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55 Cards in this Set

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2 big categories of K remedies
1. In Rem Remedies
2. Monetary Remedies
Categories of In Rem Remedies
1. Specific Performance
2. Seller's Right to Reclaim
3. Entrustment
4. Adequate Assurance
Stern contracts to sell Reel Point to Mr. Ram. Later, Stern has second thoughts & refuses to convey Reel Point. Ram wants Reel Point, not money. What result?
Ram gets Reel Point. Real Property is unique and has no monetary substitute. GR: Generally, specific performance is ok for Real Property Actions. Tip: other than RP actions, SP almost never a right answer on bar exam
Seller contracts to buy "a rug" to Buyer. Seller breaches. Buyer sues for Specific Performance for the rug. What result?
UCC art. 2 governs b/c sale of goods. Under UCC, Specific Performance only available if the goods are unique or where similar goods not available to Buyer in marketplace. e.g. Art, Antiques, Custom Goods. So, here I guess answer depends on if rug was unique.
Barbri hires Whitebread to lecture. Whitebread breaches. Can Barbri get specific performance?
No. This is a K for service so CL governs. For Service K, Specific Performance not gen. available. We aren't going to force someone to work b/c it smacks of slavery and Whitebread prob. would do a shitty job is forced to work.
*But- Barbri might be able to get an injunction.
Barbri hires Whitebread to lecture. Charlie breaches and lectures for Pieper instead. Can Barbri get an "injunction" barring Whitebread from lecturing for Pieper?
Yes. Cts are willing to prevent Whitebread from working for a competitor if he breaches. (note: court won't force performance though)
(note: sometimes referred to as "negative specific performance")
Buyer buys goods on credit on May 10. B is insolvent on May 22, the same date B receives the goods. Seller learns of B's insolvency on May 29. Does Seller has a right to reclaim the goods under Art. 2?
Yes b/c 3 part test for Seller's Right to Reclaim Goods under Article 2 met here:
1) Was B insolvent when B received the goods
2) Did D demand return within 10 days after B received the goods? [tip: don't be tricked into thinking it is the date K formed that matters. It is date B "receives" goods that matters"]
3) Buyer has not already sold the goods to a 3rd party by the time of S makes demand.
Buyer buys goods on credit on May 10. B is insolvent on May 22, the same date B receives the goods. Seller learns of B's insolvency on May 29. But on May 25, Buyer sold the goods to a third party C.
Q: Does Seller has a right to reclaim the goods under Art. 2?
No. Seller has no right to reclaim goods from a third party .
Rule: Seller's Right to Reclaim goods under Art. 2, if it exists, is only a right against the Buyer. However, exception applies if Buyer misrepresented his financial status in writing within 3 months before delivery of goods.
In April, Buyer sent Seller a letter stating his finances were in order to buy the goods. Buyer buys goods on credit on May 10. B is insolvent on May 22, the same date B receives the goods. Seller learns of B's insolvency on May 29. But on May 25, Buyer sold the goods to a third party C.
Q: Does Seller has a right to reclaim the goods under Art. 2?
Yes. Even though 3rd party has goods now and general rule is that seller's right reclaim to goods under art 2 does not apply once goods have been passed from buyer to a third party -- an exception exists here. This is the only exception - when the Buyer has misrepresented his solvency to the Seller in writing within 3 months of delivery.
Note: so if the letter about Seller's finances had been earlier than 3 months before delivery, Seller cannot Reclaim Goods b/c 3rd party hs goods now. Or, if there had never been a misrepresentation, Seller could not reclaim goods b/c 3rd party has goods now.
Who is a Dealer for purposes of UCC and why this this important?
Dealer = a special type of merchant. Merchant who deals in goods of the kind.

Important b/c Entrustment fact pattern usually involves An OWNER who entrusts her property to a DEALER rather than just a regular old merchant.
Who is a Bona Fide Purchaser (BFP) and why does it matter for the Remedy of Entrustment?
A BFP is a purchaser who has paid value for a good, but has no idea that the good she purchased really belongs to someone else.

