Remedies Flashcards
Damages specified in the contract
Stipulated damages
A type of stipulated damages.
Stipulated damages that are a specified sum (so it must be monetary compensation).
Liquidated damages
A _________ ______ provision will not be enforced if it is deemed to be a penalty provision.
liquidated damages
Damages for breach by either party may be __________ in the agreement but only at an amount that is reasonable in the light of
the anticipated or actual loss caused by the breach and
the difficulties of proof of loss.
liquidated
A term fixing unreasonably large liquidated damages is unenforceable on grounds of public policy as a ________.
penalty
The damages to be anticipated from the breach must be uncertain in amount or difficult to prove,
The parties must have intended the clause to liquidated damages rather than operate as a penalty, and
The amount set in the agreement must be a reasonable forecast of just compensation for the harm flowing from the breach.
Traditional Test for Determining validity of agreed remedy clauses
Buyer’s rights on improper delivery
if the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may:
Reject the whole; or
Accept the whole; or
Accept any commercial unit or units and reject the rest.
Perfect Tender Rule
unit of goods
that by commercial usage
is a single whole for purposes of sale
division of which materially impairs its character or value on the market or in use.
Commercial Unit
A ________ _____ may be a single article (as a machine) or a set of articles (as a suite of furniture or an assortment of sizes) or a quantity (as a bale, gross, or carload) or any other unit treated in use or in the relevant market as a single whole.
commercial unit
occurs when the buyer
after a reasonable opportunity to inspect the goods signifies to the seller that the goods are conforming or that he will take or retain them in spite of their non-conformity; or
fails to make an effective rejection, but such acceptance does not occur until the buyer has had a reasonable opportunity to inspect them; or
does any act inconsistent with the seller’s ownership; but if such act is wrongful as against the seller it is an acceptance only if ratified by him.
Acceptance of goods
Acceptance of a part of any _________ ____ is acceptance of that entire unit.
commercial unit
any exercise of ownership by the buyer with respect to any commercial unit is wrongful as against the seller
Rejection if
Notify seller
Within a seasonable time
Buyer took possession
Buyer subsequently rejected goods (so still has possession)
buyer only has a duty to hold them with reasonable care at the seller’s disposition for a time sufficient to permit the seller to remove them
Rejection
Buyer accepted!
The goods have a nonconformity that substantially impairs its value to buyer.
When buyer accepted . . .
Buyer knew of the nonconformity
Buyer accepted on reasonable assumption that nonconformity would be cured
and it has not been seasonably cured
Buyer can Revoke
When buyer accepted . . .
Buyer did not know of the nonconformity
Buyer’s acceptance was reasonably induced by
difficulty of discovery before acceptance or Seller’s assurances.
Buyer can Revoke
Revocation
must occur within a reasonable time after the buyer discovers or should have discovered the ground for it
Not effective until Buyer notifies Seller of revocation
Once Buyer rightfully revokes, has same duties and rights as Buyer who has rejected nonconforming goods.
Conditions on Revocation
Damages =
Value of goods as promised – Value of goods as accepted + incidental damages + consequential damages
Damages Based on Sellers Breach
Buyer has goods
Cost to cover – Contract Price + Incidental Ds+ Consequential Ds
– Expenses save
Damages Based on Sellers Breach
Buyer does not have goods
Cover
Damages Payment of the price, Relief court deems just Replevin Others
Damages Based on Sellers Breach
Buyer does not have goods
Specific Performance
Market Price – Contract Price + Incidental Ds+ Consequential Ds – Expenses save
Damages Based on Sellers Breach
Buyer does not have goods
Market Price
Incidental damages resulting from the seller’s breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach.
Buyer’s Incidental
any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and
injury to person or property proximately resulting from any breach of warranty.
Buyer’s Consequential Damages
calculated at time buyer learned of breach
Market value
After a breach within the preceding section the buyer may ______ by making in good faith and without unreasonable delay any reasonable purchase of or contract to purchase goods in substitution for those due from the seller.
“cover”
The buyer may recover from the seller as damages the difference between the _____ __ ______ and the contract price together with any incidental or consequential damages as hereinafter defined, but less expenses saved in consequence of the seller’s breach.
cost of cover
If Seller has breached by Failing to make delivery, Repudiates, Buyer rightfully rejects, or Buyer rightfully revokes acceptance Then Buyer may Without unreasonable delay Acting in good faith Reasonably purchase substitute goods And Damages = Cost of cover minus contract price plus incidental and consequential damages minus expenses saved due to the breach.
UCC § 2-712. “Cover”
If Seller has breached by
Failing to make delivery,
Repudiates,
Then
Damages = Market Price minus Contract Price plus incidental and consequential damages minus expenses saved because of the breach
NOTE: Market Price is calculated at time you learn of the breach and
At place of tender,
But if you reject after arrival or revoke after acceptance, at place of arrival.
