Ch. 18 Outline

1
Ch. 18 Outline

• 1. Damages
• 2. Rescission and Restitution
• 3. Specific Performance
• 4. Reformation
• 5. Recovery Based on Quasi Contract
• 6. Election of Remedies
• 7. Waiver of Breach
• 8. Contract Provisions Limiting Remedies

2
Introduction

• Most Common Remedies
• Damages (4 types).
• _______________________
• Rescission and Restitution.
• Specific Performance.
• Reformation.
• Recovery Based on Quasi Contract.

3
Four Basic Types of Money Damages

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

4
Compensatory Damages

• See Regular Handout

5
1 Damages

• Compensatory Damagesdirect losses.
• Sale of Goods difference between contract and
  market price.
• Sale of Land specific performance.
• Construction Contracts varies.

6
1 Damages

• Consequential (Special) Damagesforeseeable
  losses.
• Breaching party is aware or should be aware,
  cause the injury party additional loss.
• Case Hadley v. Baxendale (1854).

7
Damages

• Punitive Damagespunish or deter future conduct.
• Generally not available for mere breach of
  contract.
• Usually tort (e.g., fraud) is also involved.
• Nominal Damagesno financial loss.
• Defendant is liable but only a technical injury.

8
Mitigation of Damages

• When breach of contract occurs, the innocent
  injured party is held to a duty to reduce the
  damages that he or she suffered.
• Duty owed depends on the nature of the contract.
• Case Fujitsu Ltd. v. Federal Express Corp.
  (2001).

9
Liquidated Damages

• Liquidated Damages.
• A contract provision which specifies an amount to
  be paid as damages in the event of future default
  or breach of contract. The amount is based on a
  reasonable estimate of the value of the promised
  performance.
• Penalties.
• Specify a certain amount (bearing no relationship
  to the value of performance) to be paid in the
  event of a default or breach of contract and are
  designed to penalize the breaching party. They
  are rarely enforceable.

10
2 Rescission and Restitution

• Rescission.
• A remedy whereby a contract is canceled and the
  parties are restored to the original positions
  that they occupied prior to the transactions.
• Restitution.
• Both parties must return goods, property, or
  money previously conveyed.
• Note Rescission does not always call for
  restitution. Restitution is called for in some
  cases not involving rescission.

11
3 Specific Performance

• Equitable remedy calling for the performance of
  the act promised in the contract.
• Remedy in cases where the consideration is
• Unique (land)
• Scarce
• Not an available remedy in contracts for personal
  services.

12
4 Reformation

• Equitable remedy allowing a contract to be
  reformed, or rewritten to reflect the parties
  true intentions.
• Available when an agreement is imperfectly
  expressed in writing.

13
5 Recovery Based on Quasi Contract

• Equitable theory imposed by courts to obtain
  justice and prevent unjust enrichment.
• Party seeking quantum meruit must show the
  following
• A benefit was conferred to the other party.
• Party conferring did so with the reasonable
  expectation of being paid.
• The benefit was not volunteered (not a gift).
• Retaining benefit without paying for it would
  result in unjust enrichment of the party
  receiving the benefit.