Mbe - Contracts - Remedies

Front 1

What general types of damages are available at common law?

Back 1

Monetary Damages:

1. Expectation Damages,

2. Reliance Damages,

3. Restitutionary Damages,

4. Liquidated Damages (if in K)

Front 2

What are expectation damages, and how are they calculated?

Back 2

Amount that will restore party to the position he would have been in had the K been fully performed.

Formula:

Contract Price
- Payments Received
- Costs Saved as result of breach
+ Incidental & Consequential Damages
________________
= Expectation Damages

Front 3

When may the right to receive expectation damages be limited, or curtailed?

Back 3

1. Cost of performance greatly exceeds market value of performance,
(Peevyhouse v. Garland)

2. Cannot be calculated w/ reasonable certainty
(newly formed business),

3. Unforeseeable Damages
(Hadley v. Baxendale)

4. Failure to Mitigate Damages

Front 4

What are reliance damages?

Back 4

Monetary award designed to restore non-breaching party to position he was BEFORE the contract.

Front 5

How are reliance damages calculated?

Back 5

Expenditures made in preparation for, and performance of the K

- minus

Any losses aggreived party would have suffered even if K fully perfomed (burden on breaching party to prove this).

Front 6

What are Restitution Damages?

Back 6

The value of benefits conferred upon the other party to the transaction.

(usually arises in context of a losing contract)

Front 7

When are restitutionary damages available?

Back 7

Only available where a K has been partly performed.

Not applicable where full performance has been rendered by aggrieved party.

Front 8

What is the measure of damages for a party aggrieved by misrepresentation of the other party?

Back 8

Benefit of the Bargain Theory

Difference b/w Value of K as represented, and

Actual value of the K (irrespective of price actually paid by aggrieved party)

Ex: Misrepresent house is in good condition (worth $500k if good condition), but misrepresented condition so houuse is only worth $400k -- Damages are $100k, even if only paid $450k.

Front 9

What is the rule regarding the effect of express conditions on the measure of damages?

Back 9

Rule: Measure of damages are limited to the terms expressed in the contract.

Example:

$2500 upon completion of a deck, and then house is destroyed 1/2 way through completion -- homeowner does not have to pay 50% because his performance was conditioned upon COMPLETION.

Front 10

What is required for consequential damages to apply?



Q77-Final MBE Exam

Back 10

For consequential damages to apply:

Breaching party must know or have reason to know that the consequential damages would result from the breach.

Front 11

Under UCC -

What factors does a Seller's remedies depend upon?

Back 11

Whether goods have been:

Delivered & Accepted by the buyer.

Front 12

Under UCC

What is seller's measure of damages if goods have been rightfully delivered & accepted by buyer?

Back 12

Measure of Damages:

Contract Price

Front 13

Under UCC

What is seller's measure of damages where buyer has wrongfully rejected goods, or repudiated the contract?

Back 13

Depends upon whether seller has resold the goods or not:

1. Resold Goods - difference b/w the K price and the resale price.

2. Not Resold - difference b/w K price and the market price

(remember, in the resale of the goods, UCC imposes a duty of good faith and fair dealing in every transaction)

Front 14

Under UCC

What is required for a seller to qualify for lost volume damages?

Back 14

3 Requirements - seller must show:

1. Sale could have been made to BOTH breaching party and subsequent purchaser of the goods, and

2. It would have been profitable to make both sales, and

3. Seller would in fact have made both sales.

PLUS - seller also entitled to incidental damages for costs associated with getting stuck with the goods, and costs of resale.

Front 15

Under UCC

What factors does a Buyer's remedies depend upon?

Back 15

Whether or not buyer has "Covered" or not.

Front 16

Under UCC

What is measure of damages for a buyer who has "covered>"

Back 16

Difference b/w K price and price paid to cover.

Front 17

Under UCC

What is measure of damages for a buyer who has NOT "covered?"

Back 17

Difference b/w K price & market price,

+PLUS

Incidental & Consequential Damages

Front 18

Under UCC

What is buyer's measure of damage for receipt & acceptance of "non-conforming" goods?

Back 18

Difference b/w value of goods contracted for, and

Value of goods actually received.

Front 19

What is required for a Liquidated Damages clause to be enforceable?

Back 19

For a liquidated damages provision to be valid, 2 conditions must be met:

2 Requirements:

1. Damages anticipated by a possible breach must be difficult to prove or uncertain, and

2. The amount chosen for the provision must be a reasonable estimate of losses to be expected from a breach

Front 20

Can an employer prevent an employee under an employment contract from working for a competitor in absence of a non-compete agreement?

Back 20

Yes - In limited circumstances.

Negative Injunction:

1. WHERE the employee’s talents are extraordinary & unusual (like a famous opera singer).

2. Courts will enter negative injunctions to protect their employers from competition that would follow a breach of their employment contract.