Remedies and Excuses Flashcards
Consequential
SPECIAL Damages (specific to P) foreseeable AT THE TIME of K that breaching party should have expected to cause to P (NOTICE is required)
K Equitable Remedy: Specific Performance
Cha Cha Is My Favorite Dance
- Forces D to perform on valid K
Elements:
1) Contract MUST be valid (not unconscionable) - K Terms MUST be sufficiently definite and certain (more proof than for money damages)
2) Conditions for P are satisfied/performed or excused by NON-breaching party
- If P breaches but partially performs look for Restitutionary remedies
- Minor defect on RealProp: Seller CAN enforce K
- Major defect on RealProp: Seller cannot enforce K unless cured by closing -vs- Buyer CAN enforce K
- Ct MUST lower purchase price to reflect defect
3) Inadequacy of legal remedy (no compensatory: D is insolvent, damages are speculative, etc)
- RealProp (unique) between two parties
BUT if TP BFP not in the K, B cannot recover RP from BFP
- Personal Prop NOT unique
Except: Rare goods or One of a Kind (art, antiques, etc) ID in the K
- If goods are not unique award damages
4) Mutuality of performance: counter-performance
5) Feasibility of enforcement: performance is possible under the K
- NOT personal services
- Covenants not to compete ARE enforceable if a) services are unique AND b) scope is reasonable
5) Defenses overcome: SLUUMM
- Equitable Defenses
a) Laches: clock runs when P learns of injury and P’s right is cut off when relief is Unreasonable AND Prejudicial to D
b) Unclean Hands: P’s wrongful act MUST relate to claim
c) Unconscionability at the time of K formation
- K Defenses
Mistake
Misrepresentation
SoF (RealProp exception: any two is sufficient: payment + possession + valuable improvement OR Estoppel based on Detrimental Reliance)
- If Specific Performance NOT available award look for Restitutionary
- Time is of the Essence Clause: award Specific performance EVEN if clause is valid
- Specific Performance AND Liquidated damages are allowed UNLESS K provides Liquidated is only remedy
K Equitable Remedy: Reformation
- Ct changes written K to conform w/party’s original understanding
- MUST be a valid K (meeting of the minds)
- Grounds for Reformation: MM
1) Misrep of material fact/law: MUST show actual reliance
2) Mutual Mistake of material fact: NOT on collateral fact (e.g. quality, desirability, fitness of prop) - Unilateral mistake NOT rescission
Exception: non-mistaken party KNOWS of the mistake - Defenses:
1) Laches: clock runs when P learns of injury and P’s right is cut off when relief is Unreasonable AND Prejudicial to D
2) Unclean Hands: P’s wrongful act MUST relate to claim - PER NOT a defense to reformation
K Excuses
- Excuse if Duty to perform is absolute: FREE from ALL K obligations BUT may still recover in quasi-K theory
Types: (Death and Destruction are Impractical and Impossible Conditions that Anticipate a Later Perfect Breach)
Anticipatory Repudiation
Conditions (excuse, not a requirement)
Perfect Tender (UCC) and Material Breach (CL)
Later K (rescission, accord and satisfaction, mod)
Impracticability: party encounters extreme and unreasonable difficulty or expense and its nonoccurrence was a basic assumption of the parties
Impossible performance: unanticipated event makes duties objectively impossible to perform
Death AFTER K (services)
Damage/destruction of prop
- Excuses to K Formation: I FILM MUD (all occurred AT THE TIME of K formation)
1) Illegal subject matter, illegal purpose for K
2) Failure of Consideration: 1) promise, 2) bargained-for promise (asked for in exchange), 3) bargained-for legal detriment (requested legal detriment: asking not to do something legally entitled to do IS detriment, OR promise for promise)
Exception: written promise to pay barred debts, or promisory estoppel ARE substitute considerations
3) Impossible performance: unanticipated event makes duties objectively impossible to perform
4) Lack of capacity (mental/minor = even if misrepresented age): mental/minor party can disaffirm K if not performed OR ratify K and enforce it he performs or retains benefit
Except for necessaries: minor/mental party is OBLIGATED to pay for necessities based on quasi-K theory
5) Misrepresentation of MATERIAL fact (MUST show actual reliance): statement of fact (EVEN if hones/innocent) by party in K, that is false OR material AND induces the K
6) Mutual mistake of existing material fact AND party SEEKING avoidance of K did not assume risk (e.g.
