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Flashcards in Contract - Remedies Deck (16):

What are the monetary damage remedies under common law?

  1. Expectation damages
  2. Restitutionary damages
  3. Reliance damages


What are expectation damages?

  • the default cts award
  • Defined:
    • the aggreived pty will be entitled to the amount that would restore him to the position he would have been in had the contract been fully performe


How are expectation damages calculated?

Difference from what you expected to get & what you actually got

+ any incidental & consequential costs generated by the breach

- any payments receoved from the breaching pty

- any costs saved as a result of the breach


= Expectation Damages of the aggreived pty


What are the limitations on the right to recover expectation damages?********

The aggreived pty may not recover the full amount in the following situations:

  • Where the cost of performance greatly exceeds the mkt value of the performance
  • Where expectation damages cannot be calculated with reasonable certainty
  • Where damages are unforeseeable
  • Where damages can be mitigated


What are reliance damages and where are they available?

Made to restore the pty to the position he was in prior to the K


Available where expectation damages are not available such as when they are too uncertain or speculative


How are reliance damages measured?

Any expenditures made in preparation of performance or in actually performing (out of pocket expenditure)

- (minus) any loss that the breaching pty can prove that the aggreived pty would have suffered even if the K woul dhave been fully performed


What are restitutionary damages?

It is the value of the benefits conferred upon the other pty in the transaction


How are restitutionary damages measured?

It is measured in the ct's discretion by either:

  • the reasonable value or cost of the benefit conferred OR
  • the extent to which the other pty's property has increased in value b/c of the performance rendered


When would you elect to recover restitutionary damages?

when it would exceed the value it would recover in expectation damages

  • i.e. - in a losing K

Only availbele when:

  • the aggreived pty has partially performed
  • Not available where the aggreived pty has fully performed


What are liquidated damages provisions?

Parties are free to include this clause to provide for damages of their own choosing in the event of a breach.

Provisions are:

  • Enforceable - if ct finds it valid to compensate for breach
  • Unenforceable - ct finds it constitute a penalty to punish a breach



What is the test to determine whether a liquidated damages clause is valid?

  1. Did the pty's intend for the clause to operate as a liquidated damages clause or a penalty? (modern decisions downplay this importance & move to #2)
  2. Was the clause reasonable at the time of contracting in relation to the anticipated item?
    • ASK - Whether there was an anticipated harm that would be difficult to prove
  3. Was the clause reasonable in relation to the tharm & losses that actually occurred due to the breach?
    • split whether you can recover if 1 & 2 are satisfied but no actual harm


What is the difference between anticipated harm vs. actual harm?

Spli in the cts to enforce the clause if anticipate harm (prong #2) satisfie dbut actuual harm (prong #3) not satisfied:

  • Majority rule
    • the clause is still valid & enforceable
  • Minority Rule
    • clause an unenforceable penalty

If deemed a penalty, that provision will be stricken, & recovery reverts to the default of remedies & damages


What are the monetary damages available under the UCC?


What are the seller's remedies under the UCC?

Depends on whether the goods have been delivered & accepted by the buyer:

  • Delivered & accepted
    • seller remedy is for the K price
  • Not delievered & accepted (meaning buyer wrongfully breached)********
    • seller has resold to 3rd pty on the mkt
      • damages are the difference between the K price & the resale price
    • seller has not resold
      • damages are the difference between the K price & the mkt pric


What is a lost volume seller and how do they recover damages?

A lost volume seller is one whose supply of goods exceeds the demand for the same. In such case, the above differential formulas will not fully compensate for the seller’s damages.

UCC permits:

  • recover the profit they would have made on the lost sale

How to recover? Must show:

  1. That he could have made the sale to both the breaching buyer & the resale buyer
  2. That it would have been profitable to make both sales
  3. That it would have made the additional sale absent the buyer's breach


What are incidental remedies for a seller?


They are the cost associated with getting stuck with the goods + the cost of resale