Remedies

Question 1

General Rules: What Remedies Available?

Answer 1

Default rules:

• Real property –> specific performance
• Unique goods –> specific performance
• Labor K –> monetary damages + possible injunctive relief
• All others –> monetary damages

Question 2

Specific Performance

Answer 2

=equitable remedy

ONLY available when damages are inadequate to compensate the injured party

Availability depends on type of K…

• 1) Real property: specific performance is the USUAL REMEDY
  
  • b/c real property is considered unique (even though not really)
  • NY DISTINCTION: if the vendor cannot deliver title b/c of a LATENT DEFECT that he’s unaware of, then damages = down pmt + reasonable exps
• 2) Sale of Goods (Art. 2/UCC): ONLY IF the goods are
  
  • (i) unique; OR there are “other proper circumstances” (e.g. an inabillity to buy substitute goods in the mkt)
  • • (ii) seller still possesses the goods
• 3) Service Ks: NOT AVAILABLE in service K,
  
  • injunctive relief may be
    
    • (i.e. barring someone from completing similar service for competitor)

Question 3

When can a seller reclaim goods that were NOT paid for?

[UCC]

Answer 3

General rule = NOT available under Art. 2/UCC

EXCEPTIONS:

• 1. If a buyer
     * (i) was insolvent WHEN it received the goods;
     * AND (ii) seller makes a demand w/in 10 DAYS after buyer received them
• 2. Buyer misrepresented its solvency in WRITING w/in 3 MONTHS before delivery

Question 4

What monetary damages available?

Answer 4

Liquidated Damages OR Expectation Damages

+ Incidental Damages

+ CL: Consequential Damages

BUT duty to mitigate (- avoidable damages)

Question 5

When are punitive damages available?

Answer 5

NEVER!! The purpose of K damages is to COMPENSATE, not PUNISH

Question 6

Liquidated Damages clauses: enforceable?

Answer 6

The clause would be UPHELD IF:

• (i) was difficult to estimate damages at time of K
• (ii) the liquidated damages were a reasonable forecast of probable damages
  
  • “reasonable”?
    
    • CL: more likely if graduated/flexible; depends only on probable damages (not actual)
    • UCC: in light of probable OR actual damages
• (iii) Do NOT act as penalty

If liquidated damages cl is struck down, π will get actual damages

Question 7

What are expectation damages AND how are the calculated?

Answer 7

*default

Expectation damages put the injured party IN AS GOOD a position as full performance

• CL = reasonable expenses + expected profit
• UCC: options
  
  • For buyer:
    
    • Cover damages
      
      • = cover price - K price (good faith)
    • Market damages
      
      • = market price - K price (didnt buy/cdnt buy)
    • Loss in value
      
      • = value of goods promised - value of goods deliered
  • For seller:
    
    • IF seller = volume dealer –> lost profit
    • IF can resell –>
      
      • Resale damages
      • Market damages
        
        • (if didnt resell/not in gf)
    • IF can’t resell –> contract price

If expectation damages are too speculative (e.g. the profit level), then π can get reliance damages for expenditures spent in reliance on the K (i.e. puts π in a position as if the K had NEVER existed)

Question 8

What are expectation damages AND how are the calculated under Art. 2/UCC?

Answer 8

Expectation damages put the injured party IN AS GOOD a position as full performance (i.e. the benefit of the bargain) Expectation damages are the DEFAULT measure of damages CALCULATION Buyer’s damages 1) Cover damages (default) = cover price – K price Use this IF buyer covers in GOOD faith 2) Mkt damages = mkt price – K price This is used if buyer DOESN’T cover at all OR does so in bad faith NOTE: there is NO rule of mandatory covering in the UCC (mitigation) 3) Loss in value = value as promised – value delivered Is used in buyer KEEPS non-conforming goods Seller’s damages 1) Resale damages (default) = K price – resale price Use IF seller resells in GOOD faith 2) Mkt damages = K price – mkt price This is used if buyer DOESN’T resell at all OR does so in bad faith NOTE: there is NO rule of mandatory covering in the UCC (mitigation) 3) Lost profit (for volume dealer) = all the LOST profits from MISSED sale (even IF resells at same price, i.e. $0 resale damages) ONLY use IF, π is a “lost volume dealer” (i.e. can get virtually UNLTD supply of the good) NOTE: any ADDITIONAL profit made on the REPLACEMENT sale does NOT reduce the amt of profit damages owed to merchant from breaching buyer 4) K price = if seller CANNOT resell the goods (RARE!) E.g. custom made goods that cannot be resold to anyone else

Question 9

What are incidental damages AND how are the calculated?

Answer 9

Incidental damages =

• COST to the injured buyer/seller of transporting/caring for goods AFTER breach;
• AND of arranging a substitute trxn (e.g. a cover/resale)

Question 10

What are consequential damages AND how are the calculated?

Answer 10

CL only + (rarely available)

Consequential damages = damages special to THIS π that were REASONABLY foreseeable to the breaching party at the time of the K