Contract and remedies


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Contract and remedies

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Contract and remedies

  1. 1. Contracts Breach of Contract and Remedies
  2. 2. Introduction <ul><li>Most Common Remedies: </li></ul><ul><ul><li>Damages. </li></ul></ul><ul><ul><li>Rescission and Restitution. </li></ul></ul><ul><ul><li>Specific Performance. </li></ul></ul><ul><ul><li>Reformation. </li></ul></ul><ul><ul><li>Recovery Based on Quasi Contract. </li></ul></ul>
  3. 3. §1: Damages <ul><li>Compensatory Damages—direct losses. </li></ul><ul><ul><li>Sale of Goods: difference between contract and market price. </li></ul></ul><ul><ul><li>Sale of Land: specific performance. </li></ul></ul><ul><ul><li>Construction Contracts: varies. </li></ul></ul><ul><li>Consequential (Special) Damages—foreseeable losses. </li></ul><ul><ul><li>Breaching party is aware or should be aware, cause the injury party additional loss. </li></ul></ul><ul><ul><li>Case 17.1: Hadley v. Baxendale (1854). </li></ul></ul>
  4. 4. Damages <ul><li>Punitive Damages—punish or deter future conduct. </li></ul><ul><ul><li>Generally not available for mere breach of contract. </li></ul></ul><ul><ul><li>Usually tort (e.g., fraud) is also involved. </li></ul></ul><ul><li>Nominal Damages—no financial loss. </li></ul><ul><ul><li>Defendant is liable but only a technical injury. </li></ul></ul>
  5. 5. Mitigation of Damages <ul><li>When breach of contract occurs, the innocent injured party is held to a duty to reduce the damages that he or she suffered. </li></ul><ul><li>Duty owed depends on the nature of the contract. </li></ul><ul><li>Case 17.2: Fujitsu Ltd. v. Federal Express Corp. (2001). </li></ul>
  6. 6. Liquidated Damages <ul><li>Liquidated Damages. </li></ul><ul><ul><li>A contract provides a specific amount to be paid as damages in the event of future default or breach of contract. </li></ul></ul><ul><li>Penalties. </li></ul><ul><ul><li>Specify a certain amount to be paid in the event of a default or breach of contract and are designed to penalize the breaching party. </li></ul></ul><ul><li>Case 17.3: Green Park Inn v. Moore (2002). </li></ul>
  7. 7. §2: Rescission and Restitution <ul><li>Rescission. </li></ul><ul><ul><li>A remedy whereby a contract is canceled and the parties are restored to the original positions that they occupied prior to the transactions. </li></ul></ul><ul><li>Restitution. </li></ul><ul><ul><li>Both parties must return goods, property, or money previously conveyed. </li></ul></ul><ul><li>Note : Rescission does not always call for restitution. Restitution is called for in some cases not involving rescission. </li></ul>
  8. 8. §3: Specific Performance <ul><li>Equitable remedy calling for the performance of the act promised in the contract. </li></ul><ul><li>Remedy in cases where the consideration is: </li></ul><ul><ul><li>Unique (land); </li></ul></ul><ul><ul><li>Scarce; or </li></ul></ul><ul><ul><li>Not available remedy in contracts for personal services. </li></ul></ul>
  9. 9. §4: Reformation <ul><li>Equitable remedy allowing a contract to be reformed, or rewritten to reflect the parties true intentions. </li></ul><ul><li>Available when an agreement is imperfectly expressed in writing. </li></ul>
  10. 10. §5: Recovery Based on Quasi Contract <ul><li>Equitable theory imposed by courts to obtain justice and prevent unjust enrichment. </li></ul><ul><li>Party seeking quantum meruit must show the following: </li></ul><ul><ul><li>A benefit was conferred to the other party. </li></ul></ul><ul><ul><li>Party conferring did so with the reasonable expectation of being paid. </li></ul></ul><ul><ul><li>The benefit was not volunteered. </li></ul></ul><ul><ul><li>Retaining benefit without paying for it would result in unjust enrichment of the party receiving the benefit. </li></ul></ul>
  11. 11. §6: Election of Remedies <ul><li>Doctrine created to prevent double recovery. </li></ul><ul><li>Nonbreaching party must choose which remedy to pursue. </li></ul><ul><li>UCC rejects election of remedies. </li></ul><ul><ul><li>Cumulative in nature and include all the available remedies for breach of contract. </li></ul></ul>
  12. 12. §7: Waiver of Breach <ul><li>A pattern of conduct that waives a number of successive breaches will operate as a continued waiver. </li></ul><ul><li>Nonbreaching party can still recover damages, but contract is not terminated. </li></ul><ul><li>Nonbreaching party should give notice to the breaching party that full performance will be required in the future. </li></ul>
  13. 13. §8: Contract Provisions Limiting Remedies <ul><li>Exculpatory clauses. </li></ul><ul><ul><li>Provisions stating that no damages can be recovered. </li></ul></ul><ul><li>Limitation of liability clauses. </li></ul><ul><ul><li>Provisions that affect the availability of certain remedies. </li></ul></ul>