Contract Remedies

T/F Injunctions are frequently used by courts to force employees to complete their contractual obligations with their employers.

False-infrequently

Joy and Kris enter into a contract for Kris to lay sod in Joy's yard for which she agrees to pay Kris. When Kris's schedule conflicts, she contacts Leza, to whom Kris "assigns all rights under the contract." Kris is​

LIABLE TO JOY IF LEZA DOES NOT PERFORM

The parties to a contract agree that in the event of a breach, the breaching party will pay damages of $5000. These damages are

Liquidated Damages

The party suffering injury in a breach of contract case is under a duty to lessen his damages. This is called

Mitigation

A contract for a sale of land from Bayside Properties, Inc., to City Development Corporation contains an erroneous legal description. The most appropriate remedy for these parties is​

Reformation

Bill contracts to work exclusively for TechCorp during November for $3000. On Sept 29, TechCorp cancels the contract. Bill finds another job during November, but only earns $2000. Bill files suit against TechCorp. What are his compensatory damages?

$1,000

Ben agrees to sell a painting for $300 and the buyer gives him a $100 deposit, but Ben never delivers the painting. If a court orders ben to make a restitution, what will he have to give the buyer.

$100

Oxley contracts to buy a pizza oven from Restaurant Supplies Warehouse (RSW) for $2,500, but RSW fails to deliver. Oxley buys the appliance else-where for $3,500. Oxley's measure of damages is​

$1000 PLUS INCIDENTAL DAMAGES

T/F Courts do not grant restitution damages in instances where a party conferred a benefit but there was no valid contract.

False

T/F: Tess, a tenant, moves from her apartment in breach of the lease agreement. The landlord, Lenny, has no duty to mitigate his damages by attempting to rent the apartment.

False

A supplier of flower to a bakery fails to make a weekly delivery, for which he would have been paid $300. The baker does not pay him, but is forced to acquire flour elsewhere, at a cost of $350. The bakers' compensatory damanges are

$50

Restitution

-Act of RETURNING to the Aggrieved Party the CONSIDERATION, or its Value, that they Gave to Other Party -Purpose is RESTORE Injured Party to Position They Were in BEFORE Contract was Made -Party Seeking Restitution MUST RETURN what has been Received from Other Party as well Available... 1. For a Party INJURED BY BREACH as an Alternative Remedy, 2. For a Party in DEFAULT 3. For a Party who MAY NOT ENFORCE Contract because of the STATUTE OF FRAUDS and 4. For a Party Wishing to RESCIND VOIDABLE CONTRACT EX: Finished 1/3 of building house ($100,000) and they change their mind, they sue what have already provided to party ($100,000)

Nominal Damages

-Action for Breach Even Though Plaintiff has Not Sustained or Cannot Prove Injury or Loss Resulting from Breach -"RECOGNIZE WRONGDOING When NO Monetary Loss is Shown" -SMALL SUM FIXED Without Regard to Amount of Loss -MAY INCLUDE COURT FEES -SUING SOMEONE TO PROVE A POINT -Want World to Know that Other Party Screwed Them Over

Damages for Misrepresentation

-Basic Remedy for Misrepresentation is RESCISSION --SOMETIMES RESTITUTION -- FRAUDULENT MISREPRESENTATION -Party Who Has Been Induced by Fraud to Enter into a Contract May Recover GENERAL DAMAGES in a Tort action Plus CONSEQUENTIAL DAMAGES And PUNITIVE DAMAGES (in some cases) -INTENTIONALLY - SCIENTER --"BENEFIT OF THE BARGAIN" RULE - Majority Rule Where General Damages are Equal to the Difference Between the Value of What Injured Party has Received and Value of the Fraudulent Party's Performance as Represented --SUBTRACT FROM WHAT WE WERE PROMISED & WHAT WE ACTUALLY RECEIVED --EX: $200,000 for Car, Actual Value was $125,0000 ---WE GET $75,000 --"OUT OF POCKET" RULE- Minority Rule where General Damages are equal to Difference between the Value of What Injured Party has Received and Value of What Injured Party has Given for It ---WHAT DID WE ACTUALLY PAY FOR IT ---EX: You Pay $175,000, Actually Worth $125,000 ----WE GET $50,000 --- Pennsylvania - EXAM -NON-FRAUDULENT MISREPRESENTATION --When Negligent, OUT OF POCKET RULE Plus CONSEQUENTIAL DAMAGES --When Neither Fraudulent Nor Negligent (Innocent), OUT OF POCKET RULE

Incidental Damages

-Damages/Expenses that ARISE DIRECTLY OUT OF BREACH such as those incurred to obtain Performance FROM ANOTHER SOURCE EX: 2 year Employment Agreement, Employee leaves after 1 year, need to hire someone else, train them, wouldn't have those training, recruiting costs if it weren't for employee, add these onto total

Attorney's Fees

-EACH PARTY PAY OWN ATTORNEY FEES, Regardless Who Wins UNLESS Applicable STATUTE or Express Contract CLAUSE State Losing Party will Pay Prevailing Party's Attorneys' Fee -PLAINTIFF LAWYERS Paid Only if You Win or Your Client Settles Case -DEFENDANT LAWYERS Paid by Hour (6 minute increments)

