Remedies

Front 1

What are Special damages?

Back 1

Special damages cover economic losses.

Front 2

What Special damages can P recover?

Back 2

Plaintiff can recover all economic losses proximately caused (e.g., past and future medical expenses, and past and future loss of earnings and earning capacity).

Front 3

What are General Damages?

Back 3

General damages cover noneconomic losses. Plaintiff will also be compensated for noneconomic losses (past and future)—i.e., damages for pain and suffering, emotional distress, loss of enjoyment of life, etc.

Front 4

What are Compensatory Damages?

Back 4

Are awards of money to protect plaintiff’s expectation interest.
~ damages must be causal, foreseeable, certain, and unavoidable.

Front 5

What is Quasi-Contract?

Back 5

Quasi-contract is a remedy imposed by law that obligates defendant to pay plaintiff the reasonable value of a benefit unjustly obtained.
(Quasi contract is available in tort situations only where tort results in a benefit to D.)

Front 6

What is Specific Performance?

Back 6

Specific performance is a mandatory decree or injunction that essentially orders a contracting party to perform that which he has promised to perform under the contract.

Front 7

What are the requirements for Specific Perfornance?

Back 7

Requirements: 1) Legal remedy must be inadequate; 2) Contract must exist; 3) All conditions to the contract must be satisfied 4) Terms must be definite and certain; 5) decree must be feasible to enforce; 6) Mutuality of remedy not necessary; 7) Action must not be blocked by any defenses.

Front 8

What is Rescission?

Back 8

Rescission (and Restitution): cancels the contract where it results from mistake, fraud, or duress, or where the contract is materially breached;
~ Rescission is usually accompanied by restitution of benefits conferred.
~ Rescission can be legal (by action of the parties) or equitable (by court decree).
~ Rescission functions to terminate the contract and restore to plaintiff the consideration given by him to defendant.

Front 9

What is Reformation?

Back 9

Reformation is an equitable remedy for modifying a written instrument to reflect the parties’ true agreement.
There must be a showing of a valid prior agreement free from grounds for rescission;
~ reformation is not available if the contract is ambiguous or incomplete, or if there is a mutual mistake as to the meaning of words in the contract.
The underlying ground for reformation is that the writing does not conform to the parties’ valid prior agreement because of mistake or fraud.
~ If the mistake relates to entering into the agreement in the first place, the case must be analyzed under rescission.

Front 10

What are Compensatory Damages?

Back 10

Compensatory damages are an award of money to compensate the plaintiff for loss or injury.

Front 11

What are General Damages?

Back 11

General damages: compensate foreseeable losses (e.g., pain and suffering).

Front 12

What are Special Damages?

Back 12

Special damages: compensate losses not necessarily foreseeable (e.g., wage losses) and unlike general damages must be specifically pleaded.

Front 13

What is required for damages to be recoverable?

Back 13

Damages: must be causal, foreseeable, certain, and unavoidable to be recoverable.
~ Foreseeability is tested by proximate cause.

Front 14

What is the Avoidable Consequences Doctrine?

Back 14

Avoidable consequences doctrine: limits damages to those which could not reasonably have been avoided.

Front 15

What are Punitive Damages?

Back 15

Punitive damages may be awarded to punish a defendant for “willful, wanton, or malicious conduct.”
~ Punitive damages are generally limited to intentional torts, although they may also be recoverable in cases of reckless misconduct. Some courts require reasonable relationship between punitive and compensatory damages awards.

Front 16

What are Nominal Damages?

Back 16

Nominal damages are often recoverable when no actual injury is sustained.
~ Note, however, that actual injury is a required element of certain claims (e.g., fraud), so nominal damages cannot be recovered in such cases.

Front 17

When are Interest and Attorneys' fees recoverable?

Back 17

Awards of prejudgment interest are generally statutory. Attorneys’ fees generally are not recoverable absent an applicable statute or contract (except for prevailing plaintiff in shareholders’ derivative suit).

Front 18

What are Restitutionary Remedies?

Back 18

Restitutionary remedies may be legal or equitable and are an alternative to compensatory damages where defendant has obtained a benefit, the retention of which amounts to “unjust enrichment.”

Front 19

What is the goal with Restitutionary Remedies?

Back 19

~ The objective is to restore defendant’s unjust gain to plaintiff.

Front 20

What is Replevin?

Back 20

Replevin is a legal remedy that permits plaintiff to recover, before trial, possession of specific chattel wrongfully taken or detained. A judicial hearing is generally required to make a prejudgment seizure valid.

Front 21

What is Ejectment?

Back 21

Ejectment is a legal remedy to restore possession of real property from which plaintiff was wrongfully ousted.

Front 22

What is Quasi-Contract?

Back 22

Quasi-contract is a remedy imposed by law that obligates defendant to pay plaintiff the reasonable value of a benefit unjustly obtained.
The benefit can be conferred as a result of mistake, duress, tort, or breach of contract
~ Quasi contract is available in tort situations only where tort results in a benefit to D.

