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Breach of Contract and Remedies
Breach of Contract and Remedies
Overview
Contract
Agreement, Consideration, Capacity, Legality Non-performance Failure to perform an absolute duty required under the K Relief provided to the innocent party
Breach
Remedy
Breach of Contract
What is it? How does it occur?
be sure to be able to distinguish between a breach and situation where party says other is breaching when in actuality a defense has been raised to enforcement
consideration
Remedies...
At Law classic compensation for injury limited to land items of value money In Equity based on principles of justice and fairness relief provided through specific performance injunctions rescission and restitution
Remedies at Law
Damages... RM.RM.RM.RM Compensation for loss of the Benefit of the
Bargain Most common remedy ... innocent party to be placed in the position they would have occupied had the contract been fully performed...
Punitive
Nominal
Compensatory Damages
Compensation for the loss of the benefit of
the bargain Injuries must be actually sustained Must arise directly from the loss of the bargain Generalized examples
Sale of Goods contract Land contract Construction contract
Compensatory Damages
Sale of Goods contract
e.g., Seller Breach Benefit of Bargain? Twenty RM
RM100 Market Price
RM80
K Price
Compensatory Damages
Sale of Land contract
Because each parcel of land is unique... But what if land has been sold after breach?
Compensatory Damages
Construction Contract
Breach by owner can occur at essentially
Before (profits) During (profits and costs incurred) After (Contract price + interest)
Consequential
Punitive
Nominal
(Specials)
Consequential Damages
Key issue
FORESEEABILITY
must know or have reason to know as by special relationship Defendant must be able to reasonably foresee injury as a probable result.... injury or damage?
Compensatory
Consequential
Punitive
Nominal
Punitive Damages
Inconsistent with contract theory
contract as a civil relationship between two parties business has its own way to punish...
with torts
Compensatory
Consequential Punitive
Nominal
Nominal Damages
Technical injury only No actual damages suffered
Typically RM1
A matter of principle
Mitigation of Damages
...cause to be less harsh... injured party must use reasonable means to
Liquidated Damages
Sum certain... calculable... determined...
specified amount Cannot be punitive... as already noted penalties have no place in contract law The Test:
When contract entered into, was it apparent that damages would be difficult to estimate in event of breach? Was amount set reasonable and not excessive? Estimation of damages? Reasonable?
Contract to rebuild
Remedies...
At Law classic compensation for injury limited to land items of value money In Equity based on principles of justice and fairness. relief provided through specific performance injunctions rescission and restitution reformation
Equitable Remedies
Usually only awarded if legal remedies are inadequate
Specific Performance
Specific Performance
Appropriate where the legal remedy (RM
damages) is inadequate ... an order to perform what was promised... Injured party gets what was agreed to under the contract Why is SP not usually appropriate where the dispute centers around the sale of goods?
Injunctions
... forbids defendant to do some act... which
he is threatening or attempting to commit, or restraining him in the continuance thereof, such act being unjust and inequitable, injurious to the plaintiff, and not as such as can be adequately redressed by an action at law...
Injunctions
Not a typical remedy in contract disputes Difference between positive and negative Some use in a negative fashion in personal
services contracts
e.g., Contract dispute between a performing artist and promoter... prohibition on performing in same area for a different promoter
Remedies at law inadequate, thus causing irreparable harm... Plaintiff must demonstrate at least a reasonable likelihood of success at trial Threatened injury to the plaintiff outweighs the threatened harm the granting of the injunction may inflict on the defendant Whether by granting the preliminary injunction the public interest would be disserved
a dissolution or undoing of the contract... restoration of the parties to their positions before the contract was entered into
present according to the objective theory of contracts, a contract may be unenforceable if there is not Genuine Assent by the Parties. If assent is not genuine, the contract can be avoided by the party whose assent was not genuine
Mutual
Restitution is payment ordered by a criminal court after the offender has been found guilty. Civil damages are ordered when someone has won a lawsuit in civil court.
of contract
Reformation
Another Equitable Remedy... Differs from R&R most significantly in that it
does not try to undo the contract... ... but rather attempts to reform, correct or modify the contract so that it accurately reflects the agreement of the parties
Reformation
Plaintiff must show by clear and convincing
evidence that the parties had reached agreement on a term and that because of a mutual mistake (or unilateral mistake + misconduct by the other) the term wasnt included.