctions to an employer, blocking the employee from leaving to work elsewhere, but almost never uses an injunction to force an employee to complete a contract.

Question 4

Expectation Damages

Answer 4

The money required to put one party in the position she would have been in had the other side performed the contract.

Question 5

Specific Performance

Answer 5

In cases of rare property, like the Ferrari car that the seller no longer wants to part with, courts often award specific performance, forcing both parties to compete the deal.

Question 6

Liquidated Damages Clause

Answer 6

A provision in the contract that declares in advance what one party will receive if the other side breaches. Sometimes enforced

Question 7

Remedy Ethics

Answer 7

The focus of remedies is on compensating the injured party, rather than punishing the party in breach.

Question 8

Interest

Answer 8

A legal right in something.

Question 9

Expectation Interest

Answer 9

What the injured party reasonably though she would get from the contract. Goal is to put her in a position she would have been in if both parties fully performed

Question 10

Reliance Interest

Answer 10

Injured party may be unable to demonstrate expectation damages, perhaps its unclear he would have profited. But he may still prove he expended money in reliance on the agreement and should receive compensation.

Question 11

Restitution Interest

Answer 11

Injured party has conferred a benefit on the other party.

Question 12

Equitable Interest

Answer 12

Money damages may not suffice to help the injured party. Something more, such as an order to transfer property to injured party (specific performance) or an order forcing one party to stop doing something (injunction) is needed.

Question 13

Incidental Damages

Answer 13

Minor costs such as storing or returning defective goods, advertising for alternative goods, and so forth.

Question 14

Compensatory Damages

Answer 14

Most common monetary awards for expectation interest. Damages that flow directly from the contract.

Question 15

Consequential Damages or “Special Damages”

Answer 15

Damages resulting from the unique circumstances of this injured party. Injured party may recover consequential damages only if the breaching party should have foreseen them when the two sides formed the contract.

Question 16

Seller’s Remedies

Answer 16

If a buyer breaches a sale of goods contract, the seller generally has at lease two remedies.

1. Sell elsewhere - if she acts in good faith she will be awarded the difference between the original contract price and the price she was able to obtain in the open market.
2. Keep goods - settle for the difference between the contract price and the market value of the goods.

Question 17

One difference in Seller Remedies

Answer 17

Most courts hold that the seller of goods in NOT entitled to consequential damages

Question 18

Buyer’s Remedies

Answer 18

Two options:

1. “Cover” by purchasing substitute goods. Make a good faith purchase of goods similar to those in contract. Buy may obtain difference between original contract price and her cover price.
2. Chooses not to cover - she is entitled to the difference between the original contract price and the market value of the goods.

Question 19

Under UCC, buyer remedies…

Answer 19

The buyer IS entitled to consequential damages provided that the seller could reasonably have foreseen them. (Christmas tree example)

Question 20

Reliance Interest

Answer 20

The reliance interest is designed to put the injured party in the position he would have been in had the parties never entered into a contract

Question 21

Promissory estoppel cases

Answer 21

A court will generally award only reliance damages. Plaintiff must show that the defendant made a promise knowing that the plaintiff would likely rely on it, that the plaintiff did rely, and that the only way to avoid injustice is to enforce the promise

Question 22

Restitution of a Valid Contract

Answer 22

The restitution interest is designed to return to the injured party a benefit that he has conferred on the other party, which it would be unjust to leave with that person. Common remedy in contracts involving fraud, misrepresentation, mistake, and duress.

Question 23

Rescission

Answer 23

To “undo” a contract and put the parties where they were before they made the agreement

Question 24

Restitution of a Quasi-contract

Answer 24

A court may award restitution, even in the absence of a contract, where one party has conferred a benefit on another and it would be unjust for the other party to retain the benefit.

Question 25

Specific Performance

Answer 25

A court will award specific performance, ordering the parties to perform the contract, only in cases involving the sale of land or some other asset that is unique

Question 26

Preliminary Injunction

Answer 26

An order issued early in a lawsuit prohibiting a party from doing something during the course of the lawsuit.

Question 27

Reformation

Answer 27

Least common remedy. A court will partially “re-write” a contract, if it may reform a simple mistake in the contract.

Question 28

Mitigation Damages

Answer 28

A party injured by a breach of contract may not recover for damages that he could have avoided with reasonable efforts. Must try to prevent unecessary losses.

Question 29

Nominal Damages

Answer 29

A token sum given to a plaintiff who demonstrates that the defendant breached the contract but cannot prove damages.

Question 30

Liquidated Damages Clause

Answer 30

Provision stating in advance how much a party must pay if it breaches

Question 31

Enforcing Liquidated Damages Clause

Answer 31

Court will generally enforce a liquidated damages clause if:
1 at the time of creating the contract it was very difficult to estimate actual damages
2. the liquidated amount is reasonable.

Question 32

Punitive Damages

Answer 32

Designed not to compensate the injured party but to punish the breaching party.

Question 33

3 Guideposts to Punitive Damages

Answer 33

1. The reprehensibility of the defendant’s conduct
2. The ration between harm suffered and the award
3. Difference between the punitive award and any civil penalties used in similar cases.

Trial court should not permit a punitive award more than nine times higher than the compensatory damages. Trial court may not use the defendant’s wealth as an excuse to award an unreasonably high award.