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22 Cards in this Set
- Front
- Back
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What is a liquidated damages clause?
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(1) A specific contract provision limiting or fixing the amount of damages that can be recovered in the event of a breach.
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How do courts view provisions excluding or limiting the amount of damages in a liquidated damages clause?
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(1) Narrowly. Courts tend to construe such provisions narrowly and will strike down provisions that are unconscionable or unreasonable.
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How do the courts view a stipulated damages provision (damages shall be X in the event of any breach)?
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(1) Depends on whether the court finds it to be a valid liquidated damages clause or an attempted “penalty.”
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What happens if the court views a stipulated damages provision (damages shall be X in the event of any breach) as a penalty?
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(1) Then it would be unenforceable.
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What are the elements of an enforceable stipulated damages provision? (damages shall be X in the event of any breach)?
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(1) Damages must be difficult to estimate at the time the contract was entered (2) The amount agreed upon must be a reasonable forecast of actual damages; ie, a reasonable forecast of fair compensation for the harm that would occur on breach. (3) (Clause to be made in Good Faith.)
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May a liquidated damages clause be enforced if it awards the non breaching party nearly $300,000 when that party’s actual loss is only around $1000? [disproportionate liquidated damages—Wassermann’s inc v. middle town]
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(1) No. (2) The court looks down upon penalty clauses. (3) Note: Equity will relieve against a forfeiture if the clause is unconscionable in light of the circumstances existing at the time of breach.
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When is the remedy of SPECIFIC PERFORMANCE normally available?
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(1) When the item involved is one of a kind, like real estate, or where damages are impossible to ascertain.
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Will a decree of specific performance be given in a construction situation where damages are ordinarily adequate? [difficulty of court supervising performance—London bucket co v. Stewart]
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(1) No. (2) Specific performance is typically the exception and not the normal application of the rule.
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Are damages an adequate remedy for breach of an exclusivity clause in a lease with 10 years left before expiration? Cost of injunction weighed against cost of damages—wallgreen co. v. sara creek property co.]
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(1) No. An injunction is normally only okay if P proves that damages are inadequate.
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Is specific performance an appropriate remedy for breach of a contract involving personal property? Property that was unrecoverable/unreplaceable. [practical approach—laclede gas co. v. Amoco oil co]
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(1) Yes. (2) The only requirement for specific performance is inadequacy of a remedy at law.
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What are Reliance Damages? [anecdote]
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(1) When one party incurs expenses in RELIANCE on the contract and the other party breaches, the first party may recover for the actual costs he incurs.
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If a party relies on a contract and incurs reasonable expenses, and the other party fails to perform the contract, are such expenses recoverable in damages? [recovery of expenses incurred in reliance—security stove & manufacturing co. v. American railway express co]
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(1) Yes (2) Case where furnace was to be delivered to a show but it never was. (3) If P relies on the contract and incurs reasonable expenses, and all benefits of the contract are lost through failure of D to perform, and if such expenses are within the contemplation of the parties at the time the contract was made, and if P’s loss is attributable to D, P’s expenses may be recovered.
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Can a breaching party be held liable for expenses incurred by the other party before the contract was even entered into?
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(1) One court found so.
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If prospective profits are too speculative to be awarded as damages, can the breaching party still be held liable to reimburse the non breaching party for its expenses incurred in preparation and part performance of the contract?
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(1) Yes.
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If a breaching party can prove that the contract, if completed, would have resulted in a loss for the non breaching party, can the breaching party assert that prospective loss as an offset to a claim by the non breaching party for preparation damages.
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(1) Yes.
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What kind of recovery can quantum meruit have?
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(1) If a breach results in a failure of consideration, the non breaching party may unilaterally rescind the contract and sue for restitution of whatever benefits were conferred upon the breaching party.
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Is restitution available even if D partially performed if D’s breach is substantial? [Substantial Breach—osteen v. Johnson—The country singer girl case]
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(1) Yes. (2) The breach here went to the essence of the contract. P may recover in restitution. (3) D’s failure to send out a second record was a substantial breach and justifies the remedy of restitution.
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May a plaintiff recover in restitution even fi he would have recovered nothing in a suit on the contract? [recovery in restitution despite actual loss if contract had been performed—united states v. Algernon blair, inc]
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(1) Yes. (2) The promise upon breach has the option to forgo any suit on the contract and claim only the reasonable value of his performance. (3) D has retained benefits, conferred at P’s own expense, without having fully paid for them. This entitles P to restitution ni quantum meurit.
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What is the SPLIT OF VIEWS as to the proper recovery by a plaintiff who is in default when part performance does not fall within the doctrine of substantial performance?
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(1) No recovery allowed (2) Net benefit recovery—allowed to the extent of the reasonable value of the benefits conferred LESS any damages arising out of the breach.
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May an employee who voluntarily leaves the employ of an employer before the termination of an employment contract recover the net benefit received by his employer but not exceeding the contract amount? [employment contract—britton v. turner]
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(1) Yes. (2) An employee may recover the benefit to the employer, less damages the employer suffers by reason of the early termination, with the contract providing a limit the amount of recovery. (3) This is to prevent injustice on the employee
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If a breaching party confers a benefit, may it recover the value of the benefit? [and what else must go into the calculation?]
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(1) It may recover the value of the benefit, less any damages caused by the breach, but only up to the amount of the contract price.
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Has there been a shift way from the traditional rule against recovery by a breaching party toward allowing restitution to prevent unjust enrichment and to avoid forfeiture?
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(1) Yes.
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