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

Contracts: Breach of Contract and Remedies

• Most Common Remedies:
• Damages.
• Rescission and Restitution.
• Specific Performance.
• Reformation.
• Recovery Based on Quasi Contract.

• 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).

• 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.

• 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).

• 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).

• 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.

• 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.

• 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.

• 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.

• 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.

• 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.

• Exculpatory clauses.
• Provisions stating that no damages can be recovered.
• Limitation of liability clauses.
• Provisions that affect the availability of certain remedies.

• Lawyers.com website describing how contracts can be breached.
• Cornell U on contracts.
• Nolo.com on Contracts.
• Legal Research Exercises on the Web.