© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. C HAPTER 18: C ONTRACT R EMEDIES

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. A.Monetary Damages. B.Remedies in Equity. C.Restitution. D.Limitations on Remedies. T OPICS C OVERED IN C HAPTER 18: C ONTRACT R EMEDIES

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. M ONETARY D AMAGES  Monetary damages is the most common judicial remedy for breach of contract.  Compensatory Damages. Loss of Value – value of promised performance minus value of actual performance. 

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. M ONETARY D AMAGES  Compensatory Damages. Cost Avoided – loss or costs the injured party avoids by not having to perform. Incidental Damages – arise directly out of a breach. Consequential Damages – not arising directly out of a breach but arising as a foreseeable result of the breach.

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. M ONETARY D AMAGES  Reliance Damages – contract damages placing the injured party in as good a position as she would have been in had the contract not been made.  Nominal Damages – a small sum awarded where a contract has been breached but the loss is negligible or unproved.

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. M ONETARY D AMAGES  Damages for Misrepresentation. Fraud. Benefit-of-the-Bargain, and Out-of-Pocket measure of damages. Plaintiff may also be entitled to punitive or ‘bad faith’ damages. Nonfraudulent Misrepresentation. Plaintiff may recover general damages and consequential damages.

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. M ONETARY D AMAGES  Punitive Damages – are generally not recoverable for breach of contract.  Liquidated Damages – reasonable damages agreed to in advance by the parties to a contract. A RROWHEAD S CHOOL D ISTRICT N O. 75, P ARK C OUNTY, M ONTANA V. J AMES A. K LYAP, J R. (2003). A RROWHEAD S CHOOL D ISTRICT N O. 75, P ARK C OUNTY, M ONTANA V. J AMES A. K LYAP, J R. (2003).

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. M ONETARY D AMAGES  Limitations on Damages. Foreseeability of Damages – potential loss that the party now in default had reason to know of when the contract was made. H ADLEY V. B AXENDALE (1854). H ADLEY V. B AXENDALE (1854). 

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. M ONETARY D AMAGES  Limitations on Damages. Certainty of Damages – damages are not recoverable beyond an amount that can be established with reasonable certainty. 

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. M ONETARY D AMAGES  Limitations on Damages. Mitigation of Damages – injured party may not recover damages for loss he could have avoided by reasonable effort. P ARKER V. T WENTIETH C ENTURY -F OX F ILM C ORP. (1970). P ARKER V. T WENTIETH C ENTURY -F OX F ILM C ORP. (1970).

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. R EMEDIES IN E QUITY  Available only where there is no adequate remedy at law.  Types: Specific Performance – court decree ordering breaching party to render promised performance. R EAL E STATE A NALYTICS, LLC V. V ALLAS (2008).  R EAL E STATE A NALYTICS, LLC V. V ALLAS (2008). 

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. R EMEDIES IN E QUITY  Types: Injunctions – court order prohibiting a party from doing a specific act. M ADISON S QUARE G ARDEN C ORP., III V. C ARNERA (1931). M ADISON S QUARE G ARDEN C ORP., III V. C ARNERA (1931). Reformation – court order correcting a written contract to conform with the original intent of the contracting parties.

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. R ESTITUTION  Restoration of injured party to position she was in before the contract was made.  Party Injured by Breach –  Party Injured by Breach – if other party breaches the contract by nonperformance or repudiation. 

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. R ESTITUTION  Party in Default –  Party in Default – for any benefit conferred in excess of the loss caused by the breach.  Statute of Frauds –  Statute of Frauds – if a contract is unenforceable because of the statute of frauds, a party may recover the benefits conferred on the other party in reliance on the contract.

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. R ESTITUTION  Voidable Contracts – a party who has avoided a contract is entitled to restitution for any benefit conferred on the other party.

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. L IMITATIONS ON R EMEDIES  Election of Remedies – if remedies are not inconsistent, a party injured by a breach of contract may seek more than one. 

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. L IMITATIONS ON R EMEDIES  Loss of Power of Avoidance – a party with the power to avoid a contract may lose that power by: M ERRITT V. C RAIG (2000). Affirmance. M ERRITT V. C RAIG (2000). Delaying unreasonably in exercising the power of avoidance. Being subordinate to intervening rights of 3rd parties.

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Equitable Remedies may be available No Compensatory Damages Restitution Reliance Damages Legal Remedies are available No C ONTRACT R EMEDIES Are legal remedies adequate? Yes Is there a provision for reasonable liquidated damages? Yes Recovery of liquidated damages Yes No Remedy Has the contract been breached? No