Front 23

What is Constructive Trust?

Back 23

Equity creates a “trust” to compel defendant to reconvey title to property unjustly retained.
~ Is an equitable restitutionary remedy.

Front 24

What are the requirements for a Constructive Trust?

Back 24

Plaintiff must show that defendant acquired title to specific property;
~ Defendant’s retention of the property would result in unjust enrichment;
~ and (some courts) plaintiff has no adequate remedy at law (defendant’s insolvency suffices).

Front 25

What are the benefits of a Constructive Trust over monetary restitution?

Back 25

~ Plaintiff becomes a secured creditor (entitled to recover the specific property constituting trust res);
~ plaintiff can recover the property or its proceeds under the doctrine of tracing;
~ and plaintiff gets the benefit of any enhanced value of the property.

Front 26

What are the defenses to the imposition of a Constructive Trust?

Back 26

The usual equitable defenses apply (e.g., laches, unclean hands, transfer of legal title to BFP).

Front 27

What is an Equitable Lien?

Back 27

An equitable lien is a lien imposed on defendant’s property to secure payment of debt owed to plaintiff.

Front 28

What are the Requirements for the imposition of an Equitable Lien?

Back 28

Plaintiff must show that defendant misappropriated plaintiff’s money or property;
~ the property or money can be traced to defendant’s property;
~ defendant’s retention of the property results in unjust enrichment;
~ and (some courts) plaintiff has no adequate remedy at law.

Front 29

If P's property is not used to acquire title, what type of remedy is available?

Back 29

If plaintiff’s property is not used to acquire title, only an equitable lien is available.

Front 30

When can the enhanced value of the property be recovered?

Back 30

~ With a Constructive Trust.
The equitable lien can be enforced only up to the amount of plaintiff’s claim; the enhanced value of the property cannot be recovered. The lien is also cut off by transfer to a BFP.

Front 31

When is a Mandatory Injunction available as a restitutionary remedy?

Back 31

A mandatory injunction may be available where the legal remedy is inadequate.
~ It results in an equitable restitutionary remedy when the court orders defendant to make specific restitution.

Front 32

In Tort, what are the requirements for P to get an Injunction?

Back 32

1. Inadequacy of Legal Remedy, 2. Feasibilty of Enforcing Decree,
3. Balancing of Hardships
~ Where damages or restitution are inadequate to remedy a tort, plaintiff may be able to get an injunction.
~ An Injunction is a decree ordering defendant to perform (mandatory) or refrain from performing (prohibitory) certain acts.

Front 33

Why may the legal remedy be inadequate?

Back 33

1. Money Damages Inadequate
2. Damages Highly Speculative (If injury may be certain, but damages are difficult to assess, the legal remedy is inadequate.)
3. Multiplicity of Suits - Where the wrong is continuous or has been threatened on numerous occasions, plaintiff would have to bring many suits to recover all damages
4. Irreparable Injury - where Damages cannot compensate plaintiff for loss of “unique” property (e.g., land, family heirloom);
5. Prospective Tort - Where a wrong has not yet been committed, no legal remedy for damages exists.
6. Inadequacy of Replevin- Replevin (recovery of a specific chattel) sometimes is an inadequate remedy for recovery of unique chattels because of the hearing requirement, because defendant can recover the chattel by posting a bond, and because of the difficulty in executing the writ.

Front 34

What is the Distinction of Mandatory vs. Negative Injunctions?

Back 34

Negative (prohibitory) decrees: order defendant to stop doing an act. These are NOT difficult to enforce because of the court’s contempt power.
Mandatory injunctions order defendant to do an affirmative act. Such decrees pose enforcement problems because of difficulty in supervising defendant; Where this is a problem, courts will often frame the decree negatively.

Front 35

Can Decrees be issued Requiring Acts in Other States?

Back 35

Today, a court has power to issue injunctions requiring acts in other states, but relief is granted only if the decree is feasible to enforce.
~ Problems are (i) supervision (often overcome by framing decree negatively) and (ii) punishing defendant should he leave the jurisdiction and not return (often overcome by sequestering defendant’s local property).

Front 36

What is a T.R.O.?

Back 36

A T.R.O. is a short-term decree (e.g., 10 days) to maintain the status quo pending issuance of a preliminary injunction.
~ A T.R.O. can be issued ex parte.
~ Hardships usually are not balanced at this stage.

Front 37

What is a Preliminary Injunction?

Back 37

A preliminary injunction is issued only after notice and hearing.
~ Its purpose is to maintain the status quo pending trial.
~ Hardships are balanced at this stage.

Front 38

When is a permanent injunction issued?

Back 38

A permanent injunction is issued only after trial on merits. Hardships are balanced at this stage for encroachment or nuisance cases.

Front 39

What are the minority and majority approaches to the balancing of the Hardships?

