Chapter 16

Executed contract

A fullt performed contract

Penalty

A liquidation damages clause is considered a _____________ if actual damages are clearly determinable in advance or if the liquidated damages are excessive or unconscionable. If a liquidated damages clause is found to be a ______________, it is unenforceable. The non breaching party may then recover actual damages.

Consequential Damages (special damages)

A non breaching party can sometimes recover __________________, from the breaching party. Are foreseeable damages that arise form circumstances outside a contract. To be liable for consequential damages, the breaching party must know or have reason to know that the breach will cause special damages to the other party.

Nominal Damages

A non breaching party can sure a breaching party to a contract for ________________ even if no financial loss resulted from the breach. Are usually awarded is small amounts, such as $1. Cases involving. Case involving ____________________ are usually brought on principle. Most courts disfavor ____________________ because they use valuable court time and resources.

Intentional Interference with Contractual Relations

A party to a contract may sue any third person who intentionally interferes with the contract and causes that party injury. The third party does not have to have acted with malice or bad faith. Usually arises when a third party induced a contracting party to breach a contract with another party. The following element must be shown: 1) A valid, enforceable contract between the contracting parties 2) Third-party knowledge of this contract 3) Third-Party inducement to breach the contract.

Tender of performance (tender)

Also discharges a party's contractual obligations. ___________ is an unconditional and absolute offer by a contracting party to perform his or her obligations under the contract

Employment Contact

An employee whose employer breaches an ____________________________ can recover lost wages or salary as compensatory damages. If the employee breach the contract, the employer can recover the costs to her a new employee plus any increase in salary paid to the replacement.

Equitable remedies

Are available if there has been a breach of contract that cannot be adequately compensated through a legal remedy. They are also available to prevent unjust enrichment.

Compensatory Damages

Are intended to compensate a non breaching party for the loss of the bargain. In other words, they place the non breaching party in the same position as if the contract has been fully performed by restoring the "benefit of the bargain"

Construction contract

Arises when the owner of real property contract to have a contractor build a structure or do other construction work. The compensatory damage recoverable for a breach of a construction contract vary with the stage of completion of the project when the breach occurs. A contractor may recover the profits he or she would have made on the contract if the owner breaches the construction contract before construction begins.

Sale of a good

Compensatory damages for a breach of a sales contract involving goods are governed by the uniform commercial code. The usual measure of damages for a breach of sales contract is the difference between the contract price and the market price of the goods at the time and place the goods were to be delivered.

Disclaimer of Consequential Damages

Consequential damages are often disclaimed in sale or license agreement. This means that the breaching party is not responsible to pay consequential damages. Is lawful in most instances.

Restitution

Generally, to rescind a contract, the parties must make ______________ of the consideration they received under the contract. It consists of returning the goods, property, money, or other consideration received from the other party. If possible, the actual goods or property must be returned. If consumed there will be cash equivalent.

Mitigation of Damages

If a contract has been breached, the law places a duty on the innocent non breaching party to make reasonable efforts to mitigate (avoid or reduce) the resulting damages. The extent of ___________________ required depends on the type of contract involved. If an employer breach an employment contract, the employee owes a duty to ___________________ by trying to find substitute employment. The employee is only required to accept comparable employment. The court consider factor such as compensation, rank, status, job description, and geographical location in determining the comparability of jobs.

Injunction

Is a court order that prohibits a person from doing a certain act. To obtain an ________________, the requesting party must show that he or she will suffer irreparable injury if the ________________ is not issued.

Arbitration

Is a nonjudicial, private resolution of a contract dispute. Not a judge or jury, rendered a decision in the case.

Reformation

Is an equitable doctrine that permits the court to rewrite a contract to express the parties true intentions. _____________ is usually available to correct clerical errors in contracts.

Liquidated damages clause

Is an exclusive remedy even is actual damages are later determined to be different

Complete performance (Strict Performance)

Occurs when a party to a contract renders performance exactly as required by the contract

Anticipatory Breach (anticipatory repudiation)

Of a contract occurs when a contracting party informs the other party in advance that he or she will not perform he or her contractual duties when due. This type of material breach can be expressly stated or implied from the conduct of the repudiator. Where there is an ____________________________, the non breaching party's obligations under the contract are discharged immediately. The non breaching party all has the right to sure the repudiating party when the ________________________ occurs; there is no need to wait until performance is due.

Writ of garnishment

Orders that wages, bank accounts, or other property of the breaching party that are in the hand of third parties be paid over to the non-breaching party to satisfy the judgment. Federal and state laws limit the amount of the breaching party's wages or salary that can be garnished.

Specific performance

Orders the breaching party to perform the acts promise in a contract. The courts have the discretion to award this remedy if the subject matters of the contract in unique. ____________________ is available to enforce land contracts because every piece of real property is considered to be unique. Works of art, antiques, items of sentimental value, rare coins, stamps, etc, also fit the requirement for uniqueness. Most other personal items do not

Writ of attachment

Orders the sheriff or other government officer to seize property in the possession of the breaching party that he or she owns and to sell the property at auction to satisfy the judgment

Binding Arbitration

The arbitrators decision cannot be appealed to the courts.

Covenant of good faith and fair dealing

The parties to a contract are not only held to the express terms of the contract but also required to act in "good faith" and deal fairly in all respects in obtaining the objective of the contract. A breach of this implied ___________ is a tort for which tort damages are recoverable.

Liquidated Damages

Under certain circumstance, the parties to a contract may agree in advance to the amount of damages payable on a breach of contract. To be lawful, the actual damages must be difficult or impracticable to determine, and the liquidated amount must be reasonable in the circumstances.

Monetary damages

Where they has been a breach of a contract, the non breaching party may recover _____________________ from a breaching party. Are available whether the breach was minor or material. Are sometime referred to as dollar damages.

Rescission

is an action to undo a contract. It is available where there has been a material breach of contract, fraud, duress, undue influence, or mistake.

Minor breach

it occurs when a party to a contract renders performance that deviates slightly from complete performance. The non breaching party may try to convince the breaching party to elevate his or her performance to complete performance. If the breaching party does not correct the breach, the non breaching party can sue to recover damages by 1) Deducting the cost to repair the defect from the contract price and remitting the balance to the breaching party 2) Suing the breaching party to recover the cost to repair the defect if the breaching party has already been paid.

Material breach

of a contract occurs when a party renders inferior performance of his or her contractual obligations that imparts or stores the essence of the contract. There is no clear line between a minor breach and a material breach. A determination is made on a case-by-case basis. Where there has been a _____________________ of contract, the non breaching party may resting the contract and seek restitution of any compensation paid under the contract to the breaching party. The non breaching party is discharged from any further performance under the contract. Alternatively, the non breaching party may treat the contract as being in effect and sure the breaching party to recover damages.