Remedies for an Unexcused Nonperformance Flashcards
What are the nonmonetary remedies (in rem) for breach of contract?
(a) Specific performance/injunction
(b) Seller’s reclamation from an insolvent buyer of goods
(c) Entrustment
What is specific performance? When is it available? When is it NOT available?
Equitable remedy: Look for adequacy of remedy at law or unclean hands, or other parties’ equities. Available for (1) Contracts for sale of real estate; (2) Contract for sale of goods: Unique goods: antiques, art, custommade or other appropriate circumstances;
NOT available for a contract for services: No specific performance, but possible injunctive relief.
What is meant by a seller’s reclamation from an insolvent buyer of goods?
Right of an unpaid seller to get its goods back. Key facts are that (i) the buyer must have been insolvent at the time that it received the goods, and
(ii) the seller demands return of goods within 10 days of receipt (this “10- day rule” becomes a “reasonable time rule” if, before delivery, there had been an express representation of solvency by the buyer), and (iii) the buyer still has goods at time of demand.
What are the general categories of money damages availabe for breach of contract?
(a) EXPECTATION
(b) Incidental
(c) CONSEQUENTIAL
(d) Avoidable
(e) Certainty
(f) Reliance
(g) Liquidated
What are the policy reasons for money damages for a breach of contract?
Compensate plaintiff, not punish defendant.
What is the general approach for measuring damages when there has been a breach of contract?
General approach – protection of expectation: Expectation simply means that people who contract expect that the other person will not breach. Expectation damages protect that expectation. Accordingly, (1) look to facts for dollar value of performance without breach, (2) look to facts for dollar value of performance with breach, and (3) compare the two to determine the
amount of damages.
Generally, what is the damages rule for sales of goods under Article 2, Part 7?
Part 7 of Article 2 reflects the general contract damages policy of putting the innocent party where it would have been had the contract been performed, i.e., expectation. There are three relevant facts: (1) who breached, (2) who has the goods, and (3) was there a later “replacement” deal.
Under Article 2, what damages are available if the seller breaches and buyer has the goods?
Seller breaches, buyer keeps the goods [Fair market value if perfect – fair market value as delivered] OR [cost of repair].
Under Article 2, what damages are available if the seller breaches and seller has the goods?
Seller breaches, seller has the goods: [market price at time of discovery of the breach – contract price] OR [reasonable replacement price – contract price] whichever is greater.
Under Article 2, what damages are available if the buyer breaches and buyer has the goods?
Buyer breaches, buyer keeps the goods [contract price].
Under Article 2, what damages are available if the buyer breaches and seller has the goods?
Buyer breaches, seller has the goods: [contract price – resale unless seller cannot resell in which case the seller can recover the contract price and in some situations provable lost profits].
Note: Lost profits are available for lost volume seller, who sells goods that are part of seller’s regular inventory.
What are incidental damages? When can one seek incidental damages?
Costs incurred in dealing with the breach such as costs of storing rejected goods in a sale of goods or finding a replacement in a services contract – always recoverable. Can seek incidental damages along with expectation damages.
What are consequential damages?
In addition to seeking expectation damages and incidential damages, P can also seek foreseeable CONSEQUENTIAL (special) damages: The term “consequential damages” is very important. And very confusing. Consequential damages does not mean all damages caused as a consequence of the breach. Rather think of damages as being either (1) general damages, i.e., kind of loss that any person would sustain or (2) consequential damages, i.e., kind of loss that is special to this plaintiff. Consequential damages are limited to damages arising from P’s special circumstances and recovery of consequential damages is limited to situations in which D had reason to know of these special circumstances at the time of
the contract.
What is the general rule for damages that are avoidable?
No recovery for damages that could have been avoided without undue burden on plaintiff. Burdens of pleading and proof on defendant.
What is the general rule for damages that are not reasonably certain?
No recovery for damages that cannot be established with reasonable certainty: Look for fact pattern involving a services contract and plaintiff engaged in new business or a new business activity. Consider reliance recovery as an alternative to expectation.
