MBE Contracts Flashcards
1
Q
Offer
A
an objective manifestation of a present intent to contract
_______________
- a promise, undertaking, or commitment
- definite and certain terms
- communicated to the offeree
- create the power of acceptance in the offeree
_____________
Offer must give offeree a reasonable expectation that the offeror is willing to enter into a K
2
Q
Acceptance
A
a clear expression of assent to the terms of the offer
3
Q
UCC and Common Law Offer
Communication to an Identified Offeree
A
means that an offeree must:
- know about the offer
and
- have the power to accept it
4
Q
Unilateral Contract
A
Offer expressly requires performance as the only manner of acceptance ex: cash reward for finding lost dog
5
Q
Bilateral Contract
A
Anything other than a Unilateral K (offer that is open as to the method of acceptance) ex: i promise to pay you $100 if you promise to paint my house
6
Q
Quasi Contract
A
Not a contract but an equitable remedy
- Arises when there is an unenforceable agreement, but one side has realized a benefit
Look For:
- P has conferred a benefit to D
- P reasonably + expects to be paid
- D knowingly + accepted the benefit
- D will be unjustly enriched if P is not compensated
7
Q
Void Contract
A
Contract never had any legal effect ex: contract for an illegal conduct
8
Q
Unenforceable Contract
A
An otherwise valid contract, but a defense applies rending it unenforceable (incapacity, SOF, etc)
9
Q
Formation Defenses
A
DUMIIS
duress
unconscionability
misrepresentation/fraud
incapacity
illegality
statute of frauds
Make the K UNENFORCEABLE
10
Q
Common Law applies to these contracts
A
governs contracts for services and real estate
NOT SALE OF GOODS
11
Q
UCC Article 2 applies to these contracts
A
governs contracts for the sale of goods
12
Q
Predominant Purpose Rule
A
K involves both goods and services, apply UCC or Common Law based on whichever plays a bigger role in the contract
called “mixed contracts”
exception: If K terms divide payment between goods & services, apply the UCC to goods and common law to the remainder
13
Q
Common LAW Offer:
Certain & Definite Terms
A
1. parties
2. subject
3. price
and
4. quantity
14
Q
UCC OFFER
Certain & Definite Terms (UCC)
A
Quantity - must be certain or capable of being made certain
- For requirements/output contracts, cannot unreasonably increase quantity disproportionate to past practice
Subject - should be made clear
Price doesn’t need to be stated.
_______________________________
Missing terms are ok if it appears parties intended to make a K and there is reasonably certain basis for giving a remedy
15
Q
Common Law Offer
What terms are needed for real estate to be certain and definite?
A
- price
and
- identification of the land
16
Q
Advertisements
A
Usually are not considered offers.
EXCEPT WHEN BOTH:
- highly specific about the quantity #
and
- clearly indicate who may accept
17
Q
Revocation of an Offer
A
Terminates:
the offer
and
the offeree’s power of acceptance
18
Q
Irrevocable Offers
A
FOODR
Firm Offers (UCC)
Option contracts
Detrimental Reliance by the offeree
19
Q
How do you revoke an offer?
A
An unambiguous statement by the offeror to the offeree
Constructive Revocation: offeree becomes aware of the offeror’s conduct or statement indicating an unwillingness or inability to contract
20
Q
When is a revocation effective?
A
Upon the offeree’s receipt
21
Q
When can an offer be revoked?