Foreseeable Damages

-Expected to Consider Foreseeable Risks at Time Enter Contract -Damages Recoverable Only for Loss that Party in Breach had REASON TO FORESEE as Probable Result of Breach -Test for FORESEEABLE DAMAGES is OBJECTIVE -Foreseeable if: 1. ORDINARY Course of Events 2. Result of SPECIAL CIRCUMSTANCES BEYOND ORDINARY COURSE of Events, about which Party in Breach had Reason to Know

Hairy Hands Case

-How Can We Actually Calculate Damages? -Why Might It Be Good Thing to Calculate what COULD EARN if you Decided to Sue? -What Would Judge/Jury Reward Me? HAWKINS VS. MCGEE --Kid burned his hand, he went to the doctor --Doctor said he can make his hand perfect --Took skin from his chest to put on his hand --Now he has "Hairy Hands" --Doctor promised a "perfect hand" "The Paper Chase" (1973) --Real Life Law School Class

Consequential Damages or Special Damages

-INDIRECT DAMAGES Out of Breach but ARISING as a FORESEEABLE RESULT of Breach -"INDIRECT & FORESEEABLE LOSSES" --Include LOST PROFITS & INJURY TO PERSON OR PROPERTY EX: Volkswagen manufacturing, install new machinery, week later, explodes from manufacturing defect, it can damage property or people, can get added onto total You are also going to lose money, must add onto total

Liquidated Damages

-If You Breach, You Pay this Amount of Money... -HAVE TO BE REASONABLE -PROVISION IN CONTRACT by which Parties Agree IN ADVANCE to Damages to be Paid in Event of Breach -Provision is Enforced if it Amounts to REASONABLE FORECAST of the Loss that May or Does Result from Breach -If Sum Agreed On Has NO REASONABLE Relationship to Amount of Probable Loss, it is UNENFORCEABLE as a PENALTY --PENALTY is Contractual Provision Designed to Deter a Party from Breaching Contract and to Punish Party for doing so --If Liquidated Damages Provision is NOT Enforceable, then Injured Party is Entitled to Ordinary Remedies for Breach --Why have Liquidated Damages? Provide Certainty, Avoid Lawsuits Provide an Incentive to Enter into Contracts

Mitigation of Damages

-Injured Party may NOT Recover Damages for Loss COULD HAVE AVOIDED W/REASONABLE EFFORT, Without Undue Risk, Burden or Humiliation "REDUCE AMOUNT OF DAMAGES SUFFERED" "When Contract Breached, Law places Duty on the Innocent Non-breaching party to Avoid and Reduce the Resulting Damages" -REASONABLE EFFORTS Note: Mitigation does not need to be successful, but the non-breaching party must take reasonable steps. Ex: Landlord has duty to find a new tenant if a tenant abandons the premises and fails to pay rent. Ex: A wrongfully terminated employee has a duty to take a similar job if one is available.

Monetary Damages

-MOST FREQUENT Judicial Remedy -Award for Losses that are... -FORESEEABLE -REASONABLE CERTAINTY -NOT AVOIDABLE (Because Legal Responsibility to Mitigate)

Remedies In Equity

-Monetary Damages May NOT Adequately Compensate Injured Party 1. REFORMATION 2. SPECIFIC PERFORMANCE 3. INJUNCTION

Reliance Damages

-Option IN LIEU OF COMPENSATORY DAMAGES "WE LOOK BACKWARDS" --How Much did Plaintiff Lose bc they Relied on Contract "Putting the Plaintiff in the Position as if the Contract had Never Happened" -Reimbursement for Foreseeable Loss caused by Reliance on Contract" --Market Value of Injured Party's Uncompensated Contractual Performance, Not Exceeding Contract Price of such Performance, Plus Incidental & Consequential Losses -Purpose is to Place Injured Party in Position as Good as One they Would have been in HAD CONTRACT NOT BEEN MADE -MAY BE BENEFICIAL when Injured Party CANNOT ESTABLISH LOST PROFITS with Reasonable Certainty -EX: We have already bought all of Materials for Constructing House for $300,000, Compensatory = $200,000, would only Sue for One of Them

Compensatory Damages or Expectation Damages

-Place Injured Party in POSITION AS GOOD as if Other Party HAD PERFORMED" -Receive Dollar Value of Benefits Had Contract Performed Less Savings Not Having Perform Own Obligation "DIRECT LOSSES & COSTS ACTUALLY SUSTAINED" -Protects EXPECTATION INTEREST --Value Expected to Derive from Contract -ALWAYS AVAILABLE TO INJURED PARTY FOR BREACH LOSS OF VALUE (Failure to Perform or Deficient Performance) MINUS Loss or Cost AVOIDED (OR SAVED) by Injured Party PLUS INCIDENTAL Damages PLUS CONSEQUENTIAL Damages

Punitive Damages

-Purpose is to PUNISH Defendant & DISCOURAGE or DETER Them & Others from Similar Wrongful Conduct -However, Objective of Contract Remedies is Compensatory, Not Punitive. -Not Recoverable Unless Conduct is also a TORT for Which Plaintiff may Recover Punitive Damages ---WILLFUL, WANTON, or MALICIOUS CONDUCT

Loss or Cost Avoided

-Recovery by Injured Party is REDUCED BY ANY COST OR LOSS that they have Avoided by NOT having to Perform Under Contract EX: $500,000 to build house, a few weeks later they don't want house built, must compensate for labor ($100,000) and materials ($200,000), you are suing for $200,000?

