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Chapter 20 Breach of Contract and Remedies

Chapter 20 Breach of Contract and Remedies. Twomey, Business Law and the Regulatory Environment (14th Ed.). Damages and Remedies [20-1]. Anticipatory Repudiation. No Waiver. Breach. No Cure. Nominal Damages. Compensatory Damages. Punitive Damages. Consequential Damages.

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Chapter 20 Breach of Contract and Remedies

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  1. Chapter 20Breach of Contract and Remedies Twomey, Business Law and the Regulatory Environment (14th Ed.)

  2. Damages and Remedies[20-1] Anticipatory Repudiation No Waiver Breach No Cure Nominal Damages Compensatory Damages Punitive Damages Consequential Damages Remedies for Breach Rescission Specific Performance Injunction } Liquidated Damages Judicial Review Agreed Upon Remedies Limitation of Liability Exculpatory or Hold Harmless Clauses Chapter 20

  3. What Follows the Breach? Contract Continues as Though There Were No Breach Waiver of Breach Contract Continues as Modified Defective Performance Accepted with Reservation of Right to Damages Contract Performed but at Reduced Price or, in Suit for Full Price, Counterclaim for Damages Contractual Limitations of Remedy or Provision for Liquidated Damages Breach of Contract Remedy Specified in Contract Action for Damages Action for Rescission Action for Specific Performance Action for Injunction Chapter 20

  4. Chapter 20 Summary When a party fails to perform a contract or performs improperly, the other contracting party may sue for damages caused by the breach. What may be recovered by the aggrieved person is stated in terms of being direct or consequential damages. Direct damages are those that ordinarily will result from the breach. Chapter 20

  5. Chapter 20 Summary [2] Consequential damages are those that are in fact caused by the breach but do not ordinarily or necessarily result from every breach of the particular kind of contract. Direct damages may be recovered on proof of causation and amount. Chapter 20

  6. Chapter 20 Summary [3] Consequential damages can be recovered only if, in addition to proving causation and amount, it is shown that they were reasonably within the contemplation of the contracting parties as a probable result of a breach of the contract. The right to recover consequential damages is lost if the aggrieved party could reasonably have taken steps to avoid such damages. In other words, the aggrieved person has a duty to mitigate or reduce damages by reasonable means. Chapter 20

  7. Chapter 20 Summary [4] In any case, the damages recoverable for breach of contract may be limited to a specific amount by a liquidated damages clause. Damages may be canceled out completely by a limitation-of-liability clause. Chapter 20

  8. Chapter 20 Summary [5] In a limited number of situations, an aggrieved party may bring an action for specific performance to compel the other contracting party to perform the acts called for by the contract. Specific performance by the seller is always obtainable for the breach of a contract to sell land or real estate on the theory that such property has a unique value. Chapter 20

  9. Chapter 20 Summary [6] With respect to other contracts, specific performance will not be ordered unless it is shown that there was some unique element present so that the aggrieved person would suffer a damage that could not be compensated for by the payment of money damages. Chapter 20

  10. Chapter 20 Summary [7] The aggrieved person also has the option of rescinding the contract if (1) the breach has been made concerning a material term and (2) the aggrieved party returns everything to the way it was before the contract was made. Rescission and recovery of money damages are alternative remedies except when the contract relates to the sale of goods. In the latter case, the aggrieved party may both rescind and obtain money damages. Chapter 20

  11. Chapter 20 Summary [8] Although there has been a breach of the contract, the effect of this breach is nullified if the aggrieved person by word or conduct waives the right to object to the breach. Conversely, an aggrieved party may accept a defective performance without thereby waiving a claim for breach if the party makes a reservation of rights. A reservation of rights can be made by stating that the defective performance is accepted “without prejudice,” “under protest,” or “with reservation of rights.” Chapter 20

  12. Chapter 20 Summary [9] The continued waiver of a breach of a particular clause may indicate that the parties have modified their contract by abandoning the clause to which the waiver relates. To guard against the unintended modification of a contract by waiver, the contract may contain a clause stating that nothing shall constitute a modification of the contract unless stated in writing. Chapter 20

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