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Fundamentals of Business Law and Ethics > Remedies > Flashcards

Flashcards in Remedies Deck (33)
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Someone breaches a contract when he fails to perform a duty without a valid excuse



A method a court uses to compensate an injured party



An order forcing someone to do something, or refrain from doing something. Courts frequently grant injunctions to an employer, blocking the employee from leaving to work elsewhere, but almost never uses an injunction to force an employee to complete a contract.


Expectation Damages

The money required to put one party in the position she would have been in had the other side performed the contract.


Specific Performance

In cases of rare property, like the Ferrari car that the seller no longer wants to part with, courts often award specific performance, forcing both parties to compete the deal.


Liquidated Damages Clause

A provision in the contract that declares in advance what one party will receive if the other side breaches. Sometimes enforced


Remedy Ethics

The focus of remedies is on compensating the injured party, rather than punishing the party in breach.



A legal right in something.


Expectation Interest

What the injured party reasonably though she would get from the contract. Goal is to put her in a position she would have been in if both parties fully performed


Reliance Interest

Injured party may be unable to demonstrate expectation damages, perhaps its unclear he would have profited. But he may still prove he expended money in reliance on the agreement and should receive compensation.


Restitution Interest

Injured party has conferred a benefit on the other party.


Equitable Interest

Money damages may not suffice to help the injured party. Something more, such as an order to transfer property to injured party (specific performance) or an order forcing one party to stop doing something (injunction) is needed.


Incidental Damages

Minor costs such as storing or returning defective goods, advertising for alternative goods, and so forth.


Compensatory Damages

Most common monetary awards for expectation interest. Damages that flow directly from the contract.


Consequential Damages or "Special Damages"

Damages resulting from the unique circumstances of this injured party. Injured party may recover consequential damages only if the breaching party should have foreseen them when the two sides formed the contract.


Seller's Remedies

If a buyer breaches a sale of goods contract, the seller generally has at lease two remedies.
1. Sell elsewhere - if she acts in good faith she will be awarded the difference between the original contract price and the price she was able to obtain in the open market.
2. Keep goods - settle for the difference between the contract price and the market value of the goods.


One difference in Seller Remedies

Most courts hold that the seller of goods in NOT entitled to consequential damages


Buyer's Remedies

Two options:
1. "Cover" by purchasing substitute goods. Make a good faith purchase of goods similar to those in contract. Buy may obtain difference between original contract price and her cover price.
2. Chooses not to cover - she is entitled to the difference between the original contract price and the market value of the goods.


Under UCC, buyer remedies...

The buyer IS entitled to consequential damages provided that the seller could reasonably have foreseen them. (Christmas tree example)


Reliance Interest

The reliance interest is designed to put the injured party in the position he would have been in had the parties never entered into a contract


Promissory estoppel cases

A court will generally award only reliance damages. Plaintiff must show that the defendant made a promise knowing that the plaintiff would likely rely on it, that the plaintiff did rely, and that the only way to avoid injustice is to enforce the promise


Restitution of a Valid Contract

The restitution interest is designed to return to the injured party a benefit that he has conferred on the other party, which it would be unjust to leave with that person. Common remedy in contracts involving fraud, misrepresentation, mistake, and duress.



To "undo" a contract and put the parties where they were before they made the agreement


Restitution of a Quasi-contract

A court may award restitution, even in the absence of a contract, where one party has conferred a benefit on another and it would be unjust for the other party to retain the benefit.


Specific Performance

A court will award specific performance, ordering the parties to perform the contract, only in cases involving the sale of land or some other asset that is unique


Preliminary Injunction

An order issued early in a lawsuit prohibiting a party from doing something during the course of the lawsuit.



Least common remedy. A court will partially "re-write" a contract, if it may reform a simple mistake in the contract.


Mitigation Damages

A party injured by a breach of contract may not recover for damages that he could have avoided with reasonable efforts. Must try to prevent unecessary losses.


Nominal Damages

A token sum given to a plaintiff who demonstrates that the defendant breached the contract but cannot prove damages.


Liquidated Damages Clause

Provision stating in advance how much a party must pay if it breaches