Contract Remedies

1
Chapter 13

• Contract Remedies

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Damages

• Term used 2 ways
• What the nonbreaching party has lost
• What the nonbreaching party can recover to
  compensate for what was lost
• Used to compensate the nonbreaching party for
  anything short of full performance

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Damages Generally

• Infinite variety of contracts
• Infinite ways can be breached
• Thus
• No single damage formula
• Flexibility in remedies
• General principles and goals
• Protect the nonbreaching party

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Benefit of the Bargain

• Puts the nonbreaching party where she would have
  been if the contract had been properly performed
• Expectation damages
• Not a return to the status quo
• First goal of remedies
• Cannot always be done, though

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Example Contract forSale of car for 10,000

• Buyer breaches, sells to another, what seller
  collect as damages if sold for
• 7,800?
• 10,000?
• 11,000?

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Example Contract forSale of car for 10,000

• Seller breaches, buyer gets similar car from
  another for
• 8,500
• 10,000
• 12,000
• Buyer does not buy another, but can prove car was
  worth 11,500

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Example Contract to paint house for 6,000

• Painter does no work, homeowner must pay another
  7,000
• Painter does 50 of the work, another paid 5,000
  to finish
• Painter does 10 of the work, another paid 6,800
  to finish

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Example Contract to paint house for 6,000

• Homeowner cancels (breach)
• (painter supplies materials of 1500)
• Painter can get no other work
• Painter gets other job netting 3,500
• Painter has already spent 700 on supplies
  (nonrefundable) and can find no other work

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Consequential Damages

• One step removed
• Must be
• Foreseeable or
• Known to breaching party
• Hadley v. Baxendale p 360
• Examples
• Boulder Theatre Band
• Rental car for car repair
• Renting car to brother

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Mitigation

• Nonbreaching party has duty to minimize damages
• Examples
• Tenant who must eat at restaurant
• Driving car with known problem
• Reasonable efforts to get good price when selling
  to another

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Liquidated Damages

• Fixed in advanceOK if
• Not excessive (very little ok)
• Actual hard to determine
• Examples
• Loss of damage deposit
• Loss of earnest money
• New roll of film

12
Rescission and Restitution

• Used where benefit of bargain does not work
• Example
• Artist breaches by not completing a custom
  sculpture for me.
• What is benefit of bargain?
• (how much would it be worth? Who knows?)
• Go back to where were to begin

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Specific Performance

• Making the other party do what he was supposed to
  do
• Courts dont like it.supervisory role
• Awarded when damages are not adequate
• Buyer of unique item (all real estate)
• Never for personal services

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Limits on Remedies

• Types of exculpatory clause
• Sometimes enforced, but wont be if essentially
  undoes the entire contract.
• Not enforced re illegal acts