The Whole Syllabus Flashcards
1
Q
What is the fundamental purpose of remedies in noncriminal cases?
A
To make the nonbreaching party whole.
2
Q
What are the two general categories of remedies?
A
Legal and equitable.
3
Q
What is the definition of legal remedies?
A
Damages paid by one party to another.
4
Q
What are the three types of equitable remedies?
A
- Specific performance
- Injunction
- Restitution
5
Q
Why do courts not simply order obligors to keep their promises?
A
Courts allow breaches and provide remedies instead of enforcing performance.
6
Q
What did Justice Oliver Wendell Holmes Jr. state about the duty to keep a contract?
A
It means a prediction that you must pay damages if you do not keep it.
7
Q
What interests do contract remedies aim to protect?
A
- Expectation interest
- Reliance interest
- Restitution interest
8
Q
What is an expectation interest?
A
The benefit for which the promisee bargained.
9
Q
What does reliance interest refer to?
A
The loss suffered by relying on the contract.
10
Q
What is restitution interest?
A
Restoring any benefit conferred on the promisor.
11
Q
What are the six types of damages?
A
- Compensatory
- Incidental
- Consequential
- Nominal
- Liquidated
- Punitive
12
Q
What are compensatory damages?
A
Damages paid to directly compensate the nonbreaching party for the value of what was not performed.
13
Q
What are incidental damages?
A
Expenditures incurred in attempting to minimize the loss from the breach.
14
Q
Define consequential damages.
A
Damages incurred without action on the part of the nonbreaching party because of the breach.
15
Q
What are nominal damages?
A
Damages awarded when there has been a breach but no actual loss suffered.
16
Q
When are liquidated damages enforceable?
A
When the actual amount of damages is difficult to ascertain and the sum is reasonable.
17
Q
What are punitive damages?
A
Damages awarded to punish a defendant for willful and malicious conduct.
18
Q
Fill in the blank: The law does not force a party to perform; he or she always has the power (though not the right) to _______.
A
breach.
19
Q
What is the primary reason for allowing parties to breach contracts?
A
If it is economically more advantageous to breach and suffer the consequence than to perform.
20
Q
What is a key takeaway regarding contract remedies?
A
Remedies are intended to make the nonbreaching party whole and are categorized as legal or equitable.
21
Q
What are punitive damages?
A
Damages awarded to punish a defendant and deter similar conduct
They are proper in cases of willful and malicious behavior.
22
Q
Under what circumstances may punitive damages be awarded?
A
When the breach of contract is also a tort, such as:
* Malicious behavior
* Reckless conduct causing physical harm
* Deliberate defamation
* Knowingly unlawful taking of property
In all but four states, punitive damages are permitted in tort law.
23
Q
What is the purpose of contract remedies?
A
To make the nonbreaching party whole
24
Q
What are the types of damages allowed in contract law?
A
- Compensatory damages
- Consequential damages
- Incidental damages
- Nominal damages
- Liquidated damages
- Punitive damages
25
What is specific performance?
A judicial order requiring a party to fulfill the terms of a contract
26
What is an injunction?
A court order directing a person to stop doing something
27
What is restitution?
Restoring a party to the benefit conferred on another party when the contract is not performed
28
What is required for liquidated damages to be allowed?
The actual amount must be difficult to ascertain and must not constitute a penalty
29
What is the main difference between legal and equitable remedies?
Legal remedies involve monetary compensation, while equitable remedies involve specific actions ordered by the court
30
What types of equitable remedies exist?
* Specific performance
* Injunction
* Restitution
31
What is a key limitation on recovering damages in contract law?
Foreseeability of damages
32
What must the nonbreaching party do to mitigate damages?
Make a reasonable effort to reduce the damages
33
What is the significance of the case Hadley v. Baxendale?
It established the rule of foreseeability in contract damages
34
Fill in the blank: A _______ is a promise by a person not to do something.
negative covenant
35
True or False: Specific performance can be ordered for any breach of contract.
False
36
What happens if a nonbreaching party suffers total nonperformance by the breaching party?
They are entitled to restitution
37
What is the measure of restitution if a party has substantially performed before breaching?
The benefit conferred on the injured party, if greater than the loss incurred
38
What is the general rule regarding restitution in cases of total breach?
The nonbreaching party is entitled to recover the value of the benefit conferred
39
What is the purpose of the Statute of Frauds in relation to restitution?
