BUSA2106 Lecture 14Outline of Last Lecture I. Definition of a contractII. Contract formation III. Contract breach Outline of Current Lecture I. Contract PerformanceII. Contract breach III. RemediesCurrent Lecture • Is the contract unconscionable? What do you think? • Should courts void contracts on grounds of unconscionability? Do contracts have to be in writing? STATUTE OF FRAUDS: A state statute under which certain types of contracts must be in writing to be enforceable• Statute of Frauds requires writing for: 1. Contracts for land 2. Contracts that cannot be performed a year and a day after the date the contract is formed3. Secondary contracts, e.g. pay another person’s debt 4. Prenuptial agreements 5. Contracts for the sale of goods for $500 or more • Writing must contain all material terms. BREACH OF CONTRACT: The failure, without legal excuse, of a promisor to perform the obligations of a contract. Breach of contract Legal remedies 1. Compensatory damages: direct losses and costs2. Consequential damages: indirect and foreseeable losses 3. Punitive damages: punishment/ deterrence (rare; usually fraud) 4. Nominal: recognize wrongdoing when no monetary loss 5. Liquidated damages: contract for the amount of damages Duty to mitigate MITIGATION OF DAMAGES: A rule requiring a plaintiff to do whatever is reasonable to minimize the damages caused by the defendant. • Injured party has a duty to minimize (mitigate) his or her damages Breach of contract • Equitable remedies: RESCISSION: is the process by which a contract is canceled or terminated and the parties are returned to the positions they occupied prior to forming it.RESTITUTION: An equitable remedy under which a person is restored to his or her original position prior to loss or injury, or placed in the position he or she would have been in had the breach not occurred.SPECIFIC PERFORMANCE: An equitable remedy requiring exactly the performance that was specified in a contract; usually granted only when money damages would be an inadequate remedy and the subject matter of the contract is unique (for example, real property).• Will not be granted unless legal remedies (damages) are inadequate. REFORMATION: is an equitable remedy used when the parties have imperfectly expressed their agreement in writing. Reformation enables a court to modify, or rewrite, the contract to reflect the parties’ true intentions. (changes the
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