A
anytime before the offer is accepted
22
Q
Limitations on Revocation - Irrevocable Offers
Option Contract
A
a promise to keep an offer open in exchange for consideration
23
Q
Limitations on Revocation - Irrevocable Offers
UCC Firm Offer
A
Under UCC IRREVOCABLE OFFER where:
- Offeror is a Merchant (or any business person) makes
- Written Assurances that offer will remain open
- For reasonable time <em><u>but no more than 90 days </u></em>
-
No consideration needed to keep offer open
* This is similar to Option Contract, but applies only to the UCC*
24
Q
Limitations on Revocation - Irrevocable Offers
Detrimental Reliance by the Offeree
A
reliance must be reasonable
25
Limitations on Revocation - Irrevocable Offers
Unilateral Contracts
**START OF PERFORMANCE** makes the offer **irrevocable** for **a reasonable time** to **complete performance**
## Footnote
***start of performance must go beyond mere preparation***
26
Rejection of Offer
terminates: 1. the offer and 2. the offeree's power of acceptance
27
Counteroffer
Serves as a rejection of the offer, terminates the original offer and becomes a new offer
28
Bargaining vs Counteroffer
Bargaining is not a counteroffer
**Bargaining** = response to offer is _a question_
**Counteroffer**= response to offer is _a statement_
29
Conditional Acceptance
Serves as a
* **rejection of the offer,**
* **terminates the original offer**
* and
* **becomes a new offer.**
*Look for these terms: "if", "only if", "but", " "provided" "so long as" "on the condition that"*
30
Acceptance w/ Additional Terms (Common Law)
serves as a rejection b/c common law requires the acceptance to mirror the terms of the offer
31
Common Law Mirror Image Rule
acceptance must mirror the terms of the offer
32
UCC Acceptance w/ Additional or Different Terms
Acceptance that proposes additional or different terms is valid, unless acceptance is expressly conditioned on assent to the additional or different terms.
Acceptance can be by made under UCC by:
1. Promising to ship goods
2. Promptly shipping good
* Acceptance and breach if nonconforming goods sent
* Will be Counteroffer if nonconforming goods sent + an accomodation (we sent these goods instead as an accomodation)
33
Do the Additional Terms automatically become part of a UCC contract?
**_Yes,_** **additional terms generally become part of the contract (both parties must be merchants).**
**_UNLESS_**
* New terms materially alter existing terms
* Offer expresssly limits acceptance
* Offeror rejects in reasonable time
34
Acceptance By Prompt Shipment
a **merchant** may accept an offer to buy goods by either
(1) **providing a promise to ship goods** (usually by written confirmation)
OR
(2) **promptly shipping conforming goods**
35
According to the mailbox rule, when are offers effective?
upon receipt
36
According to the mailbox rule, when are acceptances effective?
upon dispatch unless the offer says something different, then the offer controls.
37
According to the mailbox rule, when is acceptance effective w/ option contracts?
upon receipt
38
According to the mailbox rule, what happens when you send an acceptance and a rejection?
the first to arrive is controlling
39
According to the mailbox rule, when is a revocation effective?
upon receipt
40
In a Unilateral Contract how do you accept by Performance?
complete performance required to accept an offer
41
In a unilateral contract is the offeree required to give notice upon starting performance?
**_No_**
but **must notify** the offeror *within a reasonable time* **upon completion**
42
In a bilateral contract, is partial performance considered acceptance?
Yes, partial performance gives rise to acceptance
43
In a bilateral contract, do you have to give notice of acceptance?
Yes, offeree must make offeror aware of acceptance
44
Can an offer that requires acceptance by promise be accepted by performance?
Yes, if:
1. the **offeree begins to perform**
and
2. the **offeror learns** that the **offeree has started performance** and acquieces
45
Consideration
a bargained for legal detriment incurred by each party to a contract by promise, forebearance, or performance
46
Legal detriment
obligation to do or refrain from doing something one would not otherwise be obligated to do or refrain from doing ex: stop smoking for a million dollars
47
Pre-existing legal duty
a promise to perform a pre-existing legal duty is not valid consideration **unless there is a new, written promise to fulfill a debt obligation**
48
Consideration Substitutes: reliance/estoppel
courts may enforce a promise if:
1. promisor reasonably expects reliance by promisee
2. promisee acts or refrains from acting such that his reliance is detrimental
and
3. injustice will occur without enforcement of the promise
49
Consideration Substitutes: UCC modifications to contracts
consideration is not necessary for good- faith written modifications to a contract governed by the UCC
50
Consideration Substitutes: past debts
if a debt is barred by the statute if limitations, a new written promise to fulfill the debt is enforceable without consideration but only according to the new terms.
