Remedies for Breach of Contract (55%) Flashcards
Monetary damages at common law
may be able to recover damages calculated to protect that party’s
1. expectation interest,
2. reliance interest, or
3. restitutionary interest.
A party may: elect only one of these remedies
Expectation damages
the aggrieved party will be entitled to the amount: that would restore him to the position he would have been in had the contract been fully perform
Calculating Expectation Damages
Loss of value + incidental costs + consequential costs - payments received - costs saved
The aggrieved party may not be able to recover the full amount of expectation damages in the following situations:
(1) Where the cost of performance greatly exceeds the market value of performance
(2) where expectation damages cannot be calculated with reasonable certainty
(3) When damages are unforeseeable
(4) Where damages can be mitigated/reasonably avoided
A recurring example of a case where uncertainty in awarding expectation damages exists is
A new business with no profit history
Reliance Damages
restore the aggreieved party to the position they were in prior to the contract
Types of Monetary damages
- Expectation damages
- Reliance Damages
- Restitutionary Damages
Calculating Reliance Damages
- Any expenditures made in preparation for performance or in actually performing // no matter who is paid
(minus) - Any loss the breaching party can prove the aggreieved party would have suffered had the contract been fully performed
When to use reliance damages
when expectation damages are unavailable: i.e. when uncertain or speculative
Restitutionary Damages
the value of the benefits conferred on the other party in the transaction
Calculating Restitutionary Damages
(a) The reasonable value or cost of the benefit conferred; or,
(b) The extent to which the other party’s property has increased in value due to performance rendere
When will a party most likely seek restitutionary damages
in a losing contract
Restitutionary damages only available when
where the aggreieved party has partly performed but not fully performed
Liquidate Damages are
clauses designed to provide for damages of their own chosing in the event of a breach
When are Liquidated Damages Enforceable & Unenforceable?
(a) enforceable if: it is a valid liquidated damages designed to compensate for breach
(b) unenforceable if: it is a penalty designed to punish a breach
Test for liquidated damages clause
Primary consideration: Was the clause reasonable at the time of contracting in relation to the anticipated harm?
Secondary consideration: Was the clause reasonable in relation to the harm that actually occurred due to the breach?
If the court concludes that the liquidated damages clause is in fact a penalty, then
the clause is stricken from the contract and damages are recoverable according to the default rules.
Seller’s UCC Remedies
- Profit,
2. Incidental damages
The seller’s of goods right to recover depends on
whether the goods have been delivered and accepted by the buyer
The seller’s remedy if goods have been delivered to and accepted by the buyer
the seller’s remedy is for the contract price
The seller’s remedy if goods have not been delivered to and accepted by the buyer if the seller has resold
Contract Price – Resale Price
The seller’s remedy if goods have not been delivered to and accepted by the buyer if the seller has not resold
Contract Price – Market Price
Lost volume sellers may only recover
the profit they would have made on the lost sale
Lost volume sellers are
A lost volume seller is one whose supply of goods exceeds the demand for the same (e.g. Best Buy)
Whether or not the seller resells goods, he is entitled to recover
incidental damages
Incidental Damages are
the cost associated with getting stuck with the goods + cost of resale - expenses avoided on account of breach
Buyer of goods remedies depend upon
If the buyer covers: purchases replacement goods.
Damages calculation if buyer of goods
- Covers
- Does not cover
(a) If the buyer covers: the damages = Cover price - Contract Price
(b) If the buyer does not cover: the damages = Market Price – Contract Price
Incidental damages for buyer of goods
cost of securing cover
Buyer of goods can seek what damages
incidental damages + consequential damages
Buyer of goods consequential damages
the peculiar costs arising to the buyer because of a particular need or use of the goods in question (lost profits)
Has to be foreseeable
Buyer of goods damages will be reduced by
costs avoided
Buyer’s damages if they accept non-conforming goods
the buyer is entitled to recover the difference between:
1) The value of goods contracted for
2) The value of the goods Received
Specific Performance is only available when
a monetary reward is considered inadequate
Monetary reward is considered inadequate when purchasing either:
- Unique Objects; or,
2. Real Property
Specific Performance are absolutely not available for
(a) Contracts for personal services
(b) Contracts requiring ongoing cooperation between the parties
Specific Performance under the UCC allowed when
- a buyer has adequately searched but unable to cover
2. Output contracts & requirement contracts
Negative Injunctions are
orders by the court prohibiting the breaching party from taking particular action
When an employee is under contract for a specified period of time and the employee breaches the contract by departing before the end of that period, a negative injunction will be available to prevent the employee from competing if
The employee’s services are unique or extraordinary
Non-compete clauses depend on three factors:
(1) Is there a significant business justification for enforcing post-employment restraints (e.g. access to trade secrets)
(2) Is the scope of the non-compete clause reasonable in duration & geographical reach?
(3) Is there an express provision of a covenant not to compete?
Types of promissory estopple damages that can be recovered
Depending upon jurisdiction
(1) Expectation Damages
(2) Reliance Damages
(3) Chose on a case by case basis
Restitution as a Cause of Action (outside breach of contract) can be brought
- To recover benefits are conferred under a failed contract
2. To recover benefits conferred by a breaching party, as long as the other party receives damages for breach
Liability of patient when Emergency Benefits are Conferred by a Health Care Professional without consent?
will be able to recover for services rendered to a patient unable to give consent
The general rule is that a person who bestows benefits without request from the benefitting party: is considered
an officious intermeddler that will not be able to recover since there is no opportunity to decline
A person who mistakenly confers benefits to another party may be entitled to restitution from the mistaken party if
1) Not a blameworthy error
2) the recipient was aware of the error in time to prevent it
3) The recipient avails himself of the benefits at issue
Provisions limiting or excluding damages are not enforceable if
they are unconscionable or fail their essential purpose
Enforceability Limitation of consequential damages for personal injury in the case of consumer goods
it is prima facie unconscionable
How to distinguish between material breach and substantial performance
(5)
- the extent to which the aggrieved party will be deprived of the benfit for which he reasonably expected under the terms of the contract;
- the extent to which the aggrieved party can adequately be compensated via damages for the defective performance;
- the extent to which the breaching party will suffer forfeiture if a material breach is found;
- the extent to which the breach was willful or in bad faith rather than merely negligent or innocent;
- the likelihood that the breaching party will cure his failure within a reasonable time and in a manner consistent with the reasonable purpose of the contract.
A material breach of contract on the part of one party entitles the other party to…
terminate the contract
