VIII: Breach of K remedies

Question 1

CL Breach of K

Answer 1

Once a duty exists, nonperformance is a breach unless duty discharged.

Question 2

Material breach

Answer 2

allows nonbreaching party to w/hold any promised performance and to pursue remedies for breach including damages

Question 3

Minor breach

Answer 3

nonbreaching party entitled to pursue remedies for nonmaterial breach but must perform under the K

Question 4

Breach of K UCC

Answer 4

In general, seller must strictly perform w/ all obligations under the K

Material breach only applies to installment Ks or when parties stipulate in K.

Question 5

CL anticipatory repudiation

Answer 5

Promisor repudiates before time for performance: repudiation must be clear and unequivocal through words or acts

Nonbreaching party may: treat repudiation as breach, or ignore repudiation and demand performance of promisor, bu may suspend any performance by promisee if it would increase promisor’s damages

If date of performance has not passed and the only performance left is payment, must wait for actual suit before filing suit.

Doesn’t apply to unilateral Ks

Question 6

Retraction of repudiation

Answer 6

Can be retracted until promisee acts in reliance on repudiation, accepts repudiation, or commences action for breach of K.

Question 7

Anticipatory repudiation UCC

Answer 7

Unequivocal refusal of buyer/seller to perform or when reasonable grounds for insecurity arise and the other party fails to provide adequate assurances w/in reasonable time (not to exceed 30 days)

Question 8

Prospective inability to perform under UCC

Answer 8

Either party can demand assurances if reasonable grounds for insecurity about other party’s ability to perform.

Failure to provide adequate assurances w/in reasonable time treated as repudiation (not to exceed 30 days)

Question 9

Retraction of repudiation UCC

Answer 9

permitted if other party has not canceled the K or materially changed his position.

Question 10

Expectation damages

Answer 10

Intended to put injured party in same position as if K had been performed

Must be calculated w/ reasonable certainty

Loss in value + other loss - cost avoided - loss avoided

Question 11

Partial performance expectation damages

Answer 11

Partially performing party recovers work performed + expectation damages for work not yet performed

Question 12

Construction K: defective performance

Answer 12

damages equal to the difference between the K price and cost of construction by another builder.

Question 13

Defective performance sale of goods

Answer 13

Damages equal to the difference between the value of the goods as warranted and the actual value of the tendered nonconforming goods.

Question 14

Diminution in value (economic waste)

Answer 14

Occurs when the amount of damages owed is disproportional to any economic benefit/utility gained as a result of the award

Question 15

Consequential damages

Answer 15

Reasonably foreseeable losses to nonbreaching party that go beyond expectation damages (e.g. loss of profits)

Damages are recoverable if they are natural and probable consequences of breach, or if they were contemplated by the parties at K formation, or if they were otherwise foreseeable.

Ds defense that Ps losses would have occurred regardless of D’s breach

Reasonable certainty: dollar amount of damages must be proven w/ reasonable certainty
If lost profits are too speculative, courts may limit recovery to reliance damages (reasonable expenditures made in connection with K)

Question 16

UCC breach of warranty

Answer 16

Limitation of consequential damages for personal injury in the case of consumer goods is prima facie unconscionable

Limitation of damages when the loss is commercial is not prima facie unconscionable

Question 17

Liquidation of damages and penalties

Answer 17

Damages stipulated by the parties to the K as a reasonable estimation of actual damages to be recovered in the event of a breach.

Enforceable if: parties intended to agree in advance to damages that might arise from breach

Stipulated amount was reasonable at the time of K, bearing some relation to damages that might be sustained, and

Actual damages would be uncertain in amount if difficult to prove.

Question 18

Incidental damages

Answer 18

Compensation for commercially reasonable expenses incurred as a result of other party’s breach

Question 19

Punitive damages

Answer 19

Rarely available in K actions but may be available if conduct constituting breach is also recoverable under tort theory

Question 20

Nominal damages

Answer 20

When no damages are alleged/proven

Question 21

Mitigating damages

Answer 21

Party to K must avoid or mitigate damages to extent possible by taking such steps as to not involve undue risk, expense, or inconvenience.