51
incapacity
infants and mentally incompetent persons lack the capacity to contract
52
Intoxication
intoxicated persons may lack capacity to contract is the other party knows or has reason to know of the intoxication
53
Consequences of Incapacity
**Right to disaffirm** - a person who lacked capacity to contract may disaffirm the contract rendering it void
**Implied affirmation/ratification** - a contract can be enforced against an infant at the time of contract formation if she has since gained capacity and retained the benefits of the contract
**Infant liability for necessities:** infants are legally obligated to pay for necessities ex: food, clothes, medical care \*\*\*liability is based in quasi-k so infant cannot be sued for breach (b/c there's no enforceable k)
54
Contracts Within the Statute of Frauds MY LEGS
1. Marriage Contracts
2. Service contracts incapable of being performed w/in 1 year
3. Real estate contracts that transfer interests in land
4. Executor promises
5. Guarantees/ Suretyship
6. Sales of goods of $500 or more
55
SOF: Service contracts incapable of being performed w/in 1 year
SOF does not apply to lifelong deals or contracts that say nothing about time for performance \*\*\*Both are capable of performance w/in one year
56
SOF: Real estate contracts that transfer interests in land
transfers of property interests including leases for terms greater than one year
57
SOF: Executor promises
promises of executrors/administrators to personally answer for the debts of the decedent's estate
58
SOF: Guarantees/ Suretyship
promises to pay the debt of another
59
How do you satisfy the Statute of Frauds?
contracts subject to the SOF require special proof of their existence and can be satisfied by:
* **Writing**
* **Signed by the party asserting the SOF defense**
* **Contain the essential elements of the deal**
60
In a service contract, can performance satisfy SOF?
Yes, full performance satisfies SOF
61
In the UCC when is a signed writing not required to satisfy SOF?
(1) when both parties are merchants
(2) when the party asserting the SOF received a signed writing memorializing the agreement and failed to respond w/in 10 days
62
SOF: Custom Made Goods
Specially/Custom made goods ***_generally require a writing under SOF._***
**Exception to SOF general rule:**
* Goods must be specially manufactured for buyer
* Seller must have made a substantial beginning on their manufacture or made commitments for their purchase
* Goods must not be resellable in ordinary course of business
Exceptions where
63
In a real estate contract, what satisfies SOF?
part performance by the buyer satisfies SOF if buyer does 2 of the 3:
(1) full or partial payment
(2) possession of the property
(3) improvements in the property
64
Formation Defense: Illegality
look for an:
(1) illegal subject matter: contract is unenforceable or
(2) illegal purpose for the contract: if the subject matter is legal contract is enforceable only by the party who didn't know about the illegal purpose \*\*legality is based on existing law at the time of the contract
65
Formation Defenses: Misrepresentation/Fraud
includes false assertions, concealment, or misstatements about material facts before contract formation \*\*contract will be voidable if A induces B into a contract by misrepresentation and B relies on that misrepresentation.
66
Formation Defenses: Duress
an improper threat that deprives a party fro making a meaningful choice to contract \*\*contracts induced by duress or coercion are voidable
67
Formation Defenses: Unconscionability
courts may refuse to enforce all or part of a contract that is either:
(1) procedurally unconscionable: usually involves an unfair surprise (ex: a new material term)
(2) substantively unconscionable: usually involves oppressive terms which are often hidden
68
Misunderstanding
when there's ambiguity concerning terms of a contract, the contract is voidable if:
(1) the parties use a material term reasonably susceptible to at least 2 different interpretations
(2) each party attaches different meaning to the term
(3) neither party knows or had reason to know about the other's interpretation
69
What if a party knows of the other party's misunderstanding but remains silent?
