remedies and damages calculations Flashcards
K expectation damages calculation
The general formula is that expectation damages = losses in value caused by the breach + gains prevented by the breach − savings resulting from not having to perform.
Lost volume seller damages under UCC
The manufacturer is a lost-volume seller, i.e., a seller that could have made both the breached sale and the second sale because it could produce a virtually unlimited number of goods. Upon breach, a lost-volume seller is entitled to recover the lost profit on the sale
Equitable vs legal remedies
Equitable: order party to refrain from or engage in act. Legal - montary damages. Equitable R: (1) discretionary; (2) issued by a judge (NOT entitled to jury on equitable issues); (3) backed by court’s contempt power; (4) require showing legal remedy is inadequate typically; (5) may be deemed extraordinary because they place burden on the court and may be obtained without full procedural protections.
Preliminary injunction requirements
HELP +notice + bond to cover the costs
and damages to the nonmoving party in the event it is later determined that the injunction should not have issued; CA law does not require a bond to be posted.
HELP: irreparable harm, balance of equities between possibilyt of irreparable harm and injury/inconvenience to nonmovant; liklihood of success on the merits; and public interest
Detailed purelim injunction rerquirements
1) The party seeking relief must give notice to the nonmoving party before filing the motion;
(2) The moving party must show a likelihood of success on the merits of the case (though the
movant does not have to prove its case at this stage, the court will consider whether the
movant’s evidence may later lead to success on the merits);
(3) The moving party must establish that the nonmoving party’s conduct, if not enjoined, is likely to
irreparably harm the movant or render a final judgment on the merits ineffectual;
(4) The moving party must prove that the balance of equities tips in its favor (i.e., the possibility
of irreparable harm to the movant if the injunction does not issue is greater than the possible
injury or inconvenience to the nonmoving party if the injunction does issue); and
(5) The court must consider the impact on nonparties to the litigation, and specifically whether
there would be a critical public interest that likely would be injured or furthered by granting the
preliminary injunction.
Temproary restraining order
Temporarily prevents immediate harm. Can only last 14 days (15 in CA to 22) and extended another 14 for good cause -turns into PI.
Requires showing of PI HELP
No notice required IF (1) moving party can prove it will suffer irreparable harm before the nonmoving party can be notified and a hearing held AND (2) atty certifies its attempts to give notice or reasons why notice shouldn’t be required.
TRO CA specifics
Court has discretion to issue a TRO w.o bond. IF granted w/o notice, court MUST hear a hodlging on TRO application as soon as available, but NO LATER than 15 days after TRO issued. CAN be extended to 22 days with good cuase.
TRO Alternative test: balance/weigh certain elements of traditional (HELP) test w/o giving equal weight on a sliding scale so strong showing on one element can compensate for weak showing on another.
Examples of irreparable harm
Courts have found that the following may constitute irreparable harm:
the likelihood of multiple lawsuits;risk of loss of a unique or irreplaceable good;
uncertainty or difficulty in measuring or proving damages;the defendant’s insolvency;
the abrogation of constitutional rights; and
loss of chance or advantage.
Public interest test
“public interest” has generally been deemed synonymous with public policy. It can encompass public concerns such as the economy, the environment, safety, health, government, and national security. However, the government’s involvement in a lawsuit does not always satisfy the public interest requirement.
Permanent injunction
is issued after a full trial or a decision on the merits, and lasts for an indefinite
amount of time unless modified or dissolved. Five requirements must be met:
(1) The moving party must establish that the nonmoving party’s conduct, if not enjoined, is likely to
irreparably harm the movant or render a final judgment on the merits ineffectual;2) The moving party must prove that the balance of equities tips in its favor (i.e., the possibility of
irreparable harm to the movant if the injunction does not issue is greater than the possible injury or
inconvenience to the nonmoving party if the injunction does issue);
(3) The moving party must show that there is no critical public interest that would be injured if the
permanent injunction were granted;
(4) The claim must be ripe (i.e., that the alleged injury is real and concrete; not remote, speculative, or
contingent on some future event that may or may not occur); and
(5) There must be no administrative burden on the court (i.e., it cannot require the court’s supervision
over a long period of time or complex involvement of the court).
Equitable remedy - specific performance
s a type of permanent injunction that requires a party to perform a contractual
obligation as an alternative to paying damages. Seven requirements must be met:
(1) The legal remedy is inadequate;
(2) A valid contract exists with certain and definite material terms;
(3) The defendant is able to perform its duties under the contract or stands ready to continue
performance in the future;
(4) The plaintiff has substantially performed or satisfied any conditions precedent;
(5) The decree is enforceable and able to be supervised;
(6) Enforcement would not create an unreasonable hardship on the defendant relative to the
benefit the plaintiff would gain by performance; and
(7) There are no defenses.