Important for Entrustment because fact pattern usually involves an entrusting owner who entrusts her property to a dealer (to fix or something like that). Then Purchaser purchases entrusting owner's property from the dealer w/o owner's knowledge. If this Purchaser is BFP - the BFP gets to keep it (org. owner can't get it back from a BFP).
Sarah takes her watch to Coach to be repaired. Coach wrongfully sells the watch to Jess, a bona fide purchaser for value (BFP). Can Sarah get her watch back from Jess?
Does Sarah have any cause of action against Coach?
No. Sarah is an "entrusting owner" and an entrusting owner has no right to get her property back from a later BFP. Owner can only sue Coach for "conversion."
Rule: Under Article 2, an owner who entrusts her property to a merchant who deals in goods of the kinds [a dealer] has no rights against a BFP.
Other good examples of "dealers"
jewlers
car dealers
add more as i do pmbr?
What is the typical Entrustment fact pattern going to look like on Test Day?
An owner takes a jewelry or a car in to be repaired by a merchant "who sells that particular kind of good"
Buyer contracts to buy computer chips from Seller. B learns from other manufacturers that S's recent deliveries have contained an uncommon number of defective chips. Q. What can B do?
RULE: A party w/ reasonable grounds for insecurity may request in writing adequate assurance from the other party.

HERE, This gives Buyer reasonable grounds to worry so buyer should request written assurance about quality of the chips she is supposed to receive.
Buyer contracts to buy computer chips from Seller. B learns from other manufacturers that S's recent deliveries have contained an uncommon number of defective chips. Because this gives B reasonable grounds for insecurity about the goods she is buying, B decides to request adequate assurance from the other party. However, Seller never provides Buyer with adequate assurance.

Q. What can B do?
Buyer can treat S's failure to provide adequate assurance as Seller's "Anticipatory Repudiation" of their Contract.
*But watch out b/c Anticipatory Repudiation can be retraced as long as other party has not relied on the AR.
Buyer contracts to buy computer chips from Seller. B learns from other manufacturers that S's recent deliveries have contained an uncommon number of defective chips. Because this gives B reasonable grounds for insecurity about the goods she is buying, B decides to request adequate assurance from the other party. However, Seller never provides Buyer with adequate assurance. Therefore, Buyer decides to treat Seller's failure to provide adequate assurance as an "Anticipatory Repudiation" of their K.

Q. What, if anything, can Seller do?

Q. What can B do?
Seller can retract her Anticipatory Repudiation as long as Buyer has not relied on it.
Buyer contracts to buy computer chips from Seller "on credit." Later, Seller learns that Buyer is missing payments to other suppliers. Can Seller now demand that Buyer pay cash instead of credit by exercising her right to request assurance under Article 2?
No. A Seller or Buyer cannot use their "right to request assurance" to rewrite the K or to demand a "particular" kind of assurance. All the right entitles you to is "adequate assurance"

SO HERE, all Seller can do is demand in writing a request for adequate assurance from Buyer that he will pay
Review: name the 4 types of In Rem Remedies.

What is the next category of remedies called?
4 types of in rem remedies are:
1. specific performance (CL- RP usually) (UCC- unique good antique, or custom good)

2. unpaid seller's right to reclaim goods (article 2)

3. entrustment (under article 2) (*where merchant is also a dealer)

4. written demand for adaquate assurances (under article 2)
Types of Monetary Damages
1. Punitive
2. Liquidates
3. Expectation
Purpose of Punitive Damages for Breach of K
Compensation (not to punish)
Sarah hires Larry to redo her apt. The contract provides damages of $100/day for each day Larry is late.

Q. What type of clause does this contract contain?
The contract contains a "liquidated damages clause." (LCD)

Rule: Liquidated Damages are permissible if "damages were difficult to estimate at the time K formed" & the clause is a "reasonable forecast of probable damages"
Sarah hires Larry to redo her apt. The contract provides damages of $100/day for each day Larry is late.

Q. Is this Liquidated Damages Clause valid?
Yes, LDC is valid b/c $100 per day is flexible, i.e. "graduated" in that they go up proportionately w/ the length in delay. This makes them "reasonable to forecast" b/c the probable damages are easy to predict.

CF: Fixed Figures.
Sarah hires Larry to redo her apt. The contract provides damages of 2k in the event that Larry is late.

Q. Is this Liquidated Damages Clause valid?
No this LCD is not permissible.
Rule: must be able to reasonably forecast liquidated damages.

Tip: Fixed numbers indicate something wrong w/ LCD clause.
What happens if a K contains a liquidated damages clause, but the court finds the liquidated damages clause in unenforcible? In other words, does the injured party have any other remedy against the breaching party?
Yes. Even if LDC struck down, injured party can still recover for Actual Damages. In CL & esp. NY we refer to this as "Expectation Damages." RULE: Expectation damages = a sum that leaves an injured party IN AS GOOD A POSITION AS FULL PERFORMANCE (benefit of the bargain). It's the usual measure of damages.
Expectation Damages
RULE: Expectation damages = a sum that leaves an injured party IN AS GOOD A POSITION AS FULL PERFORMANCE (benefit of the bargain). It's the usual measure of damages.
I agree to paint Doug's House for 10k. I breach. Doug pays Sam to paint his house for 13k.

