Breach of Contract and Remedies

When Quasi Contracts are used

- Allow courts to act if a contract exists when there is no actual contract or agreement between the parties. - Also can be used when parties entered into a contract, but is unenforceable for some reason. `

Oral contracts and covenants not to compete

- Parties have executed a written covenant not to compete if the covenant is for a valid and legitimate purpose (such as the sale of a business) but the area of time restraints of the covenant are unreasonable, some courts will reform by making them reasonable and will enforce the entire contract as reformed.

Oral contracts and covenants not to compete

- Two parties who have made a binding oral contract. They further agree to put the oral contract in writing, but in doing so, they make an error in stating the terms. Court will allow into evidence the court terms of the oral contract, thereby reforming the written contract

Types of Damages

1. Compensatory 2. Consequential 3. Punitive 4. Nominal

Requirements of Quasi Contract

1. The party has conferred a benefit on the other party 2. The party conferred the benefit with the reasonable expectation being paid. 3. The party did not act as volunteering in conferring the benefit 4. The party receiving the benefit would be unjustly enriched if allowed to retain the benefit without paying for it

Two Questions

1. When the contract was entered into, was it apparent that damages would be difficult to estimate in the event of a breach? 2. Was the amount set as damages a reasonable estimate not excessive (Yes Means Enforceable)

Pleading in the Alternative

Although the nonbreachng party must ultimately elect which remedy to pursue , modern court procedures do allow plaintiffs to plead their cases "in the alternative." When the plaintiff originally files a lawsuit, he or she can ask the court to order either rescission (and restitution) or damages.

Restitution is not limited to rescission cases

Award of restitution basically returns something to its rightful owner, a party can seek restitution in actions for breach of contract, tort actions, and other types of actions.

Damages

Breach of contract entitles the nonbreachng party to sue for monetary damages.

Reasons for Waiving a Breach

Businessperson waive breaches of contract to get whatever benefit is still possible out of the contract.

Specific Performance

Calls for the performance of the act promised in the contract. Will not be granted unless the party's legal remedy (monetary damages) is inadequate. Provide exact bargain promised in the contract (Nonbreachng Party)

Sale of Goods (Damages)

Contract for the sale of goods, the usual measure of compensatory damages is an amount equal to the difference between the contract price and the market price.

Contract Provisions Limiting Remedies

Contract may include provision stating no damages can be recovered for certain types of breaches or that damages will be limited to a maximum amount. Contract may also provide that the only remedy for breach is replacement, repair, or refund of the purchase price.

Before Performance has Begun (Owner)

Contractor can recover only the profits that would have been made on the contract (that is, total contract price less the cost of materials and labor)

After the Construction has been completed (Owner)

Contractor can recover the entire contract price, plus interest

Breaches During Performance (Owner)

Contractors can recover the profits plus the costs incurred n partially constructing the building.

Before Construction has begun (Contractor)

Cost in excess of contract price to complete work

Sales of Land

Courts may grant specific performance to a buyer in an action for a breach of contract involving the sale of land.

When fraud or mutual mistake is present

Courts order reformation most often when fraud or mutual mistake is present. Party seeks reformation so that some other remedy may then be pursued.

Equitable Remedies

Damages are inadequate remedy for a breach of contract. Equitable remedies include rescission and restitution, specific performance, reformation.

Punitive Damages

Damages generally are not recoverable in contract law, even for an intentional breach of contract.

Construction Contracts and Economic Waste

Economic waste occurs when the cost of repairing or completing the performance as required by the contract greatly outweighs the benefits of the owner.

Reformation

Equitable remedy used when the parties expressed their agreements in writing. Allows a court to rewrite the contracts to reflect the parties' true intentions

Incidental Damages

Expenses that are caused directly by a breach of contract - such as those incurred to obtain performance from another source

Consequential Damages or Special Damages

Foreseeable damages that result from a party's breach of contract

Before construction is completed (Contractor)

Generally. all costs incurred by owner to complete

Enforceability

Involve two questions to determine provisions is for liquidated damages or for a penalty

Quasi Contract

Is a legal theory under which obligation is imposed in the absence of an agreement. When one party has conferred a benefit on another party, justice requires that the party receiving the benefit pay the reasonable value for it. The party conferring the benefit can recover in quantum meruit, which means "as much as he or she deserves it"

Rescission

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

UCC'S Rejection of the Doctrine

Many problems associated with the doctrine of election of remedies, the UCC expressly rejects it. Remedies under the UCC are not exclusive but are cumulative in nature and include all the available remedies for breach of contract

Construction Contracts

Measure of damage in a building or construction contract varies depending on which party breaches and when the breach occurs. Can breach Before Performance has Begun, During Performance, After the construction has been completed.

Sale of Land (Damages)

Parcel of land is unique, the remedy for a seller's breach of contract for a sale of real estate is specific performance - that is, the buyer is awarded the parcel of property for which she or he bargained

Consequences of a Wavier of Breach

Party waiving the breach cannot take any later action on it. Wavier erase the past breach: the contract continues as if the breach had never occurred. Extends only to the matter waived and not to the whole contract

Contracts for Personal Services

Personal services contracts require one party to work personally for another party. Order party to perform against their will amounts to a type of involuntary servitude

Election of Remedies Doctrine

Prevent Double Recovery

UCC Allows Sales Contracts to Limit Remedies

Provides that in a contract for the sale of goods, remedies can be limited.

Liquidated Damages Provisions

Provision in a contract specifies that a certain dollar amount is to be paid in the event of a future default or breach of contract. (Liquidated means determined, settled. or fixed)

Quasi - Contractual

Recovery is often granted when one party to recover the reasonable value of partially performance under a contract that is unenforceable. Provides an alternative to suing for damages and allows the party to recover the reasonable value of the partial performance, measured in some cases according to the benefit received and in others according to the detriment suffered

Restitution

Rescinding a contract, both parties must make restitution to each other by returning goods, property, or funds previously conveyed. If the property, or goods can be returned, they must be. If the goods or property have been consumed, restitution must be made in an equivalent dollar amount

Penalty

Specifies a certain amount to be paid in the event of a default or breach of contract and is designed to penalize the breaching party

Mitigation of Damages

The duty owed depends on the nature of the contract, Reduced the damages that he or she suffers.

Compensatory

To cover direct losses and costs: Damages compensate the injured party only for damages actually sustained and proved to have arisen directly from the loss of the bargain caused by the breach of contract. (Incidental Damages)

Consequential

To cover indirect and foreseeable losses

Punitive

To punish and deter wrongdoing

Nominal

To recognize wrongdoing when no monetary loss is shown

Wavier of Breach

Under certain circumstances, a nonbreachng party may be willing to accept a defective performance of the contract

Waiver of Breach and Subsequent Breaches

Waiver by contracting party law will not operate to waive subsequent, additional, or future breaches of contracts. This is always true when the subsequent breaches are unrelated to the first breach. (Read Section)

Recovery Based on Quasi Contracts

When no actual contract exists, a court may step in to prevent one party from being unjustly enriched at expense of another party.

Nominal Damages

When no actual damages or financial loss results from a breach of contract and only a technical injury is involved. most lawsuits for nominal damages are brought as a matter of principle under the theory that a breach has occurred and some damages must be imposed regardless of actual loss.

Election Of Remedies

When remedies are inconsistent with one another, the common law of contracts requires the party to choose which remedy to pursue.

Enforceability of Limitation-of-Liability Clauses

Whether a limitation-of-liability clauses in a contract will be enforced depends on the type of breach that is excused by the provision.