Parker vs. Twentieth Century-Fox

-Shirley McClain hired for musical in Hawaii -Changed to Western -She says NO -Movie Studio says Breached Contract -She Sues. MITIGATION OF DAMAGES -Was it Similar Type of Work? -NO, Court said NOT Obligated to Western, Received her $

Loss of Value

-VALUE OF PROMISED Performance (MINUS) VALUE OF ACTUAL Performance -WHEN BREACH OF WARRANTY, VALUE GOODS WOULD HAVE HELD (MINUS) VALUE OF GOODS IN ACTUAL CONDITION RECEIVED EX: Look to Buy New Bentley, Amazing & Brand New, Find out later that it Wasn't New, Was in Accident, Was Repaired, DEPRECIATION

Contract Remedies

-When 1 Party Breaches Contract -Law provides REMEDY for Injured Party -Court Provides RELIEF to Injured Party --EQUIVALENT OF PROMISED PERFORMANCE

Opportunity Market Company (OMC) and Pierce enter into a contract for Pierce to cut and trim the landscaping around OMC's building before a meeting of the company's sales staff. When Pierce's schedule conflicts, he asks Rachel to do the cutting and trimming. This transfer of duties is​

A Delegation

Metro Facilities, Inc., contracts to sell a parking lot to Nouveau Property Company. The contract provides that if Metro does not close the deal by September 15, it must pay Nouveau one-half of the contract price. This provision is not enforceable because it is​

A PENALTY CLAUSE

​Bea takes out a life insurance policy with Vida Insurance Corporation that names her spouse Wendell as the beneficiary. This is

A THIRD PARTY INTENDED BENEFICIARY CONTRACT

Which of the following are circumstances under which a court might award restitution damages? a. When a contract is terminated by impossibility b. When the plaintiff has committed fraud c. In cases of quasi-contract d. When a contract is breached e. When an injured party to a voidable contract rescinds the agreement f. When a contract is discharged g. When the plaintiff has not yet had the opportunity to confer a benefit on the defendant h. When a contract is void

A,C,D,E,F

A gun dealer agreed to sell a gun to a purchaser for $500. The dealer had acquired the gun for $425, and thus stood to make a profit of $75 on the transaction. The purchaser made a down payment of $100. Before the purchaser took possession of the gun, the state government passed a new law forbidding sales of that model of gun. The purchaser sued the dealer for the return of his $100 down payment. How will a court likely rule? A. The dealer must return the $100 down payment to prevent unjust enrichment of the dealer. B. The dealer must return the $100 down payment to prevent unjust loss for the purchaser. C. The dealer does not need to return the $100 down payment, because he is the non-breaching party.

Answer option A is correct. A party may recover restitution to prevent unjust enrichment when the duties of performance under a contract are discharged due to death, impossibility, impracticality, frustration of purpose, or nonoccurrence of a condition. Restatement (Second) of Contracts § 377 (1981). The goal of restitution damages is to prevent unjust enrichment. Here, a subsequently passed law made performance of the contract impossible. The purchaser had rendered partial performance by paying $100 to the dealer. The dealer benefited by $100 due to the purchaser's actions. Therefore, a court will likely rule that the dealer must return the $100 so that he is not unjustly enriched.

A technology start-up company hired a product manager to lead its product development team. The parties' employment contract specified that the manager was being hired for an initial three-year term with a salary of $125,000 for year one, $150,000 for year two, and $175,000 for year three. The contract further provided that, in the event of the company's early termination of the manager's employment, the manager would be entitled to liquidated damages of $1,000,000. Two years into the contract, the company terminated the manager's employment. The manager sued the company for breach of contract and asked for the $1,000,000 liquidated damages amount as the remedy. Which of the following findings, if true, would LEAST support a court's decision not to enforce the liquidated damages provision? A. The manager failed to mitigate the manager's actual damages. B. The liquidated damages constituted a penalty to the company.

Answer option A is correct. Liquidated damages are a fixed measure of damages for breach set forth in the terms of a contract. Liquidated-damages provisions are generally enforceable, but only if the amount is reasonable, considering (1) the actual or anticipated loss resulting from the breach, and (2) any difficulties in proving the amount of loss. By contrast, penalties are unenforceable. A liquidated-damages provision is unenforceable as a penalty if it is so unreasonably large that it appears that it was meant to punish the breach, not just to compensate for it. SeeRestatement (Second) of Contracts § 356 cmt. a; Liquidated Damages, Black's Law Dictionary (10th ed. 2014). The fact that an injured party failed to mitigate the party's actual damages is not a finding that would support a court's decision not to enforce a contractual liquidated-damages provision. Answer options B, C, and D are incorrect because each accurately states a finding that would support a court's decision not to enforce a contractual liquidated-damages provision.

