Remedies for Breach of Contract (55%) Flashcards Preview

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Flashcards in Remedies for Breach of Contract (55%) Deck (49):

Monetary damages at common law

may be able to recover damages calculated to protect that party’s
1. expectation interest,
2. reliance interest, or
3. restitutionary interest.
A party may: elect only one of these remedies


Expectation damages

the aggrieved party will be entitled to the amount: that would restore him to the position he would have been in had the contract been fully perform


Calculating Expectation Damages

Loss of value + incidental costs + consequential costs - payments received - costs saved


The aggrieved party may not be able to recover the full amount of expectation damages in the following situations:

(1) Where the cost of performance greatly exceeds the market value of performance
(2) where expectation damages cannot be calculated with reasonable certainty
(3) When damages are unforeseeable
(4) Where damages can be mitigated/reasonably avoided


A recurring example of a case where uncertainty in awarding expectation damages exists is

A new business with no profit history


Reliance Damages

restore the aggreieved party to the position they were in prior to the contract


Types of Monetary damages

1. Expectation damages
2. Reliance Damages
3. Restitutionary Damages


Calculating Reliance Damages

1. Any expenditures made in preparation for performance or in actually performing // no matter who is paid
2. Any loss the breaching party can prove the aggreieved party would have suffered had the contract been fully performed


When to use reliance damages

when expectation damages are unavailable: i.e. when uncertain or speculative


Restitutionary Damages

the value of the benefits conferred on the other party in the transaction


Calculating Restitutionary Damages

(a) The reasonable value or cost of the benefit conferred; or,
(b) The extent to which the other party’s property has increased in value due to performance rendere


When will a party most likely seek restitutionary damages

in a losing contract


Restitutionary damages only available when

where the aggreieved party has partly performed but not fully performed


Liquidate Damages are

clauses designed to provide for damages of their own chosing in the event of a breach


When are Liquidated Damages Enforceable & Unenforceable?

(a) enforceable if: it is a valid liquidated damages designed to compensate for breach
(b) unenforceable if: it is a penalty designed to punish a breach


Test for liquidated damages clause

Primary consideration: Was the clause reasonable at the time of contracting in relation to the anticipated harm?

Secondary consideration: Was the clause reasonable in relation to the harm that actually occurred due to the breach?


If the court concludes that the liquidated damages clause is in fact a penalty, then

the clause is stricken from the contract and damages are recoverable according to the default rules.


Seller's UCC Remedies

1. Profit,
2. Incidental damages


The seller’s of goods right to recover depends on

whether the goods have been delivered and accepted by the buyer


The seller's remedy if goods have been delivered to and accepted by the buyer

the seller’s remedy is for the contract price


The seller's remedy if goods have not been delivered to and accepted by the buyer if the seller has resold

Contract Price – Resale Price


The seller's remedy if goods have not been delivered to and accepted by the buyer if the seller has not resold

Contract Price – Market Price


Lost volume sellers may only recover

the profit they would have made on the lost sale


Lost volume sellers are

A lost volume seller is one whose supply of goods exceeds the demand for the same (e.g. Best Buy)


Whether or not the seller resells goods, he is entitled to recover

incidental damages


Incidental Damages are

the cost associated with getting stuck with the goods + cost of resale - expenses avoided on account of breach


Buyer of goods remedies depend upon

If the buyer covers: purchases replacement goods.


Damages calculation if buyer of goods
1. Covers
2. Does not cover

(a) If the buyer covers: the damages = Cover price - Contract Price
(b) If the buyer does not cover: the damages = Market Price – Contract Price


Incidental damages for buyer of goods

cost of securing cover


Buyer of goods can seek what damages

incidental damages + consequential damages


Buyer of goods consequential damages

the peculiar costs arising to the buyer because of a particular need or use of the goods in question (lost profits)

Has to be foreseeable


Buyer of goods damages will be reduced by

costs avoided


Buyer's damages if they accept non-conforming goods

the buyer is entitled to recover the difference between:
1) The value of goods contracted for
2) The value of the goods Received


Specific Performance is only available when

a monetary reward is considered inadequate


Monetary reward is considered inadequate when purchasing either:

1. Unique Objects; or,
2. Real Property


Specific Performance are absolutely not available for

(a) Contracts for personal services
(b) Contracts requiring ongoing cooperation between the parties


Specific Performance under the UCC allowed when

1. a buyer has adequately searched but unable to cover
2. Output contracts & requirement contracts


Negative Injunctions are

orders by the court prohibiting the breaching party from taking particular action


When an employee is under contract for a specified period of time and the employee breaches the contract by departing before the end of that period, a negative injunction will be available to prevent the employee from competing if

The employee's services are unique or extraordinary


Non-compete clauses depend on three factors:

(1) Is there a significant business justification for enforcing post-employment restraints (e.g. access to trade secrets)
(2) Is the scope of the non-compete clause reasonable in duration & geographical reach?
(3) Is there an express provision of a covenant not to compete?


Types of promissory estopple damages that can be recovered

Depending upon jurisdiction
(1) Expectation Damages
(2) Reliance Damages
(3) Chose on a case by case basis


Restitution as a Cause of Action (outside breach of contract) can be brought

1. To recover benefits are conferred under a failed contract
2. To recover benefits conferred by a breaching party, as long as the other party receives damages for breach


Liability of patient when Emergency Benefits are Conferred by a Health Care Professional without consent?

will be able to recover for services rendered to a patient unable to give consent


The general rule is that a person who bestows benefits without request from the benefitting party: is considered

an officious intermeddler that will not be able to recover since there is no opportunity to decline


A person who mistakenly confers benefits to another party may be entitled to restitution from the mistaken party if

1) Not a blameworthy error
2) the recipient was aware of the error in time to prevent it
3) The recipient avails himself of the benefits at issue


Provisions limiting or excluding damages are not enforceable if

they are unconscionable or fail their essential purpose


Enforceability Limitation of consequential damages for personal injury in the case of consumer goods

it is prima facie unconscionable


How to distinguish between material breach and substantial performance

1. the extent to which the aggrieved party will be deprived of the benfit for which he reasonably expected under the terms of the contract;
2. the extent to which the aggrieved party can adequately be compensated via damages for the defective performance;
3. the extent to which the breaching party will suffer forfeiture if a material breach is found;
4. the extent to which the breach was willful or in bad faith rather than merely negligent or innocent;
5. the likelihood that the breaching party will cure his failure within a reasonable time and in a manner consistent with the reasonable purpose of the contract.


A material breach of contract on the part of one party entitles the other party to...

terminate the contract