Remedies at Common Law

Question 1

Specific Performance

Answer 1

Specific enforcement is an equitable remedy which is available if the nonbreaching party proves that the legal remedies are inadequate to redress the breach.

It is available for:

– Land sale contracts (land is unique)
– goods that are rare or unique at the time performance is due

Question 2

When Specific Performance may not be sought

Answer 2

Specific performance is not available for service contracts even if the service is rare or unique

Question 3

Injunction As Alternate Remedy

Answer 3

A court may enjoin a breaching employee from working for a competitor throughout the duration of the contract if the services contracted are rare or unique

Question 4

Convenient not to Compete

Answer 4

Most courts will specifically enforce a contract not to compete if (1) the services to be performed are unique and (2) the covenant is reasonable.

Reasonable - must be reasonably necessary to protect a legitimate interest of the person benefited by the covenant and reasonable as to the geographic scope and duration.

Question 5

Equitable Defenses

Answer 5

Laches - A claim that the plaintiff delayed bringing the action and the delay has prejudiced the defendant

Unclean Hands - The party seeking specific performance is guilty of wrongdoing in the transaction

Sale to Bona Fide Purchaser - a claim that the subject matter has been sold to a person who purchased for value and in good faith

Question 6

Monetary Remedies

Answer 6

Damages can be recovered only to the extent that they can be proved with reasonable certainty and could not be avoided with reasonable effort

Question 7

Compensatory Damages

Answer 7

Compensatory damages put the nonbreaching party in the position they would have been in had the contract been performed.

The standard measure is expectation damages

If the plaintiff’s expectation damages are too speculative, the plaintiff may elect to recover reliance damages - they are the damages suffer based on the reasonable reliance on the contract - this puts the plaintiff in the position they would have been in had they never entered the contract.

Question 8

Incidental Damages

Answer 8

These are damages that are reasonably incurred as an incident of the other party’s breach - they are always recoverable

Question 9

Consequential Damages

Answer 9

These are special damages that arise because of the nonbreaching party’s particular circumstance (includes lost profits)

To be recovered:
– they may only be recovered if, at the time of contracting, a reasonable person would have foreseen the damages as a probable result of the breach (must have known or had reason to know of the possibility of the damages)

Question 10

Punitive Damages

Answer 10

Punitive damages are generally not awarded in contract cases

Question 11

Nominal Damages

Answer 11

Nominal damages may be awarded when a breach is shown but no actual loss is proven

Question 12

Liquidated Damages

Answer 12

The parties may stipulate what damages are to be paid in the event of a breach if they are an amount that is reasonable in view of the actual or anticipated harm by the breach.

Liquidated damages will be enforceable if:
– Damages for breach are difficult to estimate or ascertain at the time of contracting; and
– the amount agreed upon is a reasonable forecast of compensatory damages in the case of breach

If the liquidated damages clause is held to be valid, the plaintiff may recover under the clause even if no actual money or pecuniary damages have been suffered.

Question 13

Damages for Land Sale Contracts

Answer 13

The standard measure for breach of a land sale contract is the difference between the contract price and the fair market value of the land

Question 14

Damages for Breach by Employer

Answer 14

Irrespective of when the breach occurs (during, part, or after performance) the standard measure of the employee’s damages is the full contract price

NOTE – this may be reduced if the employee fails to mitigate

Question 15

Damages for Breach by Employee

Answer 15

If an employee materially breaches an employment contract, the employer is entitled to recover the cost of replacing the employee (wages paid to replacement minus breaching employee wages)

Question 16

Damages for Breach of Construction K by Owner

Answer 16

The builder will be entitled to profits that would have resulted from the contract plus any costs expended

Question 17

Damages for Breach of Construction K by Builder

Answer 17

The owner is entitled to the cost of completion plus reasonable compensation for delay

Question 18

Damages for Breach of Installment K

Answer 18

in contracts calling for installment payments and a payment is not made, there is only a partial breach - the nonbreaching party is limited to recovering only the missed payment

Unless the contract contains an acceleration clause

Question 19

Mitigation of Damages

Answer 19

Under common law, the nonbreaching party cannot recover damages that could have been avoided with reasonable effort

NOTE - IN GA mitigation is not require in lease contracts

Question 20

Mitigation in Employment Contracts

Answer 20

If the breaching employer can prove that a comparable job in the same locale was available, then the contract damages for lost wages will be reduced by the wages that the plaintiff would have received from that comparable job

However, there is no duty to take employment of a different or inferior kind

Question 21

Mitigation in Construction Contracts

Answer 21

A builder does not owe a duty to avoid consequences of breach of an owner by securing other work, but does have a duty to mitigate by not continuing to work after the breach