Business Law Chapter 20

equitable remedies

Arise from Quasi contracts when there is a material breach. returning parties to the status quo anti or the position they were in before the breach only in circumstances when a legal damage doesn't fit the injury

Anticipatory repudiation

Due to material breach Result of the buyer or seller refusing contract before time of performance. When a party states they will not perform it before it is done. Repudiation made in advance of the time of performance of the contract obligations. clear refusal to perform they can take back a reputation if the other party has not changed because of it

two types of anticipatory breaches

Expressly- "I am not going to do it" • *Conduct- If a farmer only has a certain crop and sells it to another party prior to contracting parties date, then contract is impossible to carry out and is reputed. If adequate insurance wasnt given,

Breach

Failure to act or perform in the manner called for in a contract failure to act or to perform in the manner called for in a contract. Frees material party from contract. If it is a quasi contract- there are equitable remedies (status quo ante to prevent unjust enrichment) instead of damages. Law gives rise to damages to give non-breaching party the benefit of the bargain. • Material- Major Breach • Non Material- Minor Breach • Damages- Law • Remedy- Equity

mitigate

U.C.C. calls it cover. The injured party is required to try and reduce damages if reasonably possible. After a major breach, anticipatory breach, occurs.

Anticipatory breach

When a party expressly declares that performance will not be made when required. Can result in repudiation (undoing of the contract). Refers to time of the contract. When a party makes it clear before the performance of the contract that they will not perform it. Promisor's repudiation of the contract prior to the time that performance is required when such repudiation is accepted by the promise as a breach of the contract.

quasi contract or restitution remedy

a contract is unenforceable because it was missing definite terms or was not in compliance with the statute of frauds, yet one of the parties performed services for the other. the amount of damages is a reasonalbe vlaue for the services performed.

remedy

action taken to obtain damages for injury or a n infringement of rights

reservation of rights

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

reformation of contract by court

at times a written contract does not actually say the agreement that was made, and parties may have the court re-write it so as to say the agreement that was actually made. when a unilateral mistake is made that makes it impossible to enforce the contract, the court can fix it.

"american rule"

attorneys fees play a huge role in contract court. the American rule states that each party is responsible for its own attorneys fees in the absence of an express contractual or statutory provision to the contrary. courts can prevent the payment of attorneys fees if they would be inequitable.

liquidated

circumstances where damages are difficult to prove. if they don't get construction on time buildings don't generate income but how do you measure how much damage that is? Preagreed upon sum that is applied based on days it is not completed. If building could generate revenue and was not done on time, builder has to pay.

5 types of damages

compensatory consequential (duty to mitigate) nominal punitive liquidated contract laws are matter of fact, must be proven with certainty by a mathematical formula.

waiver

contract continues as though the breach had not happened, if a company does not want to take legal action giving up a known right or objection a party allowing the other party to continue without objecting to performance waives the right to raise objection

consequential damages

damages the buyer experiences as a result of the seller's breach with respect to a third party, also called special damages. don't necessarily flow from the type of breach of contract involved but have to do so in a particular case as a result of injured parties specific circumstances. may only be collected if it was reasonably foreseeable to the defendant that the kind of loss in question could be sustained by the non-breaching party if the contract was broken.

punitive damages

damages, in excess of those required to compensate the plaintiff for the wrong done, that are imposed in order to punish the defendent because of the particuraly wanton or willful character of wrongdoing; also called exemplary damages.

consequential

does not necessarily flow from type of breach but arise from foreseeable consequences. you have to try and mitigate damages, if flour making machine breaks you must try and go into the market to find parts

invalid clauses

if a liquidated damages clause contains stipulations of payments that are clearly unreasonably large and unrelated the clause will be made void as a penalty. the clause is removed from the contract and they injured party will continue to collect actual damages he can prove

nominal

little impact in contracts, in name only, sometimes they give attorney's fees sum awarded to plaintiff in order to establish legal rights have been violated but are damages in name only. 1 dollar. Used for attorneys fees.

direct damages

losses that are caused by breach of a contract

nominal damages

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

special performance

only made in unique situations in which subject matter of the contract is unique thereby making money an inadequate remedy. ex: selling of a unique musket gun if they can be measured in monetary value then the judge will refuse special performance ordinarily orders for the performance of personal servcies are not given because of the difficult of supervision by the court

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. ex: if a vocalist makes a contract to only record with one company but she breaks it, the court may bar her from recording with any other company so she has to record with that company or not record at all.

