BCOR 3000 1nd Edition Lecture 19 Outline of Last Lecture I. DamagesII. Benefits of the BargainIII. Applying the Benefit of Bargain: Damages AmountIV. Applying the Benefit Bargain: Alternative PerformanceV. Consequential DamagesVI. MitigationVII. Liquidated DamagesVIII. Rescission and RestitutionOutline of Current LectureI. Liquidated DamagesII. Rescission and RestitutionIII. Specific PerformanceIV. Limits on RemediesV. In class review topic—KNOW THESE.Current LectureLiquidated 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 breachThese 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 filmIf 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 canbe 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 services1.) Performing a service against your will—they probably won’t do it well2.) Puts court into a supervisory role—now the court has to make sure the surgeon (for example) performs the surgery and dies it wellLimits 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 actsReview In Class—Important topics to know:1. Know the Rules2. Capacity3. Agreement4. Consideration5. Void vs. Voidable—able to make it void6. Illusory Promise—a promise when you look at it works is not actually promising anything. Failure to not perform a promise does not make itan illusory promise.7. Consequential Damages—foreseeable or known8. Preexisting duty—I promise to do something I am already legally comitted to do9. Past consideration—did something for me10. 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 toenforce 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,