Breach And Remedies

Material - Non-breaching party not obligated to perform.

Non-material - Non-breaching party is still obligated to perform, but can get damages. If K is repudiated, then that is a material breach.

Seller must strictly perform under the K or be in breach. Material breach only applies to installment Ks or when parties provide for the concept in the K.

Repudiation must be clear and unequivocal and may be by acts or words.

(1) Treat repudiation as a breach;

(2) Ignore repudiation and demand performance. If ignored, then non-repudiating party must suspend its performance.

May be retracted unless non-repudiating party (1) acts in reliance of the repudiation;

(2) signifies acceptance of the repudiation; OR

(3) commences an action for breach of K.

Anticipatory repudiation does not apply to unilateral Ks.

Occurs when unequivocal refusal of buyer or seller to perform OR when reasonable grounds for insecurity arise and other party fails to provide adequate assurances within a reasonable time, not to exceed 30 days.

Damages meant to compensate the non-breaching party for actual economic losses. Put nonbreaching party in as good a position as performance would have done, plus consequential and incidental damages, if any, less possible mitigation damages. Alternatively, P might recover liquidated damages, reliance damages, or restitutionary relief.

Put injured party in same position as if K had been performed. If too speculative, P may seek reliance damages instead. Compare value of performance without the breach (what was promised) with value of performance with the breach (what was received). CANNOT recover expectation and reliance damages in same K.

(1) Must be proved with reasonable certainty;

(2) Unforeseeable consequential damages are not recoverable unless the breaching party hadsome reason to know about the possibility of these unforeseeable consequential damages;

(3) Must mitigate. If you do not, law will calculate damages as if you mitigated.

Losses that are unique or special to this plaintiff. Reasonably foreseeable losses to nonbreaching party that go beyond expectation damages, such as loss of profits.

The type of losses that almost anyone would suffer from a breach.These include incidental damages, such as the cost of storing rejected goods, or findinga new buyer, or finding a replacement vendor.

(1) Failure to begin or complete project - Difference between K price and cost of construction by another builder plus compensation for delay.

(2) Owner's failure to pay K price - Profits builder would have earned plus any costs incurred by builder minus payments made by owner to contractor and any materials purchased by contractor that are used by contractor on another job.

Sale of goods and real estate - Difference between K price and market value. (or cost of cover for sale of goods).

K to lend money - Additional cost of obtaining a loan from another lender.

Recover for work performed plus expectation damages for work not yet performed.

Expectation damages = Contract Price – Amount already Paid – Amount that Would BeNeeded to Finish the Job

Used when cost-to-complete damages will dramatically overcompensate theplaintiff (economic waste). How much lower is the market value of what you gotversus what you wanted? Note that the breaching party must normally have acted in aninnocent and unintentional manner for DMV damages.

Difference at time and place of acceptance between value of goods accepted and value they would have had if they were as warranted.

If the paying party breaches, then normally the selling party needs to mitigate by resellingthe goods or services to another person. But if the seller is a retailer who sells this type ofproduct all the time, the seller can try to argue for LVP.

(1) Damages were uncertain;

(2) Parties agreed to amount;

(3) Liquidated damages are reasonable.

Party should mitigate. If party does not, party cannot be sued for not mitigating. All that would happen is damages would be reduced as if mitigation occurred.

P can recover benefit conferred on D by P.

(1) Liquidated damages clause already in K; AND

(2) breach was willful.

Put a party inthe same economic position that it would be in if the contract had never been created. CANNOT HAVE RELIANCE DAMAGES AND EXPECTATION DAMAGES IN SAME K.

When damages are inadequate. Look for when fact pattern involves land or other unique goods. SP will not be granted where courts cannot supervise enforcement.

Buyer may purchase similar goods elsewhere and recover the replacement price minus the K price.

an equitable right of an unpaid seller to reclaim goods when the buyeris insolvent.

(1) Buyer must be insolvent at time of receipt of goods;

(2) seller must demand the return of goods within 10 days of receipt; AND

(3) buyer still has the goods.

(1) buyer expressly states acceptance;

(2) uses the goods; OR

(3) fails to reject the goods.

Seller can cure defective tender if:

(1) Time for performance under K has not yet elapsed; OR

(2) seller had reasonable grounds to believe buyer would accept despite the nonconformity.