Back 39

Strict (Minority) View - The minority view refuses to balance hardships, holding that if the plaintiff otherwise satisfies the requirements, an injunction should be granted as a matter of course.
Liberal (Majority) View - Under the majority view, where hardships substantially balance in defendant’s favor, the court will deny the injunction and limit the plaintiff to damages.
~ However, courts will not balance hardships if defendant’s conduct was intentional.

Front 40

What is Laches?

Back 40

Laches is an unreasonable delay by plaintiff in initiating his equitable claim that results in prejudice to defendant.
~ Effect of delay is the key.
The period of laches may be shorter (but never longer) than the comparable statute of limitations.
~ Laches begins to run from the time plaintiff has knowledge that one of his rights has been infringed.

Front 41

What is Unclean Hands?

Back 41

The party seeking equitable relief must not be guilty of any “unfair dealing” with respect to the transaction sued upon.
~ the unclean hands conduct has to be related to the case at hand - unrelated unfair conduct is irrelevant

Front 42

Why does equity usually not have jurisdiction to enjoin crimes or enforce criminal penalties?

Back 42

Constitutional Problems - Constitutional problems are raised because the equitable remedy would deprive defendant of the procedural safeguards of the criminal law system (e.g., jury trial, burden of proof, etc.).
~ However, equity will act if the crime is also a public nuisance and criminal prosecution is an inadequate remedy.
~ Public nuisance is traditionally defined as use of property so as to endanger public health and welfare, but some courts have expanded the definition to include many crimes. Suit is usually brought by the attorney general; however, a private person can sue to abate public nuisance where he suffers injury “special in kind” or is authorized to do so by statute.

Front 43

How About Injunctions to Protect Political or Civil Rights?

Back 43

Traditionally, equitable relief is not granted to protect political or civil rights because the decree would be difficult to enforce and political questions were deemed “nonjusticiable.” The modern trend is contra in certain cases (e.g., reapportionment).

Front 44

When will a constructive trust be avaliable for misappropriation of money?

Back 44

Constructive trust will be available for misappropriated money if plaintiff can specifically identify and trace stolen money to defendant.
~ However, if funds are used only to pay off debts, etc., the majority view is that no constructive trust will lie against defendant's remaining assets because there is no trust res.

Front 45

When will an Equitable Lien be imposed for Misappropriated Funds?

Back 45

An equitable lien is available where the misappropriated funds were not used to obtain title to the property they can be traced to.
The remedy is also appropriate where defendant commingles the funds.
~ In cases of commingling, the lien can be placed on both remaining funds and property traced from the account. (However, the lien is limited to the lowest intermediate balance where funds were dissipated and the balance sinks below plaintiff’s claim). An optional constructive trust remedy (on a pro rata basis) is available if defendant is a conscious wrongdoer.

Front 46

What is the Measure of damages for tortiously destroyed chattels?

Back 46

If chattels are tortiously destroyed, damages are measured by:
Damage = Value of Chattel (at time destroyed) - Salvage + Interest
Damages are measured by the value of the chattel at the time it was destroyed, less salvage, plus interest (but generally not loss of use unless the chattel is not easily replaceable).
~ Loss of use generally is not recoverable unless the chattel destroyed was income-producing.

Front 47

What is the Measure of Damages for Injury to Chattels?

Back 47

Damage = (Dimunition in Value or Cost of Repair) + Loss of Use
Damages may be measured by either diminution in value or cost of repair (limited to market value) plus loss of use.

Front 48

What is the Standard Measure of Damages for Conversion?

Back 48

Damage = Market Value (at time of conversion) + Interest + expenditures in pursuit
The standard measure of damages for conversion is the market value at the time of conversion, plus interest and expenditures in pursuit of the property.
~ If the chattel’s value fluctuates, the usual measure for damages is the highest value between the time of the wrong and a reasonable time to cover.
~ If the chattel is retained by defendant, value is measured at the time of seizure, demand, or disposession (plaintiff’s option). If the chattel is improved and conversion is willful, the increased value is recoverable.

Front 49

Is the P required to mitigate by accepting the Chattel?

Back 49

No - The plaintiff is not required to mitigate damages by accepting the chattel; he may force the converter to purchase.
~ However, if he does accept the chattel, damages are reduced by the chattel’s value at the time of the return.
~ Successive converters are liable for the value of the chattel on the date they acquired it, except to the extent of improvements made by a previous innocent converter.

Front 50

What is the Measure of Damages for Trespass to Chattels for a Minor Dispossession?

Back 50

The standard measure of damages is nominal damages or damages for loss of use if a minor dispossession.

Front 51

What are the Restitutionary Remedies for Dispossession of Chattels?

Back 51

These Include: Self-help (by using reasonable force to recapture), Replevin, Quasi contract, Constructive trust (only if title obtained—i.e., where thief sells the property, trust can be imposed on proceeds), Equitable lien, and Mandatory injunction (only if chattel is “unique” so that money damages and replevin inadequate).

Front 52

What is the value of damages for simple trespass?

