Defenses and Remedies of a Contract Flashcards
(117 cards)
1
Q
What is voluntary consent in contract law?
A
It’s the genuine agreement of both parties to the terms of a contract.
2
Q
Why might an otherwise valid contract be unenforceable?
A
Because of a lack of voluntary consent or assent.
3
Q
What are four reasons voluntary consent may be lacking?
A
Mistake, misrepresentation, undue influence, or duress.
4
Q
What does a lack of voluntary consent indicate?
A
That there was no true ‘meeting of the minds.’
5
Q
What options does a party have if they can prove lack of voluntary consent?
A
They may either carry out the contract or rescind (cancel) it to avoid the transaction.
6
Q
What type of mistake can make a contract voidable?
A
Only a mistake of fact, not of value or quality.
7
Q
What is a material fact in the context of contract mistakes?
A
A fact that a reasonable person would consider important in deciding their course of action.
8
Q
What is a unilateral mistake of fact?
A
A mistake made by only one party in a contract.
9
Q
Is a contract enforceable when only one party makes a unilateral mistake?
A
Yes, unless the other party knew or should have known about the mistake or it involved a substantial mathematical error without gross negligence.
10
Q
Give an example of a unilateral mistake.
A
Elena types $1,500 instead of $2,500 in an offer and is bound by it if accepted.
11
Q
What is a bilateral mistake of fact?
A
A mutual misunderstanding by both parties about a material fact in the contract.
12
Q
Can a contract be rescinded due to a bilateral mistake?
A
Yes, either party can rescind the contract.
13
Q
What case illustrates a bilateral mistake?
A
Coleman and the Eklunds both misunderstood property restrictions and the court allowed rescission.
14
Q
What happens if contract terms have more than one reasonable interpretation?
A
The contract may be rescinded due to no true ‘meeting of the minds’.
15
Q
What is a mistake of value?
A
A misunderstanding about the future market value or quality of the contract’s subject.
16
Q
Is a contract enforceable if based on a mistake of value?
A
Yes, contracts are usually enforceable despite mistakes of value.
17
Q
Why are mistakes of value not grounds for rescission?
A
Because value is variable and each party assumes the risk of value change.
18
Q
What is fraudulent misrepresentation in contract law?
A
It refers to a knowingly false statement intended to mislead another party, invalidating voluntary consent and making the contract voidable.
19
Q
What are the elements required to prove fraudulent misrepresentation?
A
1) Misrepresentation of a material fact, 2) Intent to deceive, 3) Justifiable reliance, 4) Injury to the innocent party (for damages).
20
Q
How can fraudulent misrepresentation occur?
A
Through false statements of material fact or by conduct intended to mislead.
21
Q
Can a merger clause bar evidence of fraudulent inducement?
A
No, courts generally allow evidence of fraud even if a merger clause exists, to avoid encouraging deliberate fraud.
22
Q
What did the court decide in McCullough v. Allstate regarding fraud?
A
The court found genuine issues of material fact regarding fraud and ruled that the merger clause did not bar fraud claims.
23
Q
What is an example of misrepresentation by conduct?
A
Selling a horse unfit for competition while acting as if it is fit, as in Tom Selleck’s case.
24
Q
Are statements of opinion considered fraudulent misrepresentation?
A
Generally no, unless made by an expert and relied upon by a naive party.
25
What is scienter in the context of fraudulent misrepresentation?
It is 'guilty knowledge'—knowing a statement is false or making it recklessly without knowing if it's true.
26
When is reliance on a misrepresentation justifiable?
When the reliance is reasonable and the misrepresentation significantly influences the decision to contract.
27
Is injury required to rescind a contract based on fraud?
No, but injury is required to recover damages from fraud.
28
How are damages calculated in a fraud case?
Typically, the difference between the value as represented and the actual value paid; punitive damages may also be awarded.
29
What is undue influence in contract law?
Undue influence arises when one party can greatly influence another, overcoming that party’s free will and making the contract voidable.
30
Why does a contract formed under undue influence lack voluntary consent?
Because one party's free will has been overpowered by the influence of another.
31
In what types of relationships is undue influence commonly found?
Fiduciary relationships like physician-patient, parent-child, husband-wife, or guardian-ward.
32
How might a guardian exert undue influence over a ward?
By inducing the ward to enter into a contract that primarily benefits the guardian.
33
Is being elderly or impaired alone enough to prove undue influence?
No. There must be clear and convincing evidence that the person did not act out of their free will.
