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West Legal Studies in Business
A Division of Thomson Learning
Chapter
17
Contracts:
Breach of Contract and Remedies
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West Legal Studies in Business
A Division of Thomson Learning
Introduction
Most
Common Remedies:
Damages.
Rescission
and Restitution.
Specific
Performance.
Reformation.
Recovery
Based on Quasi Contract.
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漏 2004
West Legal Studies in Business
A Division of Thomson Learning
搂1: Damages
Compensatory
Damages00irect losses.
Sale
of Goods: difference between contract and market price.
Sale
of Land: specific performance.
Construction
Contracts: varies.
Consequential
(Special) Damages00oreseeable losses.
Breaching
party is aware or should be aware, cause the injury party additional
loss.
Case
17.1: Hadley v. Baxendale (1854).
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West Legal Studies in Business
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Damages
Punitive
Damages00unish or deter future conduct.
Generally
not available for mere breach of contract.
Usually
tort (e.g., fraud) is also involved.
Nominal
Damages00o financial loss.
Defendant
is liable but only a technical injury.
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West Legal Studies in Business
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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
17.2: Fujitsu Ltd. v. Federal Express Corp. (2001).
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West Legal Studies in Business
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Liquidated
Damages
Liquidated
Damages.
A
contract provides a specific amount to be paid as damages in the event
of future default or breach of contract.
Penalties.
Specify
a certain amount to be paid in the event of a default or breach
of contract and are designed to penalize the breaching party.
Case
17.3: Green Park Inn v. Moore (2002).
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West Legal Studies in Business
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搂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.
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West Legal Studies in Business
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搂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;
or
Not
available remedy in contracts for personal services.
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West Legal Studies in Business
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搂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.
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West Legal Studies in Business
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搂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.
Retaining
benefit without paying for it would result in unjust enrichment of the
party receiving the benefit.
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West Legal Studies in Business
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搂6:
Election of Remedies
Doctrine
created to prevent double recovery.
Nonbreaching
party must choose which remedy to pursue.
UCC
rejects election of remedies.
Cumulative
in nature and include all the available remedies for breach of contract.
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West Legal Studies in Business
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搂7: Waiver of Breach
A
pattern of conduct that waives a number of successive breaches will
operate as a continued waiver.
Nonbreaching
party can still recover damages, but contract is not terminated.
Nonbreaching
party should give notice to the breaching party that full performance
will be required in the future.
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West Legal Studies in Business
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搂8: Contract Provisions
Limiting Remedies
Exculpatory
clauses.
Provisions
stating that no damages can be recovered.
Limitation
of liability clauses.
Provisions
that affect the availability of certain remedies.
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West Legal Studies in Business
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Law
on the Web
Lawyers.com
website describing how contracts can
be breached.
Cornell
U on
contracts.
Nolo.com on Contracts.
Legal
Research Exercises on the Web.
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