Contracts

Front 1

Fundamental Assumption #1

Back 1

The law is mainly concerned with the relief of promises to redress breach, NOT with forced performance or punishment.

Front 2

Nominal Damages

Back 2

all victims of breach are entitled, they are awarded as a declaration of P’s rights. (breach proven but no damage done)

Front 3

Compensatory Damages

Back 3

given to relieve breach, to protect the expectations, reliance, and restitution interests of the aggrieved party.

Front 4

Punitive Damages

Back 4

damages given with purpose to punish (not in contracts) never given, unless accompanied by a tort. Unless- breach of fiduciary duty, or excessive bad behavior. Starting to be allowed in insurance insureds cases.

Front 5

Fundamental Assumption #2

Back 5

Relief usually protects a promisee’s expectation interest. Party contracts because they expect to receive benefit.

Front 6

Expectations Interest

Back 6

a. Puts the aggrieved party in the position they would be in if the promise had been fulfilled.
b. Expectation damage if: injury is worse than if the promise had been preformed.

Front 7

Reliance Interest

Back 7

a. Puts the aggrieved party in the position they would be in if the promise were never made.
b. Reliance damage if: injury if worse than before the promise was formed
c. Usually couples with recovery for malpractice

Front 8

Restitution Interest

Back 8

a. Puts the promisor back in the position they would be in if the promise were never made (disgorgement of unjust enrichment/profits)
b. Restitution damages if: promisor is unjustly enriched (if they benefited at the aggrieved party’s expense.)
c. No out of pocket expenses, only money/benefits given to the promisor.

Front 9

Fundamental Assumption #3

Back 9

Appropriate form of relief is compensatory ($) rather than specific (injunction – court order directing performance of promise)

Front 10

Pareto Efficiency

Back 10

Scarce resources need to be allocated to where they can reach their highest value.
Reallocation of resources is efficient only if it will make an economic unit better off w/o making another unit worse off. (Then it is said to be pareto efficient/ pareto superior).

Front 11

Pareto Efficiency
(Economic Breach)

Back 11

breaking a contract when you would gain more than the penalty for breach. (argument – you could develop reputation as aggressive publisher, it was already custom anyway) done for the good of society.

Front 12

Pareto Efficiency
(Transaction Costs)

Back 12

look for a way to get around them (negotiating settlement out of court or for the lower end seller to buy and then resell to higher)

Front 13

Pareto Efficiency
(criticism)

Back 13

economic analysis is too simple. Not every buyer acts in a rational way…there are also social values and emotions that come into play. This analysis is limited-only based on money (Look at long-term value of breaching a contract – could develop reputation as contract breacher, no one would trust. Damage measure might also affect other parties’ reliance on contract ($ on advertising, etc)