Remedies

Front 1

Contract Legal Remedy Requirements

Back 1

1. causal (but for)

2. Foreseeable (at time of formation)

3. Certain

- Factors: availability of evidence, certainty of actual loss, D's culpability

- ex: profit history for businesses

4. Unavoidable (duty to mitigate)

Discuss these 4 factors when:

1. lost future profits

2. consequential damages

3. reliance damages

but not for benefit of the bargain damages

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Benefit of the Bargain

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Seeks to put parties in position they would've been, had the contract not been breached &

is normally the FMV - K price.

focus on the economic deal itself- what did the parties bargain for?

UCC cover: the cost of cover (FMV P would have to pay to replace)

Front 3

Consequential Damages

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Damages that logically flow from a breach of a contract other than the cost of sale, profit, and purchase price [do 4 part analysis]

includes future profits beyond those from the deal, costs incurred due to breach which weren't part of original deal, and similar damages

Front 4

Reliance Damages

Back 4

Seeks to put the party in position they would've been in had the K not been FORMED and are ONLY available were expectation (benefit of the bargain) damages are too speculative [4 part analysis]

-usually out of pocket $ before K is breached/formed

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Incidental Damages

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expenses which are REASONABLY incurred in shipping, care, and custody of goods AND where plaintiff = seller, in re-selling the goods after breach

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Liquidated Damages

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LD are agreed upon damages where actual damages would be hard to calculate, and are only upheld IF the stipulated to amount is PROPORTIONAL to possible level of damages, otherwise, such LDamages are void as penalties.

10% or less of K price

be careful when it's a solid number regardless of how many days D breaches for.

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Equitable Remedies

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ALWAYS SAY: "the equitable remedies are generally only available if the legal remedy is inadequate"

Front 8

Specific Performance

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1. valid K

2. all conditions met by party seeking SP

3. all legal remedies are inadequate

- uniqueness measured at time of litigation, not at time K was formed!

- LD clause does not make $$ damages adequate; so SP can be available unless LD says "this is the only remedy"

4. court supervision is feasible

- covenants not to compete are enforceable IF services are unique and scope (geographic & duration) = reasonable

- no personal service K's

Defense to Specific Performance

1. Unclean Hands

2. Laches

3. Unconscionability at time K was formed

4. Mistake

5. Misrepresentation

6. SOF

Front 9

TRO/Preliminary Injunctions

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Generally, injunctions are NOT available to prevent a breach of K, but are available to preserve the specific performance/replevin claim where there's an IMMINENT likelihood of irreparable harm from the loss of the subject of the K.

for TRO/preliminary injunction, P must show:

1. a reasonable likelihood of success on the merits

2. irreparable harm if injunction is not granted,

irreparable harm: harm which can't be satisfied by legal damages

3. a balancing of the hardship in P's favor.

for a court to consider hardship to D, D's conduct can't be intentional.

Plus for TRO

4. special showing of immediate & irreparable harm if TRO is not granted right away.

SO for Contract claims: K must be unique and it should be to preserve the subject of K from imminent sale/transfer but it still must be in court's JX; a car in another country is not enforceable.

Front 10

Rescission

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(a restitutionary remedy)

Is the undoing a K, where P affects a cancellation of the K by:

1. prompt notice of the rescission, and

2. tender back of the consideration (or offer to tender back consideration after filing suit).

Two grounds for rescission:

1. Mistake and 2. Misrepresentation

Front 11

Mistake

Back 11

Mutual:

mutual mistake by both parties as to a MATERIAL issue (goes to basis of the bargain) & mistake must be about nature/identity of K, but not quality.

Unilateral:

Traditionally: only grounds for mistake if non-mistaken party knew/should've known about the mistake.

Modernly, rescission is granted IF unilateral mistake is:

1. basic, and

2) mistaken party's hardship outweighs (>) detriment to non-mistaken party's expectations under the K.

Front 12

Misrepresentation

Back 12

1. false representation/omission of a material fact

2. intent to misrep (scienter) or negligence

3. P relied on it to P's detriment

Defenses:

1. unclean hands

2. laches (won't work if P was just neglient)

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Reformation

Back 13

remedy by which court reforms K to make it conform to parties previous understanding and requires that there be a valid prior agreement in the first place.

