Remedies

Question 1

When is the equitable remedy of specific performance available?

Answer 1

Only if monetary damages are inadequate.

It’s the usual remedy for real property, available under Article 2 only if the goods are unique, and not available for service contracts.

Question 2

May an unpaid seller, under Article 2, reclaim goods?

Answer 2

The general rule - NO

Question 3

What are the two exceptions under which an unpaid seller may reclaim goods?

Answer 3

1. If the buyer was insolvent when he received the goods and the seller makes a demand within 10 days after the buyer received them.
2. Seller can reclaim at any time if buyer misrepresented his solvency to seller in writing within 3 months before delivery.

Question 4

Can an unpaid seller reclaim from an innocent third party?

Answer 4

No, even when the exceptions would apply to the original buyer. Seller would have to recovery from the original buyer.

Question 5

Are punitive damages available for breach of contract?

Answer 5

No.

Question 6

When will liquidated damages in a contract be upheld?

Answer 6

When damages were difficult to estimate at the time of formation and are a reasonable forecast of probable damages.

Note: Cannot operate as a penalty. Graduated damages are more reasonable than a lump-sum payment.

Question 7

What happens if liquidated damages are deemed unreasonable?

Answer 7

The injured party will receive actual damages.

Note: Article 2 will compare liquidated damages with actual damages to determine reasonableness.

Question 8

What are expectation damages?

Answer 8

They put the injured party in the same position as if there had been full performance.

Question 9

How are expectation damages determined under the common law?

Answer 9

Ask - what did I expect to pay / receive?

Question 10

What are a buyer’s remedies under Article 2?

Answer 10

1. Cover damages
2. Market damages
3. Loss in value

Question 11

How are cover damages calculated? (Buyer)

Answer 11

Cover damages: (cover price - contract price), if buyer covers in good faith

Question 12

How are market damages calculated? (Buyer)

Answer 12

Market damages: (market price - contract price), if buyer doesn’t cover in good faith or at all

Question 13

How are loss in value damages calculated? (Buyer)

Answer 13

Loss in value: (value as promised - value as delivered), if buyer keeps non-conforming goods

Question 14

What are the seller’s remedies under Article 2?

Answer 14

1. Resale damages
2. Market damages
3. Lost profit
4. Contract price

Question 15

How are resale damages (Seller) calculated?

Answer 15

(Contract price - resale price), if seller resells in good faith

Question 16

How are market damages (Seller) calculated?

Answer 16

(Contract price - market price), if seller does not resell in good faith or does not resell at all

Question 17

When is a seller eligible for lost profit?

Answer 17

When they are a lost volume dealer (i.e., a car dealer with regular inventory)

Question 18

When can a seller recover the full contract price?

Answer 18

When the seller can’t resell the goods because they are too unique for the open market

Question 19

What are incidental damages?

Answer 19

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

Question 20

What are consequential damages?

Answer 20

Damages specific to this plaintiff that were reasonably foreseeable to the breaching party at the time of the contract.

Note: These are NOT available to a seller under Article 2.

Question 21

Is an injured party entitled to avoidable damages?

Answer 21

No. An injured party cannot recover damages he could have avoided with a reasonable effort.

Question 22

When is the reasonableness of a liquidated damages clause evaluated?

Answer 22

Common law: look only to reasonableness at the time of contract formation (whether or not it’s reasonable when actual damages occur is irrelevant)

Art 2: as long as they’re reasonable either at the time of contract formation or actual damage, they will be upheld.