Back 52

Nominal damages: are recoverable for simple trespass where there is no actual injury.
Restitution: for the value of defendant’s land was denied at common law, but some modern cases allow such damages.
Injunction: also is appropriate (to avoid multiplicity of suits) and a court may grant restitutionary relief as well (?).

Front 53

What is the measure of damages for a Trespass Causing Severance?

Back 53

Where there is a severance from realty (e.g., timber, minerals), the measure of damages is the diminution in the value of the land, or plaintiff can elect a conversion measure.
~ Also available: Replevin, Quasi contract (value of severed property, unless defendant acted willfully, in which event value of property as improved), and injunction (because land is “unique”).

Front 54

How about for Trespass Causing Other Injury (e.g., debris dumped on land)?

Back 54

Damages for injury (e.g., debris dumped on land) is measured by the cost of removing an obstruction or rental value of land.
~ Mandatory injunction: is available if damages are inadequate (e.g., where plaintiff has burden of removing debris).

Front 55

How about for a Trespass Effecting Ouster?

Back 55

Ejectment: is available where plaintiff proves the right to possession and wrongful withholding by defendant— plaintiff recovers property and mesne damages (mesne damages involve the fair rental value for loss of use and possession of the subject land).
~ Improvements by an innocent trespasser can be set off against mesne damages or can be compensated for under modern “betterment statutes.”
~ Injunctive relief is not available.

Front 56

What are Encroachments?

Back 56

Encroachments result where defendant’s structure invades plaintiff’s land or airspace.

Front 57

What is the measure of damages for an encroachment?

Back 57

If classified as a continuing trespass, damages are measured by the rental value of occupied land; if a permanent trespass, the measure is the market value of the occupied land.
~ Ejectment is available but difficult to enforce.

Front 58

Is Injunctive relief available for an Encroachment?

Back 58

Yes - Injunctive relief is usually sought.
Legal Remedies Inadequate - Land is unique and damages cannot compensate for loss thereof and ejectment is impracticable.
Balancing of Hardships - Most courts refuse to balance hardships where defendant acted willfully.
~ If the encroachment was inadvertent, a majority of courts will weigh the relative hardships but deny injunction only if defendant’s hardship greatly outweighs plaintiff’s.
~ Laches and public interest also enter into the balancing process.

Front 59

What is the Measure of Damages for Destruction of or Injury to Realty?

Back 59

~ The usual measure of damages for injury to realty is the diminution in the value of the land.
~ If a building is destroyed, plaintiff can recover its value at time of destruction.
~ If a building is damaged, compensation equals the cost of repair plus loss of use.
~ Where trees or crops are destroyed, damages are either diminution in the value of the land or the value of the crops and trees.
~ Damage to underlying real estate usually is measured by the diminution in value of the real estate.

Front 60

What is the Measure of Damages for Destruction of or Interference with Easements?

Back 60

If an easement is destroyed, plaintiff recovers the diminution in the value of the land; if the easement is merely interfered with, the cost of restoration plus loss of use, etc., is the measure.

Front 61

Is Injunctive Relief available for Destruction of or Interference with Easements?

Back 61

Injunctive relief is possible (“unique” property, multiplicity of suits), provided the easement is recognized at law.
~ Courts will balance the hardships here.

Front 62

What is Waste?

Back 62

Waste refers to injury to realty by one in rightful possession against the interest of one entitled to future possession.

Front 63

What is Voluntary Waste?

Back 63

Voluntary waste consists of deliberate destructive acts.

Front 64

What is the measure of Damages for Voluntary Waste?

Back 64

Damages = the diminution in the value of the land or the cost of repair.
~ Injunction is also appropriate.

Front 65

What is Permissive Waste, the measure of Damages?

Back 65

Permissive waste occurs where the premises are allowed to fall into a state of disrepair.
Plaintiff can recover the cost of repair, but courts are reluctant to grant injunctive relief (supervision problems).

Front 66

What is Ameliorative Waste, the measure of damages?

Back 66

Involves alterations to the realty that increase its value.
~ Generally damages are not available (because there is no loss in value) [check for different possessory interests];
~ usually injunction is available only if defendant is a short-term tenant.

Front 67

What is Equitable Waste?

Back 67

Occurs when those not chargeable with legal waste effect material changes to the premises.
~ There is no legal remedy, but an injunction will be granted (e.g., to prevent mortgagor from impairing security of mortgagee).

Front 68

What is Nuisance?

Back 68

Nuisance is the use by defendant of his own property in such a way as to cause unreasonable interference with the use and enjoyment of plaintiff’s property.
~ It can also result from interference with incorporeal rights (e.g., easements).

Front 69

What is the Measure of Damages for Nuisance?

Back 69

Standard measure of damages includes the loss of use and enjoyment, costs of abatement, emotional distress, etc.
~ Most courts deny future damages.
~ Some use the “permanent nuisance” doctrine (award of permanent diminution in value of land) to avoid multiplicity of suits, but there is a split of authority as to when the doctrine is appropriate.