To limit recovery in oral contracts unless the purpose of the statute would be frustrated
40
What event caused the milling at Hadley's flour mill to stop?
The shaft of the milling engine broke.
41
Who was the managing director of Pickford and Company involved in the Hadley case?
Joseph Baxendale.
42
What was the ruling of the Court of Exchequer regarding Baxendale's liability?
Baxendale was not liable because he had no notice that the mill was stopped.
43
In Hadley v. Baxendale, how should damages be considered according to the court's ruling?
Damages should be such as may fairly and reasonably be considered either arising naturally or in contemplation of both parties.
44
What are consequential or special damages?
Losses that flow from events that do not occur in the ordinary course of events.
45
Under what condition can a repair shop be liable for lost profits due to a delay?
If it knew why timeliness of performance was important.
46
What does the parol evidence rule state regarding the introduction of evidence?
It does not bar introduction of evidence bearing on the party’s knowledge before the contract was signed.
47
What is the standard of foreseeability in contract law?
It is objective, meaning a reasonable person would understand that a particular loss was probable.
48
What does the concept of mitigation of damages encourage?
The nonbreaching party to avoid loss wherever possible.
49
What happens if the nonbreaching party fails to mitigate damages?
The promisor can deduct from damages the amount of the loss that could have been avoided.
50
What must a substitute transaction be to limit damages?
Suitable under the circumstances, considering similarity, time, and place of performance.
51
What is the rule regarding the timely mitigation of damages?
The nonbreaching party must mitigate as soon as practicable.
52
What is required for a party to recover damages with reasonable certainty?
Proof of damages must be established, especially for lost profits and goodwill.
53
What can a party seek if they cannot recover damages for lost profits?
Restitution of the monies advanced.
54
What circumstances can lead to a loss of power to avoid a contract?
Delay, affirmation, and rights of third parties.
55
What is the implication of delay in a fraud case?
The victim must act promptly to rescind or lose the right to remedy.
56
What happens if a minor sells an item and it is sold to a third party before they disaffirm?
The minor cannot get the item back from the third party.
57
What is the general rule regarding limitations on remedies in contracts?
Such limitations are generally permissible if they are conspicuous, bargained-for, and not unconscionable.
58
What does the election of remedies doctrine prevent?
Double recovery for the victim of fraud.
59
How does the UCC treat the doctrine of election of remedies?
The UCC rejects the doctrine, allowing cumulative remedies.
60
What are the considerations in choosing between tort and contract actions?
* Statute of limitations
* Allowable damages
* Expert testimony
* Insurance coverage
61
True or False: A party can recover for speculative lost profits.
False.
62
Fill in the blank: The concept that encourages the nonbreaching party to avoid loss is called _______.
mitigation of damages.
63
What are punitive damages more often permitted in?
Tort actions
## Footnote
Punitive damages can be awarded in tort cases to punish the wrongdoer and deter future misconduct.
64
What type of damages are compensable in tort but not in contract suits?
Pain and suffering
## Footnote
Pain and suffering damages are typically not recoverable in breach of contract cases.
65
In what cases can expert witnesses be dispensed with in contract suits?
Certain contract cases, such as those charging physician abandonment
## Footnote
In simpler cases, the need for expert testimony may be unnecessary.
66
What type of torts do most insurance policies not cover?
Intentional torts
## Footnote
Insurance coverage for intentional torts is often excluded to reduce risk.
67
What is a significant reason why parties may choose not to pursue legal remedies?
Disruption to ongoing relationships
## Footnote
Lawsuits can significantly affect business relationships between parties.
68
What must the damages suffered by the nonbreaching party be?
Reasonably foreseeable
## Footnote
This limitation ensures that only predictable losses are compensated.
69
What must the nonbreaching party do to mitigate damages?
Make a reasonable effort
## Footnote
Failure to mitigate can result in a reduction of the damages awarded.
70
What happens if the damages cannot be articulated with certainty?
The party will be entitled to nominal damages
## Footnote
Nominal damages recognize a breach without quantifiable loss.
71
What can cause a party to lose their remedy of avoidance in a contract?
Circumstances where they could have avoided the contractual obligation
## Footnote
If a party had the opportunity to avoid a contract but did not, they may lose rights to remedies.
72
What is the term for damages that a party may be limited to in a contract?
Liquidated damages
## Footnote
Liquidated damages are pre-determined amounts agreed upon in a contract for breaches.
73
What must be shown for consequential damages to be awarded?