34
Does the existence of a fiduciary relationship automatically prove undue influence?
No. The relationship alone is not enough without evidence of improper influence.
35
What happens if the dominant party in a fiduciary relationship benefits from the contract?
A presumption of undue influence arises, and the dominant party must show utmost good faith.
36
What must the dominant party prove when undue influence is presumed?
That they acted in good faith and did not improperly influence the other party.
37
When will a court presume undue influence existed?
When a contract enriches the dominant party in a fiduciary relationship.
38
What is duress in contract law?
Duress occurs when one party is forced into a contract through threats, making the agreement involuntary.
39
What forms of pressure can constitute duress?
Threats, blackmail, or extortion used to force agreement to a contract.
40
Is duress a defense to enforcing a contract?
Yes, duress is both a defense to enforcement and grounds for rescission of a contract.
41
What must be proven to establish duress?
There must be a threat to do something the threatening party has no legal right to do.
42
Must the threatened act be wrongful or illegal to qualify as duress?
Yes, the act must be wrongful or illegal and prevent the victim from exercising free will.
43
Does a threat to exercise a legal right, like suing, count as duress?
No, a threat to exercise a legal right usually does not constitute duress.
44
How does duress affect the validity of a contract?
It renders the contract voidable because consent was not given freely.
45
What does a breach of contract entitle the nonbreaching party to do?
It entitles the nonbreaching party to sue for monetary damages.
46
What is the primary purpose of contract law damages?
To compensate the nonbreaching party for the loss of the bargain.
47
How do contract law damages differ from tort law damages?
Contract law damages compensate for lost expectations, while tort law damages compensate for harm suffered due to wrongful acts.
48
What is the goal of awarding damages in contract law?
To place the innocent party in the position they would have been in had the contract been fully performed.
49
What are two major challenges with collecting damages through a court judgment?
Litigation can be expensive and time-consuming, and court judgments may be hard to enforce if the breaching party lacks sufficient assets.
50
Why do most parties settle their lawsuits for damages before trial?
Because litigation is costly, time-consuming, and outcomes may be uncertain or difficult to enforce.
51
What are the four broad categories of damages awarded by courts?
Compensatory, Consequential, Punitive, and Nominal damages.
52
What are compensatory damages in contract law?
Damages that compensate the nonbreaching party for actual, direct losses caused by the breach.
53
What do compensatory damages aim to do?
They aim to put the injured party in the position they would have been in if the contract had been fully performed.
54
What are incidental damages?
Expenses directly caused by a breach, such as costs incurred to obtain performance from another source.
55
In a sale of goods contract how are compensatory damages typically measured?
By the difference between the contract price and the market price at the time of the breach.
56
In a sale of land what is the usual remedy for a seller's breach?
Specific performance—awarding the buyer the property bargained for.
57
What measure of damages applies when a buyer breaches a contract to purchase land?
The difference between the contract price and the market price of the land.
58
What is the minority rule for land sale breaches by the seller?
Damages are limited to a refund of the down payment and expenses incurred.
59
What compensatory damages are available when a construction owner breaches before performance?
The contractor may recover only the profits that would have been made on the contract.
60
What damages can a contractor recover if the owner breaches during construction?
The contractor can recover profits plus costs already incurred.
61
What damages apply when the owner breaches after construction is complete?
The contractor can recover the entire contract price plus interest.
62
What is the measure of damages when a contractor breaches a construction contract?
The cost of completion, including compensation for delay.
63
What are consequential damages?
Foreseeable damages that result from a party’s breach due to special circumstances beyond the contract.
64
When can a nonbreaching party recover consequential damages?
When the breaching party knew or should have known about the special circumstances.
65
What are punitive damages?
Damages intended to punish and deter wrongdoing, rarely awarded in contract cases.
66
When might punitive damages be awarded in a contract case?
Only if the breach also involves a tort, such as fraud.
67
What are nominal damages?
Small damages awarded when no actual financial loss occurs, but a legal wrong has happened.
68
Why might a party pursue nominal damages?
As a matter of principle, to establish that a breach occurred even without actual loss.
69
What is a liquidated damages provision in a contract?
A provision specifying a certain dollar amount to be paid in the event of a future breach or default.
70
How do liquidated damages differ from penalties?
Liquidated damages are designed to compensate the nonbreaching party, while penalties are designed to punish the breaching party.
71
Are liquidated damages clauses enforceable?
Yes, liquidated damages clauses are usually enforceable, provided they meet certain criteria.