the contract will be enforced according to the unknowing party's understanding
70
Mutual Mistake of Fact
If both parties are mistaken about an underlying factual assumption at the time of contract formation, the contract is void if:
1. both parties are mistaken
2. mistake concerns a basic assumption of fact
3. mistake materially affects the agreed upon exchange
4. adversely affected party did not bear risk of the mistake Ex:parties find a rock and mistake it for a diamond
71
Unilateral Mistake
only one party is mistaken concerning underlying facts of the agreement unilateral mistake will not prevent contract formation except when non- mistaken party knows or should have known of the other party's mistake
72
Parol Evidence Rule
evidence extrinsic (outside) to a written agreement is inadmissable to supplement or contradict the written agreement \*\*applies if the writing is a complete integration
Parole Evidence Bars Evidence of:
* 1. negotiations before K becomes integrated
* 2. agreements before k becomes integrated (oral or written)
73
Complete Integration
parties must intend the writing to express their final agreement
74
Parole Evidence will be allowed if:
1. agreement was only partially integrated or
2. additional terms would ordinarily be in a separate agreement
75
Parole Evidence rule does not apply to or bar admission of:
1. evidence of oral agreements made after the writing
2. evidence necessary to determine if there was a mistake in the process of reducing an agreement to writing
3. evidence concerning a party's defense based on misrepresentation, fraud or duress
4. evidence used to resolve ambiguities about the meaning parties intended to give particular terms in the writing
76
In a shipment K, what are the seller's delivery obligations if the goods are shipped by a common carrier?
Indicated by FOB-Seller's City Seller's delivery obligation is satisfied when seller: 1. delivers goods to a common carrier 2. makes reasonable arrangements for delivery 3. notifies the buyer Once complete risk of loss passes to the buyer
77
In a destination K, what are the seller's delivery obligations if the goods are shipped by a common carrier?
Indicated by anything not FOB-seller's city seller's delivery obligation is complete only when goods arrive at buyer's location
78
Risk of Loss
arises if goods are lost or destroyed by no fault of either party after contract formation but before buyer receives the goods
79
Factors Determining Risk of Loss
IN ORDER OF PRIORITY: (1) prior agreement of the parties (2) Breach- breaching party liable for any uninsured loss even if unrelated to the breach (3) Common Carrier: risk shifts to buyer once seller completes delivery obligations (4) Default: applies when 1-3 are N/A -if seller is a merchant ROL shifts to buyer once he takes possession of the goods. -non-merchant seller ROL shifts to buyer upon tendering felivery
80
Express Warranty
when seller makes promises or describes facts about the product or its use warranty will be breached if product falls short of the sellers promise or description \*\*includes samples and models
81
Implied Warranty of Mechantability
merchant selling goods automatically warrants goods are fit for their ordinary purpose
82
Implied Warranty of Fitness for a Particular Purpose
seller warrants that goods are fit for buyers purpose if:
* (1) buyer has a particular purpose
* (2) buyer relies on seller to select suitable goods
* (3) seller has reason to know of buyers purpose AND
* (4) buyer relies on seller
83
Limiting Warranty Liability by contract
(1) Disclaimer: limits liabilty only for implied warranties (ex: as is, w/ all faults) (2) remedy limitation: limits recovery upon breach of warranty
84
Perfect Tender
**Perfect Tender -** seller's performance must be perfect with respect to the goods delivered and the manner of delivery
**Imperect Tender -** if the seller's performance is not perfect buyer can either:
* (1) retain goods delivered and sue for damages or
* (2) reject some or all goods and sue for damages
85
Rejection for imperfect tender
(1) Buyer must notify seller of rejection in a reasonable time (2) buyer must hold the rejected goods using reasonable care (3) buyer must give the seller reasonable time to arrange for removal of the goods
86
What if seller never arranges removal of the rejected goods?
buyer can return the goods to the seller, store the goods for the seller, or resell the goods on behalf of the seller
87
Acceptance of goods occurs if:
(1) buyer after a reasonable opportunity to inspect the goods indicates to the seller that the goods conform or that he will keep them despite their non-conformance (2) buyer fails to reject or notify seller of rejection within a reasonable time (no more than a month)
88
Is it acceptance if the buyer pays before he's had an opportunity to inspect?