Q. What damages am I gonna owe Doug if he sues me for breach?
I owe Doug 3k. Why? Doug expected to pay 10k, but actually paid 13k. So I owe Doug the extra 3k he spent as a result of my breach. This puts Doug back in the position he would be in had I not breached (which is the purpose of Expectation Damages - they are not to punish).
I agree to paint Doug's House for 10k. But after I start painting Doug's house, Doug refuses to pay me. I have already spent 5k on supplies. And I expected to make $1,500. profit off the job.

Q.What Damages can I get from Doug?
$6,500. Why? I expected a $1,500 profit from the job, but now I'm -5k. So Doug has to pay me $6,500 to make me whole again. That is the purpose of expectation damages.
Theory of damages under the UCC Art. 2

Formulas
Article 2 takes position that seller's tend to breach in rising markets, so replacement goods will cost a buyer more. Therefore, 2 formulas to put injured party back where he should be: EITHER
[cover - contract] > when Buyer re-buys in good faith

OR

[market - contract] > when Buyer re-buys in bad faith or not at all.
What should you do if you cannot remember the Damages Formulas under UCC Article 2?
Use common sense. The purpose is to make the injured party whole again. As if the breach had not occurred. Damages are not to punish in contract law.
B contracts to buy carpeting for $2,500. S does not deliver. The market price for similar carpeting is $2,700. What are B's damages if B pays $2,800 for the same carpeting?
$300. Why? This is [cover-contract]. NOTE: And even though buyer paid more for than market price, it was not much more so good faith here.
B contracts to buy carpeting for $2,500. S does not deliver. The market price for similar carpeting is $2,700.

Q. What are B's damages if B pays $6,000 for better quality carpeting?
B can only recover $200 here b/c she used S's breach to benefit herself. Therefore, B is limited to [market price - contract price] instead of [cover-contract]. [$2,700-$2,500] Not [$6,000 - $2,500].

RULE: Buyer cannot use Seller's breach to benefit itself at seller's expense.
B contracts to buy carpeting for $2,500. S does not deliver. The market price for similar carpeting is $2,700.

Q. What are B's damages if B does not buy a replacement carpet?
$200. [market -contract]. Same as if she had bought a v. expensive carpet for 6k/used the breach to her own benefit.
Review: seller breaches and buyer re-buys the good using good faith (i.e. of similar market value)--- what formula for damages under UCC?
COVER PRICE (the price buyer pays for new good after breach)

-

CONTRACT PRICE
Review: seller breaches and buyer uses breach to re-buy a better good at a higher price OR does not re-buy at all ---- what formula for buyer's damages for seller's breach under UCC?
MARKET PRICE/VALUE
-
CONTRACT PRICE
Marsha contracts to buy a rug from Gerald New from 4k. Marsha later discovers it's not an antique rug and she is pissed! But, Marsha keeps it anyway. The rug is really only worth 2k. But, if the rug were an antique, it would be worth 7k. Marsha decides to sue and wants to know what she can recover for damages.
5K in damages.
[value of goods as promised] - [value of goods delivered]
[7k] -[2k] = 5k.

*DOUBLE CHECK THIS FORMULA
I contract to sell my used volvo to Court for 7k. Court breaches our contract. A week later, I sell the car to Paige for $6,500.

Q. What damages can I get from Court?
Contract Price - Resale Price = $500. This will make me whole again.
I contract to sell my used volvo to Court for 7k. Court breaches our contract. A week later, I sell the car to Paige for $7k

Q. What damages can I get from Court?
Nothing b/c I was made whole in re-sale to Paige.
I contract to sell my used volvo to Court for 7k. Court breaches our contract. A week later, I sell the car to Paige for $2k.

Q. Can I recover the 5k difference b/e contract and resale price from Court?
Probably not. I might get Contract Price- Fair Market Price. But I won't get Contract Price - Resale Price b/c I re-sold for way under market value.

RULE: Seller must use good faith, just like buyer when seller breaches.
I contract to sell my used volvo to Court for 7k. Court breaches our contract. After Court's breach, I decide not to sell the car to anyone.

Q. What damages can I get from Court?
I, the Seller, can still can get

[Contract Price] - [Market Price]
Review:
Buyer breaches. If Seller resells in good faith, Seller gets _________________?
Contract Price
-

Resale Price
Review:
Buyer Breaches. If Seller does not resell in good faith, S gets ___________?
Contract Price

-

Market Price
Review:
Buyer Breaches. If Seller does not resell at all, Seller gets __________ ?
Contract Price

-

Market Price
What is the one special situation where seller gets expectation damages from B1 for B1's breach - even though seller is able to resell the good for the same price B1 promised to pay?
The Lost Volume Seller. A lost profit seller is someone who has an unlimited supply of goods. Therefore, the lost profit seller loses profit even though he resells the goods.
I contract to buy a car off the lot of Santiago's BMW for 500k. But I breach and won't buy the beamer - I don't have that kind of cash! A week later, Mr. Santiago sells the same BMW to Richy Rich for 500k (the same exact price I was gonna pay!).

