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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.

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chapter 17 contracts breach of contract and remedies
Chapter 17

Contracts: Breach of Contract and Remedies

introduction
Introduction
  • Most Common Remedies:
    • Damages.
    • Rescission and Restitution.
    • Specific Performance.
    • Reformation.
    • Recovery Based on Quasi Contract.
1 damages
§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).
damages
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.
mitigation of damages
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).
liquidated damages
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).
2 rescission and restitution
§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.
3 specific performance
§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.
4 reformation
§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.
5 recovery based on quasi contract
§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.
6 election of remedies
§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.
7 waiver of breach
§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.
8 contract provisions limiting remedies
§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.
law on the web
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.