Nonbreaching party held to standard of reasonable conduct in preventing loss

Failure to mitigate reduces damages that may be recoverable by nonbreaching party

Question 22

Restitution: recovery by nonbreaching party

Answer 22

Restores a party the benefit conferred on the other party

Measured by either reasonable value of the D obtaining that benefit from another source, or increase in D’s wealth from having received that benefit

If P has not substantially performed and is in breach, P not permitted to recover

Recovery by nonbreaching party: any benefit conferred on breaching party by way of part performance or reliance

Nonbreaching party: may not recover restitution if he has fully performed and the only remaining performance is payment of a definite sum of money

Question 23

Restitution: recovery by breaching party

Answer 23

Recovery by breaching party: If D has benefitted from P’s performance, P can recover for benefit conferred less the D’s damages for the breach

P generally can’t recover if P’s breach was willful or if K provides that nonbreaching party may retain value of breaching party’s performance as liquidated damages

Question 24

Reliance damages

Answer 24

Reasonable out of pocket expenses incurred by nonbreaching party.

Recoverable if nonbreachning party incurs expenses in reasonable reliance upon the promise that the other party would perform

Party cannot recover both reliance and expectation damages

Question 25

Specific performance

Answer 25

An equitable remedy possible when damages are inadequate.

Difficulty proving damages w/ reasonable certainty.

Hardship on D

Balance of equities

Practicality of enforcement

Mutuality of agreement

Real property: specific performance granted bc real property is considered unique

UCC specific performance may be granted to the buyer when goods are rare or unique

Equitable defenses - laches prejudicial delay in bringing the action or unclean hands: nonbreaching party guilty of some wrongdoing in the tx, may be raised by breaching party.

Question 26

UCC buyer remedies

Answer 26

When seller fails to perform or makes nonconforming tender.

Failure to tender goods: Damages: market price minus K price plus incidental and consequential damages

Cover: B may purchase similar goods elsewhere adn recover replacement value minus K price

Specific performance for unique goods

Nonconforming tender: buyer has right to accept or reject all or party of the goods and inspect before making that decision.

Rejection: buyer can reject goods if he gives notice to seller w/in reasonable time before acceptance, and is then entitled to return of any payments made or seek same remedies as if no tender was made.

Acceptance: B accepts goods by expressly stating acceptance, using the goods, or failing to reject goods

Right to cure: seller has right to cure defective tender if time of performance is not yet due or seller had reasonable grounds to believe that buyer would accept despite nonconformity

Question 27

UCC Seller Remedies

Answer 27

Right to price upon acceptance: price is due after goods physically delivered to the buyer and buyer has had opportunity to inspect

Right to reclaim goods: from insolvent buyer if he makes a demand w/in 10 days after buyer receives goods

Stoppage of goods in transit: permitted if buyer breaches or is insolvent

Wrongful rejection by buyer: seller can collect damages, resell the goods, or recover teh price, and also collect incidental damages and if seller is a lost volume seller, lost profits.

Question 28

Risk of Loss unidentified goods

Answer 28

If goods are damaged/destroyed and ther is no breach, risk of loss is on seller until he satisfies his delivery obligations and then risk shifts to buyer

Question 29

ROL shipment K

Answer 29

risk of loss passes to buyer when the seller gives possession of the goods to the carrier and makes proper contract for their shipment

Question 30

ROL Destination K

Answer 30

ROL passes to buyer when the seller tenders the goods at the place specified in the K

Question 31

ROL and breach

Answer 31

If seller delivers nonconforming goods, ROL remains on the seller until buyer accepts or there is a cure

If buyer breaches/repudiates after goods have been identified but before ROL shifts, the risk immediately shift to buyer (to extent lack of ins of sell).

Question 32

SOL on breach of sales K

Answer 32

4 years

Generally c/a accrues when breach occurs, regardless of whether aggrieve party knows

Parties may reduce SOL but not less than 1 year, can’t extend it.