Front 70

Is Injunctive Relief avaliable in a Nuisance situation?

Back 70

Yes - An injunction against nuisance is usually negative in form.
1) Damages Are Inadequate - because of the injury to land and the possibility of multiplicity of suits.
2) Balancing of Hardships - Some courts do not balance the hardships in nuisance cases because nuisance is usually intentional.
~ Courts that do balance generally weigh such factors as: relative uses of the land; whether the decree would require defendant to shut down a costly enterprise; and injury to the public (loss of jobs, loss of a useful product, etc.).
~ Modern courts make use of conditional decrees (e.g., denial of injunction, conditioned upon defendant adopting abatement procedures).
~ If the defendant has eminent domain rights, permanent injunction will be denied if compensation is paid.
~ "Coming to the Nuisance" - Is Ordinarily not a good defense, but may affect recovery of damages where the purchase price reflected the claimed nuisance.

Front 71

What is the Usual Remedy for Personal Injuries?

Back 71

The usual remedy for personal injuries is compensatory damages. (There is no basis for restitution because defendant receives no benefit;
~ Injunction is rare because the harm has already occurred—although relief is available for a continuing course of conduct.)

Front 72

What are Special Damages?

Back 72

Economic Losses - Plaintiff can recover all economic losses proximately caused (e.g., past and future medical expenses, and past and future loss of earnings and earning capacity).
~ The award must be a lump sum; future losses are discounted to present value.
~ A minority of courts permit the jury to consider inflation. Generally, the award is not subject to income tax.

Front 73

What are General Damages?

Back 73

Noneconomic Losses - Plaintiff will also be compensated for noneconomic losses (past and future)—i.e., damages for pain and suffering, emotional distress, loss of enjoyment of life, etc.
~ Limitations on damages include the collateral sources rule and the avoidable consequences doctrine

Front 74

What is the usual remedy for Defamation?

Back 74

Damages are the usual remedy.
Restitution will be denied (usually because there is no benefit to defendant).
Injunctions are rarely granted, on the rationale that the decree would amount to an unconstitutional prior restraint on speech.
~ Declaratory relief may be the most effective way to protect reputation.

Front 75

What is the usual remedy for Privacy torts?

Back 75

For invasion of the right to privacy, damages are recoverable for mental anguish. Restitution will be denied (because defendant is not enriched).
Injunction: is the most effective remedy for a continuing wrong—damages are inadequate because they are often speculative and because of the the likelihood of repetition. The traditional "property right" requirement is no longer a bar to equitable relief.
Damages are recoverable for mental anguish.
Restitution will be denied (because defendant is not enriched).
Injunction is the most effective remedy for a continuing wrong—damages are inadequate because they are often speculative and because of the likelihood of repetition. The traditional “property right” requirement is no longer a bar to equitable relief.

Front 76

What are the measures of damages for Fraud?

Back 76

No action for fraud will lie absent proof of actual injury; thereafter, consequential damages are also recoverable as are punitive damages where “malice” is shown.
~ If fraud is by the seller, some courts apply a “benefit-of-bargain” measure of damages (difference between contract value and actual value received); others limit damages to “out-of-pocket” loss.
~ If fraud is by the buyer (or is collateral to sale), plaintiff recovers damages proximately caused.
~ Plaintiff may elect to rescind the contract (infra) and seek restitution, or have a constructive trust imposed on the property obtained by fraud.

Front 77

What is the measure of damages for Inducing Breach of Contract?

Back 77

The usual relief for inducing breach of contract is damages for all losses proximately caused. Restitution and injunctive relief are rare.

Front 78

What is the Measure of Damages for Interference with Prospective Advantage?

Back 78

Damages are usually only speculative, but plaintiff can seek restitution of the “benefit” defendant would otherwise not have obtained.

Front 79

What is Trade Libel?

Back 79

Trade libel is defined as a statement disparaging plaintiff’s business, product, etc., for the purpose of inducing the public not to deal with him.
~ No cause of action will lie absent proof of special damages (pecuniary loss), and most courts require a showing of loss of particular customers.
~ Injunctive relief traditionally is denied on free speech grounds unless the trade libel occurred in conjunction with another enjoinable tort.
~ The modern trend is to grant relief, on the theory that the harm to plaintiff outweighs free speech considerations.

Front 80

In Contract cases, what are Compensatory Damages?

Back 80

Compensatory damages are awards of money to protect plaintiff’s expectation interest.
~ As with tort cases, damages must be causal, foreseeable, certain, and unavoidable.

Front 81

When is Foreseeability tested?

Back 81

Foreseeabiity is tested at the time the contract is entered into. [Hadley v. Baxendale]

Front 82

What does Unavoidable mean?

Back 82

Unavoidable means plaintiff cannot recover damages that reasonably could have been mitigated.

Front 83

When are Liquidated Damages clauses upheld?