An entrepreneur wanted to open a store that sold sports memorabilia. The entrepreneur contracted to lease a commercial building for $2,000 per month, for one year. In preparation for opening the store, the entrepreneur purchased $30,000 worth of sports memorabilia that he planned to sell in the store. Prior to the starting date on the lease, the building owner repudiated the contract and leased the building to someone else. The entrepreneur resold the memorabilia he had purchased. Due to increased demand for sports memorabilia, the entrepreneur was able to sell all of the items he had purchased for $50,000. He expended $1,000 in advertising and other incidental expenses in selling the memorabilia. If the entrepreneur sues the building owner seeking reliance damages, how much, if anything, is a court likely to award? A$0. B$1,000. C$30,000. D$31,000.

Answer option A is correct. Reliance damages serve as an alternative to expectation damages and are typically awarded when the injured party relied on the contract but cannot prove any lost profits. When awarding reliance damages, the court will set an amount that places the injured party in the position that he would have been in had the contract never been made. To calculate the amount of reliance damages, the court will consider the loss incurred by the injured party in reliance on the contract, including expenditures made while performing or preparing for the contract. Restatement (Second) of Contracts § 349 (1981).

A contractor agreed to build a gazebo for a homeowner for $8,000. The contractor spent $5,000 on supplies and worked for several days on the project. When the gazebo was nearly complete, a tornado destroyed it. The homeowner demanded that the contractor rebuild the gazebo according to the original contract terms, but the contractor refused to do so without additional compensation. The homeowner then contracted with another builder, and the original contractor sued the homeowner for restitution damages. Is the original contractor likely to prevail in recovering restitution damages? A No, because the homeowner was not unjustly enriched by the destruction of the gazebo. B No, because the contractor was the breaching party.

Answer option A is correct. Restitution is a contract remedy that allows a party to recover a benefit conferred on the other party through a partial or full performance by the party seeking restitution, where it would be unjust to allow the other party to keep the benefit. Here, there has been no benefit conferred on the homeowner because the gazebo was destroyed. Note that while any delay in building the gazebo caused by the tornado would likely be excused by impossibility, the contractor was still bound to rebuild the gazebo under the original contract, and the contractor's refusal to do so constituted a breach.

A man and a woman entered a contract in which the man agreed to give the woman stock shares valued at $5,000 and a painting valued at $10,000, in exchange for land valued at $12,000 and a car valued at $2,000. The man performed by giving the woman the stock shares and the painting. The woman partially performed by giving the man the car, but then refused to transfer the land to the man.If the man sues the woman for breach of contract, what remedy is a court most likely to award him? A Specific performance, requiring the woman to transfer the land to the man. B Specific restitution, requiring the woman to return the man's painting and stock shares, and the man to return the woman's car.

Answer option A is correct. When an enforceable contract is breached, the injured party may have a right to specific performance of the contracted duty. Restatement (Second) of Contracts § 357 (1981). Real property is usually considered unique, such that a court will order specific performance, because damages are inadequate to compensate a buyer for the seller's breach of a land-sale contract.

A private art museum entered into an agreement with a contractor to renovate the museum. The museum agreed to pay the contractor $100,000 after the contractor's completion of the work. The contractor renovated the museum, incurring expenses of $80,000, but the workmanship was so poor that the renovation did not constitute substantial performance. The museum hired another contractor to correct the defect for $10,000. As a result of the initial contractor's work, the museum's value increased by $20,000.Is the initial contractor entitled to any remedy as a result of the failed renovation? A. No, the initial contractor is not entitled to any remedy because the contractor did not render substantial performance B. Yes, the initial contractor is entitled to recover, or offset, the $10,000 benefit the contractor conferred on the museum.

Answer option B is correct. If a party justifiably refuses to perform on the ground that the party's remaining performance has been discharged by the other party's breach, the breaching party is entitled to restitution for any benefit that the breaching party conferred on the other party, either by partial performance or by reliance, that exceeds the loss that the party's breach caused. In other words, a breaching party is, of course, liable for the loss caused by the party's breach.

A man agreed to sell a tract of land to a woman in exchange for five classic paintings. After the woman had transferred one painting to the man, she breached the contract, refusing to give him any of the other paintings or to take possession of the land. The woman then sued the man, seeking restitution of the one painting that she had transferred to him. Assuming that the man did not suffer any loss from the breach, how is a court likely to rule? AThe woman is entitled to recover the painting. BThe woman will not recover the painting, but she will recover its cash value. CThe woman will recover nothing.

Answer option B is correct. If an enforceable contract is breached, a party may have an interest in the restoration of any benefit conferred on the other party. This interest is known as restitution, or the prevention of unjust enrichment. Restitution (Second) of Contracts § 370 (1981). To receive restitution, the party seeking restitution must already have rendered partial performance. There are two types of restitution that may be awarded as a remedy: (1) restitution damages, in the form of a sum of money, and (2) specific restitution, which allows a party to recover a specific thing, rather than an amount of money. Restitution damages are available to either a breaching or nonbreaching party, but specific restitution is only available to a nonbreaching party. Id. at §§ 372, 374.

A plaintiff sued a defendant for breach of contract. The court determined that, because the plaintiff's expectation damages were too speculative to measure, reliance damages were the appropriate remedy. Which of the following accurately states how the court should calculate the proper amount of reliance damages? A. The court should determine the amount of money necessary to place the plaintiff in the position she would have been in had the contract been fully performed. B. The court should determine the amount of money necessary to place the plaintiff in the position that she would have been in had the contract never been made. C. The court should determine the amount of money necessary to compensate the plaintiff for the value of the benefit she conferred on the defendant.