72
When is a liquidated damages provision enforceable?
It is enforceable if damages were difficult to estimate at the time of contract formation and the amount is a reasonable estimate, not excessive.
73
What two questions must a court answer to determine if a provision is for liquidated damages or a penalty?
1) Was it apparent that damages would be difficult to estimate in the event of a breach? 2) Was the amount a reasonable estimate and not excessive?
74
Can a court enforce a provision that is a penalty?
No, if a court finds that a provision is a penalty, it will not enforce it, and recovery will be limited to actual damages.
75
In the case Kent State University v. Ford what was the amount of liquidated damages Ford was required to pay?
Ford was required to pay $1.2 million in liquidated damages.
76
Why did Kent State enforce the liquidated damages clause in Ford’s contract?
Because it was difficult to estimate the damages resulting from Ford’s breach, and the amount was considered reasonable to compensate for Kent State’s losses.
77
Why did the court find the liquidated damages clause in Kent State v. Ford reasonable?
The damages were difficult to determine, and the amount reflected the actual losses Kent State would incur, such as decreased ticket sales and coaching search costs.
78
What was one of the factors that led to the determination that the damages were reasonable in Kent State v. Ford?
The fact that Ford’s breach caused a loss in market value for Kent State, as seen in Ford's higher salary at Bradley University.
79
What is the difference between liquidated damages and actual damages?
Liquidated damages are predetermined in a contract, while actual damages are based on the actual losses sustained due to the breach.
80
In the Kent State v. Ford case why would alumni support diminish if Ford breached his contract?
The team would likely perform worse without Ford, leading to less interest and financial support from alumni.
81
Why did Kent State desire a long-term contract with Ford?
Long-term employment was necessary for stability in the program, which was important for recruitment, retention of staff, and community support.
82
Why is it difficult to assess the damages resulting from Ford’s breach of contract?
The damages were not easily quantifiable, as they involved factors like ticket sales, recruitment, and coaching search costs, which are difficult to measure in advance.
83
What happens when a breach occurs in a sales or lease contract?
The aggrieved party seeks remedies for the breach.
84
How are remedies for breach of contract under the UCC different from common law contracts?
Under the UCC, remedies are cumulative, meaning the aggrieved party is not limited to one exclusive remedy.
85
Can an aggrieved party under the UCC seek multiple remedies for a breach?
Yes, the UCC allows the aggrieved party to seek multiple remedies for a breach.
86
What is the role of remedies in sales and lease contracts?
Remedies help the aggrieved party obtain compensation or other relief when the contract is breached.
87
What factors determine the remedies available to the seller or lessor when the buyer or lessee breaches?
The remedies depend on the possession of the goods, whether the goods are in transit, and whether the buyer or lessee has accepted or rejected the goods.
88
What is the right of the seller or lessor when the buyer or lessee breaches the contract?
The seller or lessor can cancel the contract, with notice to the buyer or lessee, discharging the seller or lessor’s obligations but not the buyer’s or lessee’s.
89
Can the seller or lessor withhold delivery if the buyer or lessee breaches?
Yes, the seller or lessor can withhold delivery or discontinue performance if the buyer or lessee is in breach, including non-payment or insolvency.
90
What can the seller or lessor do if they have possession of the goods when the buyer or lessee breaches?
The seller or lessor can resell or dispose of the goods in good faith and in a commercially reasonable manner, and retain any profits.
91
What must the seller do before reselling goods after a breach?
The seller must give the original buyer reasonable notice of the resale, unless the goods are perishable or will rapidly decline in value.
92
What happens if the seller or lessor resells goods for less than the contract price?
The seller or lessor can hold the buyer or lessee liable for any loss, which is the deficiency between the resale price and the contract price.
93
What can a lessor do in a lease contract after a breach by the lessee?
The lessor can lease the goods to another party and recover damages, including unpaid lease payments and any deficiency between the original and new lease payments.
94
What can the seller or lessor do with unfinished goods at the time of breach?
The seller or lessor can either cease manufacturing and sell the goods for scrap or complete the manufacture and resell them, holding the buyer or lessee liable for any deficiency.
95
What is the seller's or lessor's responsibility when dealing with unfinished goods after a breach?
The seller or lessor must use reasonable commercial judgment to mitigate the loss and obtain maximum value from the unfinished goods.
96
What damages can the seller or lessor recover if the buyer refuses to accept the goods?
The seller or lessor can recover damages equal to the difference between the contract price and the market price at the time of tender, plus incidental damages.
