Chapter 12: Contractual Remedies Flashcards Preview

J - B LAW 301 > Chapter 12: Contractual Remedies > Flashcards

Flashcards in Chapter 12: Contractual Remedies Deck (79):
1

Damages

An award of money that is intended to cure a wrongful event, such as a breach of contract.

2

Instead of receiving the exact thing they would have received under the contract, damages typically award...

Money.

3

Expectation Damages

Represent the monetary value of the benefit that the plaintiff expected to receive under the contract.

4

___ damages are forward-looking, while ___ damages are backward-looking.

Expectation, compensatory.

5

Why are backward-looking damages easily justified?

Because they allow the plaintiff to recover the value of something they previously enjoyed.

6

Why are forward-looking damages not as easily justified as backward-looking damages?

Because they allow the plaintiff to recover the value of something that they never preciously enjoyed but merely expected to receive under their contract.

7

How are expectation damages calculated?

Expected benefits under the contract minus the costs under the contract.

8

How can expectation value be calculated when the market value of something often fluctuates?

The expectation value is calculated at the time. No one knows what to expect when a contract is created, as it is a gamble.

9

You order a bale of cotton. The price agreed upon was $75. However, I fail to deliver, and the market price is $100. To fulfill your expectation, how much do I have to pay?

$25 if you have not yet paid, $100 if you have paid.

10

You order a bale of cotton. The price agreed upon was $75. However, I fail to deliver. The market price has fell to $50. To fulfill your expectation, how much do I have to pay?

None. You cannot recover expectation damages, as your expectation is a loss.

11

Expectation damages is essentially the difference between what the plaintiff ___ to have at the end of the contract, and what the plaintiff ___ had.

Expected, actually.

12

Can a court award expectation damages in a case where someone sues because they did not win a beauty contest due to a breach of contract?

Even though you cannot say with certainty that the plaintiff would've won, if the courts deem it to be reasonable, they can award expectation damages.

13

Difference between Cost of Cure and Loss of Value:

- Cost of Cure is how much it would cost to restore the thing to pre-contractual state.
- Loss of Value is how much the thing would be worth if repaired.

14

Which is more commonly awarded, Cost of Cure of Loss of Value?

Cost of Cure.

15

Courts are more likely to grant Cost of Cure if...

- Plaintiff has a legitimate interest in having work done.
- If the plaintiff has already spent money curing the defendant's defective performance.

16

When would Cost of Cure not be granted, and Loss of Value be granted instead?

When the difference between the Cost of Cure and the benefits of that cure is unreasonably large.

17

A farmer signs a contract allowing a company to mine on his land that stipulated the land would be levelled after. The company breached the contract. The farmer sues. Would Cost of Cure or Loss of Value be granted in this case?

Cost of Cure.

18

Intangible Loss

A loss that does not have any apparent economic value.

19

Pecuniary Losses

Losses that have monetary value.

20

Do courts traditionally award damages for intangible losses? What about recently?

Traditionally no, recently beginning to do so.

21

Remote

A loss is remote if it would be unfair to hold the defendant legally responsible for it.

22

What is the test for remoteness of a loss?

1. Liability may be imposed of a reasonable person would have known that the plaintiff's loss might result from a breach.
2. Liability may be imposed if the defendant actually knew that the plaintiff's loss might result from the breach.

23

Mitigation

Occurs when the plaintiff takes steps to minimize losses flowing from the defendant's breach.

24

Is a business owner expected to take exceptional steps to mitigate a loss?

No, just reasonable steps.

25

Is the plaintiff required to mitigate?

No, but failing to do so is a poor business decision because you are unable to recover damages for losses you could have mitigated.

26

Damages are denied only to the extent that the plaintiff unreasonable failed to mitigate. True or false?

True.

27

Can you recover costs of mitigation?

Yes.

28

Reliance Damages

Represent the monetary value of the expenses and opportunities that the plaintiff wasted under a contract.

29

Reliance damages differ from expectation damages in that...

Expectation damages says "give me what I would have gotten if the contract was performed" while reliance damages says "give me what I lost by attempting to fulfill this contract."

30

Reliance damages look ___.

Backward.

31

Expectation damages look ___.

Forward.

32

Can a plaintiff recover reliance and expectation damages?

No.

33

Reliance damages can only be awarded in situations where...

The contract is not unprofitable.

34

You agreed to pay $14,000 in exchange for a shipment of steel and paid $5000 as a down payment. However, the steel is only worth $11,000. You would have suffered a net loss of $3000. How much can you recover in reliance damages?

$2000 (the difference between the down payment and what you would have suffered as a net loss).

