Remedies/Damages

Question 1

remedies

Answer 1

2 broad branches of remedies available in breach of K situations: monetary and nonmonetary (primary nonmonetary – specific performance)

Question 2

specific performance

Answer 2

if legal remedy (money damages) is not adequate, nonbreaching party can seek specific performance (order from court to the breaching party to perform)

Question 3

when is specific performance available

Answer 3

• available for LAND (land is unique) and rare/UNIQUE GOODS (or buyer can’t cover)
• NOT available for breach of a K to provide services (it’d be involuntary servitude)

Question 4

defenses available when pff seeks specific performance

Answer 4

sale to a bona fide purchaser – a claim that subject matter has been sold to a person who purchased for value and in good faith!

Question 5

reformation (non-monetary remedy)

Answer 5

remedy whereby the writing setting forth the agreement b/w parties is changed so that it conforms to original intent of the parties

Question 6

DAMAGES

Answer 6

damages can be recovered only to extent they can be proved with reasonable CERTAINTY and couldn’t be avoided

usual goal of damages for breach of K is to put the nonbreaching party in position they would have been in had the promise been performed (so far as money can do this)

Question 7

compensatory damages

expectation damages

Answer 7

• pff’s standard measure of damages will be based on an expectation measure – sufficient damages for them to buy a substitute performance (if breach never occurred)

*look for answer that closely gives damaged party what she would have gotten without the breach

Question 8

compensatory damages

reliance damages

Answer 8

if pff’s expectation damages are too speculative to measure (e.g., pff can’t show the profits they would’ve made if D had performed), the pff may elect to recover those damages THEY SUFFERED based on their reasonable reliance on the K

Question 9

compensatory damages

incidental damages

Answer 9

• incidental damages = most commonly associated with contracts for sale of goods
• includes expenses incurred by buyer in care, receipt, etc, of goods rightfully rejected
• and by the seller in storing, shipping, returning and reselling goods due to buyer’s breach

Question 10

compensatory damages

consequential damages

Answer 10

• arise b/c of nonbreaching party’s particular situation and most often consist of lost profits
• test: can only be recovered only if, at the time the K was made, a reasonable person would have FORESEEN the damages as a probable result of breach (foreseeability - key issue)
• breaching party must have KNOWN or had reason to know of the circumstances giving rise to the damages

in K for sale of goods, only a BUYER can recover consequential damages from seller

Question 11

liquidated damages

Answer 11

parties to a K can stipulate what damages are to be paid in event of a breach; must be in an amount that is reasonable in view of possible harm caused by breach

2 requirements:
1) damages for K breach are difficult to estimate or ascertain at time K is formed (idea is that such a clause will save both parties difficulty of estimating damages); and
2) amount agreed on is a reasonable forecast of compensatory damages in case of a breach

IF the liquidated damages amount is not reasonable, courts will view it as a PENALTY and not enforce provision

Question 12

contracts for sale of goods
BUYER’S DAMAGES (measured at time buyer learns of breach)

SELLER HAS BREACHED!

Answer 12

1) seller doesn’t deliver or buyer REJECTS/REVOKES

buyer’s damages consist of DIFFERENCE between the CONTRACT price and either:

a) market price (when buyer doesn’t cover) OR
b) cost of buying replacement goods (buyer does cover), plus incidental and consequential damages

2) seller delivers nonconforming goods that buyer ACCEPTS

buyer may recover difference between value of goods as DELIVERED and value they would have had IF THEY HAD BEEN ACCORDING TO THE CONTRACT, plus incidental and consequential damages

notice requirement: to recover damages for any defect as to accepted goods, buyer must notify seller of defect

3) consequential damages: seller is liable for consequential damages arising from their breach if they had reason to know of buyer’s particular requirements

BUYER’S DAMAGES ARE MEASURED AS OF TIME THEY LEARN OF BREACH

Question 13

SELLER’S DAMAGES (measured as of time of delivery by seller)

THE BUYER HAS BREACHED

Answer 13

where buyer repudiates or refuses to accept CONFORMING GOODS

in addition to incidental damages (costs of storing, shipping, etc), seller can:

1) recover difference b/w contract price and resale price (seller resells)
2) recover difference between market price (seller doesn’t resell in good faith) and contract price, or
3) if above measures are inadequate b/c seller could’ve made additional sale, recover under a lost profits measure

SELLER’S DAMAGES MEASURED AS OF TIME FOR DELIVERY

Question 14

lost volume seller rule

Answer 14

• seller has unlimited supply
• aggrieved seller can recover lost profit that seller would’ve made if original buyer hadn’t breached (subtract the original price from the wholesale price–e.g., agreed to sell to buyer for 10k and the wholesale price is 7k; lost profits is 3k)

Question 15

can seller obtain specific performance (force goods on buyer) where buyer hasn’t accepted goods?

Answer 15

ONLY IF seller can’t resell at reasonable price

Question 16

action for price

Answer 16

only if goods can’t resell OR if buyer has accepted goods and did not pay for them

Question 17

K for sale of land

Answer 17

for breach of land sale K’s: difference b/w K price and the fair market value of the land

Question 18

employment contracts

Answer 18

• breach by employer: employee’s damages is the full K price
• breach by employee: employer entitled to recover cost of replacing the employee

Question 19

construction contracts

Answer 19

• breach by owner: builder entitled to any PROFITS that would’ve resulted
• breach by builder: owner entitled to cost of COMPLETION + reasonable compensation for DELAY in performance (builder can offset/recover for work performed to date to avoid unjust enrichment by owner)

Question 20

K’s calling for installment payments

Answer 20

• if a K calls for payments in installments and a payment is not made, only a partial breach (aggrieved party can only recover missed payment and not entire K price)

watch for an acceleration clause - making entire amount due on any late payments (in which case aggrieved party CAN recover entire amount)

Question 21

mitigation damages

Answer 21

• under CL: nonbreaching party can’t recover damages that could’ve been avoided (after they receive notice of breach, they can’t pile up losses)
• if there’s a clear breach and pff/nonbreaching party doesn’t attempt to mitigate damages, they can still recover (but their recovery will be reduced by the damages that would’ve been avoided has they mitigated)

Question 22

restitution

Answer 22

• based on preventing UNJUST ENRICHMENT when one has conferred benefit on another
• restitution can provide remedy not only when K exists and has been breached… BUT ALSO when a K is unenforceable and even when no K exists at all (these are actions for quantum meruit)
  note: party cannot recover both expectation damages and restitution damages

Question 23

when K unenforceable and when no K involved – quasi-K remedy

Answer 23

available in a quasi-K action when there is no contractual relationship b/w parties:

1) pff has conferred benefit on D by rendering services
2) pff conferred benefit with reasonable EXPECTATION of being compensated for its value
3) D knew or had reason to know of pff’s expectation of being compensated
4) D would be unjustly enriched