Remedies

Question 1

What is specific performance?

Answer 1

If a legal remedy is inadequate the non breaching party may seek a court order to perform.

Always available for: land sale contracts, unique/rare goods
Never available for: services contracts (but can get injunction against working for competitor)

Question 2

When will courts grant specific performance of covenant not to compete?

Answer 2

(1) if services are unique (money damages inadequate)
(2) covenant is reasonable:
(a) necessary to protect a legitimate interest
(b) reasonable in geographic scope and duration
(c) no harm to public

Question 3

What equitable defenses are available to specific performance?

Answer 3

Laches (plaintiff delayed bringing the action causing prejudice to defendant)
Unclean hands
Sale to a bona fide purchaser (sold to a person who purchased for value in good faith)

Question 4

What are the buyer’s nonmonetary remedies under Art 2?

Answer 4

Cancellation
Replevin
Specific performance (where goods are unique, even where not yet identified to the contract)

Question 5

When may a UCC buyer obtain replevin?

Answer 5

**if they made at least partial prepayment and the goods have not been delivered, they may replevy (1) if the seller becomes insolvent within ten days after receiving the buyer’s first payment; or (2) the goods were purchased for family/personal/household use. Buyer must still tender any remaining purchase price

Question 6

What are a seller’s non monetary UCC remedies?

Answer 6

Withholding goods (in response to nonpayment or, if paid on credit, on discovery of buyer insolvency)
Recover goods
Force goods on buyer

Question 7

When can a seller recover goods from the buyer?

Answer 7

(1) if seller learns the buyer received goods on credit while insolvent, if seller makes demands within ten days. ten day limit inapplicable where written misrepresentation of solvency made within 3 months before delivery
(2) can recover from bailee (stop delivery) if they discover buyer is insolvent or buyer breaches

Question 8

When is there a right to demand assurances in sales of goods?

Answer 8

If circumstances indicate risk of nonperformance (reasonable grounds for insecurity), the other party may demand assurances in writing and suspend their own performance until they receive them. If the assurances do not come in a reasonable period of time, the contract may be treated as repudiated

Question 9

What are expectation damages?

Answer 9

The standard measure of contract damages: sufficient damages to give the injured party the benefit of the bargain (same position as if K had been performed)

Question 10

What are reliance damages?

Answer 10

If expectation damages are too speculative (e.g., can’t prove profits), then award the cost of performance. Put the plaintiff in the position they would have been in if the contract had never been formed.

Question 11

What are consequential damages?

Answer 11

Special damages reflecting losses over and above expectation damages, which may be recovered if at the time the K was made, a reasonable person would have foreseen the damages as a probable cause of breach (meaning the breaching party has to have known or had reason to know at the time of K the special circumstances giving rise to damages)

**In UCC: only available to buyer!!

Question 12

What are incidental damages?

Answer 12

Included as part of compensatory damages and usually associated with sale of goods – these are expenses incurred as a result of breach like care and custody of rejected goods and costs of returning or reselling

Question 13

What is the certainty rule?

Answer 13

Plaintiff must prove losses were certain and not speculative.

Question 14

Are there punitive damages in contracts?

Answer 14

no

Question 15

May nominal damages be recovered?

Answer 15

yes (breach but no loss)

Question 16

What are liquidated damages?

Answer 16

Parties may stipulate damages in contract but they must be reasonable in view of the harm caused by the breach. They will be enforceable if (1) damages for breach were difficult to estimate/ascertain at time of K, and (2) amount agreed upon was a reasonable forecast of damages and cannot be a penalty.

Reasonableness is determined by comparing amount of damages probable at time of K and the liquidated damages figure.

If requirements are met, available absent actual damages.

Question 17

What are a buyer’s damages when the seller does not deliver or buyer rejects?

Answer 17

Either cover damages (the difference between contract price and cost of replacement) or market damages (the different between the contract and market price) plus incidental and consequential damages, less expenses.

Question 18

What are a buyer’s damages when the seller delivers nonconforming goods that the buyer accepts?

Answer 18

Warranty damages (difference between value of goods as delivered and the value they would have been if conforming), but buyer must notify seller of the defect within reasonable time

Question 19

What are the buyer’s damages for seller’s anticipatory breach?

Answer 19

Difference between market price at time the buyer learned of the breach and the contract price

Question 20

When is seller liable for consequential damages?

Answer 20

If they had reason to know of the buyer’s general or particular requirements, and the subsequent loss could not reasonably be prevented by cover.

Particular needs must be made known to the seller

If the buyer is in the business of buying goods for resale, then the seller is deemed to have knowledge of resale.

If seller knows the goods are being used in the manufacturing process, they should know that breach would cause a disruption in production

Question 21

What are the seller’s damages where the buyer accepted the goods and did not pay or did not accept and seller cannot resell?

Answer 21

Wrongful repudiation/refusal to accept

(1) difference between contract price and resale price
(2) difference between contract price and market price
(3) lost profits if they are a lost volume seller

Accepts but doesn’t pay – action for full K price

Question 22

What are standard damages for land sale contracts?

Answer 22

difference between contract price and fair market value of the land

Question 23

What are standard damages for employment contracts?

Answer 23

Breach by employer: full contract price irrespective of when the breach occurs

Breach by employee: cost of replacing the employee (wages paid to replacement minus breaching employee’s wages)/with possible offset money for work done to date

Question 24

What are standard damages for construction contracts?

Answer 24

Breach by owner: builder entitled to profits expected plus costs expended. If work complete on breach – measure is full K price plus interest

Breach by builder: cost of completion plus reasonable compensation for delay. usually can offset/recover for work performed to date

Question 25

What are standard damages for installment payment contracts?

Answer 25

Missed payment = partial breach and recovery only for that missed payment – unless the K contained an acceleration clause making entire amount due on late payment

Question 26

What are avoidable damages?

Answer 26

plaintiffs have a duty to mitigate/cannot recover damages which could have been avoided with reasonable effort (can usually recover expenses of mitigation)

Largely inapplicable to UCC

Question 27

What is restitution?

Answer 27

prevention of unjust enrichment when one has conferred a benefit