No, payment without an opportunity to inspect is not acceptance
89
Revocation of acceptance of goods
Generally, buyer cannot later reject accepted goods unless: (1) the nonconformity substantially impairs the value of the goods (2) buyer is excusably ignorant of the grounds for revocation or reasonably relies on the sellers assurance of satisfaction (3) buyer revokes within a reasonable time after discovering non-conformity.
90
If buyer has notified seller of imperfect tender, seller may have an opportunity to cure if:
(1) time for performance has not yet expired (2) seller has reasonable grounds to believe nonconforming good sent would be acceptable (ex: prior dealings w/ buyer) (3) seller gives buyer notice of intent to cure
91
Notice of intent to cure
seller must give buyer reasonable notice and deliver conforming goods
92
Installment Contract
authorizes or requires delivery of goods in seperate lots
93
Buyer can only reject a delivery/installment if:
(1) nonconformity substantially impairs the installment (2) nonconformity cannot be cured
94
If buyer receives a nonconforming installment, can he reject the entire contract?
No, rejection is limited to the non- conforming installment not the entire contract
95
When can a buyer cancel the entire installment contract based on a nonconforming installment?
If that installment substantially impairs the value of the entire contract.
96
If one party has substantially performed, is the other party obligated to complete performance?
Yes, less than perfect performance by one party does not excuse the other party from his obligation. \*\*although the other party may seek money damages for the difference between the performance rendered and the performance expected
97
What counts as substantial performance
Usually half way complete
98
Common Law Material Breach
material breaches by the other party excuse performance
99
Can you recover damages for material breach?
Yes, damages are recovered for any breach
100
Timeliness of performance
Failure to perform by the time stated in the contract is not a material breach if performance is rendered within reasonable time after the stated time.
101
Time is of the Essence Clause
if a timely performance is essential, failure to perform by that time is a material breach. Arises if one party indicates as a term of the contract that performance by a given date is essential.
102
Do material breach rules apply to sales of goods contracts?
No, material breach rules apply to sales of goods contracts
103
Conditions
Conditions - agreed upon limitations on performance
**Express** - self-evident
**Implied** - self-evident
**Condition Precedent** - Performance is not obligated unless condition occurs; non-occurrence excuses performance.
**Condition Subsequent** - Condition that occurs after performance has begun and excuses further performance.
**Excuse of Condition** - if a condition exists it must be strictly complied with but substantial performance of the condition may suffice if it fulfills the conditions purpose. A person who is protected or benefited by the condition may make statements which constitute a waiver of the condition or estop the condition from being enforced.
104
Insecurity
Options for Insecure Party
excuse by insecurity arises if A gives B reasonable grounds for insecurity or uncertainty regarding whether A will perform under the contract
* demand adequate assurances
* suspend performance until she receives adequate assurance
* treat contract as repudiated if she does not receive adequate assurances within 30 days
105
Anticipatory Repudiation
arises when one party to a contract
* **makes a clear and unambiguous statement or conduct**
* **prior to when performance is due**
* **which indicates that he will not perform**
**Effect of Repudiation:** if repudiation occurs the non-repudiating party's duty to perform is excused \*\*he can treat the contract as breached and sue for damages
106
Can anticipatory repudiation be revoked?
What if repudiation involves demands for a new bargain or benefit?
Yes, anticipatory repudiation can be reversed or retracted if the non-repudiating party has not materially changed his position
The non-repudiating party is not required to notify the repudiating party of his refusal to comply with the demands
107
Unforeseen Events
performance on a contract may be excused if an unforeseen event occurs after contract formation but before performance is finished
108
Requirements to excuse performance
an unforeseen event must make completing performance either: (1) impossible: performance is objectively impossible (2) commercially impracticable: performance is only possible with extreme and unreasonable difficulty or expense
109
Common Unforeseen Events
(1) Damage or destruction of contract's subject matter or purpose (2) Death (3) subsequent law or regulation
110
Common Unforeseen Events: Damage or destruction of contract's subject matter or purpose
may excuse performance as long as performance has not been completed
111
Common Unforeseen Events: Death
contract obligations generally survive the death of a party unless the deceased party's obligations are non-delegable ex: unique personal services
112
Common Unforeseen Events: subsequent law or regulation
(1) if performance becomes illegal: excuse by impossibility (2) if purpose of contract becomes illegal: excuse by frustration of purpose
113
Rescission
a mutual cancellation of a contract that arises if some performance obligation remains for each party and they both agree to rescind the contract; recission is essentially a new contract that excuses further performance by both parties on the old contract's obligations must be supported by consideration, unless contract is governed the UCC.