97
What happens if the ordinary measure of damages is insufficient for the seller or lessor?
If the ordinary measure is inadequate, the seller or lessor can recover lost profits, including reasonable overhead and other expenses.
98
Can the seller or lessor stop delivery of goods in transit if the buyer is insolvent?
Yes, the seller or lessor can stop delivery if the buyer is insolvent, regardless of the quantity of goods.
99
What happens if the buyer is in breach but not insolvent when the goods are in transit?
The seller or lessor can stop delivery only if the quantity of goods shipped is at least a carload, truckload, planeload, or a larger shipment.
100
What must the seller or lessor do to stop the delivery of goods in transit?
The seller or lessor must notify the carrier or bailee in a timely manner to return or hold the goods for the seller or lessor.
101
What is the seller's or lessor's liability when stopping delivery in transit?
The seller or lessor is liable to the carrier for any additional costs incurred due to stopping delivery.
102
Beryl enters into a contract with Clay for a guided tour of Deep Canyon. Clay represents that he is an experienced, knowledgeable guide, when in reality he has never been in the canyon. Most likely, Beryl
might recover damages for the mistake.
can rescind the deal based on fraudulent misrepresentation.
must comply with the contract because the representation is an opinion.
could exert duress to obtain a new guide.
can rescind the deal based on fraudulent misrepresentation
Clay has committed a unilateral mistake of fact. Normally no relief would be allowed, but in this case, Clay knew he was misrepresenting his knowledge and experience. Beryl is well within her rights to rescind the deal.
103
Restaurant Food Inc. intends to sell a certain quantity of beef for $1,100. In an e-mail, however, the firm’s sales representative mistakenly offers to sell the beef to Steak House for $1,000. Steak’s manager immediately accepts. The seller
is bound to the deal but can charge the intended price.
can rescind the deal.
is bound to the deal at the offered price.
can rescind the deal and recover damages for the mistake.
is bound to the deal at the offered price
A unilateral mistake is made by only one of the parties. In general, a unilateral mistake does not give the mistaken party any right to relief from the contract. Normally, the contract is enforceable. This general rule has at least two exceptions. The contract may not be enforceable if (1) the other party to the contract knows or should have known that a mistake of fact was made, or (2) the error was due to a substantial mathematical mistake in addition, subtraction, division, or multiplication and was made inadvertently and without gross (extreme) negligence. If, for instance, a contractor’s bid was significantly low because the contractor made a mistake in addition when totaling the estimated costs, any contract resulting from the bid normally may be rescinded.
104
At an auction, Ben bids on a 1957 Chevy coupe, believing that it is worth more than the price asked. When the car proves to need more repairs than Ben estimated, and thus is worth less as is, Ben is
not liable on the bid because he underestimated the cost of repairs.
still liable on the bid.
not liable on the bid because the auctioneer misrepresented the value.
not liable on the bid because the need for repair is not a material fact.
still liable on the bid
If a mistake concerns the future market value or quality of the object of the contract, the mistake is one of value, and the contract normally is enforceable. The reason that mistakes of value do not affect the enforceability of contracts is that value is variable. Depending on the time, place, and other circumstances, the same item may be worth considerably different amounts. When parties form a contract, their agreement establishes the value of the object of their transaction—for the moment. Each party is considered to have assumed the risk that the value will change in the future or prove to be different from what they thought. Without this rule, almost any party who did not receive what they considered a fair bargain could argue mistake. Ben believed that the car was worth more than he paid; he has made a mistake of value, especially when he must pour more money into it than expected. Additionally, items sold at auction are generally sold in “as-is” condition.
105
Open Range agrees to sell Pinewood Ranch a remote parcel of land for $15,000. Both parties believe the land to be worthless, but beneath it is shale rock containing oil. A court would
rescind the contract on the basis of a mistake of opinion.
not rescind the contract.
rescind the contract on the basis of a mistake of quality.
rescind the contract on the basis of a mistake of value.
not rescind the contract
In this case both parties have assumed that the land is essentially worthless. A bilateral mistake is a “mutual misunderstanding concerning a basic assumption on which the contract was made.” Note that, as with unilateral mistakes, the mistake must be about a material fact. When both parties are mistaken about the same material fact, the contract can be rescinded by either party. The court would refer this back to the parties and let the two of them decide whether they want to go through with the deal.
106
Bee is an employee of Credit Agency Inc. On the termination of Bee’s position, Credit pays Bee $10,000 to agree not to disclose the employer’s confidential information. Later, Bee sells the information to Debt Records LLC for $100,000. In a suit for breach, Credit is most likely to recover
all future profits from Debt.