Equitable defenses to specific performance
equitable defense will bar SP, but could still get monetary. Unclean hands, laches, acquiescence, equitable estoppel. mistake, misrep, unconsionabilty, parole evidence, SOF
UCC specific performance of goods
UCC specific performance for sale of goods IF goods are unique: (1) goods are availablet to buyer ONLY from seller; (2) goods are custom-built FOR buyer; (3) goods have historical or sentimental significance OR (4) goods are designed to particular specifications. WILL NOT be availbale if can buy cover (substitute goods
Limits on contract specific performance
court will decline discreation to award SP if (1) unclean hands by claimant; (2) laches (harm caused by claimant’s unreasonable delay in asserting rights; (3) prior sale of Ks subject matter toa good faith bfp; (4) sharp practices which are P’s conduct that odes not rise to level of a K defense, but has elements of unconsionability, undue influence, duress, or misrep
Limits on contract specific performance
court will decline discretion to award SP if (1) unclean hands by claimant; (2) laches (harm caused by claimant’s unreasonable delay in asserting rights; (3) prior sale of Ks subject matter toa good faith bfp; (4) sharp practices which are P’s conduct that odes not rise to level of a K defense, but has elements of unconsionability, undue influence, duress, or misrep
Mandatory and negative injunction
party to DO something.
Negative injunction - prohibits party from performing a K or engaging in certain behavior.
Specific performance inadequate at law requuirement
Inadequate Remedy at Law: situations where there is an inadequate remedy at law
include:
(1) When the contract is for the sale of land, because land is unique;
(2) When an employer is seeking to prevent employees from disclosing trade secrets in
breach of confidentiality agreements; and
(3) When the contract involves the sale of unique goods, custom-built goods, goods with
historical or sentimental significance, or goods designed to particular specifications.
* Personal Services: courts have never awarded specific performance for personal services
Equitable remedy - reformation
when a written document does not conform to the actual agreement between the
parties (perhaps because of a typographical error), the aggrieved party may seek a reformation of the
document. The moving party must show, by clear and convincing evidence, that the contract’s terms are
not as the parties agreed upon because of mistake, fraud, or misrepresentation.
Reformation/recision not permitted to adversely affect BFP
reformation is not an available remedy if reformation of the document
would adversely affect the rights of a bona fide purchaser (i.e., a purchaser of property who
gave value in good faith without notice of the error or conflicting interest)
Specific performance defenses
(1) unclean hands - P denied equitable relif IF engaged in wrongful conduct that is directly related to claim at issue (not about a collateral matter) (2) laches - bar equitable claim when P hasn’t acted promptly - unreasonable delay based on TOC -wartime conditions, P’s socioeconomic status, P’s invetigation of claims and prep for litigation, incapacity, illness, pursuit of other avenues for legal resolution + material prejudice to D that is evidentiary loss or economic; (3) acqueisence - P knowingly fails to object to infringement of rights by D acting unkowingly/w/o malice; (4) equitable estoppel - (a) first person misrepd/concealed material facts; (b) knew when making rep they were untrue; (c) estoppel claimer did NOT know misreps were untrue when acted upon’ (d) first person intended/reasonably expected seocnd person would act on misresps; (e) second person reasonably relied in good faith to determinet on misreps and was prejudiced or would be prejudiced by reliance if first person permitted to deny truth. EE applies to Equitable claims AND legal claims
Mutual recision
all parties and decision MUST be supported by consideration. If no party has performed, recision itself counts as consideration. NO mutual recision if one party started performance. NO writing requirement.
Unilateral rescision
is an equitable remedy where the court invalidates a contract upon a showing
by the moving party that, at the time of formation, the contract was not supported by mutual assent due
to fraud, fraudulent misrepresentation, misrepresentation of a material fact (even if not fraudulent), mutual
mistake, or unilateral mistake.
recision notice requirement
efore filing suit and promptly upon discovering grounds
for rescission, a plaintiff must provide notice to the defendant and return the benefits received from the contract, unless (1) the benefit has been disposed of prior to discovery of the grounds for rescission, (2) the benefit is presently worthless, or (3) if the benefit is money, and the amount equates to whatever the defendant may owe the plaintiff.
Declaratory judgment
sets forth the rights, status, and other legal relations of the parties, regardless
of whether further relief is or could be claimed.
Seller damages when Buyer breaches LAND SALE K
Expectation damages! =
difference between K price
and FMV on date of breach
(usually date of performance unless
anticipatory repudiation) +
consequential -
benefits recieved and expenses
saved by seller
if breach is in a failing market,
seller may recover damages
if property value drops btwn
time K entered and breach.
