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Chapter 17 Contracts: Breach of Contract and Remedies PowerPoint PPT Presentation


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Chapter 17 Contracts: Breach of Contract and Remedies . Introduction. Most Common Remedies: Damages. Rescission and Restitution. Specific Performance. Reformation. Recovery Based on Quasi Contract. §1: Damages. Compensatory Damages—direct losses. - PowerPoint PPT Presentation

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Chapter 17 Contracts: Breach of Contract and Remedies

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Chapter 17 contracts breach of contract and remedies l.jpg

Chapter 17

Contracts: Breach of Contract and Remedies


Introduction l.jpg

Introduction

  • Most Common Remedies:

    • Damages.

    • Rescission and Restitution.

    • Specific Performance.

    • Reformation.

    • Recovery Based on Quasi Contract.


1 damages l.jpg

§1: Damages

  • Compensatory Damages—direct losses.

    • Sale of Goods: difference between contract and market price.

    • Sale of Land: specific performance.

    • Construction Contracts: varies.

  • Consequential (Special) Damages—foreseeable losses.

    • Breaching party is aware or should be aware, cause the injury party additional loss.

    • Case 17.1:Hadley v. Baxendale (1854).


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Damages

  • Punitive Damages—punish or deter future conduct.

    • Generally not available for mere breach of contract.

    • Usually tort (e.g., fraud) is also involved.

  • Nominal Damages—no financial loss.

    • Defendant is liable but only a technical injury.


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Mitigation of Damages

  • When breach of contract occurs, the innocent injured party is held to a duty to reduce the damages that he or she suffered.

  • Duty owed depends on the nature of the contract.

  • Case 17.2:Fujitsu Ltd. v. Federal Express Corp. (2001).


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Liquidated Damages

  • Liquidated Damages.

    • A contract provides a specific amount to be paid as damages in the event of future default or breach of contract.

  • Penalties.

    • 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.

  • Case 17.3:Green Park Inn v. Moore (2002).


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§2: Rescission and Restitution

  • Rescission.

    • A remedy whereby a contract is canceled and the parties are restored to the original positions that they occupied prior to the transactions.

  • Restitution.

    • Both parties must return goods, property, or money previously conveyed.

  • Note: Rescission does not always call for restitution. Restitution is called for in some cases not involving rescission.


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§3: Specific Performance

  • Equitable remedy calling for the performance of the act promised in the contract.

  • Remedy in cases where the consideration is:

    • Unique (land);

    • Scarce; or

    • Not available remedy in contracts for personal services.


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§4: Reformation

  • Equitable remedy allowing a contract to be reformed, or rewritten to reflect the parties true intentions.

  • Available when an agreement is imperfectly expressed in writing.


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§5: Recovery Based on Quasi Contract

  • Equitable theory imposed by courts to obtain justice and prevent unjust enrichment.

  • Party seeking quantum meruit must show the following:

    • A benefit was conferred to the other party.

    • Party conferring did so with the reasonable expectation of being paid.

    • The benefit was not volunteered.

    • Retaining benefit without paying for it would result in unjust enrichment of the party receiving the benefit.


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§6: Election of Remedies

  • Doctrine created to prevent double recovery.

  • Nonbreaching party must choose which remedy to pursue.

  • UCC rejects election of remedies.

    • Cumulative in nature and include all the available remedies for breach of contract.


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§7: Waiver of Breach

  • A pattern of conduct that waives a number of successive breaches will operate as a continued waiver.

  • Nonbreaching party can still recover damages, but contract is not terminated.

  • Nonbreaching party should give notice to the breaching party that full performance will be required in the future.


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§8: Contract Provisions Limiting Remedies

  • Exculpatory clauses.

    • Provisions stating that no damages can be recovered.

  • Limitation of liability clauses.

    • Provisions that affect the availability of certain remedies.


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Law on the Web

  • Lawyers.com website describing how contracts can be breached.

  • Cornell U on contracts.

  • Nolo.com on Contracts.

  • Legal Research Exercises on the Web.