Limitation of liability clause

provision in a contract stating that one of the parties is not be liable for damages in breach of contract. Business people are allowed to do this. However, there are no waivers to personal injury.

exculpatory clause

provisions in a contract stating that one of the parties shall not be liable for damages in case of breach. also called a limitation of liability clause if a monetary limit to damages for breach is needed.

liquidated damages

provisions stipulating the amount of damages to be paid in the event of default or breach of a contract. may be a fixed sum such as $1,000 per day, when there is a total default the damages may be a percentage of the whole

repudiation

result of a buyer or seller refusing to perform the contract as stated.

liquidated damages clause

specification of exact compensation in case of a breach of contract. two requirements: it must be impossible to calculate the exact value of the damages, the amount specified must not be excessive when compared to the probable damages that would be sustained once it is set it cannot be changed by either party. ex: buying apartment complex next to military base that shut down lost 10% profit so paid 10% less

limited damages clause

specification to exact compensation in case of breach of contract Injured party cannot collect more then the specified amount.

compensatory

sum of money that compensates party for the damages incurred as result of breach. Contract Price Vs. Market Price. ex: price of getting hay from a different seller

compensatory damages

sum of money that will compensate an injured plaintiff for actual loss (two branches: direct and consequential (or special) damages)

waiver of breach

the breach of a contract may have no importance if the other party waives the breach

mitigation of damages

the injured party must make an effort to mitigate damages, or prevent them from increasing if possible in the case of an employment contract the employer must mitigate damages by seeking work from a similiar employer and the wages earned from the employment may be deducted from the damages claimed

specific performance

the level of monetary damages is the sum of money that will place the injured party in the same position as if the contract had been performed when collecting monetary damages is not adequate 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.

rescission

to restore injured party to position before contract was made when one party commits a material breach of the contract, the other party may rescind the contract. a breach is material when it is so substantial that it defeats the object of the parties in making the contract. if one party performs a service they can recover reasonable value for services.

punitive (treble) damages

very little in contract cases only allowed when authorized by statute makes sure that no one gets a sale forced on them (logger) damages designed to punish. Excess of compensatory damages imposed on defendant because of the particular wrongdoing. Keeps people from being able to force to sell smoething by increasing the punishment. Only if statute is set.

limitation of liability clause

when a monetary limit to damages for breach on contract is set forth provisions in a contract stating that one of the parties shall not be liable for damages in case of a breach, also called exculpatory clause. liability is neither excluded nor limited if the conduct alleged is found to be grossly negligent, willful, or wanton.

types of equitable remedies

*Restitution- not damages because it is less. when someone has been injured and you must pay them status quo ante. Back to original standing. cow on someone's property you only get money used to keep cow alive. • *Recession- mutual mistake of fact. Annul contract. Money back to original standing. undoing a deal. • *Reformation- contract says the wrong thing so you can both rewrite it. • *Injunction- (injoin) Order from court to refrain from doing a specified act. See it when an activity lacks utiity or usefullness. Abating a nuesense • *Specific Performance- Chattel (unique items). This is allowed for unique chattel of money or other compensation wouldn't be adequate because of unique nature of the chattel. This is also true in terms of land.

remedies upon anticipatory repudiation

Stating that performance at the correct time will be required, regard the contract as broken and bring lawsuit, or regard the repudiation as an offer to cancel the contract