If breach is in rising market,
seller may not have any
damages.
seller can always recover
costs and expenses of putting
property back on market
as consequential damages
e.g. maintenance, tax,
escrow fees…AND rental value
of land if purhcaser occupied
land before breach.
Reduce damages by sum
seller saved due to breach.
Equitable defense unclean hands
a plaintiff may be denied an equitable remedy if two requirements are met:
(1) The plaintiff engaged in wrongful conduct (i.e., conduct that is fraudulent, illegal, willful,
reckless, grossly negligent, or in blatant disregard for the rights of others, although the conduct
does not need to have caused injury to the defendant); and
(2) That wrongful conduct is directly related to the claim at issue (i.e., directly related to the same
transaction forming the basis upon which relief is sought; it cannot be a collateral matter).
Equitable damages laches
s a defense that bars an equitable claim where the plaintiff has not acted promptly in bringing
the action. The defendant must show:
(1) An unreasonable delay by the plaintiff, and
(2) Material prejudice to the defendant.
* Unreasonable: to determine whether the delay was unreasonable, the court will
examine a variety of factors, including:
(1) The plaintiff’s socioeconomic status, incapacity, or illness;
(2) Wartime conditions;
(3) Conduct inducing delay by the opposing party;
(4) Good faith negotiations between the parties;
(5) The plaintiff’s investigation of claims and preparation for litigation; and
(6) Pursuit of other avenues for legal resolution.
* Material Prejudice: there are two kinds of prejudice that will support a laches defense.
(1) Evidentiary Prejudice: such as loss or destruction of critical documentary evidence or unavailability of important witnesses
(2) Economic Prejudice: such as potential loss of a relied-upon income stream or the
expenditure of resources in reliance on the status quo
Buyer’s expectation damages when seller breaches LAND SALE
expectation damages = FMV on due date of seller’s performance - K price + consequential damages - benefits received and expenses saved by buyer.
Good faith title defect - If resulting from seller’s good faith mistake, 2 rules. Majority (CA) - allows nonbreaching buyer to recover expectation damages using formula. (minority rule limits buyer’s recovery to reliance damages)
Bad-faith title defect - expectation damages imposed in all jx.
Equitable defense acquiescence
applies when a plaintiff knowingly fails to object to an infringement of her rights by a
defendant who is acting unknowingly and without malice.
Equitable defense equitable estoppel
uitable Estoppel: six elements must be met:
(1) The first person misrepresented or concealed material facts;
(2) The first person knew at the time he made the representations that they were untrue;
(3) The second person, which is the party claiming estoppel, did not know that the representations
were untrue when they were made and acted upon;
(4) The first person intended or reasonably expected that the second person would act upon the
representations;
(5) The second person reasonably relied upon the representations in good faith to her detriment; and
(6) The second person would be prejudiced by reliance on the representations if the first person is
permitted to deny the representations’ truth.
Equitable defense statute of frauds
contracts that fall within the statute of frauds are unenforceable unless evidenced
by a writing that (1) is signed by the party against whom enforcement is sought, and (2) contains the essential terms of the deal. However, if good-faith partial performance has been rendered, the oral contract may be enforced through specific performance or the plaintiff may be entitled to recover reliance damages, or restitutionary damages under quasi-contract theories
SOF applies to MYLEGS
1) Contracts pertaining to interests in land;
(2) Contracts that cannot be fully performed within a year;
(3) Promises by executors or administrators to personally pay the estate’s debts;
(4) Contracts in which a person (the surety) has promised to pay the debts of another;
(5) Contracts made in consideration of marriage; and
(6) Contracts for the sale of goods for $500 or more.
Mutual mistake -equitable defense
: a belief shared by both parties that differs from the facts existing before or at the time
the contract is executed. The belief must be one about an existing fact, not a mistaken opinion or belief
about future events. A contract may be voidable by the disadvantaged party if:
(1) The mistake concerns a basic assumption (relates to material fact/subject matter of K) on which the contract was formed;
(2) The mistake will have a material impact on the parties’ performances; and
(3) The disadvantaged party did not bear the risk of the mistake.
Bearing risk of mistake: where person either (1) has greater knowledge of relevant facts OR (2) realizes they do not have the knowledge but still proceeds with the transaction.
Mistake as to value of item is NOT enough.
unilateral misunderstanding is NOT a defense
If one party has reason to know the other party attached a different meaning, the court will find there IS mutual assent and no defense. Ambiguious language will be interpreted per meaning attached by unknowing party.
Contract defense parol evidence rule
when ther eis a final, written agreement, court shouldn’t consider extrinsic evidence CONTRADICTING written agreements when determine K terms BUT MAY consider extrinsic evidence of a prior agreement to establish FRAUD OR MISTAKE.