Answer option B is correct. Reliance damages are intended to place an injured party in the position that the party would have occupied had the contract never been made. See Restatement (Second) of Contracts § 349, with comments and illustrations; 22 Am. Jur. 2d Damages §§ 62-63, 65, Westlaw (database updated Aug. 2018). Therefore, here, in order to calculate the proper amount of reliance damages, the court should determine the amount of money necessary to place the plaintiff in the position that she would have been in had the contract never been made.

A plastic surgeon and a patient entered into a contract. In this contract, the surgeon agreed to perform five independent surgeries on the patient over the next few months for a cost of $10,000 per surgery ($50,000 total). The patient paid $40,000 in advance. However, after performing two surgeries, the surgeon informed the patient that the surgeon was moving out of state and could not perform the remaining three surgeries. If the patient sues the surgeon for restitution, how much is the patient likely to recover? A$10,000 (the difference between the contract price and the advance payment). B$20,000 (the difference between the advance payment and the value of the surgeries already performed).

Answer option B is correct. Unlike expectation damages (which focus on giving the injured party the expected benefit of the breached contract), restitution damages focus on preventing unjust enrichment. Restitution damages do this by forcing the breaching party to return any items given by the injured party (e.g., money) for which the injured party did not receive the expected benefit. The amount of money for restitution damages will be calculated by either: (1) the reasonable value of the given performance or (2) the extent of enrichment of the other party's interests. See Restatement (Second) of Contracts § 371 (1981).

A buyer contracted with a seller to purchase a piece of lakefront property. The buyer planned to build a summer cabin on the land. In reliance on the contract, the buyer expended significant funds purchasing materials and hiring workers to build the cabin. After the buyer paid the seller, the seller breached the contract by refusing to tender title to the land to the buyer. The buyer sued the seller, seeking specific performance of the contract. The seller had sufficient assets to pay any award of damages. Additionally, several other parcels of lakefront property were available for purchase. Is the court likely to order specific performance of the contract? A. Yes, because the buyer relied on the contract by purchasing materials and hiring workers. B. Yes, because damages are almost always inadequate for contracts for the purchase of real property.

Answer option B is correct. When an enforceable contract is breached, the injured party may have a right to specific performance of the contracted duty. Restatement (Second) of Contracts § 357 (1981). A court will not order specific performance unless (1) the terms of the contract are sufficiently definite, (2) the order will not be disproportionately burdensome for the court to enforce, (3) and damages will be inadequate. Id. at § 360, 362, 366. Real property is usually considered unique, such that damages are inadequate to compensate a buyer for the seller's breach of a land-sale contract.

A farmer contracted with his neighbor for the neighbor to supply the farmer with water for irrigation, at a fixed price. In reliance on the contract, the farmer planted crops that required a large amount of irrigation. Before the time for performance was due, the neighbor repudiated the contract even though he had adequate water that he could supply to the farmer. The farmer sued the neighbor, seeking specific performance of the contract. Which of the following facts, if true, would NOT support the farmer's claim for specific performance? A. The farmer was unable to obtain a similar quantity of water from another source. B. The neighbor was insolvent. C. The farmer had never before grown this particular crop, making his damages speculative. D. The contract terms also called for the neighbor to install and satisfactorily maintain an irrigation system.

Answer option D is correct. When an enforceable contract is breached, the injured party may have a right to specific performance of the contracted duty. Restatement (Second) of Contracts § 357 (1981). A court will not order specific performance unless (1) the terms of the contract are sufficiently definite, (2) the order will not be disproportionately burdensome for the court to enforce, (3) and damages will be inadequate. Id. at § 360, 362, 366. Additionally, a court will not order specific performance for a contract to render personal services. Id. at § 367.

A contract between Laser Maintenance, Inc., and Medical Vision Operation Corporation contains a clause stating that any assignment is "void." This ordinarily prohibits​

Any Assignment

Which of the following are unique assets for which a court will order specific performance of a contract? a. Shares of a public company b. A family heirloom c. A patent d. A poster depicting a famous sculpture e. Airplane tickets to France f. An apartment g. A secret formula

B,C,F,G

Which of the following are possible outcomes for the buyer when the seller breaches a contract for the sale of goods? a. the buyer is not permitted to recover consequential damages b. the buyer may purchase similar goods from another seller and the breaching party will pay the difference between the cover price and their original contract price c. the buyer may purchase similar goods from another seller and the breaching party will reimburse the buyer for the full purchase price of the similar goods d. the buyer may decline to purchase similar goods from another seller, and the breaching party will pay the buyer the difference between the contract price and the market value of the goods e. the buyer can recover punitive damages

B,D

Which of the following is the most common remedy that the law provides for a party injured by a breach of contract? a. Restitution interest b. Expectation interest c. Reliance interest d. Punitive damages e. Equitable damages

B. Expectation is another word for Compensatory Damages

Reformation allows courts to rewrite part of a contract when it includes a simple mistake, --

But courts are generally reluctant to reform a contract because doing so introduces unpredictability into contracts.