$10,000 from Bee.
$110,000 from Bee.
$100,000 from Debt.
$10,000 from Bee
Damages that compensate the nonbreaching party for the “loss of the bargain” are known as compensatory damages. These damages compensate the injured party only for damages actually sustained and proved to have arisen directly from the loss of the bargain caused by the breach of contract. They simply replace what was lost because of the wrong or damage and, for this reason, are often said to “make the person whole.” An award of the $100,000 received for the sale of the information would have left Credit better off than if the breach had not occurred.
107
Len contracts to work for Media Corporation during May for $4,500. On April 30, Media cancels the contract. Len then accepts a similar job with New Ads Inc., which pays $3,500. Len files a suit against Media. As compensatory damages, Len can recover
$1,000.
$0.
$3,500.
$4,500.
$1,000
$1,000 is the difference between the amount Len can earn at New Ads as opposed to the amount Len would have earned at Media. Damages that compensate the nonbreaching party for the “loss of the bargain” are known as compensatory damages. These damages compensate the injured party only for damages actually sustained and proved to have arisen directly from the loss of the bargain caused by the breach of contract. They simply replace what was lost because of the wrong or damage and, for this reason, are often said to “make the person whole.” Len may also be able to recover any expenses incurred to find a new job as incidental damages. An award of more than the difference between the two jobs would leave Len better off.
108
Erma enters into a contract to buy a tract of riverfront property from Forest Acres to build and sell a residential development. Forest Acres fails to close the sale. Erma’s remedy is most likely
specific performance.
the difference between the contract and market prices of the land.
nothing—Forest Acres still owns the land.
the amount that Erma invested in the project to the date of the closing.
specific performance
In this case, specific performance demands that Forest Acres close the sale. The equitable remedy of specific performance calls for the performance of the act promised in the contract. This remedy is attractive to a nonbreaching party because it provides the exact bargain promised in the contract. A court may grant specific performance to a buyer in an action for a breach of contract involving the sale of land. In this situation, the legal remedy of monetary damages may not compensate the buyer adequately. After all, every parcel of land is unique: the same land in the same location obviously cannot be obtained elsewhere. Only when specific performance is unavailable (such as when the seller has sold the property to someone else) will monetary damages be awarded instead.
109
Renew Inc. contracts to resurface the pools at Swim Park by June 1. Renew knows that if performance is not timely, Swim Park will have to delay its seasonal opening. Renew finishes the job June 15. In a suit for breach, Swim Park can recover
the loss of profit from the delayed opening.
nothing—the work is done.
the cost of the new pools.
the difference between the contract and market prices for the work.
the loss of profit from the delayed opening
Foreseeable damages that result from a party’s breach of contract are called consequential damages, or special damages. They differ from compensatory damages in that they are caused by special circumstances beyond the contract itself. They flow from the consequences, or results, of a breach. For the non-breaching party to recover consequential damages, the breaching party must have known (or had reason to know) that special circumstances would cause the non-breaching party to suffer an additional loss. Renew should have known that Swim Park needed the work to be completed by June 1 to open on time. The damage to Swim Park is the lost profit.
110
Steel Buildings Inc. agrees to sell four portable garages to Truck Service Center. Five days later, Truck refuses delivery and cancels the contract. Steel is entitled to
resell the garages and recover any damages from Truck.
recover any damages from Truck but not resell the garages.
resell the garages but not recover any damages from Truck.
force Truck to accept the garages.
resell the garages and recover any damages from Truck
When a buyer or lessee breaches or repudiates (fails to pay) the contract while the seller or lessor is in possession of the goods, the seller or lessor can resell or dispose of the goods. Any resale of the goods must be made in good faith and in a commercially reasonable manner. The seller must give the original buyer reasonable notice of the resale, unless the goods are perishable or will rapidly decline in value [UCC 2–706(2), (3)]. The seller can retain any profits made as a result of the sale and can hold the buyer or lessee liable for any loss [UCC 2–703(d), 2–706(1), 2A–523(1)(e), 2A–527(1)]. (Here, a loss is any deficiency between the resale price and the contract price.)
111
Builder Inc. and Concrete Supply Company enter into a contract for a sale of cement. Concrete delivers, but Builder does not pay. Concrete can recover as damages
the purchase price plus incidental damages.
whatever amount Concrete wishes to claim.
the market price at the place at which Concrete delivered the goods plus incidental damages.
any profit lost minus any loss avoided.
the market price at the place at which Concrete delivered the goods plus incidental damages.