114
UCC Modification
no consideration is required for good faith modifications
115
Modification
a substitute agreement where parties agree to accept a new agreement in satisfaction of the existing contract
116
Novation
parties agree to substitute a new party to perform. the original party is excused from performance and no longer has an contract obligations.
117
Accord and Satisfaction
**Accord**: an agreement to accept alternative performance in satisfaction of the existing obligation
**Satisfaction**: the completion of the alternative performance
**Effect of Accord and Satisfaction:** excuses the original obligation
**If the Accord is not Satisfied:** a party may sue on either the original obligation or the accord
* Can parties sue under the original agreement if there has been an accord? *No, an accord suspends the original agreement until satisfaction.*
118
Third Party Beneficiaries
If two parties contract with some intent of benefiting a third party, that third party is a third party beneficiary (TPB).
119
Creditor TPB
benefit is conferred based on debt owed by the promisee to the contract
120
Donee TPB
benefit is conferred gratuitously
121
Intended Beneficiary
(1) expressly designated in the contract, (2) directly benefit from some performance under the contract, or (3) stand in such a relationship to the promisee under the contract that an intent to benefit the third party can be inferred.
122
Incidental beneficiary
one who is not an intended beneficiary. Incidental beneficiary has no rights under the contract.
123
Rights of Third Party Beneficiaries
In order to enforce rights under a contract, a TPB's rights must vest. Vesting occurs when either: (1) the TPB assents to the promise in a manner requested by the parties to the contract, (2) the TPB brings suit to enforce the promise, or (3) the TPB materially changes positions in justifiable reliance on the promise.
124
TPB and Suing to enforce the contract
1. TPB can sue the PROMISOR 2. PROMISEE can sue PROMISOR (legal/equitable) 3. TPB can ONLY sue PROMISEE if TPB is a creditor beneficiary.
125
Assignment
a transfer of rights to a third party after a contract is formed.
126
Common Law Limitations on Assignments
assignments that substantially change the duties of the obligor are barred, such as assignments of rights to performance.
127
Contract provision prohibiting assignments
Take away the right to assign, but not the power to assign. That, an assignee can still enforce the assignment fi he was unaware of the provision.
128
Contract provisions invalidating assignments
Take away both the right and the power to assign. That is, any assignment is invalid and unenforceable.
129
Are Assignments for consideration revocable?
No, Assignments for consideration are irrevocable.
130
Are Gratuitous assignments revocable?
Yes, Gratuitous assignments are revocable unless: (1) obligor has already performed, (2) a tangible claim or writing is delivered to assignee, or (3) detrimental reliance by the assignee.
131
How do you revoke a Gratuitous assignment?
Gratuitous assignments may be revoked or terminated by: (1) death or bankruptcy of assignor, (2) notice of revocation by assignor, (3) taking of performance by assignor, or (4) later assignment to another.
132
Assignment - Enforcement and Recovery
An assignee can recover from the obligor. An assignor for consideration cannot recover from the obligor. Payment by obligor to an assignor is effective until obligor knows of the assignment.
133
Delegation
Generally, all duties may be delegated **except those involving:**
* **personal judgment and skill**
* delegation **changes the expectancy** in a **requirement or output contract**
* a party has placed **special trust in the delegator**
* Original K restricts delegation.
* Note, however, in order to delegate, the obligee must generally accept performance from delegee, and only duties may be delegated, not rights.
