Remedies Flashcards
Contracts: Available Remedies:
(1) expectation damages (compensatory damages); (2) reliance damages; (3) consequential damages; (4) incidental damages; AND (5) restitution damages. Punitive damages are generally NOT available without tort (i.e. fraud).
Expectation Damages:
general measure of damages. Expectation 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 speculative); AND (4) unavoidable (the plaintiff must take reasonable steps to mitigate his losses).
An award of damages must account and deduct for any costs the injured party avoided because of the breach.
Reliance Damages:
generally, the expenditures made by a party in reliance of a contract, and are an attempt to put the non-breaching party in the position it would have been if the contract never existed.
Reliance damages are available when: (1) a plaintiff acted in reliance on the defendant’s agreement to perform under a contract; AND (2) the plaintiff’s reliance was foreseeable. If expectation damages are too speculative, the court may award reliance damages instead.
Consequential Damages:
arise indirectly from the breach, and are awarded because of the injured party’s special circumstances. To recover, the damages MUST be: (1) reasonably foreseeable at the time of contract formation; (2) arise from the plaintiff’s special circumstances that the defendant knew or had reason to know of; AND (3) certain (the damages cannot be speculative).
An award of damages must account for and deduct for any costs the injured party avoided because of the breach. Consequential damages may be limited or excluded by agreement unless the limitation/exclusion is unconscionable.
Incidental Damages:
Incidental damages are the reasonable costs incurred as a result of a breach of contract (e.g., costs of returning nonconforming goods or caring/storing non-conforming goods).
Restitution Damages:
awarded to prevent unjust enrichment, and is available when one party confers a benefit onto another party (even if there is no enforceable contract). Damages will be awarded based on the value of the benefit conferred upon the defendant. A party CANNOT recover both expectation and restitution damages.
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 (i.e. unclean hands, laches).
Parol evidence is admissible to prove the misrepresentation or mistake.
Rescission:
treats the original contract as cancelled. It is available if there was a problem with the formation of the contract (e.g., a defense to formation, mistake, fraud, misrepresentation).
One bite at apple: A plaintiff may sue for both damages and rescission at the same time (but an election of remedies may bar rescission if damages are sought first).
Equitable: A contract will NOT be rescinded if: (a) a valid equitable defense applies.
Specific Performance:
(1) a valid contract exists with clear and definite terms; (2) the plaintiff has performed under the contract or is ready, willing, and able to perform; (3) legal remedies are inadequate (i.e. rare/unique item, contracts involving the sale of land, as legal remedies are inadequate because land is unique); (4) enforcement is feasible for the court (it is NOT feasible to enforce personal service contracts or where land/person is outside the court’s jurisdiction); 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, in many jurisdictions the requirement for mutuality is met if one party can sufficiently assure performance.
Preliminary Injunction:
maintains the status quo pending the outcome of an action in order to protect irreparable harm to a party. The party moving for an injunction must show: (1) a likelihood of success on the merits; (2) a likely threat of irreparable harm to the movant; (3) balancing of the hardships in favor of the moving party (the harm alleged by the movant outweighs any harm to the non-moving party); (4) an injunction is in the public interest (if there is a public interest at issue); (5) upon notice to the adverse party; AND (6) if the moving party gives security (post a bond) in an amount the court deems proper.
If the moving party has an adequate remedy at law (can be compensated by money damages for any potential loss), then a motion for a preliminary injunction should be denied.
A court may issue a restraining injunction (preventing a party from doing something) OR a mandatory injunction (compelling a party to do something).
Laches:
bars a plaintiff’s 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.
Unclean Hands:
hands bars a plaintiff’s recovery when a plaintiff is guilty of unethical, unlawful, or otherwise improper conduct related to the subject of the lawsuit.
Mitigation:
A plaintiff CANNOT recover damages as a result of a breach 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.