Causation, certainty, and foreseeability
## Footnote
Consequential damages must be proven to have been contemplated by both parties.
74
What did the jury award EBWS for direct damages?
$38,020
## Footnote
This amount was awarded for losses directly resulting from the breach.
75
What is the difference between direct damages and consequential damages?
Direct damages are losses that naturally flow from the breach; consequential damages require additional proof
## Footnote
Direct damages are typically easier to prove than consequential damages.
76
What was the reason EBWS could not recover for lost profits?
It was not a going concern at the time of the contract
## Footnote
New businesses often cannot claim lost profits due to uncertainty.
77
What type of expenses did EBWS claim during the trial for damages?
Future payment for unused milk and staff wages
## Footnote
These claims were considered consequential damages but were ultimately deemed not foreseeable.
78
What was the court's ruling regarding EBWS's claim for unused milk?
The damages were not foreseeable
## Footnote
The court concluded that Britly could not reasonably anticipate these specific losses.
79
What is the significance of the prospective approach to liquidated damages?
It evaluates reasonableness at the time of contract formation
## Footnote
This approach emphasizes the agreed expectations rather than actual damages at trial.
80
What is required for a liquidated damages clause to be enforceable?
Must be a reasonable forecast of just compensation and harm must be difficult to ascertain
## Footnote
Courts look for reasonableness and difficulty of predicting damages when enforcing these clauses.
81
What is the purpose of liquidated damages clauses?
To allocate business and litigation risks efficiently
## Footnote
They allow parties to avoid disputes over actual damages by pre-defining the consequences of breach.
82
True or False: Parties are presumed to know the condition of each other’s affairs.
False
## Footnote
Parties are not presumed to know about third-party contracts or conditions unless communicated.
83
What can a party do to protect itself against damages incurred from a breach?
Include specific terms in the contract to address potential damages
## Footnote
Contract terms can be negotiated to protect against foreseeable issues.
84
What does the prospective approach in liquidated damages allow parties to do?
It permits parties to rely on their stipulated amounts without having to precisely establish damages at trial.
85
Why does the petitioner argue the prospective approach is unfair to buyers?
It allows sellers to retain earnest money deposits even when the seller suffers no actual damage.
86
What principle does the petitioner believe is violated by the prospective approach?
The principle that contract damages should be compensatory only.
87
According to the court, why is it not the court's role to enforce contracts for equitable results?
The parties themselves know best what motivations and considerations influenced their bargaining.
88
What does the retrospective approach fail to consider according to the court?
It fails to give proper weight to the parties’ negotiations at the time of contract formation.
89
What is the central inquiry when evaluating liquidated damages at the time of contract formation?
Whether the specified liquidated damages were reasonable at that time.
90
What are the purposes of the liquidated damage provision in real estate agreements?
Certainty, assurance that the contract will be performed, and avoidance of litigation.
91
Under what condition should a prospective earnest money agreement be enforced?
If it is a reasonable prediction of potential damage suffered by the seller.
92
What is the main legal principle established in Madison Square Garden Corporation v. Carnera?
A negative covenant in a contract for personal services is enforceable by injunction where damages for breach are incapable of ascertainment.
93
What did the defendant claim regarding the enforceability of his negative promise?
He claimed there was a lack of consideration due to the contract being inequitable.
94
What was the court's ruling regarding the plaintiff's implied promise to employ the defendant?
The implied promise was considered as binding as if it were expressly stated.
95
What did the defendant do that led to the plaintiff seeking an injunction?
The defendant made a contract to engage in a boxing contest without the plaintiff's permission.
96
What was the outcome of the summary judgment in Shirley MacLaine Parker v. Twentieth Century-Fox Film Corporation?
The judgment was affirmed in favor of the plaintiff for $750,000 plus interest.
97
What must an employer show to use projected earnings from other employment as mitigation?
The other employment must be comparable or substantially similar to the original employment.
98
Why was the defendant's offer of 'Big Country' considered inferior employment?
It was different in kind and impaired the rights under the original contract.
99
What are the three different interests that contract remedies aim to protect?
* Expectation interest
* Reliance interest
* Restitution interest
100
What are the two general categories of remedies in contract law?
* Legal remedies
* Equitable remedies
101
List some limitations on the availability of damages.
* Must pass tests of foreseeability and certainty
* Must be reasonably mitigated
* Liquidated damages must be reasonable and not a penalty
102
What is the power to avoid a contract called when the rights of third parties intervene?
the power to avoid a contract
## Footnote
This refers to the legal ability to rescind a contract due to third-party rights affecting the agreement.
