Remedies

Question 1

Specific performance

Answer 1

an equitable remedy available only if monetary damages are inadequate to compensate the injured party.

Question 2

When specific performance is typically available

Answer 2

Whether specific performance is generally available depends on the nature of the contract

(land, goods, services)

Question 3

Specific Performance in Land

Answer 3

Generally available because real property is considered unique

Question 4

Specific Performance under Art. 2

Answer 4

Available only if the goods are unique or there are other proper circumstances

(e.g. an inability to buy similar goods in the market)

Question 5

Specific Performance under Personal Service contracts

Answer 5

Specific performance is not available but injunctive relief may be.

(e.g. can’t make NBA player play in your team as contracted but you can stop him from playing elsewhere)

Question 6

Unpaid seller’s right to reclaim goods under article 2

Answer 6

this remedy is not available.

Question 7

Exceptions to seller’s inabilty to reclaim goods

Answer 7

• If buyer was insolvent when it received the goods and seller makes a demand within 10 days after buyer received them
• Seller can reclaim goods at any time if buyer misrepresented its solvency to seller in writing within 3 months of delivery
• In order for a seller to reclaim goods under these exceptions, the goods must be in the possession of the buyer.

Question 8

Expectation damages

Answer 8

• Puts an injured party in as good a position as full performance.
• Not what you have before, not what you end up with, but what you expected to have.
• Expectation damages are the general rule for breach of CL contract damages.

Question 9

I agree to paint Gates’s house for $10,000. I breach. He pays another painter $13,000 to paint the house. How much expectation damages can Gates recover from me?

Answer 9

$3,000

Question 10

I agree to paint Gates’s house for $10,000. Gates refuses to pay me after I have started painting his house. I have already spent $5,000. I expected to clear $1,500 in profit. What are my expectation damages?

Answer 10

$6,500.00

Question 11

Reliance damages (CL)

Answer 11

Expectation damages are uncertain, so injured party is put in the position he was in before the breach.

Question 12

Restitution

Answer 12

Value of the benefit conferred.

e.g. if I paint a house, I can get back supplies and labor.

Question 13

Buyer’s damages

Answer 13

3 options:

1. Cover Damages
   
   • Cover Price Minus Original Contract Price,
   • Used if buyer covers in good faith
   • this is the usual measure
2. Market Damages
   
   • Market Price Minus Contract Price
   • Used if buyer doesn’t cover in good faith or doesn’t cover at all
3. Loss in Value
   
   • Value as Promised Minus Value as Delivered
   • Used if buyer keeps non-conforming goods.

Question 14

Seller’s damages

Answer 14

4 options:

1. Resale Damages
   
   • Contract Price Minus Resale Price
   • Available if seller resells in good faith
   • Usual measure
2. Market Damages
   
   • Contract Price Minus Market Price
   • Used if seller does not resell in good faith or does not resell at all
3. Contract Price
   
   • If Seller Cannot Resell the Goods
4. Lost Profit
   
   • If Seller Is a Lost Volume Dealer

Question 15

Lost volume seller lost profits damages

Answer 15

If a lost volume seller opts for lost profits, he receives the profits regardless of resale value or even the fact that they resold

(used because of the loss in inventory)

Question 16

Liquidated damages rule

Answer 16

Upheld if the damages:

1. Were difficult to estimate at the time of the contract, and
2. Are a reasonable forecast of probable damages, but
3. Cannot operate as a penalty

Question 17

Lump sum litqudated damages clause

Answer 17

Any liquidated damages clause that is a lump sum not equal to the amount of the breach is an invalid penalty clause

Question 18

Damages if a liquidated damages clause is struck down

Answer 18

If a liquidated damages clause is struck down, the injured party can still get expectation damages.

Question 19

Incidental damages

Answer 19

Costs to the injured buyer or seller of transporting/caring for goods after a breach and of arranging a substitute transaction.

Always recoverable

Question 20

Consequential damages

Answer 20

• Indirect results of breach.
• Must be reasonably foreseeable to the breaching party at the time the contract is formed.
• Not available to Article 2 seller

Question 21

Avoidable damages rule

Answer 21

An injured party cannot recover damages he could have avoided (mitigated) with reasonable effort.