Remedies

Question 1

Nominal

Answer 1

There is a breach, but no financial loss has been suffered. Court awards a nominal amount ($1 or some small amount)

Question 2

Compensatory

Answer 2

All costs or loss actually suffered and proven to be caused by the breach.

Question 3

Incidental

Answer 3

Expenses incurred by the nonbreaching party due to the breach including lawyer’s fees

Question 4

Consequential

Answer 4

Foreseeable loss known by the breaching party, like delay in delivery when time was of the essence

Question 5

Punitive

Answer 5

Damage awarded to punish the wrongdoer, usually not awarded in breach of contract cases

Question 6

Liquidated

Answer 6

An agreed amount in the contract in the event that the contract is breached

Question 7

Specific Performance

Answer 7

Requiring the other party to perform the contract. available when there are rare goods or for buyers of land

Question 8

Rescission and Restitution

Answer 8

Undoing the contract to return the parties to their original position. The nonbreaching party cannot retain the benefits that he or she has received as unjust enrichment

Question 9

Reformation

Answer 9

A contract written to address an issue that affects the parties.

Question 10

Quasi-Contract Recovery

Answer 10

Remedy given when there is no contract.

Question 11

Compensatory - Service Contracts

Answer 11

Compensatory damages are the compensation the nonbreaching party would have been paid LESS any compensation the nonbreaching party earns by working elsewhere

Question 12

Assignment to Third Parties

Answer 12

Assignments can be assigned or delegated unless an exception applies. The assignment of rights is a contract separate from the original agreement

Question 13

List the various types of third-party beneficiaries.

Answer 13

Donee (intended)
Creditor (intended)
Incidental (not intended)

Question 14

Exceptions to Assignments

Answer 14

-Terms prohibit assignment.
-Statute prohibits assignment.
-Personal contracts.
-Materially increases risks.

Question 15

Delegation

Answer 15

Duties under a contract can be delegated unless:
-Terms prohibit delegation.
-Personal skill/special trust.
-Material variation.

Question 16

When is an assignment binding on the parties to the original contract?

Answer 16

When the original parties receive notice of the assignment.

Question 17

When two assignee’s names are on the same contract, which assignment is valid?

Answer 17

U.S. rule: First in time of the assignment
English rule: First to give notice of the assignment

Question 18

Describe the liability of the assignor.

Answer 18

Unless released, the assignor remains liable.

Question 19

What elements must be in place for a creditor beneficiary to exist?

Answer 19

-A debtor-creditor relationship must exist.
-The debtor must make a contract with the third party that benefits the creditor.

Question 20

Incidental Beneficiary

Answer 20

A third party who receives an unintended benefit has no legal rights in a contract between two parties (e.g., if the city has a contract to build a stadium, the business owners around the stadium have increased business, but business owners cannot force the city to perform the contract for the stadium).

Question 21

List the various types of third-party contracts.

Answer 21

-Assignments
-Delegations
-Third-party beneficiary contracts

Question 22

Assignment

Answer 22

The transfer of the benefits under a contract to a third party (e.g., a contractor assigns payment to lumber company)

Question 23

Delegation

Answer 23

The transfer of the detriment (duties) under a contract to a third party (Mr. Ice asks Ice Inc. to take over ice supply contract for Lobster, Inc.)

Question 24

Third Party Beneficiary Contract

Answer 24

A contract between two parties that is set up for the purpose of providing benefits to a third party.

Question 25

Describe the rights of a creditor beneficiary

Answer 25

Can recover from original debtor who designated the creditor beneficiary or from the party required to pay under contract with the debtor (e.g., with health insurance, a hospital can recover from the insured or the insurer).

Question 26

Describe the rights of a donee beneficiary

Answer 26

Can recover from the party required to pay under the contract but not from the party who makes the arrangements for the payment (e.g., a life insurance arrangement, where the beneficiary can recover from the insurance company but not from the insured)

Question 27

Describe the rights of an incidental beneficiary.

Answer 27

Has no right of recovery against either party to the original contract (e.g., resident of city cannot recover if a contractor does build planned city park)