Chapter 15 contracts breach and remedies
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Chapter 15 Contracts: Breach and Remedies . Learning Objectives. What is the difference between compensatory and consequential damages? What are nominal damages? What is the usual measure of damages in a breach of contract? When will rescission and specific performance be granted as remedies?.

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Chapter 15 Contracts: Breach and Remedies

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Chapter 15 contracts breach and remedies

Chapter 15Contracts: Breachand Remedies


Chapter 15 contracts breach and remedies

Learning Objectives

  • What is the difference between compensatory and consequential damages?

  • What are nominal damages?

  • What is the usual measure of damages in a breach of contract?

  • When will rescission and specific performance be granted as remedies?


Damages

Damages

  • Compensatory Damages:

    • Compensates injured party (Plaintiff)

    • Plaintiff must prove actual damages caused by breach.

    • Calculation of Amount:

      • Generally: difference between Defendant’s promised performance and actual.

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


Damages1

Damages

  • Consequential (Special) Damages

    • Foreseeable damages that result from breach of contract.

    • Caused by other than breach of contract.

  • Punitive (Exemplary) Damages

    • Deter wrongdoer; set example.

  • Nominal Damages


Damages2

Damages

  • Mitigation of Damages

    • Injured party has a legal duty to mitigate damages.

  • Liquidated Damages vs. Penalties

    • Liquidated: fixed, certain dollar amount agreed to by parties, paid in the event of breach. LD’s are enforceable.

    • Penalty: designed to penalize a party. Generally not enforceable.


Rescission restitution

Rescission & Restitution

  • Rescission: cancel or undo a contract.

    • Available for fraud, mistake, duress and failure of consideration.

  • Restitution: recapture the benefit conferred on the defendant that has unjustly enriched her.

    • Parties must return goods, property or money.


Specific performance

Specific Performance

  • Equitable Remedy granted when damages are insufficient remedy

  • Always unique property.

  • Requires performance in contract.

  • Not granted for personal services.

  • Advantage: No need to calculate damages


Reformation

Reformation

  • Parties imperfectly expressed their intentions.

  • Court re-writes the contract to reflect parties’ true intentions.

  • Usually applies most often to fraud or mutual mistake.


Recovery for quasi contract

Recovery for Quasi Contract

  • Quasi Contract is fictional, created to prevent unjust enrichment

  • Plaintiff must show:

    • Benefit was conferred on the other party.

    • Party conferring benefit expected to be paid.

    • Party seeking recovery did not volunteer.

    • Retaining benefit without payment would be unjust enrichment.


Provisions limiting remedies

Provisions Limiting Remedies

  • Limit damages for breach of contract or limit remedies to:

    • Replacement

    • Repair or

    • Refund of the purchase price

  • Exculpatory Clauses may not be enforced


Election of remedies

Election of Remedies

  • Usually, the non-Breaching party has several remedies available

  • Common law requires injured party to choose the remedy (what she wants)

  • Prevents double recovery


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