Remedies Terms Flashcards
Breach & Goals of Remedy
Breach = Party’s failure to perform a duty that is due which entitles them to a remedy (Rest 235)
-Sometimes it’s efficient to breach. A rich person will make the economy wealth enhancing because he can pay more and move resources in more valuable uses—this isn’t a defense to anything, just an observation.
Goals of Remedy:
Compensate the non-breaching party with punishment limited to narrowly circumscribe set of circumstances
- Financial award must be sufficient to make non-breaching party indifferent between promises performance and damages of performance
- Easier to enforce than specific performance
- in the form of either cost of performance or diminution of (market) value
- typically, “as good as you would’ve been” is not measured by the diminution of market value in land or other property, but the cost of actually rendering the performance the non-breaching party bargained for
Injunction = Orders breaching party to perform contractual obligations (“specific performance”) or pay money in lieu of and as a substitute for performance (“damages”)
Punitive Damages
Exemplary damages intended to punish D rather than compensate P— are not recoverable in actions for breach of contract
- disincentivize people to contract because there are more costs on the line
Specific vs. Substitutional Performance
Specific = A court order requiring a breaching party to perform his contractual duties
- UCC limits specific performance to cases involving “unique goods or other proper circumstances” (2-716)
- Courts will not order specific performance or other injunctive relief “if damages would be adequate to protect the expected interests of the injured party” (Rest. 2d 359)
- Principle standard remedy for breach is damages, injunctive relief is extraordinary
- Difficult to oversee
- Can always “sell and injunction”—whatever it’s worth to you, can put a $$ on it
Substitutional Performance = Value of promised performance is the substitute of performance itself = remedy ($$ is sufficient)
UCC 2-716: Discharge by Supervening Frustration Buyer’s Right to Specific Performance
- Specific performance may be decreed where the goods are unique or in other proper circumstances.
- Decree for specific performance may include such terms and conditions such as the payment of the price, damages, or other relief as the court may just.
- The buyer has a right of replevin for goods identified to the contract if after reasonable effort, he is unable to affect cover for such good or the circumstances reasonably indicate that such effort will be unavailing or if the good has been shipped under reservation and satisfaction of the security interest in them has been made or tendered.
Expectation Damages
The amount of money necessary to make the non-breaching party as well off as she would’ve been the contract been performed (Rest. 2d 347)
Buyer’s Remedy: Cover
Cover
Hypothetical cover
When a seller fails to make a delivery of goods to a buyer, the buyers is entitled to damages, but may seek substitutes: two remedies (UCC 2-711)
Cover = buyer purchases substitutes as a form of mitigation; damages are the difference between cost of cover and contract price.
1. must be (1) made in good faith, (2) without reasonable delay, and for (3) a reasonable substitute
2. can occur when seller fails to make delivery or the buyer rightfully rejects/revokes
Hypothetical Cover = damages for non-delivery based on market prices
1. Difference between the market price at the time the seller learned the breach and the contract price, plus additional cost suffered (UCC 2-713) (Market Price - $K)
2. Market prices is determined:
a) if the price of goods prevailing at the time of breach is not readily available may look too good. In other places time could reasonably serve as substitutes
b) substitute goods also don’t need to be exact copies (*Egerer)
Alternatives to Loss in Value of Performance (Rest 2d, 348)
- If a breach delays the use of property and the loss in value to the injured property is not proved with reasonable certainty, he may recover damages based on the rental value of the property or an interest of the value of the property
- If breach results in defective or unfinished construction, and the loss and value to the injured pottery is not sufficiently certain he may recover damages based on:
a) the diminution in market price of the property caused by the breach or;
b) the reasonable cost of completing performance/remedying, if not clearly disproportionate to the probable loss and evaluate to him
- If a breach is of a promise condition on a fortuitous event, and it is uncertain whether the event would have occurred had there been no breach, the injured party may recover damage based on the value of the conditional right at the time of breach
Mitigation Principle
Non-breaching parties will take whatever steps necessary (reasonable) to minimize the extent of the damages suffered as a result of the breach
- but there is no duty to mitigate
Courts will calculate damages thus limit award under the assumption that non-breaching party took reasonable steps to reduce the harm (R2d 350)
Avoidability as a Limitation to Damages (R2d 350)
- Except as stated and subsection 2, damages are not recovered for the loss that the injured party could’ve avoided without undue risk, burden or hum
- The injured party is not precluded from recovery by the rules stated subsection 1 to the extent that he has made reasonable but unsuccessful efforts to avoid loss.
Sellers Remedies in General (UCC 2-703)
Where the buyer wrongfully rejects or revokes acceptance of goods or fails to make a payment due on or before delivery or repudiates with respect to a part of the whole, with respect to any good directly affected and if the breach is of the whole contract, then also with respect to the whole undelivered balance, the aggravated seller may
A) with delivery of such goods
B) stop delivery by any bailee here after provided (2-705)
C) proceeded under the next action respecting goods still unidentified to the contract
D) resell and recover damages as hereafter provided (2-706)
E) recover damages for non-acceptance or an proper case the price (2-709)
F) cancel
Seller’s Resale Including Contract for Resale (UCC 2-706)
The seller may resell the goods concerned or the undelivered balance there of.
Where the resale is made in good faith, and in a commercially reasonable manner, the seller may recover the difference between the resale price and the contract price together with any incidental damages allowed, less expenses saved in consequence of the buyers breach.
Seller’s Damages for Non-Acceptance or Repudiation (2-708)
- Subject to subsection 2 and the provisions of this article with respect to proof of market price the measure of damages for nonacceptance or repudiation by the buyer is the difference between the market price at the time and place for tender and the unpaid contract price together with any incidental damages provided by this article, but less expenses saved in consequence of the buyers breach.
- If the measure of damages provided in subsection 1 is in adequate to put the seller in as good of position as performance would have done, then the measure of damages is the profit, including reasonable overhead, which the seller would have made from performance by the buyer and any incidental damages, provided this article, due allowance for costs reasonably incurred, and due credit for payments or proceeds of resale
Lost Volume Sellers (UCC 2-708)
Has the capacity to perform the contract that was breached in addition to other potential contracts due to unlimited resources or production capacity. Cannot mitigate damages because they;
- Have the capability to enter into multiple contracts simultaneously
- have the subjective intent to
- can’t be made whole by another sale because would’ve made both anyway
- entitled to the LOST PROFITS between the contract he was in minus the contract he would’ve gotten into
- unique characteristics will lead to NOT being a LVS
Unforeseeability and Related Limitations on Damages (351)
- Damages are not recoverable for loss that the party in breach did not have reason to foresee as a probable result of the breach when the contract was made.
- Loss may be for seeable as a probable result of a breach because it follows from the breach
A) in the ordinary course of events or
B) as a result of special circumstances beyond the ordinary course of events that the party and breach had reason to know - Limit damages for foreseeable loss, excluding recovery for loss of profits by allowing recovery only for loss and card and reliance or otherwise, if it concludes in the circumstances, just so requires in order to avoid disproportionate compensation.
Uncertainty as a Limitation on Damages 352
Loss Due to Emotional Disturbance 353
352: damages are not recoverable for loss beyond the amount that the evidence permits to be established with reasonable certainty
353: recovery for emotional disturbance will be excluded unless the breach also caused bodily harm or the contact from the breach is of such kind that serious emotional disturbance was particularly likely