Back 83

A liquidated damages clause may limit the damages recoverable.
Such provisions are valid provided it is shown that, at time of contracting, actual damages would have been extremely difficult to ascertain and the amount stipulated was a reasonable forecast of the actual harm.
~ Otherwise, the clause is a penalty and proven actual damages will govern.

Front 84

Are Punitive damages available in K actions?

Back 84

No - PUNITIVE DAMAGES - are not available in contract actions.

Front 85

Are INTEREST AND ATTORNEYS’ FEES available in K?

Back 85

Prejudgment interest awards in contract are statutory and usually are granted only as to liquidated sums (x). Attorneys’ fees are recoverable if provided for by statute or contract.

Front 86

What is the Restitutionary Remedy of Quasi-Contract?

Back 86

An unjust gain received pursuant to an unenforceable contract.

Front 87

What are the most common grounds for Defendant's Unjust Enrichment?

Back 87

Defendant’s unjust enrichment most commonly results from mistake, fraud, material breach of contract, or performance of an unenforceable contract.
~ A contract may be unenforceable because it is: illegal; not in writing; discharged by impossibility or frustration of purpose; or disaffirmed because of incapacity.

Front 88

What is the Quasi-Contractual (restitutionary) Measure of Benefit Where the Contract is Materially Breached?

Back 88

Where the contract is materially breached, the nonbreaching party can recover the value of her performance, even in excess of the contract rate (most jurisdictions).

Front 89

What is the Quasi-Contractual (restitutionary) Measure of Benefit Where the Contract is Unenforceable?

Back 89

Where the contract is unenforceable, recovery depends on the nature of the benefit conferred.
~ Specific restitution is available for recovery of tangible property.
~ Where the benefit takes the form of goods or services, the plaintiff is entitled to the value thereof even in excess of the contract rate (except in cases of impossibility—where the contract rate is maximum).

Front 90

What is Specific Performance?

Back 90

Specific performance is a mandatory decree or injunction that essentially orders a contracting party to perform that which he has promised to perform under the contract.

Front 91

what are the requirements for a court to order Specific Performance in a K situation?

Back 91

1. A Contract Must Exist
2. All Conditions of the Contract Must Be Satisfied - A party will be excused from performance if the other party has not satisfied the conditions to the first party’s performance, although specific performance could be granted where the failure is only partial or immaterial.
3. The Terms Must be Definite and Certain - The parties must have entered into a contract that is sufficiently definite and certain so that the court can determine what it must order each party to do.
4. The Legal Remedy Must Be Inadequate
5. Decree Must Be Feasible To Enforce -
6. Action Must Not Be Blocked By Any Defense

Front 92

What are Defenses to Specific Performance in K?

Back 92

1. Laches - concerns an unreasonable delay that prejudices defendant.
2. Unclean Hands - unclean hands requires unfair dealing that arises out of the same transaction.
3. Hardship - Inadequacy of consideration that is either (i) grossly inadequate or (ii) coupled with an unconscionable contract or “sharp practices” is a good defense.
~ Adequacy of consideration is tested at the time the contract was entered into.
~ Subsequent hardship (e.g., discovery of oil after signing of land sale contract) is sufficient under the minority view.
4. Mistake and Misrepresentation - Mistake or misrepresentation of a type that results in hardship or that constitutes a basis for rescission is a defense.

Front 93

What is Rescisssion?

Back 93

Rescission: cancels the contract where it results from mistake, fraud, or duress, or where the contract is materially breached;
~ Rescission functions to terminate the contract and restore to plaintiff the consideration given by him to defendant.
~ Rescission is usually accompanied by restitution of benefits conferred.
~ Rescission can be legal (by action of the parties) or equitable (by court decree).

Front 94

What are the usual grounds for Rescission?

Back 94

Rescission may be based on grounds making the contract voidable at the option of one party.
~ Numerous grounds exist (e.g., illegality, impossibility of performance, lack of capacity), but mistake and misrepresentation are the most significant for bar exam purposes.

Front 95

Is Rescission allowed for Mutual Mistakes and Unilateral Mistakes?

Back 95

Mutual mistakes: all courts allow for rescission for mutual mistakes affecting the basis of the bargain (e.g., nature of subject matter).
~ There's no relief for collateral or immaterial mistakes (e.g., quantity and quality of item) is available, although resulting hardship may serve as a defense to specific performance.
~ The traditional rule denied rescission for one party's unilateral mistate unless the other party knew or should have known of the mistake.
The Modern trend is to grant relief for all unilateral mistakes going to the basis of the bargain where the hardship to the mistaken party outweighs the detriment to the other party’s expectations. And some courts grant rescission even absent a showing of hardship.

Front 96

When can P seek Rescission based on Misrepresentation?

Back 96

Plaintiff can seek rescission upon showing of actual and reasonable reliance upon an innocent material misrepresentation of fact.
~ Fraudulent misrepresentations give rise to an action for damages or alternatively a suit to rescind, upon showing actual (though not necessarily reasonable) reliance.

Front 97

What are the defenses to Rescission (2 main)?