35

What is the usual remedy for breach of contract?

Compensation.

36

Damages are typically measured by...but in account of profits, they can be measured in...

The amount that the plaintiff loses, the amount that the defendant gained.

37

Nominal Damages

Symbolize the fact that the plaintiff suffered a wrong when the defendant broke a promise.

38

True or false? Nominal damages are usually very large, totalling in the tens of thousands of dollars.

False, nominal damages are merely symbolic, and area warded in small amounts like $10.

39

Why is it usually a bad idea to bring an action to recover nominal damages?

Judges do not like to waste time on trivial matters, and may assign costs to you.

40

Liquidated Damages

Represent a genuine attempt to estimate the value of the loss that may occur as a result of a breach.

41

Penalty

Requires a party to pay an exorbitant amount if they breach the contract.

42

Punitive Damages

Are intended to punish the defendant and discourage other people from behaving badly.

43

Are penalties enforceable in court?

No, it is merely an attempt to bully a person into performing. If a contract contains a penalty clause, the court will ignore that and calculate damages in the usual way.

44

Punitive Damages

Are intended to punish the defendant and discourage other people from behaving badly.

45

Two types of compensatory damages:

- Expectation damages.
- Reliance damages.

46

Can compensatory damages and punitive damages be awarded at the same time?

Yes.

47

Which courts award punitive damages more, Canada or the U.S.?

U.S.

48

What conditions have to be met in order to award punitive damages?

- The defendant must not only commit a breach but also act in a harsh, vindictive, reprehensible, and malicious manner.
- The defendant must have also committed another independently actionable wrong, such as a tort or another breach of contract.

49

Expectation Damages

Place the plaintiff in the position that they would have enjoyed if the contract had been performed.

50

Reliance Damages

Compensate the plaintiff for the costs that they incurred in reliance upon the contract.

51

Account for Profits

Strip the defendant of a benefit that they received as a reset of breaking a contract.

52

Nominal Damages

Symbolically demonstrate that the defendant breached their promise to the plaintiff.

53

Liquidated Damages

Enforce the parties' estimate of the loss that the plaintiff would suffer if the defendant breached the contract.

54

Punitive Damages

Punish the defendant for breaching the contract in an outrageous way.

55

Specific Performance

Occurs when the court order the defendant to fulfill a contactual obligation to do something.

56

Does the plaintiff have a right to specific performance?

No.

57

Specific performance is usually granted using ___.

Discretion.

58

In order for specific performance, the plaintiff must come to court with ___ ___.

Clean hands.

59

Specific performance depends on what five factors?

- Clean hands.
- Adequacy of damages.
- Mutuality.
- Judicial supervision.
- Personal services.

60

Is specific performance available when monetary damages would suffice?

No.

61

Mutuality

Means that specific performance can be awarded to a party only if it could also be awarded against that same party.

62

Is specific performance available against children?

No. Also, due to mutuality, it is not available for children.

63

Why would judicial supervision affect specific performance?

The justice system does not want to have to keep checking up on specific performance.

64

Do courts order specific performance to perform a personal service?

No, courts do not force someone to do something they don't want to do. For example, an actress would not be compelled to appear in a movie even if she promised to do so.

65

Injunction

Occurs when the court orders the defendant to not do something that s prohibited by the contract.

66

True or false? Courts are more willing to award specific performance than injunctions.

False, it is the other way around.

67

Exclusion Clause

Excludes or limits liability for breach of contract.

68

Exclusion clauses are strictly enforced ___ the party that drafter it.

Against.

69

Exclusion clauses must be given with how much notice?

Reasonable notice.

70

What is a common way to prove that someone agreed to an exclusion clause?

A signature.

71

Fundamental Breach

Consists of a breach that goes to the very "core" of the contract.

72

Unjust Enrichment

A cause of action that requires proof of an enrichment to the defendant, a corresponding deprivation to the plaintiff, and the absence of any juristic reason for the defendant's enrichment.

73

Restitution

Requires the defendant to give back the enrichment that it received fro the plaintiff.

74

Three elements of unjust enrichment:

1. An enrichment to the defendant.
2. A corresponding deprivation to the plaintiff.
3. The absence of any juristic reason for the defendant's enrichment.

75

What is always the remedy for unjust enrichment?

Restitution.

76

Expectation damages is "give me what I expected," while reliance damages is "give me what I lost." What is restitution?

"Give me what you received from me."

77

Unjust enrichment is typically use when there is no contract. True or false?

True.

78

Restitution only pays the amount that you would have ut in under the contract. True or false?

False, restitution pays market value.

79

What are the two restrictions to expectation damages?

Remoteness and mitigation.