BCOR 3000 1nd Edition Lecture 19 Outline of Last Lecture I Damages II Benefits of the Bargain III Applying the Benefit of Bargain Damages Amount IV Applying the Benefit Bargain Alternative Performance V Consequential Damages VI Mitigation VII Liquidated Damages VIII Rescission and Restitution Outline of Current Lecture I Liquidated Damages II Rescission and Restitution III Specific Performance IV Limits on Remedies V In class review topic KNOW THESE Current Lecture Liquidated Damages Fixed in advance OK if Not excessive very little ok Actual amount is hard to determine Simply written into contracts if there is a breach These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Ex Late rent fee stated in lease if late payment you and the landlord made an agreement in lease stating a value you must pay if late Big concern when drafting the contract the amounts need to be fair if not it will not be held up in court Examples Loss of rental security deposit Termination fee re cell service Loss of earnest money New roll of film If the liquidated damage clause it to HUGE then what the damages are it is against public policy and the court will not enforce it Court cares if they are large amounts but not so much if they are small If it is too hard to prove most likely the liquidated damages are okay Example Builder builds me a house that is supposed to ready on December 1st If the contractor is late in finishing we can figure out what the damages are for having to stay elsewhere If there is a breach and there are temporary living expense it will be easy to figure out If in the lease it says there is a 500 deduction from total cost for every day I am living elsewhere the number is too large and will not be enforced Example contractor is building a new family room with a home theatre and it is supposed to be done by December 1st It will be hard to figure out what the damages would be for not having one room that is not accessible 500 would be too high but 100 may be more reasonable Rescission and Restitution Rescission the undo ing of the contract Restitution giving back what you have gotten already Generally ordered by a court if the bargain cannot be figured out Used where benefit of bargain does not work Example Artist breaches by not completing a custom sculpture for me What is benefit of bargain receiving custom yard art How much would it be worth Who knows If I have already paid the sculptor you can only get your money back No damages can be made Put the parties back where they were Specific Performance This is where alternative performance doesn t apply Making the other party do what he was supposed to do Courts don t like it supervisory role Awarded when damages are not adequate Buyer of unique item all real estate Never for personal services even if service is highly specialized If buyer is breacher cannot get court to force someone to buy b c of alternative performance Only works in favor of the buyer Possibility for the buyer for a unique item real estate ONLY IF item is still available and has not been sold NEVER EVER EVER EVER available for services 1 Performing a service against your will they probably won t do it well 2 Puts court into a supervisory role now the court has to make sure the surgeon for example performs the surgery and dies it well Limits on Remedies A type of exculpatory clause Sometimes enforced but won t be if essentially undoes the entire contract e g home inspection contract if inspector misses something it could cost you A LOT of money this limitation on the remedy undoes the entire contract and will not enforce the limit on the remedy Will let the homebuyer recovery more then what was lost Not enforced re illegal acts Review In Class Important topics to know 1 2 3 4 5 6 Know the Rules Capacity Agreement Consideration Void vs Voidable able to make it void Illusory Promise a promise when you look at it works is not actually promising anything Failure to not perform a promise does not make it an illusory promise 7 Consequential Damages foreseeable or known 8 Preexisting duty I promise to do something I am already legally comitted to do 9 Past consideration did something for me 10 3rd Party Beneficiary are they intended to benefit If so they can sue If they randomly benefit they cannot sue 11 Non compete Issues employees and business owners Court cares more about employees If it relates to employees the court will look at the case closely 12 Public Policy a court can look at any contract and choose not to enforce it They look at it as if it is illegal and not enforce it Always against public policy breach of marriage force of divorce Courts will examine prenups non competes etc