UCC § 2-713. Buyer’s Damages for Non-Delivery or Repudiation
If Seller has breached by Failing to make delivery, Goods are unique or “other proper” circumstances, Then Damages Payment of the price, Relief court deems just Replevin of goods identified to contract if can’t effect cover Others
UCC § 2-716. Buyer’s Right to Specific Performance or Replevin
_________ _________ may be decreed where the goods are unique or in other proper circumstances.
Specific performance
The decree for ________ _______ may include such terms and conditions as to payment of the price, damages, or other relief as the court may deem just.
specific performance
The buyer has a right of _________ for goods identified to the contract if after reasonable effort he is unable to effect cover for such goods or the circumstances reasonably indicate that such effort will be unavailing or if the goods have been shipped under reservation and satisfaction of the security interest in them has been made or tendered. In the case of goods bought for personal, family, or household purposes, the buyer’s right of replevin vests upon acquisition of a special property, even if the seller had not then repudiated or failed to deliver.
replevin
Doesn’t notify the seller (you just leave them to rot)
Or notifies the seller UNseasonably
Buyer does not hold them with reasonable care (e.g., so they spoil)
Buyer does not hold them for a sufficient time
Refuses to give them back to seller.
Sells the goods.
Buyer is in breach if
Where the buyer wrongfully rejects or revokes acceptance of goods or fails to make a payment due on or before delivery or repudiates with respect to a part or the whole, then with respect to any goods directly affected and, if the breach is of the whole contract, then also with respect to the whole undelivered balance, the aggrieved seller may
withhold delivery of such goods
Where the buyer wrongfully rejects or revokes acceptance of goods or fails to make a payment due on or before delivery or repudiates with respect to a part or the whole, then with respect to any goods directly affected and, if the breach is of the whole contract (Section 2-612), then also with respect to the whole undelivered balance, the aggrieved seller may
cancel
Buyer wrongfully rejects Wrongfully revokes acceptance, or fails to pay, then with respect to any goods directly affected Seller may Resell the goods In good faith In commercially reasonable manner Then Damages = Contract price minus Resale proceeds plus incidental damages minus expenses saved due to breach.
Seller’s Resale Including Contract for Resale.
Incidental damages to an aggrieved seller include any commercially reasonable charges, expenses or commissions incurred in stopping delivery, in the transportation, care and custody of goods after the buyer’s breach, in connection with return or resale of the goods or otherwise resulting from the breach.
Seller’s Incidental Damages.
Except as otherwise provided in subsection (3) or unless otherwise agreed resale may be at public or private sale including sale by way of one or more contracts to sell or of identification to an existing contract of the seller. Sale may be as a unit or in parcels and at any time and place and on any terms but every aspect of the sale including the method, manner, time, place and terms must be commercially reasonable. The resale must be reasonably identified as referring to the broken contract, but it is not necessary that the goods be in existence or that any or all of them have been identified to the contract before the breach.
Seller’s Resale
Where the resale is at _____ ____ the seller must give the buyer reasonable notification of his intention to resell.
private sale
Where the resale is at ______ _____
only identified goods can be sold except where there is a recognized market for a public sale of futures in goods of the kind; and
it must be made at a usual place or market for public sale if one is reasonably available and except in the case of goods which are perishable or threaten to decline in value speedily the seller must give the buyer reasonable notice of the time and place of the resale; and
if the goods are not to be within the view of those attending the sale the notification of sale must state the place where the goods are located and provide for their reasonable inspection by prospective bidders; and
the seller may buy.
public sale
Buyer Wrongfully refuses to accept goods Repudiates Then Damages = Contract price minus Market price plus incidental damages minus expenses saved due to breach.
Seller’s Damages for Non-acceptance or Repudiation.
When the buyer fails to pay the price as it becomes due the seller may recover, together with any incidental damages under the next section, the price
of goods accepted or of conforming goods lost or damaged within a commercially reasonable time after risk of their loss has passed to the buyer; and
of goods identified to the contract if the seller is unable after reasonable effort to resell them at a reasonable price or the circumstances reasonably indicate that such effort will be unavailing.
Action for the Price.
Where the seller sues for the price he must hold for the buyer any goods which have been identified to the contract and are still in his control except that if resale becomes possible he may resell them at any time prior to the collection of the judgment. The net proceeds of any such resale must be credited to the buyer and payment of the judgment entitles him to any goods not resold.
Action for the Price.
Damages for breach by either party may be liquidated in the agreement but only at an amount which is ________ in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is void as a penalty.
reasonable
Where the seller justifiably withholds delivery of goods because of the buyer’s breach, the buyer is entitled to restitution of any amount by which the sum of his payments exceeds
the amount to which the seller is entitled by virtue of terms liquidating the seller’s damages in accordance with subsection (1), or
in the absence of such terms, twenty per cent of the value of the total performance for which the buyer is obligated under the contract or $500, whichever is smaller.
Action for Price (Monetary action) U.C.C. § 2-709. Action for the Price.
Buyer or Seller breaches
There is a liquidated damages clause in the agreement
The clause states a reasonable amount
Unreasonable amount is void as penalty
In light of anticipated or actual harm caused by the breach
Difficulties of proof of loss
Inconvenience or nonfeasibility of otherwise obtaining adequate remedy
Then
If Seller justifiably withholds delivery of goods because of buyer’s breach
Damages = Liquidated damages amount minus Buyer’s right to restitution calculated as:
how much buyer’s payments exceed
amount due under LD clause or
if no such terms, smaller of 20% total value of performance or $500
minus value of benefits received by buyer by reason of the contract
Liquidation or Limitation of Damages, Deposits.
