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Breach of Contracts Remedies Part 1 2 04 15 2014 Part 1 Learning Objectives breaching party Identify money damages are available to the innocent non Identify situations when the non breaching party has a duty to attempt to minimize his damages Most Common Remedies Money Damages Rescission Restitution Specific Performance Contract Reformation Recovery Based on Quasi Contract Money Damages Compensatory Damages o Compensates non breaching party for loss of the bargain o Damages actually sustained out of pocket directly arising from breach Standard Measure Difference between value of promised performance value of actual performance o Incidental Damages Expenses cause directly by breach of contract o Measurement of Damages Sale of Goods Difference between contract market price OR difference between contract price that of substitute goods cover Sale of Land Specific Performance Damages Consequential Special Damages Foreseeable Losses o Breaching party is aware or should be aware cause the injury party additional loss Hadley Vs Baxendale 1854 Breaching party must be aware of extraordinary circumstances by extension Intent to re sell Punitive Damages Nominal Damages goods Punitive Damages Punish or deter future conduct o Generally not available for mere breach of contract o Usually tort e g fraud is also involved Nominal Damages No financial loss Liquidated Damages Specific amount agreed to be paid as damages in the event of future breach Enforceability Court asks two questions o When contract was entered into was it apparent damages would be difficult to estimate in the event of a breach o Was the amount set as damages a reasonable estimate and not excessive Liquidated Damages Provisions Example Construction contracts sales of real estate luggage entrusted to airlines Penalties Designed to penalize unenforceable Mitigation of Damages When breach of contract occurs the innocent injured party is generally held to a duty to reduce the damages that he or she Duty owed depends on the nature of the contract e g employment Understand how equitable remedies differ from monetary damages Identify situations that serve to waive a breach of contract suffered or a lease Part 2 Learning Objectives Equitable Remedies Rescission o Remedy whereby a contract is canceled and the parties are restored to the original positions that they occupied prior to o Both parties must return goods property or money Rescission does not always call for restitution Restitution is called for in some cases not involving the transactions Restitution previously conveyed o Notes rescission Specific Performance o Equitable remedy calling for the performance of the act promised in the contract Provides Remedy In Cases Involving Sale of Land Specially manufactured goods or goods identified to a contract NEVER in contracts for personal services Reformation intentions writing Allows a contract to be rewritten to reflect the parties true o Available when an agreement is imperfectly expressed in o Reformation is used often in cases dealing with misrepresentation or mistake of fact Recovery Based On Quasi Contract Arises when no contract actually exists Remedy created by courts to obtain justice prevent unjust Party conferring benefit can recover in quantum merit as much as enrichment she deserves Requirements of Quasi Contract o Benefit was conferred to the other party o Party conferring benefit reasonably expected to be paid o The benefit was not volunteered o Receiving benefit without paying for it would result in unjust enrichment Election of Remedies Purpose of the Doctrine To prevent Double Recovery o The non breaching party must choose which remedy to pursue except in rare cases when punitive damages are appropriate UCC Rejects Election of Remedies Waiver of Breach The non breaching party accepts defective performance of contract Consequences of a Waiver of Breach o Party waiving the breach cannot take later action on that particular issue contract continues Generally a single waiver will not waive subsequent additional or future breaches especially when unrelated to the initial breach Waiver will be extended to subsequent breaches when similar defective performances would be acceptable Contractual Provisions Limiting Remedies Enforceability of both common law UCC Limitation of Liability Clauses o Depends on type of breach excused by provision


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TEMPLE LGLS 1102 - Breach of Contracts & Remedies Part 1&2

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