1. Fundamentals of Business Law Summarized Cases, 8 th Ed., and Excerpted Cases, 2 nd Ed. ROGER LeROY MILLER Institute for University Studies Arlington, Texas GAYLORD A. JENTZ Herbert D. Kelleher Emeritus Professor in Business Law University of Texas at Austin

2. Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 2 Learning Objectives What is the difference between compensatory and consequential damages? What are nominal damages and when do courts award them? What is the standard measure of compensatory damages when a contract is breached? How are damages computed differently in construction contracts? Under what circumstances is the remedy of rescission and restitution available? When do courts grant specific performance as a remedy? What is the rationale underlying the doctrine of election of remedies?

3. Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 3 Types of Damages Compensatory Damages: –Compensates injured party (Plaintiff). –Plaintiff must prove actual damages caused by breach. Amount: Generally: difference between Defendant’s promised performance and actual. Sale of Goods: difference between the contract price and market. Sale of Land/Construction Contracts.

4. Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 4 Types of 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.

5. Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 5 Types of Damages Mitigation of Damages. –Injured party has a legal duty to mitigate damages. –CASE 12.1 Hanson v. Boeder (North Dakota, 2007).

6. Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 6 Types of 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.

7. Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 7 Equitable Remedies 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.

8. Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 8 Equitable Remedies Specific Performance. –Sale of Land. CASE 12.2 Stainbrook v. Low (Indiana, 2006). Reformation: court re-writes the contract to reflect parties’ true intentions.

9. Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 9 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. Recovery Based on Quasi Contract

10. Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 10Remedies

11. Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 11 Contract Provisions Limiting Remedies Exculpatory Clauses or Limitations of liability clauses. CASE 12.3 Lucier v. Williams (2004).

12. Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 12 Election of Remedies Nonbreaching party usually has several remedies available. Purpose is to prevent double recovery.