Back 97

Laches and unclean hands are defenses.

Front 98

What is the Election of Remedies when it comes to Rescission?

Back 98

Damages and rescission remedies are inconsistent:
1- An action for damages affirms the contract and, if sought first, bars a subsequent suit to rescind.
2- An action to set aside a contract (rescission) does not preclude legal action (although plaintiff must elect one form of relief prior to judgment).
Thus, if plaintiff first seeks damages, binding election occurs at the commencement of the action; if plaintiff first seeks to rescind, no binding election occurs until entry of judgment.

Front 99

What is Cancellation?

Back 99

A written instrument that is voidable may be canceled if there is apprehension that the outstanding instrument may cause injury to a person entitled to void it.

Front 100

What is Reformation of Contract?

Back 100

Reformation is an equitable remedy for modifying a written instrument to reflect the parties’ true agreement.

Front 101

What is Required before Reformation can take place?

Back 101

A Valid original Contract is Required - There must be a showing of a valid prior agreement free from grounds for rescission;
~ reformation is not available if the contract is ambiguous or incomplete, or if there is a mutual mistake as to the meaning of words in the contract.
~ Reformation cannot be used to fill in terms required by the Statute of Frauds—however a deed can be reformed to conform to sufficient memorandum.

Front 102

What are the Grounds for Reformation?

Back 102

The underlying ground for reformation is that the writing does not conform to the parties’ valid prior agreement because of mistake or fraud.
~ If the mistake relates to entering into the agreement in the first place, the case must be analyzed under rescission.

Front 103

Is Mistake of Fact a proper ground for Reformation?

Back 103

Yes - Reformation is proper if both parties mistakenly believed the writing conformed to their agreement (“scrivener’s errors”).
~ Similarly, it is appropriate if only one party (the nonmistaken party) knows that the writing does not conform.

Front 104

Is Mistake of Law a proper ground for Reformation?

Back 104

Yes - Reformation is proper to correct a written instrument because of mistake in the legal meaning of a term used to incorporate the underlying agreement.

Front 105

Is Fraud a proper ground for Reformation?

Back 105

Yes - An instrument fraudulently represented as incorporating the prior agreement of the parties may be reformed.

Front 106

What are Defenses to Reformation (2 main ones)?

Back 106

Defenses to reformation include laches and sale of the subject matter to a bona fide purchaser.

Front 107

Is the Parol Evidence Rule a Defense to Reformation?

Back 107

The parol evidence rule is not a defense.
2. The Statute of Frauds is not a defense under the majority view. The minority view permits reduction, but not addition, of land conveyed by written instrument
3. Negligence by the plaintiff (e.g., failure to read instrument) is not a defense.

Front 108

What is the usual remedy for Personal Property contracts?

Back 108

Damages usually is an adequate remedy for contracts to buy or sell personal property.

Front 109

When will Specific Performance be available for Personal Property contracts?

Back 109

Specific performance will be available if:
(i) the chattel is “unique” (because it is one of a kind or it is impossible to secure a replacement); or
(ii) damages are highly speculative (e.g., output contracts).

Front 110

With a Contract to Sell Real Property, what is the Measure of Damages Where Seller Breaches?

Back 110

Where seller breaches a contract to sell real property, buyer gets either out-of-pocket loss or benefit-of-bargain, depending on the jurisdiction.

Front 111

What is the measure of Damages when a buyer breaches a K to sell Real Property?

Back 111

Where buyer breaches, the seller recovers the difference between the market value and the contrat price, plus consequential damages.

Front 112

Is Restitution available with Land Contracts?

Back 112

Yes - where there is fraud or material breach of contract, plaintiff (buyer or seller) can rescind and get restitution of the benefits conferred.
a. Recovery by the buyer is offset by the value of the use of the land; recovery by the seller is conditioned on restoring part payments (less damages suffered).
b. A defaulting buyer can recover payments made in excess of seller's damages (to avoid forfeiture).

Front 113

Is Specific Performance available for land sale contracts?

Back 113

Yes - Damages are inadequate for buyer of realty because land is unique.
Damages are inadequate for seller because seller wished to be rid of land and would have to bear the burden of finding a new buyer.
~ Seller must be able to show marketable title (one reasonably free from doubt) to get specific performance.

Front 114

When does Partial Performance with Abatement arise?

Back 114

The doctrine of partial payment with an abatement in price arises where seller cannot fully perform.

Front 115

Where Seller Sues, will specific performance be granted where Seller cannot fully perform?

Back 115

Specific performance is granted to seller only if the defect in seller’s performance is immaterial and buyer can be compensated for the deficiency. The determinative factor is buyer’s intended use of the land.

Front 116

Where Buyer Sues, will specific performance be granted where Seller cannot fully perform?

Back 116

Specific performance will be granted to buyer with abatement in the purchase price even if the defect is material—unless the deficiency is so large that the court would be “making a new contract.”
~ Buyer is allowed specific performance but no abatement where the selling price is based on income generated from land and income is unaffected by defect.

