Remedies-- Equitable Remedies Flashcards
Specific Performance
- π must show:
- valid k, conditions are satisfied, inadequate legal remedies, feasibility of enforcement, defenses (CIFD)= cha cha is fairly difficult.
- ∏ MUST ALSO HAVE SUPERIOR EQUITY
Specific Performance Step 1 – Valid, certain and definite contract
i. must show contract is valid
ii. must show certain and definite terms
Specific Performance Step 2- π’scontract conditions are satisfies
i. π must show π has performed, is ready and able to perform, or is excused from performance
ii. bar: often arises in two fact patterns, both concerning sales of land: deficiencies and time of the essence
a. deficiencies:
i) bar: seller delivers a lower quantity of land than promised
ii) if seller is π: (i.e. buyer refuses to close when seller delivers less land than in K) then seller may get specific performance if defect is minor (not major) unless cured by closing.
iii) if buyer is π: (i.e. seller refuses to close when seller delivers less land than in K) specific performance available even if defect is major (only 900 acres when 100 promised) but not if sdefect is very major (i.e. when it looks like something else entirely)
iv) if specific performance is granted for a deficiency, the purchase is abated
b. time of the essence:
a) land sale K containing (i) time of the essence clause and (ii) forfeiture clause (forfeiture of all performance rendered to date if performance is not timely). there is partial performance by buyer (some installments paid). buyer makes a late payment (triggering time of essence and subject to forfeiture clause). equity abhors forfeitures
iii) factors considered to avoid harsh results:
a) small loss to seller is
b) de minimis tardiness
c) waiver (seller has accepted late payments in past)
d) buyer would suffer undue hardship (losing money and land is enough)
iv) on the bar under this fact pattern: almost always award specific performance
v) write on bar: under modern trend, courts grant plaintiff restitutionary relief if specific performance is not granted
a) return the buyer’s money
Specific Performance Step 3: Inadequate legal remedy alternative
i. money damages inadequate:
a. ∆ insolvent
b. speculative
c. multiple suits would be required
d. property is unique
i) real property: all land is unique, even if every parcel identical
a) note: sellers of land can get specific performance, even though all they get is fungible money
- hard to enforce (∆ lives far away)
- π is asking court to be a judge of taste
ii) personal property: personal property is generally not unique
a) exceptions:
(i) one-of-a kind goods and rare goods
(ii) goods of personal significance
(iii) circumstances make the chattel unique (ex. gas during a shortage)
(a) note: uniqueness tested at time of litigation, not time of contract formation
ii. UCC: court will usually grant specific performance if ∆ is unable to cover (replace goods)
iii. note: a liquidated damages clause does not automatically make money damages adequate, so specific performance still available, except if it provides that it is to be the only remedy
a. if clause says:
i) liquidated damages is the only remedy: liquidated damages only
ii) non-breaching party may elect: no liquidated damages, only compensatory damages or specific performance
iii) silence: liquidated damages, compensatory damages, or specific performance
Specific Performance Step 4: feasibility of enforcement
- is it a matter of taste or judgment? (making it hard to judge compliance)
- is the ∆ in a different state (making it harder to enforce)
i. personal services contracts are not specifically enforceable
ii. covenants not to compete can be specifically enforceable if
a. services are unique, and
b. scope is reasonable
Specific Performance Step 5: Defenses
i. equitable defenses: laches, unclean hands, unconscionability (needs more than a bad deal, tested at time of formation)
ii. mistake
iii. misrepresentation
iv. statute of frauds
a. bar: oral contract in a land sale or testamentary disposition
b. valuable partial performance satisfies SoF: 2 of 3 of: payment, possession, or valuable improvements
i) valuable services alone (ex. taking care of the deceased in exchange for oral promise for land) may also be sufficient
ii) specific performance will be granted.
Recission
remedy whereby original k is voidable and rescinded. Parties left as if no k has ever been made.
- two step analysis (good dog: GD: grounds and defenses)
Recission Step 1: Grounds for recission
i. grounds for rescission: defect in contract formation which occured BEFORE OR AT THE TIME the k was entered into.
- mutual mistake of material fact (bargaining for something that doesnt exist,e.g., but NOT a mistake over collateralfact. )
- unilateral mistake if the other party knew or should have know of the mistake
- unilateral mistake if hardship by the mistaken party is so extreme that it outweighs the other party’s expectations under the k
- misrepresentation of fact or law by one party that WAS RELIED UPON
a. duress, undue influence, illegality, lack of capacity, failure of consideration
ii. all equitable defenses are available. π negligence is not a defense.
iii. If π has paid money to ∆, may be restitution in addition to recission.
modern trend requires hardship (mistaken party to show hardship if no rescission)
Recission Step 2: Defenses
a. unclean hands, laches
b. negligence of π is not a defense to rescission (ex. contractor negligently submits low bid)
Reformation
- changing written agreement to conform with parties’ original understanding
- three step analysis (Very Good dog VGD: valid k, grounds, defenses)
ii. Negligence not a bar to reformation.
iii. Clear and convincing evidence standard—variance between agreement and writing must meet clear and convincing standard
iv. PE does not apply – mistake/ misrepresentation is one of the exceptions
SOF also doesn’t apply, even if the resulting k is within the SOF!!– we dont want people to get away with SOF defense bc of mistake or misrepresentation
Reformation step 1: valid k exists
i. valid contract exists: there must be a meeting of the minds
Reformation Step 2: grounds for reformation
a. mutual mistake of material fact – grant reformation
b. unilateral mistake– denied, unless non-mistaken party actually knows of the mistake
i) note: unlike rescission, does not apply if non-mistaken party merely should have known; reformation only for inequitable conduct
c. misrepresentation—grant reformation. Rewrite to reflect original intent.
Reformation Step 3: Defenses
a. unclean hands, laches
- reformation would not be equitable
- a bona fide purchaser exists
- not allowed if the rights of 3ps will be harmed
b. note: the following are not defenses:
i) negligence of the plaintiff
ii) statute of frauds
iii) parole evidence rule
Ks approach
- π injured? compensatory damages (direct vs. indirect, but no punitive)
- has ∆ derived a benefit? restitutionary remedies
- does π want property back? unique property or insolvent ∆
- does π want K performed? specific performance. Cha cha is fairly difficult
- does π want K ripped up? Rescission. Good dog
- does π want K rewritten? Reformation. Very good dog.
Specific Performance: must have superior equity
USUALLY AVAILABLE ONLY IF remedy at law not enough AND π has superior equity
Remember “he who seeks equity must do equity.”
i. Contracts for sale of real estate allow specific performance because money is not a substitute for land.
2. But if Seller breaches by selling to another, a bona fide purchaser.–> Buyer cannot get specific performance
a. this means buyer’s equity is not the superior equity, because the other BFPis not at fault
ii. Contrct for sale of goods. Unique goods: antiques, art, custom-made or other appropriate circumstances.
Can force specific performance, BUT he who seeks equity must do equity
1. for ex if you lied when buying and you said you were buying for museum but you were really buying to make huge profit- your hands arent clean and you wont recover