Unilateral mistake
an incorrect belief, held by only one of the parties, about an existing fact that
affects the exchange between the parties. A contract is voidable at the mistaken party’s option if:
(1) The mistake concerns a basic assumption on which the contract was formed;
(2) The mistake will have a material impact on the parties’ performances; and
(3) The advantaged party either caused the mistake or knew or had reason to know of the mistake;
or the mistake makes the contract unconscionable
Misunderstanding defense where there is no mutual assent
no manifestation of mutual assent occurs if a material term of an agreement is
ambiguous, the parties attach different meanings to the term, and either:
(1) Neither party knows or has reason to know of the meaning attached by the other party; or
(2) Both parties know or have reason to know of the meaning attached by the other party.
* Waiver: a party may waive its misunderstanding and choose to enforce the contract according
to the other party’s understanding.
Equitable defense fraudulent misrep
: a party may avoid a contract if the party justifiably relied on a
fraudulent misrepresentation of the other party. A misrepresentation is fraudulent if it was made with the
intent to induce the other party’s assent, and the party making the assertion:
(1) Knew or believed that the assertion was untrue;
(2) Stated or implied confidence that the assertion was true, while knowing that such confidence
was unfounded; or
(3) Knew that there was no proper basis on which to make the assertion.
Makes K VOIDABLE
Equitable defense material misrep
a party may avoid a contract
based on purposeful concealment or based on one of the nondisclosure circumstances listed
below, if the party justifiably relied in good faith on a concealed or nondisclosed material fact.
o Nondisclosure: may be deemed equivalent to a misrepresentation when disclosure:
(1) Would prevent a prior statement from being a misrepresentation or fraud;
(2) Would correct the other party’s mistake about a basic assumption of the contract;
(3) Would correct a mistake about the contents of a writing that forms part of the contract;
or
(4) Is required because of a relationship of trust and confidence.
Makes K voidable
Seller’s duties in real estate sales
sellers have certain duties to disclose that commonly arise in real estate sales. These duties include:the duty to respond truthfully to a question asking about a potential defect;
the duty to make a full disclosure after making a partial disclosure, where failure to do so would result in a misrepresentation; and
the duty to correct a prior unknowing false statement, i.e., a false statement that the seller believed to be true when it was made.
Statute may ALSO impose duty to disclose.
Equitable defense Unconsionability
Makes K voidable. a contract or contract term is unconscionable when it is extremely unjust or
overwhelmingly one-sided in favor of the party with superior bargaining power so that no reasonable
person would have agreed to it.
* Procedural Unconscionability: relates to unequal power in the bargaining process.
* Substantive Unconscionability: relates to unfairness of the contract’s terms.
* Sliding Scale: courts may require less evidence of procedural unconscionability if there is
more evidence of substantive unconscionability, and vice versa
Threshold for establishing entitlement to K breach damages
(1) causation - breach caused loss; (2) foreseeabilty - loss was reasonably foreseeable or w/n breaching party’s contemplation when K was formed; (3) certainty - P must prove with reasonable certainty both that the loss occurred AND amount of loss; (4) unavoidability duty to mitigate - nonbreaching party CANNOT win damages for losses that could have been avoided e.g. take reasonable steps to mitigate.
Legal remedies in K
Primary: Liquidated damages, expectation damages, reliance damages, nominal damages. Exclusive of e/o.
Secondary - consequential, incidental, punitive (never unless bad faith breach), attorney’s fees
UCC damages - buyer’s/seller’s expectation damages (market damages), buyer’s cover, seller’s resale, lost volume seller, breach of warranty, consequential damages, incidental damages
Liquidated damages remedy for K
: clauses are enforced if reasonable; courts consider several factors in
determining reasonableness, including:
(1) The difficulty of estimating or proving the harm caused by breach; and
(2) Whether the liquidated damages clause is a reasonable forecast of that harm (or a penalty
K expectation damages
: put the nonbreaching party in the economic position it would have
enjoyed if the contract had been performed.
o Common Law Calculation: expectation damages = losses in value caused by the breach +
gains prevented by the breach – savings resulting from not having to perform.
o Partial Performance: if the plaintiff partially performed and incurred expenses at the time
the defendant breached the contract, the plaintiff will first recover the plaintiff’s expenses
and then receives the expected profit under the contract.
o Defective or Unfinished Construction: the aggrieved party may recover damages based on
(1) the diminution in the property’s market price caused by the breach (i.e., the difference
between the land’s value with the proper performance and the land’s value with the defective
performance), or (2) the cost to complete performance or to remedy the defects, unless the
cost is clearly disproportionate to the loss in value caused by the breach (i.e., the cost of
repair will cause economic waste).
o Lost-Volume Sellers: are contractors who can do multiple jobs at a time; in these cases, the
party is not required to offset the amount they received from subsequent contracts because
the party could have and would have performed both contracts but for the breach.
