Remedies for Breach/ Damages

Question 1

Starting point for damages?

Answer 1

Parties Expectation Interests

Question 2

Punitive Damages

Answer 2

Not awarded in K law, whole idea is to protect the parties expectation interests, not punish.

Question 3

§352 Uncertainty as a Limitation on Damages

Answer 3

Does not require ABSOLUTE certainty, but must have REASONABLE certainty.
- Does not allow speculative in damages

Question 4

§347 Measure of Damages in General

Answer 4

ADD
(1) Loss of Value- Party’s Expectation Interests +
2) Any other loss calculated by breach.-
SUBTRACT (3) Mitigation (any cost that was avoided)

Question 5

Overhead

Answer 5

Overhead is not a separate reduction, it is part of the costs.

Question 6

Cover

Answer 6

Cover is the option of entering into the market after the seller breaches, buying subsequent goods, and suing for the difference.

Question 7

§2-708 Non-Acceptance by Buyer

Answer 7

(1) Damages are the difference between the market price at the time of the tender, and the unpaid K price.

Question 8

Lost-Volume Seller

Answer 8

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)

Question 9

Types of Damages

Answer 9

(1) Expectation- gives benefit of full performance
(2) Reliance- out of pocket
(3) Restitution- benefit conferred

Question 10

Avoidability

Answer 10

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!)

Question 11

Cost of Performance v. Diminished Value

Answer 11

Cost of Performance- (willful breach)

Diminished Value- (negligent mistake)

Question 12

Remedy for Substantial Performance

Answer 12

Is Diminished Value…but only if it is negligent. (Can’t use defense of substantial performance if it is willful).

Question 13

Incidental Damages

Answer 13

reasonably foreseeable

Question 14

Consequential Damages

Answer 14

not foreseeable (must put other party on notice!)

Question 15

Common Law

Answer 15

General rule is Cost of Performance is always required because it protects parties expectation interests.
2 Exceptions: (1) Substantial Performance
(2) - willful

Question 16

Sentimental Value

Answer 16

Parties in K law cannot recover for sentimental value

Question 17

Emotional Distress

Answer 17

Gen Rule: damags for mental anguish are not recoverable in K action

Exception: where K is personal in nature
(Ex: funeral home)

Question 18

Liquidated Damages Clause

Answer 18

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

Question 19

Equity

Answer 19

Asking the Court for an action or inaction

1) specific performance
2) injunction
3) reformation
4) recession

Question 20

Specific Performance

Answer 20

Specific Performance is used when damages

1) legal remedy at law inadequate ($)
2) item is unique

Question 21

Efficient Breach

Answer 21

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.

Question 22

What is the difference between damages and Equity?

Answer 22

Damages- When party wants $ they say damages

Equity- When seeking action or inaction

Question 23

Reliance

Answer 23

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”

Question 24

Restitution

Answer 24

value of benefit conferred.

• Can be both pre-k and Post-k
• Ex: The breaching P

Question 25

General Rule for damages?

Answer 25

Injured party has right to damages based on parties expectation interest

Question 26

absolutely certain v. reasonably certain

Answer 26

K Law will only award damages for things that are reasonably certain.
- Does not have to be absolutely certain.

Question 27

Expectation Interest example

Answer 27

Actor enter into K to make movie for 50 million. Movie does not happen, party expectation interest is 50 million

Question 28

“What are parties expectation interest?”

Answer 28

• 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

Question 29

Policies

Answer 29

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.

Question 30

Cost of Performance

Answer 30

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.

Question 31

Perfect Tender

Answer 31

UCC requires parties to perfectly perform. No substantial performance in ucc.

Question 32

Injunction

Answer 32

Equity- Court orders to do or stop doing something

Ex: covenant not to compete

Question 33

Recession

Answer 33

Equity- Court throws out the contract

Question 34

Reformation

Answer 34

Equity- court rewrites part of a contract

Question 35

Will a court order specific performance for personal K?

Answer 35

NO. Court will not order specific performance where K is personal in nature, because acts like servitude.

Question 36

§2-708 Seller’s Damages for Non-Acceptance or Repudiation

Answer 36

(1) Market Price minus Contract Price, including incidental damages
(2) Used in the case of Loss-Volume Seller

Question 37

§2-706 Cover on Seller Side

Answer 37

The seller may recover the difference between the resale price and the contract price together with any incidental damages allowed

Question 38

2-703 Seller’s remedies in general

Answer 38

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)

Question 39

2 - 711 Buyer’s remedies in general

Answer 39

(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).

Question 40

Quantum meruit

Answer 40

doesn’t matter if would of lost $ if fully performed. Can recover $ for amount performed (Fair market value)
- Like Restitution

Question 41

How to determine parties expectation interest if goods?

Answer 41

Costs + expected profit

$1 dollar to make , $2 to sell = $3 expected profit

Question 42

What remedies apply before a K?

Answer 42

Reliance and Restitution

Question 43

What remedies apply after a K?

Answer 43

Expectation interest, Reliance, Restitution, Specific performance, Reformation, Recession, Injunction

Question 44

“Wrongfully Discharged” / (switching the park)

Answer 44

Must show that it is comparable or substantially similar