Grounds

1. mutual mistake RE: whether instrument conformed to parties' intentions (ex: scrivernor's error)

2. unilateral mistake: where 1 party doesn't know instrument contained an error, but other does

3. Mistake of law as to legal meaning of terms

4. Fraud.

Defenses

1. unclean hands

2. laches

what won't work: Negligence of P, SOF, Parol Evidence Rule

Front 14

Land Sale Contracts

Back 14

S can't deliver agreed upon consideration:

S as Plaintiff:

1. can enforce K if defect is minor

2. can't enforce K if defect is major, unless S can cure by closing

B as Plaintiff:

1. can enforce K even if defect is major, yet not if defect is VERY major (less than 1/2 of what's promised is there)

Regardless for both: Courts will lower the purchase price to take into account this defect in consideration.

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Land Sale Ks where Time is of the Essence

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where B doesn't meet K condition of timely performance and there's a forfeiture clause (forfeiture of all performance rendered to date if performance is not timely); usually where B paid part of it and makes on elate payment and S wants to trigger forfeiture clause to keep both land & $.

write: "Equity abhors forfeitures. Courts will consider the following in granting specific performance:

1. loss to seller is small

2. tardiness is de minimis

3. waiver (S's accepted late payments in the past)

4. buyer would suffer undue hardship."

then award B specific performance but note that modernly B would get restitutionary relief if he was denied SP

Front 16

SOF/Oral land sale Ks

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SOF will be a defense to SP in Oral land sale Ks, UNLESS one has rendered valuable part performance in reliance on the K. In this case, SP will be granted.

valuable part performance is either:

1. payment (in whole or part)

2. possession

3. valuable improvements

^ any 2/3 works

Front 17

Tort Damages

Back 17

Must be

1. causal

2. foreseeable (at time of breach)

3. certain, and (this does not apply to non economic/general damages)

- for FUTURE damages, P must show that they are more likely to happen than not (all or nothing rule) --> lump sum payment discounted to present value; inflation not taken into account.

4. unavoidable.

3 kinds

1. general damages (pain and suffering)

2. special damages (those that could not have been foreseen from mere occurrence of wrong such lost wages and medical bills)

3. punitive damages

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Punitive Damages

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awarded for willful, wanton, or malicious conduct. (--> fraud, oppression, malice)

usually limited to intentional torts but they may also be recovered for reckless misconduct and some courts require a reasonable relationship between punitive and compensatory damages award.

fraud: intentional fraud to deprive P of property/injure P

oppression: despicable conduct leading to cruel/unjust hardship in conscious disregard of P's rights

malice: conduct by D intended to harm P or that carried on in conscious disregard of rights/safety of others

Ex: "since __ is an intentional tort, P may also be entitled to punitive damages if is actions are considered willful, wanton or malicious."

wanton: deliberate, wicked, spiteful, cruel

Front 19

Punitive Damages & Due Process

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Punitive damages are subject to due process issues; if grossly excessive they are invalid under the 14th amendment. The issue is generally whether P had FAIR NOTICE of possible MAGNITUDE of punitive damages:

1. reprehensibility of D's conduct

2. disparity between compensatory award & the punitive award, and

3. difference between punitive award and criminal/civil penalties for comparable conduct.

Front 20

Permanent Injunction

Back 20

P may seek a permanent injunction at trial, which is granted after trial on the merits when P shows:

1. legal remedies are inadequate ($ damages are inadequate, damages are too speculative, potential for multiplicity of suits, irreparable injury or threat of prospective torts)

2. feasibility of enforcing the injunction, and

3. balancing of hardship in P's favor

Note: if call of question asks about P's provisional remedies do TRO/prelim; but if it asks just about injunction do Permanent.

Front 21

Unjust Enrichment

Back 21

a legal remedy.

Quasi-K: legal theory imposing legal obligations on

D who receives a benefit

pursuant to an unenforceable K,

where D may be forced

to make some form of restitution,

the nature & amount of which

is dependent on the type of agreement

and type of benefit conferred upon him.

if D gains services, restitution = value of services

if D keeps $ and uses it to make purchases/commingles it --> constructive trust/ resulting trust/ equitable liens

if D unjustly keeps personal property = replevin

Front 22

Legal Restitutionary Remedies

Back 22

Replevin & Ejectment

Front 23

Replevin

Back 23

Replevin: meant to recover personal property wrongfully taken/kept when D has possession of such wrongfully detained property and P has the immediate right to possession/title.