**Delegation Enforcement:** obligee must accept performance from delegee; obligee may sue delegator for non-performance by delegee obligee may only sue delegee if the delegee has assumed duties of the entire contract
134
Non-monetary remedies
In the event of a breach, certain non-monetary damages may be available if money damages are unavailable or inadequate such as specific performance or reclamation.
135
Non-Monetary Remedies - Specific Performance
Specific performance is available only in contracts involving either real estate or unique goods. For service contracts injunctions preventing breach of service contract may be availiable
136
Non-Monetary Remedies - Reclamation
Under the UCC, an unpaid seller may reclaim goods from a buyer if: (1) the buyer is insolvent at time of delivery, (2) seller demands return of goods within 10 days of delivery, and (3) buyer still has possession of goods.
137
Can an unpaid seller can never reclaim goods from later buyers?
An unpaid seller can never reclaim goods from later buyers. In such cases the unpaid seller is limited to money damages from the first buyer.
138
Unauthorized resale of goods
if an owner leaves goods with a person who deals in goods of that kind and that person wrongfully sells the goods to a third party, the owner cannot recover from the third party. The owner may have a claim against the seller for conversion
139
Standard Money Damages
Contract damages generally involve compensatory damages, which aim to put the non-breaching party in the place he would have been had the breach not occured
140
Expectation Damages -
This is a standard measure of money damages that puts the parties in the economic position as if the contract had been performed (ie breach never occurred). look for the answer that gives the non breaching party the money she would have received absent the breach
141
Reliance Damages -
An alternative measure of damages when damages are too speculative. Reliance damages are designed to compensate the plaintiff based on the value of her performance. (puts parties in the same economic position as if contract was never formed) Only applicable when expectation damages are overly speculative
142
Duty to mitigate
all parties must mitigate damages, a party may not recover for avoidable damages. D bears the burden of showing P's failure to mitigate
143
Standard Damages - Incidental/Consequential
In addition to standard damage measures, incidental and consequential damages may be recovered.
144
Incidental Damages
Incidental damages are damages that are incurred by the non- breaching party for commercially reasonable expenses such as cost of inspecting, returning, storing, reselling goods, etc. Under the UCC, both parties may recover incidental damages.
145
Consequential Damages
foreseeable losses indirectly resulting from the breach, and are recoverable if: (1) damage was foreseeable result of the breach, and (2) when the contract was formed, the breaching party had reason to know the non-breaching party would suffer special, unpreventable, or unexpected damages. Under the UCC, consequential damages are only available to the buyer.
146
Restitution Damages
arise under quasi-contracts. It is applied if there is no enforceable contract and a party has been unjustly enriched, and awards the value based on the benefit wrongfully conferred.
147
Liquidated Damages
Liquidated damages are damages that are agreed-upon in the contract, which stipulate specific damages upon the occurrence of a breach. Liquidated damages are only valid if: (1) damages are difficult to project at time of contract formation, and (2) the provision is a reasonable estimate of actual damages.
148
Damages for UCC Contracts: Breach by seller and buyer keeps goods
Damages = [FMV of perfectly delivered goods - FMV of goods actually received]. Note, however, that if seller breaches by delivering non- conforming but superior goods, buyer is not responsible. Does not reduce buyers damages.
149
Damages for UCC Contracts: Breach by seller and seller keeps or buyer returns goods:
Damages = The higher of either: (1) [FMV of goods at the time of breach - contract price], or (2) [buyer's cost of covering/replacing good - contract price]
150
Damages for UCC Contracts: Breach by buyer and buyer has goods
Damages = Contract price
151
Damages for UCC Contracts: Breach by buyer and seller has goods:
Damages = Either: (1) [contract price - market price at the time of delivery], or (2) [contract price - resale price plus provable lost profits].
152
Lost Profits
A seller can recover lost profits from a buyer's breach, even though she resold the item that was the subject of buyer's breach, if she can prove that she would have made a sale to the second buyer regardless of the first buyer's breach.
