Remedies for Breach/ Damages Flashcards
Starting point for damages?
Parties Expectation Interests
Punitive Damages
Not awarded in K law, whole idea is to protect the parties expectation interests, not punish.
§352 Uncertainty as a Limitation on Damages
Does not require ABSOLUTE certainty, but must have REASONABLE certainty.
- Does not allow speculative in damages
§347 Measure of Damages in General
ADD
(1) Loss of Value- Party’s Expectation Interests +
2) Any other loss calculated by breach.-
SUBTRACT (3) Mitigation (any cost that was avoided)
Overhead
Overhead is not a separate reduction, it is part of the costs.
Cover
Cover is the option of entering into the market after the seller breaches, buying subsequent goods, and suing for the difference.
§2-708 Non-Acceptance by Buyer
(1) Damages are the difference between the market price at the time of the tender, and the unpaid K price.
Lost-Volume Seller
Capacity + Profit (someone who has the capacity to to fulfill the demand AND sell the unit at a profit)
- In order for seller to have status of lost volume seller need
1) capacity to produce additional unit
2) sell unit at a profit
(applies when measure of damages is in adequate , AKA can not go out in market and sell)
Types of Damages
(1) Expectation- gives benefit of full performance
(2) Reliance- out of pocket
(3) Restitution- benefit conferred
Avoidability
Damages are not recoverable for loss that the injured party could have avoided without undue risk, burden, or humiliation. (Injured party has an obligation to mitigate damages!)
Cost of Performance v. Diminished Value
Cost of Performance- (willful breach)
Diminished Value- (negligent mistake)
Remedy for Substantial Performance
Is Diminished Value…but only if it is negligent. (Can’t use defense of substantial performance if it is willful).
Incidental Damages
reasonably foreseeable
Consequential Damages
not foreseeable (must put other party on notice!)
Common Law
General rule is Cost of Performance is always required because it protects parties expectation interests.
2 Exceptions: (1) Substantial Performance
(2) - willful
Sentimental Value
Parties in K law cannot recover for sentimental value
Emotional Distress
Gen Rule: damags for mental anguish are not recoverable in K action
Exception: where K is personal in nature
(Ex: funeral home)
Liquidated Damages Clause
A way for parties to determine damages in the event of a breach.
1) must be difficult to measure at time of contracting
2) reasonable effort to fix damages
3) Proportionate to actual harm. (damage amount must be proportionate to harm)
Policy Concern: does not favor liq damages because viewed as a penalty
Equity
Asking the Court for an action or inaction
1) specific performance
2) injunction
3) reformation
4) recession
Specific Performance
Specific Performance is used when damages
1) legal remedy at law inadequate ($)
2) item is unique
Efficient Breach
When it costs less to breach the contract than it does to perform the contract.
Court balances costs and benefits when deciding damages or equity.
What is the difference between damages and Equity?
Damages- When party wants $ they say damages
Equity- When seeking action or inaction
Reliance
When 1 party tells another, and person relies on it
-“Out of Pocket”
- pre-k
(puts parties back at day 0)
- Post-contractual: amount cannot be speculative, but will reward for “out of pocket”
Restitution
value of benefit conferred.
- Can be both pre-k and Post-k
- Ex: The breaching P
General Rule for damages?
Injured party has right to damages based on parties expectation interest
absolutely certain v. reasonably certain
K Law will only award damages for things that are reasonably certain.
- Does not have to be absolutely certain.
Expectation Interest example
Actor enter into K to make movie for 50 million. Movie does not happen, party expectation interest is 50 million
“What are parties expectation interest?”
- If provide service , what was expected?
-If goods-“exceptation is approx. = to profit”
(find expected profit.)
Costs $1 to make, $2 for sale= $3 profit.
- Recover cost + expected profit
Policies
Injured party has duty to mitigate damages.
- Damages must be reasonably certain not absolutely certain.
-Only allowed damages for reasonably foreseeable, must put party on notice if want to get other damages not foreseeable.
Cost of Performance
When party intentionally breaches K.
Gen Rule: proper remedy of beach is cost of performance, regardless if negligent.
Exception: Substantial Performance: diminished value.
(CL only)
2) Where cost of performance is grossly disproportionate than value of economic benefit.
Perfect Tender
UCC requires parties to perfectly perform. No substantial performance in ucc.
Injunction
Equity- Court orders to do or stop doing something
Ex: covenant not to compete
Recession
Equity- Court throws out the contract
Reformation
Equity- court rewrites part of a contract
Will a court order specific performance for personal K?
NO. Court will not order specific performance where K is personal in nature, because acts like servitude.
§2-708 Seller’s Damages for Non-Acceptance or Repudiation
(1) Market Price minus Contract Price, including incidental damages
(2) Used in the case of Loss-Volume Seller
§2-706 Cover on Seller Side
The seller may recover the difference between the resale price and the contract price together with any incidental damages allowed
2-703 Seller’s remedies in general
When buyer rejects or revokes acceptance of goods the seller may
1) withhold delivery of goods;
2) stop delivery
4) resell and recover damages.
(most common, If resell at loss, recover the loss)
2 - 711 Buyer’s remedies in general
(a) “Cover” and have damages under the next section as to all the goods affected whether or not they have been identified to the contract; or
• UCC 2-713: Definition of Cover
1) Making in good faith and without unreasonable delay any reasonable purchase of or contract to purchase goods in substitution for those due from the seller.
2) Buyer’s recovery = cost of cover minus contract price, together with any incidental or consequential damages
OR
(b) Recover damages for non-delivery as provided in this Article (Section 2-713).
Quantum meruit
doesn’t matter if would of lost $ if fully performed. Can recover $ for amount performed (Fair market value)
- Like Restitution
How to determine parties expectation interest if goods?
Costs + expected profit
$1 dollar to make , $2 to sell = $3 expected profit
What remedies apply before a K?
Reliance and Restitution
What remedies apply after a K?
Expectation interest, Reliance, Restitution, Specific performance, Reformation, Recession, Injunction
“Wrongfully Discharged” / (switching the park)
Must show that it is comparable or substantially similar