Certainty of Damages

Damages are NOT Recoverable Beyond an Amount that Can Be Established with Reasonable Certainty No Speculative Damages High Degree of Confidence "Have to Prove Damages w/Reasonable Certainty"

Ready Repair Service enters into a contract to fix washers and dryers in Scrub n' Dry Company's coin-operated laundries. If Ready Repair breaches by only partially performing the contract, Scrub n' Dry can

SUE READY REPAIR FOR COMPENSATORY AND CONSEQUENTIAL DAMAGES

Ambrose enters into a contract to buy 350 acres from Belle Vista Farms to cultivate grapes and open a winery.. Belle Vista breaches the contract, Ambrose's remedy would most likely be​

Specific Performance

Tile & Grout (T&G) contracts to resurface the insides of the pools at Water World Park. T&G knows that without the resurfacing, Water World will have to delay its seasonal opening. T&G does not perform as promised. As consequential damages, Water World can recover​

THE LOSS OF PROFIT FROM THE DELAYED OPENING

Shantelle enters into a contract to buy a rare antique car. The seller breaches the contract by refusing to sell the car to Shantelle. What is Shantelle's best argument for obtaining the car?

The car is so rare it is considered an irreplaceable piece of art.

Brad agrees to hire Russ to work at his store for $200 a week. Brad later cancels the contract. Russ is entitled to recover

The wages he would have received while working for Brad less any wages he receives in a replacement job, plus any incidental damages.

T/F Carswell, a contractor, enters into a contract with Helen, a homeowner, to remodel her bathroom. The contract provides a specific completion date. The contract provides that if Carswell does not have the job finished by the date, Helen may deduct $200 per day from the contract price until the job is finished. This is an example of liquidated damages.

True

T/F Ernest operates an ice cream stand during the months of May, June, July, and August. Ernest's ice cream machine is broken and needs a new part to run. He contracts to have the part shipped to him by special carrier. Ernest emphasizes that the part needs to be delivered by April 25 and the carrier agrees, knowing that Ernest intends to open his stand May 1. If the shipper fails to deliver the part on April 25, Ernest will be able to recover consequential damages caused by the delay.

True

T/F Most courts hold that a seller of goods is NOT entitled to consequential damages.

True

T/F Specific performance is always available in real estate contracts.

True

T/F: Ernest operates an ice cream stand during the months of May, June, July, and August. Ernest's ice cream machine is broken and needs a new part to run. He contracts to have the part shipped to him by special carrier. Ernest emphasizes that the part needs to be delivered by April 25 or he will not be able to be open on May 1 as he has advertised. If the shipper fails to deliver the part on April 25, Ernest will be able to recover consequential damages caused by the delay.

True

T/F: Lucky, a contractor, enters into a contract with Penny, a homeowner, to remodel her kitchen. The contract provides a specific completion date. The contract provides that if Lucky does not have the job finished by the date, Penny may deduct $100 per day from the contract price until the job is finished. This is an example of liquidated damages.

True

T/F: Oliver contracts with Carpet Village for replacement carpeting throughout his house. The total contract price is $15,000. Carpet Village's anticipated profit on the job is $7500. If Oliver breaches the contract before Carpet Village has begun work on the job and has not incurred any expenses, then its damages will be $7500.

True

T/F: Under the UCC, the buyer is entitled to consequential damages if the seller could have reasonably foreseen them.

True

Mother & Daughter Jewelers breaches its lease with Longview Mall and vacates the premises six months before the end of the term. In some states, Longview would have to​

USE REASONABLE MEANS TO FIND A NEW TENANT TO MITIGATE DAMAGES

Anna worries that her brother Nick does not have good health insurance, so she writes a contract stating that if he mows her lawn on the last Saturday of every month she will buy him an expensive insurance policy that he could not otherwise afford "for at least the next six months, and longer if necessary." The next week, Nick gets a great job at an investment bank, which provides him health insurance coverage. Anna congratulates Nick and revokes the deal. The breach of contract infuriates Nick, who sues his sister. What result? a. The court will award Nick nominal damages. b. The court will award Nick liquidated damages. c. The court will award Nick consequential damages.

a

Farmer Elvin is holding 200 pounds of potatoes in storage for Chef Noble but Chef Noble has breached the contract by failing to pay for the potatoes. The potatoes are beginning to rot. If Farmer Elvin sells the potatoes to a local diner to make potato soup and salad, then this action would be considered: a. a reasonable mitigation of damages. b. an attempt to maximize damages .c. an attempt to realize an unwarranted profit. d. conversion.

a

Harlowe purchases a watercolor painting by a prominent local artist and a RecumbentSloth brand recliner from a yard sale. She pays cash for both items, and the seller promises to deliver them next week. Two days later the seller calls Harlowe and says he no longer wants to sell the items and sends Harlowe back her money. If Harlowe sues, will she be able to get the items she bought? a. Harlowe will be able to get the painting but not the chair. b. Yes. The UCC entitles to Harlowe to the items as well as any consequential damages that resulted from the breach of contract. c. No She will only be entitled to her money back.

a

Hector is outraged by the Ellsworth Elementary School charity auction when the school invalidates his winning bid on a trip to Paris, refunds his money, and refuses to give him the plane tickets he won. He suffers no real harm because a group of sympathetic parents pool their money and buy him a comparable trip, but the breach by the school still stings, so he sues. What result is most likely? a. Hector will win nominal damages. b. Hector will win because the school made no effort to mitigate his damages. c. Hector will win reliance damages. d. Hector will win liquidated damages.

