Remedies

Question 1

General Damages

Answer 1

In contract law, general damages are those which are the direct, natural, or probable losses caused by a breach. Included would be damages such as the difference between contract and market prices, the difference between the value of the goods as delivered and as warranted, and interest on money that has been wrongfully withheld.

Question 2

Special Damages

Answer 2

In contract law, special damages are those which are unique to an individual case and thus, must be specially pleaded and proved. Special damages are recoverable when special circumstances exist which cause some unusual injury to the plaintiff and when the defendant knew or should have known of the special circumstances at the time the defendant entered into the contract.

Question 3

Consequential Damages

Answer 3

Consequential damages are special damages. However, this term reflects the “foreseeability” requirement that arose out of the case of Hadley v. Baxendale years ago in England. It was held in this case that compensation in a breach of contract case should be given only for those injuries that the defendant, at the time the contract was made, had reason to foresee as the probable result of his or her breach. Damages that are unforeseeable will be held too remote and, therefore, uncollectible.

Question 4

Compensatory Damages

Answer 4

Compensatory damages include both general and special damages, and are awarded to the non-breaching party to place that party in the same position that he or she would have been in, had the contract been performed as agreed.

Question 5

Expectancy Measure of Compensatory Damages (Expectation Damages)

Answer 5

Where possible, the court will award compensatory damages according to the calculation of what the plaintiff expected to receive from performance of the contract.

Question 6

Reliance Measure of Compensatory Damages (Reliance Damages)

Answer 6

When the expectancy cannot be calculated to a reasonable certainty, then the court may award damages according to the calculation of what the plaintiff expended in reliance on the contract. Essential reliance damages are expenses incurred in the performance or preparation for performance of a contract and need not be foreseeable. Incidental reliance damages are foreseeable expenses incurred because of the contract.

Question 7

Liquidated Damages

Answer 7

Liquidated damages are an amount of damages stated in a contract in advance of any breach. If there is a valid liquidated damages clause in a contract, it will be the sole remedy available upon a breach of the contract. In order for such a clause to be found valid, it must be shown that it is based on anticipated damages as opposed to being a mere penalty. This is shown through establishing that damages would have been difficult to ascertain at the time the contract was made, and the amount set as liquidated damages is a reasonable forecast of what damages would be.

Question 8

Nominal Damages

Answer 8

Nominal damages are given by the court to a non-breaching party who has suffered no damages or who has been unable to prove damages at trial, but who nevertheless has been wronged and is entitled to a judgment for technical breach of contract.

Question 9

Punitive or Exemplary Damages

Answer 9

Punitive damages, which are also called Exemplary Damages, are damages that are granted to a plaintiff to punish the defendant for malicious, wanton or willful conduct and are awarded to make an “example” of the defendant’s conduct; so that such conduct will not be repeated again. Punitive or exemplary damages are not typically allowable for breach of contract.

Question 10

Mitigation of Damages

Answer 10

Mitigation of damages refers to efforts of the non-breaching party to use ordinary care to mitigate, or limit, the damages caused by the other party’s breach.

Question 11

Doctrine of Avoidable Consequences

Answer 11

Under the Doctrine of Avoidable Consequences, the plaintiff must use ordinary care to mitigate his damages. If the defendant can show that the plaintiff failed to mitigate damages, the plaintiff’s recovery may be reduced.

Question 12

Legal vs. Equitable Remedies

Answer 12

An equitable remedy will only be awarded if the available legal remedies are inadequate. Legal remedies may be inadequate for many reasons, including situations in which the dollar damages are too small or too speculative; continuing or multiple suits are possible; a threatened injury may be irreparable; or real property (which is always unique) or a unique chattel is involved.

Question 13

Quasi Contract

Answer 13

Quasi contract is an equitable remedy which allows the plaintiff to recover a benefit that was conferred upon the defendant despite the absence of a contract, usually because of a special relationship between the parties, conduct by the parties, or because the defendant would be unjustly enriched if he or she were allowed to retain the benefit.

Question 14

Quantum Meruit

Answer 14

Quantum Meruit refers to the reasonable value deserved for one’s labor, and is awarded in a quasi-contract claim.

Question 15

Quantum Valebant

Answer 15

Valebant refers to reasonable value that is deserved as payment for goods, and is awarded in a quasi-contract claim.

Question 16

Equitable Rescission of Cancellation

Answer 16

Rescission is an equitable remedy which prevents unjust enrichment by cancelling the contract and restoring the parties to their pre-contractual positions for such reasons as fraud, undue influence, duress, mistake, or substantial breach.

Question 17

Restitution

Answer 17

Restitution may be awarded as either a legal or equitable remedy, to prevent unjust enrichment to the defendant. Restitutionary damages are calculated by determining the value that the defendant received from the plaintiff’s performance of the contract.

Question 18

Reformation

Answer 18

Reformation is an equitable remedy in which the court modifies a written contract to reflect the actual intent of the parties in a situation where the contract is not an accurate representation of the parties’ agreement. It is most often used to correct a contract in cases involving fraud or mutual mistake.

Question 19

Injunction

Answer 19

An injunction is an equitable remedy in which a court issues an order commanding or preventing an action.

Question 20

Specific Performance

Answer 20

Specific Performance is an equitable remedy in the form of a mandatory decree or injunction which orders a contracting party to perform that which he has promised to perform under the contract.

Question 21

UCC: Buyer’s Remedies Prior to Acceptance of Goods

Answer 21

Under the UCC, if non-conforming goods are delivered to the buyer, the buyer has several options, including holding the goods as a security for damages, canceling the contract, recovering payments already made, or suing for damages or specific performance. However, the buyer must use reasonable care in holding the goods.

Question 22

UCC: Buyer’s Remedies After Acceptance of Goods

Answer 22

Under the UCC, if the buyer accepts a shipment of non-conforming goods, the buyer must pay the contract price but may subtract the difference between the value of the accepted goods and the value of the goods if they had conformed, plus incidental and consequential costs, but minus expenses saved by the seller’s breach. The buyer must notify the seller of any deduction in contract price.

Question 23

UCC: Seller’s Remedies Prior to Buyer’s Acceptance of Goods

Answer 23

Under the UCC, if the buyer breaches the contract before the buyer has accepted the seller’s goods, the seller can cancel contract; withhold delivery; stop shipment of goods which are already in transit; or, if the goods are unfinished, the seller may stop production and sell the materials as scrap or finish production and resell the goods. In any of these situations, the seller can also sue for damages caused by the breach.

Question 24

Lost Volume Seller

Answer 24

A lost volume seller is a seller who does not recover the profit lost by a buyer’s breach via reselling the goods because the seller would have made the second sale anyway. Such a situation occurs when the seller has an unlimited or large enough supply of goods that he or she can make repeated sales.

Question 25

Seller’s Remedies after Buyer’s Acceptance of Goods

Answer 25

Under the UCC, if a buyer has already accepted the seller’s goods and then breaches the contract, the seller may recover the goods or sue for the contract price.