Front 117

Will Specific Performance be allowed for oral land contracts?

Back 117

No - Under the Statute of Frauds (Land Section), If a contract for the sale of an interest in land is oral, specific performance will be denied.

Front 118

What is the exception to when specific performance will be allowed for Oral land contracts?

Back 118

Under the Part Performance Doctrine - Specific enforcement is available where there is part performance by the buyer consisting of possession plus payment or possession plus improvements (in California, adverse possession may be sufficient).
~ Some courts follow the evidentiary theory (acts are referable to the contract); others follow the hardship rationale—but under the hardship theory, seller cannot rely on buyer’s acts of part performance.

Front 119

What specific performance defenses apply to land sale contracts?

Back 119

Other defenses to specific performance (e.g., laches, unclean hands, sale to BFP, etc.) apply to land sales contracts as well.

Front 120

What is the Equitable Conversion Doctrine?

Back 120

The equitable conversion doctrine holds that when a contract is entered into, the buyer becomes the equitable owner of real property and the seller becomes the owner of personal property (the right to payment of the purchase price secured by legal title to land).

Front 121

Under the Doctrine of Equitable Conversion, what happens if the Seller dies?

Back 121

Under the doctrine of equitable conversion, if the seller dies, title goes to the person entitled to the seller’s real property (heir or devisee), while the right to the price goes to the person entitled to seller’s personal property.
~ Buyer must join seller’s administrator and heir in suit.

Front 122

Under the Doctrine of Equitable Conversion, what happens if the Buyer dies?

Back 122

If the buyer dies, his interest in the land goes to the person entitled to his real property (heir or devisee).
~ The seller must join the buyer’s administrator and heir in suit.
~ If both buyer and seller die before closing, all four parties (administrators and heirs) must be joined for specific performance.

Front 123

When does Equitable Conversion occur with an Option to buy land?

Back 123

Under the majority rule, equitable conversion does not occur until an option is exercised; the minority view holds that equitable conversion relates back to the time the option contract is executed.

Front 124

Who is responsible if the property is accidentally damaged or destroyed?

Back 124

If property is accidentally damaged or destroyed, the majority view holds the buyer liable for the purchase price, since the buyer is the equitable owner from the time the contract is executed.
~ Minority view and modern trend (Uniform Vendor and Purchaser Risk Act): Risk of loss shifts to buyer only when buyer has possession or legal title.

Front 125

What If the seller obtains insurance proceeds after the risk of loss passed to buyer?

Back 125

If the seller obtains insurance proceeds after the risk of loss passed to buyer, most courts impose a constructive trust on the proceeds for the benefit of the buyer
~ Parties may contract with regard to disposition of proceeds.

Front 126

In a construction contract, what is the measure of damages if the Owner breaches?

Back 126

Where the owner breaches a construction contract, the builder recovers lost profits if the contract is wholly executory; he recovers the contract price if the contract is completed, or the contract price less cost of completion if the contract is partially performed.

Front 127

In a construction contract, what is the measure of damages if the Builder breaches?

Back 127

Where the builder breaches but has substantially performed, the owner recovers the cost of restoration unless this would produce economic waste--in which case recovery is limited to diminution in value. If the builder is in material breach, the owner gets the cost of completion less payments due, plus compensation for delay.

Front 128

Can the builder get Restitution?

Back 128

If the owner breaches: builder can rescind and recover the value of the benefit conferred (not limited to contract price in most states).

Front 129

Can the Owner get Restitution?

Back 129

If the builder breaches, the owner is usually not entitled to restitution (no payments made in excess of benefit received).
Today, a breaching builder can generally get restitution of benefits conferred in excess of the owner’s damages (limited to contract rate).

Front 130

Is Specific Performance available in Construction Contracts?

Back 130

Supervisory problems traditionally precluded specific performance. Today, courts are more willing to overlook feasibility problems.

Front 131

What are the measures of damages for Personal Services contracts?

Back 131

Employee breaches: the employer recovers the costs of obtaining a replacement.
Employer breaches: Damages = Wages Due or promised- Avoidable Damages.
~ Recent cases find wrongful dismissal of an employee to be tortious, so the employee may recover lost wages, emotional distress, and punitive damages.

Front 132

Is Restitution available in Personal Services Contracts?

Back 132

Employer breaches: Restitution = Reasonable Value of the Services Rendered (even in excess of the contract rate).
Employee breaches: Restitution = Paid but Unearned Wages.
The breaching employee can recover the value of services rendered up to contract rate (but if the breach is willful, deduction is made for employer’s damages).

Front 133

Is Specific Performance available in Personal Services Contracts?

Back 133

Damages are inadequate only if services are unique.
~ Feasibility problems generally preclude specific performance, because there is no way to compel "best efforts," and the decree would amount to "involuntary servitude."
~ However, the contract may be enforced indirectly in negative covenant cases.
~ The court may specifically enforce an employee’s promise not to work for another.