Swaggy-P: Breach of Contracts
Lava Excavators, Inc., needs a drill to continue its operations and orders one for $3,000 from Mining Supplies Company. Lava tells Mining that it must receive the drill by Tuesday or it will lose $10,000. Mining ships the drill late. Lava can recover
$10,000.
Kris contracts to work exclusively for Little Manufacturing Company during May for $5,000. On April 30, Little cancels the contract. Kris finds another job during May but earns only $3,000. Kris files a suit against Little. As compensatory damages, Kris can recover
$2,000.
Bret contracts to work for City Construction Corporation (CCC) during July for $4,500. On June 30, CCC cancels the contract. Bret declines a similar job with Downtown Builders, Inc., which would have paid $4,000. Bret files a suit against CCC. As compensatory damages, Bret can recover
$500.
Earl holds 1,000 pounds of perishable fruit in storage for Fresh Food Corporation. Fresh Food does not pay for the storage. Earl sells the fruit to Green Grocers, Inc. This sale represents
a mitigation of damages.
Drew contracts to sell a residential duplex to Evan. The contract provides that if Drew does not close the deal by September 15, he must pay Evan one-half of the contract price. This provision is not enforceable because it is
a penalty clause.
SealCoat Paving enters into a contract with Royal Golf & Tennis Club to provide surface material for Royal's tennis courts by April 1 for a tournament to begin May 1. The contract specifies an amount to be paid if the contract is breached. This is a liquidated damages clause if the amount is
a reasonable estimate of the loss on a breach.
Tristan hires Stefani to perform at Tristan's Club, but she breaches the agreement to accept a higher-paying job at Rock Star Arena. Tristan files a suit against her. The court will most likely
award damages to Tristan..
Clutch Auto Parts enters into a contract with Bio Health Club for discounted memberships for Clutch's employees. Bio breaches the contract and Clutch enters into a contract with Apex Fitness for the same service at a lower price. Clutch might be awarded nominal damages to
establish, as a matter of principle, that Bio acted wrongfully.
A party seeking to recover in quasi contract must show that he or she has been unjustly enriched.
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A party who knowingly accepts defective performance of a contract thereby acknowledges the breach and can take later action on it.
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Expenses that are caused directly by a breach of contract—such as those incurred to obtain performance from another source—are incidental damages.
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Liquidated damages provisions are usually not enforceable.
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Most parties go to trial for damages or other remedies rather than settle their lawsuits.
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Rescission advances the contracting parties to the position they would have been in if the contract had been fully executed.
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The measurement of compensatory damages for breach of contract is the same for all types of contracts.
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Value Ventures, Inc., contracts to buy Umbrage Corporation's assets. Umbrage breaches the contract. Value files a suit against the corporation, seeking various remedies. The doctrine of election of remedies has been eliminated in contracts involving sales of
goods
Mitchell orally agrees to pay Lorena to plant and harvest a quarter of Mitchell's farm acreage for four soybean seasons. After Lorena prepares the land and plants the first crop, Mitchell says that their deal is off. Lorena can most likely recover
in quasi contract.
A contract between E-Debits, Inc., and Fiscal Credit Corporation includes a provision excluding liability as a result of fraud. This provision is
not enforceable.
Cooper's Brakes, Inc., enters into a contract with Byron's Service to fix Cooper's hydraulic equipment. Byron delays the repair for five days, aware that Cooper loses a certain percentage of profit each day. An award to Cooper of consequential damages would
provide Cooper with funds for a foreseeable loss beyond the contract.
Windstar Heli-Pads, Inc., enters into a contract to employ Valerie as an on-site project manager for two years. Windstar breaches the contract. Valerie has a duty to
reduce the damages that Valerie might otherwise suffer.
A contract for a sale of land from Evergreen Properties, Inc., to Longlife Investment Corporation contains an erroneous legal description. The most appropriate remedy for these parties is
reformation.
Refer to Fact Pattern 18-B1. If Watershed breaches the contract, Bella's remedy would most likely be
specific performance
For Petra to recover the benefit of her bargain from a breached real estate contract with River City Properties, Inc., the most appropriate remedy is
specific performance.
A liquidated damages provision specifies that a certain amount is to be paid in the event of a future default or breach of contract.
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Consequential damages are foreseeable damages that arise from a party's breach of a contract.
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Damages compensate a party for harm suffered as a result of another's wrongful act.
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If a party breaches a contract, the other party can choose one or more of several remedies.
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In a contract for a sale of goods, the usual measure of compensatory damages is the difference between the contract price and the market price.
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Nominal damages normally establish that the defendant acted wrongly.
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Ordinarily, the remedy for a seller's breach of a contract for a sale of real estate is specific performance.
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Punitive damages are almost never available in contract disputes.
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Reformation allows a court to rewrite a contract to reflect the parties' true intentions.
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Restitution involves one party's recapture of a benefit through which another party has been unjustly enriched.
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The measure of damages on a breach of contract is the amount that will impress on the breaching party the harm that has been done.
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When a breach of contract occurs, the innocent injured party has a duty to mitigate the damages.
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Whether a contract's limitation-of-liability clause will be enforced depends on the type of breach that the clause excuses.
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Ralph contracts to sell his Double-R Ranch to Samantha on May 1. On April 20, Ralph tells Samantha that he will not go through with the deal. Samantha can recover
the Double-R Ranch.
GroundCover Pools, Inc., agrees to build a swimming pool for Franci, but fails to complete the job. Franci hires EquiAqua, Inc., to finish the project. Candy may recover from GroundCover
the costs needed to complete construction.
Fact Pattern 18-B1 (Questions B3-B4 apply) Bella Homes enters into a contract to buy 132 acres from Watershed Holdings to subdivide and sell in fifth-acre lots for Pristine Acres, a residential development.
the difference between the land's contract and market prices.
Refer to Fact Pattern 18-B1. If Bella breaches the contract, Watershed's remedy would most likely be
the difference between the land's contract and market prices.
Handy Hardware Store agrees to hire Ilsa for one year at a salary of $500 per week. When Handy cancels the contract, Ilsa spends $100 to obtain a similar job that pays $450 per week for a year. Ilsa is entitled to recover
the difference between the wages at the two jobs plus $100.
