Business Law Ch. 20 - Breach of Contracts and Remedies

Law = Damages

Equity = Remedies

K = Law - Breached = Damages = $$

Quasi-K = Equity - Unjust enrichment = Remedy

specific performance

action brought to compel the adverse party to perform a contract on the theory that merely suing for damages for its breach will not be an adequate remedy

remedy

action or procedure that is followed in order to enforce a right or to obtain damages for injury to a right

reservation of rights

assertion by a party to a contract that even though a tendered performance is accepted, the right to damages for nonconformity to the contract is reserved

consequential damages (special damages)

damages the buyer experiences as a result of the seller's breach with respect to a third party

punitive damages (exemplary damages)

damages, in excess of those required to compensate the plaintiff for the wrong done, that are imposed in order to punish the defendant because of the particularly wanton or willful character of wrongdoing

breach

failure to act or perform in the manner called for in a contract

direct damages

losses that are caused by breach of a contract

nominal damages

nominal sum awarded the plaintiff in order to establish that legal rights have been violated although the plaintiff in fact has not sustained any actual loss or damages

injunction

order of a court of equity to refrain from doing (negative injunction) or to do (affirmative or mandatory injunction) a specified act. Statute use in labor disputes has been greatly restricted

anticipatory breach

promisor's repudiation of the contract prior to the time that performance is required when such repudiation is accepted by the promisee as breach of the contract; also a material breach. -Repudiation is by: 1) words 2) conduct

exculpatory clause (limitation-of-liability clause)

provision in a contract stating that one of the parties shall not be liable for damages in case of breach

liquidated damages

provision stipulating the amount of damages to be paid in the event of default or breach of contract

waiver

release or relinquishment of a known right or objection

anticipatory repudiation

repudiation made in advance of the time for performance of the contract obligations

liquidated damages clause

specification of exact compensation in case of a breach of contract

compensatory damages

sum of money that will compensate an injured plaintiff for actual loss

Injunctive Relief

temporary retraining order -> preliminary injunction -> permanent injunction

Purpose of Contract Damages

to pace non-breaching party in the position they would have enjoyed if the contract was fulfilled

Purpose of Equitable Remedies

to return the injured party to their original position before performance began; status quo ante

Breach of contract:

-Material (major) breach: breaks the contract and gives rise to a claim for damages -Non-material (minor) breach: does not break the contract, but does provide a basis for incidental damages and/or offsets

Mitigation of Damages

-to seek to lessen damages by obtaining substitute goods -mitigation of damages is called "cover" in the UCC

Contract Damages

1) compensatory 2) consequential - duty to mitigate 3) nominal (name) 4) punitive 5) liquidated

Equitable Remedies

1) reformation 2) rescission 3) restitution 4) injunction 5) specific performance

Attorneys' Fees

1) the "American Rule" provides that each party pay his or her own attorney's fees 2) parties in contract can agree that in disputes under the contract, the loser will pat the prevailing party fees