Remedies Flashcards
When may a party get specific performance?
1) only if monetary damages are inadequate to compensate the injured party.
2) Depends on nature of contract:
a) Real Property: Specific Performance is the usual remedy because RP is unique.
b) Sale of Goods: Specific performance is available only if the goods are unique [art, antiques, custom made goods] or if there is an inability to buy substitute goods in the market.
c) Service Contracts: Specific performance is not available, but injunctive relief may be. [Indentured Servitude issue, but courts will bar person for working for someone else.
When may a seller who does not get paid reclaim his goods from the buyer?
General Rule: This is not available under Article 2.
Exception: If the buyer was insolvent when it received the goods AND seller makes a demand within 10 days after the buyer received them.
Note: If the buyer already sold the goods to a third-party, seller cannot reclaim them from the third-party [they are gone forever].
Fraud Exception: Seller can reclaim goods at any time if buyer misrepresented its solvency to seller in writing within three months of delivery!
Talk about punitive damages in contract
Generally not awarded
How do liquidated damages work in contracts?
Liquidated damages clauses will be upheld if
- Damages were difficult to estimate
- Clause is a reasonable forecast of probable damages [MBE: only if reasonable at time of contracting. Article 2: If reas. at time of contracting or reasonable in light of actual damages].
- Does not operate as a penalty
Factors:
1) Graduated liquidated damages are favorably looked upon [$100/day late fee is better than $5,000 lump sum late fee if late at all].
What happens if a court strikes down a liquidated damages clause?
Party still gets his actual damages.
What do expectation damages do?
Put party in as good a position as full performance.
How do you calculate expected damages under common law?
Common Law: Just put party where it would be if other side had fully performed.
How do you calculate buyer’s expectation damages under Article 2?
Three options for buyer’s expectation dmgs under Article 2:
1) Cover Damages: Cover price - contract price. [extra cost of buying goods on the market]. Buyer just needs to use good faith - then pay the actual cover and not just the avreage market price.
2) Market Damages: market price - contract price. [Use this if (a) buyer doesn’t cover in good faith (b) buyer doesn’t cover at all].
3) Loss in Value: value as promised - value delivered. [Use if buyer keeps the non-conforming goods].
How do you calculate seller’s expectation damages under Article 2?
Four Options:
1) Resale Damages: Contract price - resale price if seller resells in good faith [usual measure]. (If sold for same amount, no expectation damages).
2) Market Damages: Contract price - market price if (a) seller does not resell in good faith or (b) does not resell at all.
3) Lost Profit: [Use if seller is a lost volume dealer i.e. selling out of regular inventory]. Here, the resale damages are zero, but if the dealer has a ton of inventory he has lost a sale. Thus, damages are the profit lost from breach.
4) Contract Price: [Use if Seller cannot resell goods]. This is like specific performance, often with custom make goods. Buyer must tender the contract price and buyer gets to keep the goods.
What are incidental damages?
When are they awarded?
Incidental damages are the cost to the injured party for the transportation and caring for goods after a breach and for arranging a substitute transaction.
These damages seem to always be awarded.
What are consequential damages?
When are they available?
Consequential Damages are damages that are special to THIS plaintiff that were reasonably foreseeable to the breaching party at the time of the contract.
Consequential damages are NOT AVAILABLE UNDER ARTICLE 2***
If UPS breaches in shipping a shaft, there are NO consequential damages because this was NOT foreseeable to UPS.
It is all about FORESEEABILITY!
What are avoidable damages?
Why do they matter?
An injured party cannot recover damages he could have avoided (mitigated) with reasonable effort.
MITIGATION RULE NOT IN ARTICLE 2.
- Example:* Comparable work in same city. – Employee is fired in violation of her contract. She made $900/week. Her employer alleges she can find a comparable job in the same city paying $800/week.
- Answer:* Her damages should be only $100/week because she could have mitigated by taking the comparable job.
What constitutes a comparable job for purposes of analyzing avoidable damages?
Same kind of work in same city.
Are avoidable damages available under Article 2?
NO. Only in common law.
Are consequential damages available in Article 2?
NO, only in common law.
