Contracts - Remedies

Front 1

Monetary Damages (common law)

Back 1

Three types:
1. expectation
2. reliance
3. restitution

Front 2

Expectation
(monetary damages--common law)

Back 2

Default

Restores plaintiff to position he would have been in had contract have been performed.

Formula:
(money value of breacher's performance) + (extra costs generated by breach) + (payments received by breacher) - (costs saved resulting from breach) = expectation

Front 3

Limits on Right to Recover Expectation
(monetary damages--common law)

Back 3

Four situations:
1. performance cost is much bigger than performance's market value
2. if cannot calculate with reasonable certainty (ex: new business with no profit history)
3. damages were unforeseeable
4. damages can be mitigated

Front 4

Reliance
(monetary damages--common law)

Back 4

Purpose is to restore the aggrieved party to pre-contract position.

Measured by:
(money spent to prepare or actually perform) - (losses breaching party can prove plaintiff would have suffered had contract been performed) = reliance

May be available when expectation damages are unavailable (uncertain or speculative)

Front 5

Restitution
(monetary damage--common law)

Back 5

Value of benefits conferred on the other.

Measured in the court's discretion as justice requires by either:
1. reasonable value or the cost of the conferred benefit;
2. extent to which the other's property increases because of performance rendered.

Common situation:
when it would exceed recoverable amount based on expectation and it is more likely to result in a losing contract.

Front 6

Limits to Restitution
(monetary damages--common law)

Back 6

If full performance, cannot get restitution.

Front 7

Liquidated damages

Back 7

A contracted damages provision in case of breach.

Enforceable if designed to compensate for breach.

Unenforceable if it is a penalty to punish breach.

3 prongs:
1. it is what the parties intended it to be (liquidated damages or penalty)
2. was the clause reasonable at contracting time in relation to the anticipated harm (whether anticipated harm was difficult to prove)
3. whether the clause was reasonable regarding harm that actually occurred

Front 8

Anticipated vs. Actual Harm
(liquidated damages)

Back 8

When it only satisfies the anticipated harm (but not actual harm):
Majority: still valid and can enforce
Minority: unenforceable penalty

If finds it is a penalty:
stricken from contract and go to default damages

Front 9

Monetary Damages (UCC)

Back 9

Like common law: expectation damages and duty to mitigate

Front 10

Seller's Remedies
(monetary damages - UCC)

Back 10

Seller's right to recover depends on whether buyer accepts delivered goods:

1. if delivered and accepted: remedy = contract price
2. if not delivered and accepted:
(a) has seller resold in the market?
--if resold: damages = (contract price) - (resale price)
--if not resold: damages = (contracts price) - (market price)
3. lost volume sellers
4. incidental damages

Front 11

Lost Volume Seller
(Seller's remedies)
(monetary damages - UCC)

Back 11

Supply of goods exceeds the demand.

UCC allows LVS to recover profit they would have made on the lost sale.

To get, seller must show:
1. seller could have sold to both the breaching buyer and a resale buyer
2. it would have been profitable to make both sales
3. it probably would have made both sales if buyer did not breach

Front 12

Incidental Damages
(Seller's remedies)
(monetary damages - UCC)

Back 12

Whether or not there is a resale, you can also get incidental damages.

Definition: c
(costs associated with being stuck with the goods and cost of resale) - (expenses avoided because they breached)

Front 13

Buyer's Remedies
(monetary damages - UCC)

Back 13

Buyer's right to recover depends on whether buyer covered (purchased replacement goods).

If covered, then damages is:
(contract price) - (cover price)

If no cover, then damages is:
(contract price) - (market price)

Incidental

Consequential

Difference in Value Damages for Accepted Goods

Front 14

Incidental Damages
(Buyer's remedies)
(monetary damages - UCC)

Back 14

Cost regarding securing cover

Damages are reduced by expenses avoided because of the breach.

Front 15

Consequential Damages
(Buyer's remedies)
(monetary damages - UCC)

Back 15

Costs due to the certain need or use for those goods (foreseeable)

Damages are reduced by expenses avoided because of the breach.

Front 16

Difference in Value Damages for Accepted Goods
(Buyer's remedies)
(monetary damages - UCC)

Back 16

Where buyer receives and accepts nonconforming goods.

Formula:
(value of goods contracted for) - (value of received goods)

Front 17

Equitable Remedies

Back 17

Two types:
1. specific performance
2. negative injunction

Front 18

Specific Performance
(equitable remedies)

Back 18

Context:
1. monetary reward is inadequate
2. objects are unique
3. contracts to sell real property

Factors - judge's discretion
1. whether aggrieved party has clean hands
2. are there fair contract terms
3. are there sufficiently definite contract terms
4. can we assure the aggrieved party performance
5. would specific performance be in public's interest

Front 19

Specific Performance - Not Available
(equitable remedies)

Back 19

two situations:
1. personal services contract
2. contracts requiring ongoing cooperation between parties

Front 20

Specific Performance - Availability under UCC
(equitable remedies)

Back 20

Allowed for a buyer who adequately searched but could not find a reasonable cover.
(uniqueness)

Front 21

Capable of Imminent Performance Requirement
(specific performance - UCC)
(equitable remedies)

Back 21

This includes output contracts and requirements contracts

Front 22

Negative Injunction

Back 22

Prohibit the party from taking certain action (often employment setting).

Availability of negative depends on:
Two types:
1. mid-term relief
2. post-term relief

Front 23

Mid-Term Relief
(negative injunctions)

Back 23

When the employee breaches the contract before the end of the period, we can use negative injunction if:
1. employee's service is unique
2. employee's service is extraordinary

If specific time period in contract, this helps employer in getting negative injunction but most courts will imply that term for employment period.

Front 24

Post-Term Relief
(negative injunction)

Back 24

Prohibiting post-employment competition against employer.

Three factors:
1. is there a significant business justification for the restraints
2. is the scope of it reasonable in duration and geographic reach
3. is there an express provision

Courts usually won't imply such a provision unless employee is unique or extraordinary

Front 25

Other Possible Remedies

Back 25

3 kinds
1. promissory estoppel
2. restitution and unjust enrichment
3. agreed-to remedies

Front 26

Promissory estoppel
(other remedies)

Back 26

Three types:
1. expectation
2. reliance
3. evaluate on case-by-case basis, tailor the remedy

Front 27

Restitution and Unjust Enrichment
(other remedies)

Back 27

Even when there is no breach, there are still times one can get restitution.

1. If confer benefits and contract fails (incapacity, fraud, duress), the party giving the benefits can recover.

2. Benefits conferred by breaching party: the party that breaches can recover benefits conferred on non-breaching that are off-set for damages that are breaching

3. Emergency benefits conferred by healthcare professional:
--if bestow benefits without being asked, then not entitled to recovery because no opportunity to decline.
Exception: if emergency healthcare to someone who cannot consent, then can recover

4. benefits by mistake:
Three factors:
1. blameworthiness of error
2. whether recipient was aware of error in time to prevent mistake of conferring benefits
3. whether recipient availed self of benefits at issue

Front 28

Agreed-to Remedies
(other remedies)

Back 28

Two forms:
1. liquidated damages
2. provisions limiting or excluding damages

For provisions limiting or excluding damages:
1. can limit or alter damages available
2. can create exclusive remedies (repair or replace only)
--> enforceable unless unconscionable or fail essential purpose
-Limitation on consequential damages for personal injury: only applies in consumer goods--prima facie unconscionable