BGEN 361 Ch. 19

consequential damages

Special damages that compensate for a loss that is not direct or immediate (for example, lost profits). The special damages must have been reasonably foreseeable at the time the breach or injury occurred in order for the plaintiff to collect them.

Jordynne was the manager of Pets-R-Us, a pet store in Southern Valley Mall. Pets-R-Us had a one-year lease, and rent payments were $2,000.00 per month. Five months into the lease, Jordynne found a better site for the pet store. She notified Southern's manager, vacated the mall, and moved her store to its new location. After two months, Southern was able to re-lease the premises to another retail store, but at a reduced rent of $1,800.00 per month. If Southern successfully sues Pets-R-Us, Southern will likely receive:

$14,000.00 in damages.

For which of the following contracts would a court be likely to grant a remedy of specific performance? Select all that apply.

1. A contract for the sale of a Picasso painting 2. A contract for the sale of land

What are the differences between legal and equitable remedies? Choose 2 answer choices.

1. One is monetary. 2. One requires actions instead of damages.

Restitution is an appropriate remedy when: (Select three)

1. when the parties never had a contract. 2. a contract has been breached. 3. a contract has been rescinded.

quantum meruit

A Latin phrase, meaning "as much as he deserves," that describes the extent of compensation owed under a quasi contract.

mitigation of damages

A rule requiring a plaintiff to have done whatever was reasonable to minimize the damages caused by the defendant.

waiver

An intentional, knowing relinquishment of a legal right.

incidental damages

Damages that compensate for expenses directly incurred because of a breach of contract, such as those incurred to obtain performance from another source.

Fred and Wilma enter into a contract for horse riding lessons. Fred accidentally types the price for lessons to be $4.00 each instead of $44.00 each. Wilma wishes to enforce the contract at $4.00 per lesson. Which remedy would be most effective?

Reformation

Manuel contracts to sell a painting that was painted by his deceased grandmother, then has a change of heart and decides to hang it in his own bedroom. He notifies Nadine, the person who had planned to buy it. Can Nadine have the contract enforced?

Yes, it can be enforced under the equitable remedy of specific performance.

Reformation of a contract is considered:

an equitable remedy.

A quantum meruit remedy is equivalent to:

the reasonable value of the agreement.

In which of the following scenarios is a court likely to order reformation of a contract? Select all that apply.

1. Fraud by one of the parties 2. Clerical error in the contract 3. Mutual mistake by the parties

Shania offers to sell her lakefront property to Tonya for $150,000, and Tonya agrees to buy it. Tonya and Shania both sign the real estate contract, but, before they close the deal, Shania learns that a new resort is being opened on the lake. The opening of the resort will drive property prices up in the area, so Shania believes she can sell her property to someone else and get a better price on the deal. Shania tells Tonya that she has decided not to sell the property to Tonya. If Tonya sues to enforce the contract, a court will likely:

1. X not enforce the contract, because people are free to choose to whom they sell their property. 2. award monetary damages to Tonya. 3. require Shania to go through with the sale. 4. X grant specific performance by requiring Shania to find a comparable piece of land for Tonya at a comparable price.

nominal damages

A small monetary award (often one dollar) granted to a plaintiff when no actual damage was suffered or when the plaintiff is unable to show such loss with sufficient certainty.

penalty

A sum inserted into a contract not as a measure of compensation for its breach but rather as punishment for a default. The agreement as to the amount will not be enforced, and recovery will be limited to actual damages.

liquiated damages

An amount, stipulated in the contract, that the parties to a contract believe to be a reasonable estimation of the damages that will occur in the event of a breach.

specific performance

An equitable remedy requiring the breaching party to perform as promised under the contract; usually granted only when money damages would be an inadequate remedy and the subject matter of the contract is unique (for example, real property).

restitution

An equitable remedy under which a person is restored to his or her original position prior to loss or injury, or placed in the position he or she would have been in had the breach not occurred.

Why is a court unlikely to grant a remedy for specific performance when a contract for personal services is breached?

Because it is tantamount to court ordered involuntary servitude.

Evan offers to sell his 2016 John Deere Tractor to Jorge for $30,000. Jorge accepts and promises to meet Evan on Saturday to make the exchange. On Thursday, a fire on Evan's farm totally destroys the tractor. Jorge is upset, because the price of the tractor was really good, and he knows he cannot get another one for that price. If Jorge sues Evan for breach of contract, the likely result will be that:

Evan's performance under the contract will be excused due to impossibility of performance.

What is the difference between legal remedies and equitable remedies for breach of contract?

Legal remedies are monetary while equitable remedies are non-monetary.

LaVon contracts with Nathan for Nathan to sing at her comedy club every Friday night in July. The first Friday, the crowd loved Nathan. The second Friday, they booed him. The next week, Nathan got a better offer, so he hired his twin brother Ethan to fill in for him at LaVon's club. Can LaVon compel Nathan to perform?

Yes, she can compel him under the equitable remedy of specific performance.

You own a lawn care service. A new customer calls and asks that you mow and weed eat her lawn. You tell her the price will be $150 and she agrees. You show up while she is at work and get the lawn mowed and the weed eating done by the time she gets home. Unfortunately, when she gets home, you discover that you have serviced the lawn of your customer's next-door neighbor instead of hers! Do you think you have any chance of getting any money from the neighbor for the services you have provided?

Yes, the neighbor will have to pay you a reasonable price (not necessarily the contract price) for the work.

Which of the following is an equitable remedy for breach of contract?

an order for specific performance

What is the principle that is applied to determine how much compensation a party receives in a quasi-contract settlement?

quantum meruit

Specific performance is a remedy which is always available in:

real estate contracts.

Courts may reform a contract:

to reflect the parties' true intentions.

Danny hires Evelyn to install a swimming pool at Danny's home for $40,000, to be completed by June 1. Evelyn completes the job on time. When Danny inspects the pool, he discovers that Evelyn used a vinyl lining, and the contract called for a fiberglass lining. Danny refuses to pay Evelyn, stating that Evelyn breached the contract because the contract was not completed according to the specifications stated in the contract. If Evelyn sues Danny for the contract price:

Evelyn will probably receive the contract price less the cost to replace the pool liner with a fiberglass liner.

Otto orally agrees to install three wells for Green Space Energy over the next eighteen months. When the three wells are completed, Green Space Energy will pay Otto $10,000. After the first well is completed, Green Space Energy tells Otto that it does not want any more wells. Green Space Energy refuses to pay Otto for the first well, claiming that the contract was not in writing and, therefore, not enforceable. If Otto sues Green Space Energy to enforce the contract:

Green Space Energy will have to pay Otto a reasonable price for the one well that was installed.

Rescission of a contract will:

return the parties to the position they were in before the contract was formed.