a

Costs to rent a vehicle for a short period of time after an auto dealer fails to deliver a purchased vehicle would be: a. compensatory damages. b. incidental damages. c. consequential damages. d. punitive damages.

b

Generally, reasonable liquidated damage clauses will be enforced: a. when actual damages are easily determined. b. when actual damages are difficult to determine. c. almost always. d. only in real estate sales contracts.

b

In breach of the partnership agreement, Trimble, a partner in the partnership of Morris, Newt, and Oppie, Ltd. quits the partnership and goes to work for a competitor. The former partners may ask the court for a. liquidated damages as compensation for the breach. b. an injunction to prevent Trimble from working in competition with the former partners. c. specific performance requiring Trimble to return to work for Morris, Newt, and Oppie, Ltd. d. special damages under the rule of Hadley v. Baxendale.

b

John contracts with FashionWare for the purchase of 1,000 zippers for $1 each. The agreement states that John will pay $500 when the contract is signed and the remaining $500 when FashionWare delivers the zippers. In the contract, John specifically states that he is buying the zippers for the manufacture of 1,000 windbreaker jackets for Campers' Crevasse, which he is contractually required to deliver to Campers' Crevasse in 30 days. FashionWare breaches the contract, causing John to miss his delivery date with Camper's Crevasse, which then cancels its contract with John. What remedies are available to John? a. John can recover $1,000 from FashionWare. b. John can recover from FashionWare the $500 he paid for the zippers, any reliance interest, and the expectation interest from his contract with Campers' Crevasse.

b

John sold a Vermont lakeshore lot for $115,000 to Deborah who intended to build a house on the property. John indicated the land was suitable for the project, but Deborah soon learned that a wetland protection law prevented building near the lake. Deborah sued, seeking rescission of the contract. What is the likely outcome? a. Deborah will likely win specific performance. b. Deborah will likely win restitution damages. c. John will likely win. d. None of these answers is correct.

b

Over spring break you go to Florida and accidentally spend too much on your checking account's debit card. When you get back to school, you are shocked to see you owe your bank $220, which you pay back immediately. However, you have not even had time to recover from your sunburn before the bank informs you that, pursuant to the liquidated damages clause in the contract you signed when you opened the account, you are being charged a $55 "overdraft fee" for every transaction you made on your debit card after your balance was $0. Unfortunately, you made nine such transactions, which means you owe the bank an additional $495 in fees (9 x $55 = $495). What is your best argument against the overdraft fees? a. The fee is too high and you are seeking a permanent injunction against the bank. b. The fee is too high and the bank is simply imposing a penalty. c. The fee is unethical and you should be awarded nominal damages.

b

Pamela was injured in an auto accident by an uninsured driver. Pamela filed a claim with her insurer, American Mutual, for $2,000 under her "uninsured motorist" coverage. American Mutual told her that if she sought that money, her premiums would go "sky high," so Pamela dropped the claim. Later, after speaking with an attorney, Pamela sued. What claim was her attorney likely to make? a. A claim for equitable damages. b. A claim for punitive damages. c. A claim for specific performance.

b

Rick was in the process of buying 320 acres of land when Rick signed a contract to sell that same land to Simon. Simon paid Rick $144,000, the full price of the land. Before Simon could complete the purchase of the land Rick went bankrupt. Which of the following remedies should Simon seek from Rick? a. Expectation. b. Restitution. c. Specific Performance. d. Reformation.

b

Solomon breaches his contract with Neal to purchase the 500 pairs of socks he had promised to buy. Neal is able to sell the 500 pairs to Renny for a much lower amount. Neal then sues Solomon for damages. Neal will be able to recover: a. the amount in the liquidated damages clause. b. the difference between Solomon's contract price and the amount paid by Renny. c. Solomon's contract price. d. an amount which depends on whether Solomon intentionally breached because he found cheaper socks somewhere else.

b

The remedy of reformation a. is available only if fraud is involved. b. can be used to correct mistakes in the original contract. c. applies only when money damages are inadequate. d. is a commonly used remedy.

b

Which of the following is an example of incidental damages you might be awarded if you are wrongfully terminated from your job? a. The costs of psychological counseling. b. The costs of mailing resumes to prospective employers .c. The costs of a new wardrobe for future interviews .d. The costs of cosmetic surgery.

b

Which of the following is what a plaintiff is required to prove before a court will enforce a contract for liquidated damages? a. The defendant's breach was caused by his own negligence b. At the time the contract was formed, it was very difficult to estimate actual damages c. The liquidated amount was reasonable d. The harm to the plaintiff was at least as great as the value of the liquidated damages

b,c

All Seasons, Inc. ordered $5,000 worth of Christmas decorations from Santa, Inc. The shipment of decorations was to arrive no later than October 1, but did not arrive until December 1. All Seasons was able to purchase some of the unfulfilled order through other suppliers, but had to pay 15% more than the price under contract with Santa, Inc. As a result of the delay, All Seasons' sales were down 25%. All Seasons can recover a. compensatory damages, consequential damages, and punitive damages. b. nominal damages. c. compensatory damages and consequential damages. d. punitive damages.

