Remedies Flashcards
What are Remedies?
Remedies try to put the non-breaching party in as good of a position as performance would.
Within Remedies, must all damages be proven to a degree of certainty?
Yes
What if damages cannot be proven?
Then they are considered too speculative and non-recoverable.
What are Compensatory damages?
Money damages
Within Compensatory damages, what are Expectation damages?
Expectation damages–benefit of the bargain–standard measure.
In Contracts for the Sale of Goods, when are damages measured?
At the time the seller tenders the goods (or) when the buyer learns of the breach.
In Contracts for the Sale of Goods, how are Market damages calculated?
Market price minus the contract price
In Contracts for the Sale of Goods, how are Cover (substitute performance) damages calculated?
Cover (substitute performance) price minus the contract price
In Contracts for the Sale of Goods, how are Profit damages calculated?
Contract price minus party’s savings by not performing
In Contracts for the Sale of Goods, how are Resale damages calculated?
Resale price minus the contract price: non-breaching party may resell the goods, after notice is given to other party, at either a public or private sale and recover the difference between the contract price and the proceeds from the resale.
How are Compensatory damages measured with regard to contracts for the Sale of Land?
By the difference between the contract price and fair market value.
How are Compensatory damages measured with regard to employment contracts (when breach is by the employer)?
Measure of damages is the full contract price.
How are Compensatory damages measured with regard to employment contracts (when breach is by the employee)?
Measure is whatever it costs to replace the employee.
How are Compensatory damages measured with regard to construction contracts (when breach is by the owner before completion)?
The builder will be entitled to profits that would have resulted from the contract plus any costs expended.
How are Compensatory damages measured with regard to construction contracts (when breach is by the owner after completion)?
The builder will be entitled to the full contract price plus interest.
How are Compensatory damages measured with regard to construction contracts (when breach is by the builder)?
The owner will be entitled to the cost of completion plus reasonable compensation for the delay.
How are Compensatory damages measured with regard to Lost Volume Sale?
Party will be able to recover lost profit from the breaching party even if substitute performance has occurred.
With regard to a Lost Volume Sale, what must the breaching party show?
That they had the ability to satisfy both contracts.
What rule applies to Limitations on Completion/Repair Damages?
Cost of Performance Rule v. Value rule
Within Limitations on Completion Repair/Damages, the aggrieved party is entitled to the money which will permit him to complete performance unless:
The cost of completion is grossly and unfairly out of proportion to the value added. If this occurs, the measure is the difference in value.
Within Limitations on Completion Repair/Damages, what must the fact finder determine with regard to the aggrieved party?
If the aggrieved party will actually complete performance, or whether they are only interested in obtaining the best economic position.
Within Limitations on Completion Repair/Damages, where the property is held solely for investment, the court may conclude as a matter of law that the damage award cannot:
Exceed the diminution in value.
Within Limitations on Completion Repair/Damages, where the property has special significance to the owner and repair seems likely, the cost of repair may be appropriate even if:
It exceeds the diminution in value.
What are Consequential damages?
Damages that are the consequence of a breach
When are Consequential damages recoverable?
If they are foreseeable at the time of formation
Within Consequential damages, buyer’s consequential damages from the seller’s breach include what two things:
1) 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 2) injury to person or property proximately resulting from any breach of warranty.
Consequential damages may be limited or excluded unless:
The limitation or exclusion is unconscionable
Limitation of consequential damages for injury to the person in the case of consumer goods is:
Prima facie unconscionable
Limitation of consequential damages where the loss is commercial is:
Not prima facie unconscionable
What are Incidental damages?
Damages that are incidental to the breach
When are Incidental damages recoverable?
If they are reasonable
Seller’s incidental damages resulting from the buyer’s breach include any commercially reasonable charges, expenses or commissions incurred in what four ways?
1) In stopping delivery 2) in the transportation, care and custody of goods after the buyers breach 3) in connection with return or resale of the goods 4) otherwise resulting from the breach.
Buyer’s incidental damages resulting from the seller’s breach include expenses reasonably incurred in what five ways?
1) In inspection 2) receipt 3) transportation and care and custody of goods rightfully rejected 4) any commercially reasonable charges, expenses or commissions in connection with effecting cover 5) any other reasonable expense incident to the delay or other breach.
What are Liquidated damages?
When party’s agree during formation to a set amount of damages
What three conditions must exist at the time of formation for Liquidated damages?
1) actual damages are difficult to ascertain at the time the contract was formed 2) the amount is a reasonable approximation of the anticipated damages 3) they are not a penalty
Within Liquidated damages, the amount must be reasonable in light of:
The anticipated (or actual) harm caused by the breach
When will Nominal damages be awarded?
If actual damages cannot be proven
Are punitive damages ever allowed in Contracts?
No, essentially never
What is a Duty to Mitigate?
The non-breaching party has a duty to mitigate their damages and may not recover damages that were avoidable.
What is the Duty to Mitigate in Employment contracts?
Non-breaching party must use a reasonable effort to 1) find comparable work 2) at comparable pay
What is the Duty to Mitigate in contracts for the Sale of Goods as it applies to the buyer?
Must act in good faith to find reasonable cover - substitute goods without delay
What is the Duty to Mitigate in contracts for the Sale of Goods as it applies to the seller?
Must act in good faith to resell goods
What is the Duty to Mitigate in Construction or Manufacturing Contracts?
Non-breaching contractor or manufacturer must cease work (unless) completion would decrease damages.
What is Specific Performance?
The court will require the defendant to specifically perform the contract
Specific Performance requires what four things:
1) Inadequacy of money damages 2) definite and certain terms 3) feasibility of the court to enforce 4) mutuality of remedies
Within Specific Performance, subject matter must be unique or money damages must be:
Inadequate
Within Specific Performance, is land always unique?
Yes
Will the court ever order a service to be completed, even if the service is rare or unique? Why?
No, involuntary servitude
What might the court do in lieu of ordering a unique service to be performed?
Enjoin the breaching party from performing services elsewhere (negative injunction)
What three equitable defenses apply to Specific Performance?
1) Unclean hands 2) Laches 3) Sale to Bona Fide purchaser
What is Unclean hands?
Party seeking performance is guilty of some wrong doing
What is Laches?
Delay in bringing the equitable action that prejudices the defendant
What is Sale to Bona Fide purchaser?
Sale of goods or property to a good faith purchaser without notice of any dispute - this will cut-off any equitable remedies
What is Recission?
Termination of the contract and a remedy for defenses to formation.
What is Restitution?
Return of a transferred benefit to the other party.
Restitution is used to place parties back in their pre-contractual state because:
Of a valid formation defense
Quasi Contract - Unjust Enrichment - Restitution may arise from either the absence of a contract or a failed contract when what three conditions are present?
1) Plaintiff conferred a benefit on defendant 2) plaintiff reasonably expected performance by defendant, and 3) defendant would realize unjust enrichment if plaintiff is not compensated.
How is recovery measured in Quasi Contract - Unjust Enrichment - Restitution?
Value of benefit received by defendant (or) value of plaintiff’s detriment
How is recovery generally not measured in Quasi Contract - Unjust Enrichment - Restitution?
Contract price. Contract price is not the measure of recovery, it is a ceiling if plaintiff is in default or if contract recovery is barred by the Statute of Frauds.
