Ch 18: Breach of Contract and Remedies (contracts)

a breach of contract entitles the nonbreaching party to sue for monetary damanges (designed to compensate a party for harm suffered as a result of another's wrongful act)
Types of damages:
1. Compensatory (to cover direct losses and costs)
2. Consequential (to cover indirect and foreseeable losses)
3. Punitive (to punish and deter wrongdoing)
4. Nominal (to recognize wrongdoing when no monetary loss is shown)

compensating the nonbreaching party for the loss of the bargain
special cases: sale of goods, sale of land, construction contracts

expenses that are caused directly by a breach of contract

-compensatory damages is an amount equl to the difference between the contract price and the market price

when the remedy of specific performance is unavailable or when the buyer has breached, the measure of damages is ordinarily the same as in contracts for the sale of goods - the difference between the contract price and the market price of the land

the remedy for a seller's breach of a contract for a sale of real estate is ___, the buyer is awarded the parcel of property for which she or he bargained

the owner can breach at 3 different stages before construction
1. Before performance has begun
-contractor can recover only the profits that would have been made on the contract
2. During performance
-the contractor can recover the profits plus the costs incurred in partially constructing the building
3. After performance has been completed
-the contractor can recover the enture contract price, plus interest
*if CONTRACTOR breaches the contract by
1) failing to undertake construction/stopping partway through
-the measure of damages is the cost of completion
2) finished late
-measure of damages is the loss of use

occurs when the cost of repairing or completing the performance as required by the contract greatly outweighs the benefit to the owner

special damages
foreseeable damages that result from a party's breach of contract
differ from compensatory because they are caused by special circumstances beyond the contract itself - flow from the consequences or results of a breach
EX: when a seller fails to deliver goods, consequential damages are awarded for the loss of profits planned from the resale
*to recover consequential damages, the breaching party much know that special circumstances will cause the nonbreaching party to suffer an addition loss*

exemplary damages are genearlly not recoverable in contract law
-meant to punish the wrongdoing and set an example, have no place in contract law
EX: may be used when a person's actions constitute both a breach of contract and a tort

when no actual damage or financial loss results from a breach of contract and only a technical injury is involved - court may award this to the innocent party
-often small (such as $1) but do establish the defendant acted wrongfully
-often brought as a matter of principle

when a breach of contract occurs, the innocent injured party is held to a duty to mitigate or reduce the damages that he or she suffered

this provision in a contract specifies that a certain dollar amount is to be paid in the event of a future default of breach of contract

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
1. when contract was entered into, was it apparent that damages would be difficult to estimate in the even of a breach?
22. Was the amount set as damages a reasonable estimate and not excessive
YES --> liquidated damages provision will be enforced

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

to rescind a contract, both parties must make restitution by returning goods, property, or funds previously conveyed
*involved the plaintiff's recapture of a benefit conferred on the defendant through which the defendant has been unjustly enriched

-not limited to rescission cases - because an award of restitution gives back or returns something to its rightful owner, this remedy may be sought in actions for breach of contract, tort actions, etc.

an equitable remedy that calls for the performance of the act promised in the contract
-often attractive to a nonbreaching party because it provides the exact bargain promised in the contract
-will not be granted unless the party's legal remedy (monetary damages) is inadequate
-used often for paintings, sculptures, rare books, or coins that are so unique that monetary damages will not enable a buyer to obtain an identical substitute

a court may grant specific performance to a buyer in an action for a breach of contract involving the sale of land
-every parcel of land is unique: given if the same land in the same location oviously cannot be obtained elsewhere

courts normally refuse to grant specific performance for these contracts because to order a party to perform personal services against his or her will amounts to a type of involuntary servitude
-moreover, courts don't want to monitor a service contract (especially if an exercise of personal judgement or talent)
EX: brain surgery

an equitable remedy used when the parties have imperfectly expressed their agreement in writing
-allows a court to rewrite the contract to reflect the parties true intentions

courts order reformation most often when fraud or mutual mistake is present
-a party typically seeks reformation so that some other remedy may then be pursued

when two parties have an oral contract, agree to put it i writing, but make an error in stating the terms
-court will then reform the written contract

if covenant is for a valid and legitimate purpose but the area or time restraints of the covenant are unreasonable, some courts will reform the restraints by making them reasonable and will enforce the entire contract as reformed