contracts II - damages Flashcards Preview

Contracts II Esteban > contracts II - damages > Flashcards

Flashcards in contracts II - damages Deck (47):

Remedies for Breach

1 Specific performance
2 Substantial Relief


Specific Performance

* Court orders completion of the promise
* helps avoid comparing and determining value
* easy if seller in possession and delivery is possible


substantial relief

money damages in place of promise


Purpose of Remedies

to protect expectation interests, reliance interests and restitution interests


expectation interests

interest in having the benefit of the bargain by putting non-breaching party in as good a position as they would have been in had the contract been performed
** where the plaintiff would be if defendant performed


reliance interests

interest in being reimbursed fro loss caused by reliance on the contract by putting the non-breaching party in as good a position as they would have been had the contract not been made
** where the plaintiff would be if promise never made


restitution interest

interest in restoring to the non-breaching party any benefit they conferred on the breaching party
** returning benefit plaintiff delivered to defendant
* injured party bares burden of proving breach
* injured party must prove loss
* injured party can't recover loss if they could have avoided loss


when is restitution interest appropriate

non-contract remedy, used when the contract fails and is not enforceable, could be an illusory promise or other defect


measure of expectation damages (formula)

loss in value from other party's performance caused by its failure or deficiency, any loss including incidental or consequential loss caused by breach, cost or other loss he avoided
DAS = VP - VR - CA + IC = value promise - value delivered - costs avoided + incidental costs
DAS + VP - C - CA + IC = value promise - cover - costs avoided + incidental costs


measure of reliance damages (formula)

damages based on reliance on contract including expenditures made in preparation of performance less any loss that the party in breach can prove injured party would have suffered if contract performed
DAS = VP - VD - E + CA = value promise - value delivered - expenses + costs avoided


when is specific performance granted

1 money damages are inadequate
2 proof of loss is impractical (hard to calculate)
3 not possible to get valid substitute
4 item is objectively unique
5 real estate transactions


injunctive relief

* court orders a party to perform contract
* used when it cleaner, there's minimal court supervision, and it doesn't force anyone to act


negative injunction

when the court orders a party not to do something


objectively unique

item is special to everyone, unique because people will pay a lot for it


subjectively unique

* item is unique or special to one person
* can also be unique when used by a specific person such as an animal trainer


tortuous interference

party knows of the existence of a contract and intentionally interferes with the contract


factors affecting adequacy of damages

1 difficulty of proving damages
2 difficulty of procuring suitable substitute with money award
3 likelihood that award of damages will not be collected


specific performance not granted if

1 contract induced y mistake or unfair practices
2 relief would cause unreasonable hardship
3 exchange is grossly inadequate or terms of the contract are unfair
4 if it is against public policy
5 it imposes enforcement and supervision burden on court
6 court has to force party to perform against their will


efficient breach

when a party intentionally breaches because they will make more money even if they are liable for the contract
in some cases both parties benefit from the breach


negative injunction

when a court orders a party not to do something


non-compete agreements

party agrees not to compete with other party, usually employee employer relationship but can be from buyout or business merger


proof of loss

injured party bears burden of proving loss caused by breach, that it was unavoidable, and value of loss


measure of damages for non-delivery or repudiation by seller (formula)

difference between value when buyer learns of beach and contract price plus incidental and consequential damages minus cost avoided
DAS = MV - CV + ID - CA = market value - contract value + incidental damages - costs avoided


anticipatory repudiation

when a party notifies the other party in advance that they intend to breach the contract


non-breaching party's options after learning of an anticipatory repudiation

1 give breaching party a reasonable time to perform
2 resort to any remedy for breach immediately or when performance is due
3 suspend his own performance or identity goods to the contract notwithstanding breach or salvage unfinished goods



substitute goods or services obtained by the non-breaching party to substitute goods or services due under the contract
when value fluctuates during life of contract cover gives non-breaching party amount to use for damages


measure of buyer's damages after cover (formula)

buyer may recover the difference between contract price and price of cover plus incidental and consequential damages
DAS = C-UCV + ID = cover - unpaid contract value + incidental damages


market value

value of the item
when calculating damages use market value at the time the non-breaching party learns of the breach


measure of buyer's damages for receipt of non-conforming goods (formula)

the difference between value when accepted and value they would have had if warranted, unless special circumstances show a different amount, plus incidental and consequential damages
DAS = CV - VD - CA + ID = contract value - value delivered - costs avoided + incidental damages


wasteful demolition

when the cost of repair is extreme in relation to its value


measure of seller's damages for non-acceptance or repudiation

difference between market value when breach occurs and the unpaid contract price plus incidental damages minus expenses saved
DAS = MV - UCP + ID - CA = market value - unpaid contract price + incidental damages - costs avoided


measure of damages when buyer breaches and seller resells (formula)

difference between sale price and contract price plus incidental damages minus expenses saved
DAS = CP - SP - CA = contract price - sale price - costs avoided


avoidability as a limitation on damages

damages are not recoverable for loss that the injured party could have avoided
the injured party can still recover loss if he made reasonable but unsuccessful efforts to avoid the loss


are variable costs used in damage calculation

no, attorney's do not use variable costs in calculations,
accountants use variable costs in calculations


high volume dealer

a seller with unlimited supply of products who is able to sell as many products as the market allows


lost volume sale test

would the next sale have been made even without the beach?


incidental damages

charges, expenses, or commissions incurred as a result of the breach (not as a result of the contract)


unforeseaability of damages (foreseeability limit)

1 damages not recoverable if breaching party could not foresee the damages
2 loss foreseeable if it is part of the ordinary course of business or special circumstances the breaching party has reason to know about
3 court may limit recover to reliance in the interest of justice


limitation on damages (certainty of loss limit)

damages recoverable up to the amount that can be established with reasonable certainty


what are the limits on consequential damages

1 foreseeability - was the loss foreseeable
2 mitigation - did the plaintiff find ways to minimize loss
3 certainty - can plaintiff prove the amount of damages


specific restitution - reclamation

the right to keep any profit on resale or restitution of value of goods. Value is higher but supplier gets the market value no the contract value.


American Rule on Attorney's Fees

each party bears the cost of litigation unless statute or contract shifts one party's fees to another


prevailing party issue

some contract or statutes award attorney fees to prevailing party but prevailing party is a loosely defined term.


nominal damages

party wins case but recovers token damages - can be useful in determining prevailing party.


availability of damages

injured party has a right to damages for breach by a party against whom the contract is enforceable unless the claim has been suspended or discharged.


punitive damages

are not recoverable for breach of contract but can be recovered under tort law if applicable to conduct of defendant


liquidated damages

amount fixed in contract that determines the damages recoverable as a result of breach. court will not enforce if the amount is excessive or meant as punishment or punitive damages