c

All Seasons, Inc. ordered $5,000 worth of Christmas decorations from Santa, Inc. The shipment of decorations was to arrive no later than October 1, in time for the Christmas season. The shipment did not arrive until December 1. In spite of the delay, All Seasons covered a third of the order through other suppliers, but had to pay 15% more than the price under contract with Santa, Inc. As a further result of the delay, All Seasons' sales were down 25%. All Seasons can recover: a. punitive damages. b. nominal damages. c. compensatory damages and consequential damages. d. compensatory damages, consequential damages, and punitive damages.

c

Bob, a house builder, contracts with Ollie to build a house on Ollie's lot. The total price of the construction is $100,000, $20,000 of which will be Bob's profit. After Bob has put $10,000 worth of materials into the house, Ollie wrongfully refuses to let him finish the house. If Bob sues for damages, he will be able to collect: a. $10,000. b. $20,000. c. $30,000. d. $100,000.

c

Desmond has been a fan of Crispin's paintings for years and is thrilled when the artist promises to give him painting lessons. The two agree that Crispin will provide Desmond with five weekly lessons for $1,000 each, payable once the lessons are complete. After teaching Desmond two lessons, Crispin dies of a heart attack. Crispin's estate sues Desmond for the $5,000 payment for the art lessons. What result? a. Crispin's estate will be able to recover the full contract price of $5,000. b. Crispin's estate will be able to recover $2,000 under the doctrine of promissory estoppel. c. Crispin's estate will be able to recover $2,000 in restitution. d. Crispin's estate will get nothing because the contract is discharged by his death.

c

Fred purchased a Cheapp Lawnmower because the Cheapp Company salesperson intentionally misled him by assuring him that the mower was self-propelled, mulched, and had a five-year unlimited manufacturer's warranty. When Fred finds out that his new Cheapp Lawnmower is not self-propelled, does not mulch, and has a 90-day warranty, he may successfully sue for: a. reformation of the contract only .b. restitution only .c. restitution and possibly punitive damages. d. compensatory damages only.

c

Generally, reasonable liquidated damage clauses will be enforced a. only in real estate sales contracts. b. when actual damages are easily determined. c. when actual damages are difficult to determine. d. almost always.

c

If a court orders rescission and restitution of a contract under which Nala sold a baseball card to Shirley in exchange for $450 :a. Shirley must return the baseball card .b. Nala must return the $450. c. Both a and b. d. Neither a nor b.

c

The first step a court takes in choosing a remedy is to determine a. if punitive damages should be awarded. b. whether the injured party mitigated its damages. c. what interest it is trying to protect. d. if the damages can be quantified with reasonable certainty.

c

Yvonne promises to sell 500 lbs of rice to Zed at market price. To secure Zed's rice, Yvonne enters into a contract with McKinley Ventures to ship the cargo. The contract stipulates that McKinley will deliver the rice to Yvonne within 48 hours. However, the rice does not arrive for 5 days, during which time the market price of rice decreases 11 percent. Because of the delay, Yvonne lost considerable profit. Can Yvonne recover her damages because of McKinley's breach? a. Yes, because McKinley's breach caused the damages. b. Yes, if Yvonne can provide the court with enough information to calculate the extent of her loss. c. No, because it was not foreseeable to McKinley that the shipping delay would cost Yvonne so much money. d. No, because this is a contract for the sale of goods.

c

Bob, a house builder, contracts with Ollie to build a house on Ollie's lot. The total price of the construction is $100,000, $20,000 of which will be Bob's profit. After Bob has put $10,000 worth of materials into the house, Ollie wrongfully refuses to let him finish the house. If Bob sues for damages, he will be able to collect a. $100,000. b. $20,000. c. $10,000. d. $30,000.

d

Costs to store a vehicle for a short period of time after an auto dealer fails to complete the contract to purchase the vehicle would be considered a. punitive damages. b. compensatory damages. c. consequential damages. d. incidental damages.

d

Ike is building a water park in Charleston, South Carolina, with attractions that are larger and more extravagant than anything in the area. Ike cannot afford delays in its construction and is nervous about his contractor's ability to finish the project on time. What can Ike do protect himself? a. Sue for reliance damages if there are delays in construction. b. Reform the contract. c. Sue the contractor for nominal damages if there are delays in construction. d. Include a liquidated damages clause in the contract.

d

Specific performance may be available for the breach of a contract to sell a. a Nintendo WII video game system. b. a 2007 Mustang in mint condition. c. 20 shares of WalMart stock. d. an original painting.

d

To "undo" a contract and put the parties where they were before they made the agreement is called a. remediation. b. restitution. c. reliance. d. rescission.

d

Which of the following statements is incorrect concerning liquidated damages? a. A liquidated damages clause will be enforced if, when the contract was made, it was difficult to estimate actual damages. b. The amount of liquidated damages must be a reasonable estimation of the actual harm resulting from a breach c. Nominal damages are not the same thing as liquidated damages. d. Liquidated damages are enforceable even if the amount is considered to be a penalty on the breaching party.

d

Compensatory damages are typically assessed against the breaching party: a. as a penalty for breaching the contract. b. only under the UCC when the sale of goods is the subject of the contract. c. to put the non-breaching party in the position it would have been in had the contract never been formed .d. to put the non-breaching party in the position it would have been in if the contract hadn't been breached.

d.