103
In some cases, a person is required to make an election of _______.
remedies
## Footnote
This means that the individual must choose one legal remedy among several options.
104
What is the liquidated damages clause in the contract between Owner and the army?
$300 a day for every day trucks are not operable after the deadline
## Footnote
This clause specifies a predetermined amount of damages for breach of contract.
105
How late was Contractor in finishing the remodel for Owner?
five days
## Footnote
The delay triggered potential claims for damages due to the contract's liquidated damages clause.
106
What amount can Owner claim as damages against Contractor for tardy completion?
$1,500
## Footnote
This is calculated based on the $300 per day for five days late.
107
What did the Inventor contract Contractor to manufacture?
ten prototypes of an electronic billiard table
## Footnote
The contract included an advance payment of $50,000 out of a total of $100,000.
108
What did Contractor do after Inventor repudiated the contract?
broke the ten tables up, salvaged $1,000 of wood
## Footnote
The remaining parts were used for firewood, resulting in a loss of potential sales.
109
What was the potential profit Contractor could have made had Inventor not breached?
$5,000 total
## Footnote
This is based on the sale of ten intact tables at $500 each.
110
What remedy could the basketball team seek after Calvin breached his contract?
specific performance or damages
## Footnote
The team may seek to enforce the contract or recover damages for the breach.
111
How much does Theresa owe Landlady after vacating the apartment?
$1,500
## Footnote
This amount is based on the rental difference over the remaining lease period.
112
What was the liquidated damages clause in the burglar alarm contract?
$500 as liquidated damages
## Footnote
This clause limited the liability of the burglar alarm company in case of failure to perform services.
113
What was the result of the burglary that occurred at Plaintiff's grocery store?
$330,000 loss
## Footnote
This was the amount stolen when the burglar alarm company failed to respond.
114
Was the liquidated damages clause valid in the burglar alarm case?
Yes
## Footnote
The clause was considered enforceable as it limited the liability of the contractor.
115
What was the expert testimony objected to by Defendant in the train accident case?
inflation rate of 5 percent for the next thirteen years
## Footnote
This testimony was used to calculate the loss in support money due to the father's death.
116
What type of damages must be proven with reasonable certainty?
actual damages
## Footnote
The Defendant argued that speculative damages should not be considered.
117
What type of damages did Plaintiff seek for being omitted from screen credits?
damages for loss of valuable publicity
## Footnote
The omission was considered a breach of their agreement regarding credit.
118
What remedy was available to Plaintiff regarding future damages from unmodified prints?
injunction against future injuries
## Footnote
This would prevent the Defendant from showing films without credit.
119
What happened to the telegram sent by Kerr Steamship Company?
it was mislaid and not delivered
## Footnote
This resulted in a loss of freight and potential profit.
120
Is RCA liable for the consequential damages from the failure to send the telegram?
Yes
## Footnote
The court may find RCA liable due to the importance of the message.
121
What did the Defendant falsely represent regarding equity in another house?
$15,000 to $20,000 of equity
## Footnote
This fraudulent representation led to the acceptance of the land contract.
122
What remedies did Plaintiff seek after discovering the fraud?
rescission, ejectment, recovery for lost use and expenses
## Footnote
Plaintiff aimed to reverse the contract and recover losses incurred.
123
Can Plaintiff both rescind the contract and get damages for its breach?
No
## Footnote
The election of remedies doctrine typically prevents this.
124
What is the daily liquidated damages for the construction contract?
$100.00 per day
## Footnote
This clause was set for each day the construction was not completed.
125
What is the rental value of the home being constructed?
$400–$415 per month
## Footnote
This amount is relevant to determining damages in the event of breach.
126
What interests do contract remedies protect?
all of the above
## Footnote
This includes restitution, reliance, and expectation interests.
127
What is a restitution interest?
that which restores any benefit one party conferred on the other
## Footnote
It aims to return the injured party to their pre-contract position.
128
When breach of contract caused no monetary loss, the plaintiff is entitled to _______.
nominal damages
## Footnote
These are minimal damages awarded when no actual loss occurred.
129
What type of damages are attributable to losses that flow from events that do not occur in the ordinary course of events?
consequential damages
## Footnote
These damages arise from indirect losses due to a breach.
130
Restitution is available when?
all of the above
## Footnote
This includes cases of incapacity, breach by the other party, or breach by the party seeking restitution.
