Business Law 1 // Ch. 19 Breach of Contract and Remedies

A court may grant specific performance to a buyer in an action for a breach of contract involving the sale of land why is this?

A parcel of land is unique. The same land is the same location obviously cannot be obtained elsewhere.

What are the reasons for waving a breach?

Businesspersons often waive a breach of contract to obtain whatever benefit is still possible out of the contract. Ex: To keep a good supplier, I will waive $1,000 of its a 1 time things and that this will benefit me in the future. Generally, a single waiver will not waive subsequent, additional, or future breaches, especially if unrelated to initial breach

What are the four broad categories of damages?

Compensatory Consequential Punitive Nominal

What are compensatory damages?

Compensatory damages are damages that have arisen directly from the loss of the bargain caused by the breach of the contract. They simply replace what was lost because of the wrong or damage and, for this reason, are often said to "make the person whole." If the contract would have been fulfilled it would have been this much

Also contracts for personal services can be used for specific performance why is this?

Conan o'brien commits and signs a contract for $10,000 at a birthday party, but he gets offered $100,000, you must complete the first because you had a contract. Court cannot make you do specific performance because you would not do a good job

When do courts order reformation most often when what occurs?

Courts order reformation most often when fraud or mutual mistake (clerical error for example) is present. Typically a party seeks reformation so that some other remedy may then be pursued. If Carson contracts to buy a forklift from Yoshie but their contract mistakenly refers to a crane, a MUTUAL MISTAKE has occurred. Accordingly, a court can reform the contract so that it conforms to the parties' intentions and accurately refers to the forklift being sold.

What are the most common remedies available to a non breaching party?

Damages, Rescission and Restitution, specific performance, and reformation

Sometimes, damages are an inadequate remedy for a breach of contract. In these situations, the non breaching party may ask the court for an __________________.

Equitable Remedy Equitable remedies include rescission and restitution, specific performance, and reformation

In most situations, when a breach of contract occurs, the innocent injured party is held to a duty to mitigate, or reduce the damages that he or she suffers.

If you wait a certain amount of time court may not award you. Court wants to see that you were in good faith; did you look at other things, what is your effort to mitigate the damages

A breach in contract entitles the non breaching party to sue for what?

Monetary Damages In contract law, damages compensate the non breaching party for the loss of the bargain (whereas Tort law damages compensate for harm suffered as a result of another's wrongful act.) Often, courts say that innocent parties are to be placed in the position they would have occupied had the contract been fully performed

In some situations, when no actual contract exists, a court may step in to prevent one party from being unjustly enriched at the expense of another party. _________________ is a legal theory under which an OBLIGATION is imposed in the absence of an agreement.

QUASI CONTRACT This is a remedy created by courts to obtain justice and prevent unjust enrichment. The party conferring the benefit can recover in quantum merit (as much as she deserves) They care about Truth -- tried to do what is right

___________________ is an equitable remedy used when the parties have imperfectly expressed their agreement in writing. It allows a court to rewrite the contract to reflect the parties true intentions.

Reformation Courts can reform the contract

A ____________________ is the relief provided for an innocent party when the other party has breached the contract. It is the means employed to enforce a right or to redress an injury.

Remedy

_____________________ is essentially an action to undo, or terminate, a contract-- to return the contracting parties to the positions they occupied prior to the transaction.

Rescission, or cancellation the failure of one party to perform entitles the other party to rescind the contract. The rescinding party must give prompt notice to the breaching party

Generally, to rescind a contract, both parties must make ___________________ to each other by returning goods, property, of funds previously conveyed. If the property or goods can be returned, they must be.

Restitution if the goods or property have been consumed, restitution must be made in an equivalent dollar amount To complete the rescission, restitution must take place

The equitable remedy of _______________________ calls for the performance of the act promised in the contract. This remedy is attractive to a non breaching party because it provides the exact bargain promised in the contract.

Specific Performance It avoids some of the problems inherent in a suit for damages, such as collecting a judgement and arranging another contract. ONLY IF THE GOODS ARE UNIQUE will a court grant specific performance. For instance, paintings, sculptures, or rare books or coins are so unique that monetary damages will not enable a buyer to obtain substantially identical substitutes in the market.

The ___________________ of compensatory damages is the difference between the value of the breaching party's promised performance under the contract and the value of her or his actual performance.

Standard Measure Ex: Randall contracts to perform exclusively for Hernandez during month of March for $4,000 but he can only earn 3,000 and he can sue Hernandez for breach and recover $1,000 as compensatory damages

T/F Quasi contract allows a court to act as if a contract exists when there is no actual contract or agreement between the parties.

TRUE Ericson contracts to build two oil derricks for Petro Industries. The derricks are to be built over a period of three years, but the parties do not make a written contract. Thus, the writing requirement will enforcement of the contract. After Ericson completes one derrick, Petro Industries informs him that it will not pay for the derrick. Ericson can sue Petro Industries under the theory of quasi contract.

T/F When a waiver occurs, the party waiving the breach cannot take any later action on it.

TRUE In EFFECT, the waiver extends only to the matter waived and not to the whole contract.

Under certain circumstances, a non breaching party may be willing to accept a defective performance of the contract. This knowing relinquish of a legal right (that is, the right to require satisfactory and full performance) is called a __________________

Waiver Relinquishes the right of full performance

What is true about waivers?

Waivers are strictly voluntary. Once you do it, it is done. It says I am not holding you accountable

Generally, Punitive damages are very seldom awarded in lawsuits for breach of contract. Because punitive damages are designed to punish a wrongdoer and set an example to deter similar conduct in the future, they have no legitimate place in contract law. However Punitive damages may be available in contract law when what?

When a Person's actions cause both a breach of contract and a tort (such as fraud), however, punitive damages may be available If you're business goes out of business then this is Punitive Damages

When no actual damage or financial loss results from a breach of contract and only a technical injury is involved, the court may award _________________ to the innocent party

nominal damages Awards of nominal damages are often small, such as one dollar, but they do establish that the defendant acted wrongfully EX: Taylor Swift did this. It really is for documentation so that the person or thing in the future will face repercussion from it. Employers looks to see if potential employee has anything on record or any court record