If a buyer repudiates a contract or wrongfully refuses to accept the goods, a seller can bring an action to recover the damages sustained. Ordinarily, the amount of damages equals the difference between the contract price or lease payments and the market price at the time and place of tender of the goods, plus incidental damages. This is the only way to make Concrete whole, given the fluctuations in the price of concrete.
112
Keisha contracts to buy appliances from Crazy Carlos Appliances. Keisha agrees to pay half within 5 days of the order and the remainder upon delivery. Keisha fails to pay the first 50%. Carlos can:
obtain specific performance.
withhold delivery.
claim the difference between market price and purchase price.
recover as damages the full purchase price plus incidental damages.
withhold delivery
Carlos still had the appliances in his warehouse. Carlos is entitled to withhold delivery of the appliances until Keisha pays at least the 50% she agreed to as partial payment. He can then withhold final delivery, placement in the house, until she makes the final payment as well.
113
Fiesta LLC contracts to buy 1,000 balloons from Gas Bags Inc. for $1 per item. When the market price decreases to 50 cents per balloon, Fiesta refuses to go through with the deal. Gas Bags can recover
$0.
$500.
$1,000.
$1,500.
$1,000
If a buyer repudiates (fails to pay) a contract or wrongfully refuses to accept the goods, a seller can bring an action to recover the damages sustained. Ordinarily, the amount of damages equals the difference between the contract price or lease payments and the market price at the time and place of tender of the goods, plus incidental damages. In other words, even if Fiesta refuses to go through with the deal, they are still liable for the $500 difference between the contract price and what Gas Bags can get for the balloons on the market today.
114
Real Stones Inc. and Sparkling Jewelry stores enter into a contract for a sale of gemstones. The seller fails to deliver. Sparkling can recover as damages the difference between
the actual price and the hoped-for price.
any loss avoided and any profit gained.
the current prices in the contracting parties’ places of business.
the contract price and the market price.
the contract price and the market price
If a seller fails to deliver the goods, the buyer can sue for damages. For the buyer, the measure of recovery is the difference between the contract price and the market price of the goods at the time the buyer learned of the breach. The market price or market lease payments are determined at the place where the seller or lessor was supposed to deliver the goods. The buyer or lessee can also recover incidental and consequential damages less the expenses that were saved as a result of the breach [UCC 2–713, 2A–519].
115
Office Express orders 100 smartphones from Electronic Supply for $500 per phone. Electronic Supply sends 100 flip phones instead. Office Express has the right to:
stop the delivery of the good in transit.
reject the shipment.
replevy the goods.
revoke acceptance.
reject the shipment
If a seller fails to deliver the goods ordered, the buyer can reject the shipment. The buyer must reject the shipment within a reasonable time and notify the seller of the rejection and the reason for the rejection. The buyer may also cancel the contract or sue for damages.
116
Art and Antiquities, LLC orders 5 pieces of rare imperial jade from Art Brokers, Inc. In order to meet the terms of the sale, Art and Antiquities pays in full prior to shipment. When the shipment does not arrive in the expected time, Art and Antiquities contacts Art Brokers who responds that they have decided not to sell and offers to return the payment. Art and Antiquities can:
reject the next shipment from Art Brokers.
replevy the goods.
recover damages equal to the difference between the agreed price and the market price.
obtain specific performance.
obtain specific performance
A buyer can obtain specific performance if the goods are unique or monetary damages are not sufficient to cover the injury. In this case the items are clearly unique: imperial jade is unique and the carvings that exist are very rare. They clearly either wanted the items for their own collection or to resell to very discriminating buyers. No amount of monetary damages would cover for their loss of reputation or the loss of the customers.
117
ABC Hardware orders a shipment of hammers and saws from Tools R Us for a special DIY event that they are planning. ABC agrees to pay for the tools on delivery. Tools R Us accepts the order but fails to deliver. ABC Hardware then purchases the hammers and saws from Enzo’s Tools, but the tools do not arrive in time for the event. ABC can:
obtain specific performance.
recover consequential damages.
do nothing.
obtain the hammers and saws in event of insolvency.
recover consequential damages
Consequential damages to compensate for indirect losses (such as lost profits) resulting from the breach that were reasonably foreseeable at the time of contract formation. Both ABC and Tools R Us knew that the items were needed for a special event. With that opportunity missed, ABC lost the profits they expected.