"claim and deliver": prejudgment possession of personal property proceeding

!A BFP cuts off right to replevin! (& most other restitutionary remedies)

UCC: P must show

1. goods are specifically identified in K

2. & P is unable to cover despite reasonable attempts to do so OR

3. Buyer has paid for some/all of goods AND S refuses to deliver AND:

a. S becomes insolvent within 10 days of receiving B's 1st payment OR

b. good were purchased for personal, family, or household purposes

Front 24

Ejectment

Back 24

legal remedy to restore possession of property to P where D has wrongfully possessed such property.

must be brought in timely manner or D will prevail in adverse possession.

Front 25

Resulting Trust

Back 25

When an express trust fails because the beneficiary is dead, equity creates a resulting trust in the settlor/his estate (if dead).

Purchase Money Resulting Trust: found where:

1. person who takes title didn't supply ALL or part of consideration, yet still holds title.

2. such a person is PRESUMED to hold title/partial title in trust for person who DID supply the consideration --> the resulting beneficiary.

3. Like a constructive trustee, the resulting trustee's sole obligation is convey the property to the plaintiff.

4. no writing is required to enforce the purchase $ resulting trust.

EXCEPTION

presumption of PMRT arising from supply of consideration can be rebutted by proof that the consideration was a gift/loan from resulting beneficiary to resulting trustee or a payment of debt owed to resulting trustee.

Front 26

Constructive Trusts

Back 26

may only be imposed on property to which D obtains TITLE, thus it only applies to a D who either

1. wrongfully obtains title to P's property or

2. uses proceeds of P's, which unjustly enriched D, to purchase full title to property.

To impose a constructive trust, the court must find the retention of title to property by D would = unjust enrichment.

The sole obligation of the constructive trustee is to convey title to the property to the P, who also then gets the benefit of any increase in value.

only applies when D has FULL TITLE!

Front 27

Equitable Lien

Back 27

a lien imposed on D's property to secure payment of debt owed to P.

appropriate where

1. D commingles personal property funds with V's misappropriated funds AND

a. maintains commingle funds in an account OR

b. sues funds to purchase property, OR

c. sells title acquired with misappropriated funds & commingles proceeds.

An EL then lies on both the fund remaining in the account and on any property purchased with such funds, but P is not entitled to any appreciation in value. However, his EL has priority over other liens on the property.

Front 28

Lowest intermediate balance

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Equitable liens: where the funds were commingled into an count, P gets the lowest intermediate balance.

If D wastes/blows funds from commingled account and later adds more funds, Victim can only impose and EL on the lowest intermediate balance - lowest balance after recalculating that balance after each deposit & withdrawal.

Front 29

Misappropriation of $

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available remedies:

Damages for conversion

1. amount converted

2. interest on that amount

3. punitive (maybe)

Restitution

1. constructive trust: if traceable to property where D has full title

2. Equitable Lien: if $$ commingled or used to improve D's property + lowest intermediate balance

3. Resulting trust: if it wasn't fraudulent consider Purchase Money Resulting trust if property was acquired

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Misappropriation of personal property

Back 30

possible legal remedies:

1. damages for conversion/trespass to chattel

2. possibly punitive

Possible Equitable remedies:

1. constructive trust

2. Equitable Lien

3. or Mandatory Injunction (if Replevin is inadequate)

Front 31

Laches

Back 31

equitable equivalent to SOL. It requires BOTH:

1. an unreasonable delay, and

2. that the delay resulted in harm to the other party

laches runs when P has knowledge that right has been infringed upon

Front 32

Unclean Hands

Back 32

party seeking equitable relief must not be guilty

1. of inequitable/wrongful conduct

2. with respect to subject matter of case.

3. the essence is unfair dealing/conduct,

4. not whether P has committed an actual tort.

but this only applies if party's unclean hands causes harm to other party

Front 33

Sale to BFP

Back 33

A wrongdoer's sale of property to a bonafide purchaser cuts off the remedies of replevin as to all possible defendants and constructive trusts and equitable liens as to that BFP.

A BFP can only be liable for ACTUAL, not punitive damages to the true owner in an action for conversion of personal property.

Front 34

NO injunctions cases

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1. breach of K (because damages are generally adequate)

2. against criminal prosecution (can't get injunction preventing DA from prosecuting absent strong showing of irreparable injury)

3. against crimes (unless crime is also a public nuisance) (ex: injunction granted to enjoin operation of illegal brothel/toxic dump)