Q. Will I have to pay Santiago damages for my breach even though he sold the car I was gonna buy to Richy Rich for the same price I was gonna buy it?
Yes the bastard can still get damages from me. Santiago BMW is a car dealership that sells cars off the lot from its regular inventory. It was an unlimited supply of the BMWs I was going to buy. Because of this unlimited supply, if I had not breached Santiago would have made 1 million bucks since he would have sold a BMW to me for 500k and a BMW to Richy Rich for 500k. But because I flaked out, he only made half of what he expected.

TIP: In this type of situation, it a red herring answer is that Santiago's damages are O. If it is a "Lost Volume Seller" it don't matter that he sold the same car i was going to buy for the same price - i still owe him for the loss of the sale to me.
Incidental Damages
cost of caring for/transporting goods after breach & cost of arranging a substitute transaction (CL & UCC)

Applies for Buyer or Seller
I contract to buy a car off the lot of Santiago's BMW for 500k. But I breach and won't buy the beamer - I don't have that kind of cash!
Assume Mr. Santiago has to store the beamer and insure the beamer after I breach (I'm such a flake!). Then Mr. Santiago advertises the beamer is once again for sale.

Q. Can Mr. Santiago sue me for the cost of this storing, insuring, and advertising?
Yes. These are examples of "incidental damages" I owe seller for my breach. RULE: Such incidental damages are always recoverable and seller does not even need foreseeability. The law presume such incidental damages are foreseeable.
Consequential Damages (UCC & CL)
Damages that are (1) special to this particular plaintiff AND (2) reasonably foreeeable by breaching party at time of K.

In other words, foreseeability is a limiting factor on consequential damages.

*always tested on MBE & NY so LEARN IT
What principle limits the amount of consequential damages a plaintiff would otherwise be entitled to recover?
Foreseeability. Specifically, the "if breaching party could not reasonably foresee the special damage his breach would cause the particular plaintiff, then this limits his consequential damages.
Miller contracts w/ UPS to ship a broken mill shaft to a mill shaft maker for $100. UPS does not perform. Miller pays DHL $150 to ship the mill shaft.

Q. What are Miller's expectation damages?
50 bucks in expectation damages
Miller contracts w/ UPS to ship a broken mill shaft to a mill shaft operate for $100. UPS delays shipping the shaft. Problem is - Miller doesn't have another shaft to use in meantime. As a result, the mill has to shut down for 9 days on Miller loses 2k in lost profits.
Q. Can Miller recover the 2k in lost profits?
IT DEPENDS.
These damages are "special to this plaintiff" (Miller) b/c most mill operators have more than 1 shaft. So answer depends on whether UPS could "reasonably foresee the result." If UPS could not foresee >> then UPS doesn't owe consequential damages. If the opposite is true, then UPS does owe.
I hire Bruce to paint the Heights House for 3k. Before Bruce agrees, I explain to Bruce that I'm in a bit of a pickle. I tell Bruce that I'll lose $500 big ones if he doesn't finish the paint job by Friday. But that damn Bruce - he repudiates our contract. I try to get someone else to paint the house by Friday so that I don't lose my $500 rent money, but I can't find anyone. So I lose mu $500 rent money. And then when I finally do get someone else to paint the Heights House, it costs me $3,400!!! What can I get from Bruce in damages????
I'm gettin a lot:
-$400 in "Expectation Damages" (this is the extra money I spent to get my house painted later)

- $500 bucks in consequential damages (lost rent was special to me & I told Bruce about it so Bruce could foresee the special consequence of his breach)

Grant total = $900 bucks for Expectation & Consequential damages.
Avoidable Damages.
Cannot recover damages you could have avoided with reasonable effort.
Another name for "Avoidable Damages?"
The Rule of Mitigation
I get laid off in violation of my employment contract. I was making $900 a week. My former employer claims I'll be able to get a "comparable job" paying $800 a week.

Q. Can I sue my former employer for damages?
Yes. For the $100 per week.

RULE: A "Comparable" Job means the same kind of job in the same kind of city.

RULE: Burden of Proof on my employer to prove its a comparable job.

However, I can only get the $100 in damages if I don't take the job. [come back to this one point to check application]