NOT excuse if mistake on collateral facts (e.g. quality, desirability, fitness of prop)
- Unilateral mistake: No relief, NO rescission
Exception: non-mistaken party knew or should have known of the mistake
7) UI
8) Duress (bad guy + vulnerable guy)
I: Illusory promise (“I will if I want to” / apparent but not real commitment by promisor e.g. “I agree but reserve right to terminate K at any time w/o notice)
N: Nondisclosure: no duty to disclose BUT if fiduciary duty between parties OR willful concealment then no enforcement of K
U: Unconscionable K: Ct can refuse (never goes to the jury) to enforce part or all of K. Test: K is unfair procedurally (surprise) AND substantive (oppressive terms) AT THE TIME it was made
S: SoF, unless objective evidence (performance, or writing signed by D, NOT testimony) BUT other defenses still apply
A: Ambiguity of MATERIAL terms: material term is open to reasonable double interpretation, parties attach diff meanings, neither party knows or has reason to know the other’s interpretation
Exception: one party knows other’s interpretation
Entrustment (nonmonetary remedy - UCC)
Elements: party voluntarily leaves prop in trust to Def, Def sells prop (conversion) to a BFP, party CANNOT recover prop from BFP
Avoidable damages
CANNOT continue to perform once party breaches
CANNOT turn down comparable opportunity
Modification (K excuse)
K by parties to existing obligation to accept different K instead of original obligation
Mod vs Accord and Satisfaction:
Mod excuses original obligation
Accord and Satisfaction liable on new OR original obligation
Material Breach vs Perfect Tender (K excuses)
[DO NOT apply to UCC]
- Nonbreaching party must show willing and able to perform
- Damages recoverable for ANY breach
- ONLY Material breach (no substantial performance) excuses nonperformance, then nonbreaching party may:
1) Treat K as ended and duty of counterperformance is discharged, AND
2) Immediate right to all remedies of entire K and total damages - If non-Material breach (Substantial performance) then nonbreaching party may:
1) Sue for damages BUT cannot treat K as ended/cancelled
[DO NOT apply to CL]
- EVERY K for sale of goods: Goods and Delivery MUST FULLY comply w/K terms
- Seller sends wrong goods (less than perfect tender) BEFORE B accepts Goods: S has accepted Offer thus a K AND breach (defective performance)
B has option: 1) B can accept all and pay K price, 2) B reject all and sue damages, 3) B accept in-part and reject-in part (B MUST care and not use if rejecting)
S may cure (not always may be allowed) if time for performance has not expired, OR S reasonably believes tender will be acceptable to B (e.g. B prev accepted widget of diff color than ordered) - Seller sends wrong goods AND note of accommodation (explanation): Counteroffer thus NO K and NO breach
K Remedy for Services K
Compensatory
Restitution
Specific Performance (ONLY for covenant not to compete)
Liquidated damages
Elements:
1) Damages for K breach are DIFFICULT to measure AT THE TIME of K formation
and
2) Amount is REASONABLE ESTIMATION of compensatory damages
- If valid: ONLY liquidated and NO actual damages
If invalid: ONLY actual
If Clause provides party can choose either actual or liquidated = invalid clause = Give P actual compensatory damages - Specific Performance AND Liquidated damages are allowed UNLESS K provides Liquidated is only remedy
Tip:
if set amount = NOT reasonable estimation
If formula or range amount = reasonable estimation
K Remedy for Sale of Personal Prop
Compensatory
Restitution
Specific Performance
Rescission
Reformation
K Remedy for Sale of RealProp
Compensatory
Restitution
Specific Performance
Rescission
Reformation
Conditions (K excuse)
Condition is NOT a requirement
Condition limits obligations
Express Condition MUST be strictly satisfied (except for personal satisfaction “if I am satisfied”)
Constructive Conditions: substantial performance to satisfy
Personal Satisfaction: only good faith
Condition precedent to effectiveness of K: Agreement that K is not effective UNTIL condition is met (PER does not apply thus ALL evidence of agreement may be offered), if not met K is not effective
Condition subsequent (precedent to performance): A condition that must be met before an absolute duty of immediate performance arises. If not met, excuses (cuts off) an ALREADY existing duty to perform
K Remedy for Construction K
Compensatory
Restitution
Specific Performance (Only Owner but difficult enforcement because of services)
Destruction of Subject matter (K excuse)
CL: excused ONLY if destruction is AFTER K is formed and affects ABILITY to perform, not mere cost to parties
UCC: Apply Risk of Loss rules (receipt vs tender) first
