CONTRACTS ACE

REVIEW #1
Chapter 2: Remedies

Bjerre – Yellow Section

T/Th 10:15am - 12:05pm
REVIEW INFORMATION
 Tutor: Roxanne Pelton
 Office Hours: Tuesdays 5:30-6:30pm (PST)
 rpelton2@uoregon.edu
 (She/her)

 Review Sessions
 During office hours
 Tentative schedule (I’ll email out beforehand)
 At the end of each major section
 #1: Remedies, #2: Formation, #3 Interpretation (+ Social Control), #4: Performance/Breach
 Will not be recorded, but Powerpoint will be on Community

 Disclaimer: I’m a student who did well in this class, but I’m not an expert in Contract law. If there’s any disparity between what
I say and what Prof. Bjerre says, go with what he says.
GENERAL TIPS FOR
CONTRACTS
 Focus on the concepts Facts
 Cases are used to illustrate the concepts, but you’re building a
framework of rules

 You may need a different style of brief/outline for each

class
 I found diagrams useful for contracts
Π’s Argument Δ’s Argument
 General themes/principles:
 Joint autonomy Court’s Reasoning +
 Administrability Holding
 Public policy
 REMEDIES

Formation Performance / Interpretation Remedies

Breach

Performance: 
Is it a contract? What was the contract? How do we measure damages?
Breach: 
 REMEDIES OVERVIEW
 How do we measure damages?
 Objective vs Subjective values
 No punitive damages
 No emotional damages (unless inherently
emotional agreement; marriage, funeral, etc.)
- +
$0

 Expectancy Interest 
The gross expectancy (whole green arrow)
will be what the court is trying to protect
 Reliance Interest 
Everything else about remedies is figuring
out what counts on that line and what
 Restitution Interest 
doesn’t.
 EXPECTANCY INTEREST
 Expectancy interest = what the party hopes to gain from the contract; the ideal end
result if no breach.
 Gross expectancy = the whole gain expected, including making up for reliance etc.
 This is what the court awards
 Net expectancy = the final result of the contract (e.g. profit) if performed; “the benefit of the bargain”

- +  Pareto Superior
$0
 Society is bettered by contracts when at least
Net one party benefits and no one is harmed

Gross
 EXPECTANCY INTEREST
(CONTINUED)
Mitigating Damages Specific Performance
 “Duty to” / “Might as well” mitigate:  Specific Performance = Performing the
action/service promised in contract, instead of
 The court will assume that the aggrieved party did/will $ damages
reasonably mitigate damages, whether they actually
have or not.
 (Luten Bridge Co.)  Usually disfavored because of administrability
 (No. Delaware Industrial Dev. Corp.)
 What is “reasonable?” Fact-dependent.
 Exceptions:
 Inferior substitutes do not have to count as  Injunctions (Walgreens v. Sara Creek)
“reasonable”  Land sales
 (Parker v. Twentieth Century Fox)  Unique good sales
 Mebane Bridge by Luten Bridge Co.
Photo credit: https://bridgehunter.com/nc/rockingham/mebane/
EXPECTANCY INTEREST
(CONTINUED)

Reasonable Foreseeability Reasonable Certainty

  Damages must be reasonably foreseeable.   Damages must be known to a reasonable certainty.
Otherwise holding responsible for them would be Otherwise, too speculative to measure and award.
unfair.
 “New business rule”
 Reasonably foreseeable if:  Past: lost profits considered too speculative for a new
A. Arising naturally business
B. In contemplation of both parties at time of K  Now: Can be awarded if “reasonably certain”

 (Hadley v. Baxendale)  (Chung v. Kaonohi Center)

 Lost profits from late mill part = foreseeable  was able to bring enough evidence to show lost profits with
reasonable certainty
RELIANCE INTEREST -
$0
+

 Reliance interest = the out-of-pocket losses a party loses because of breach.

 Essential reliance – the “cost” of performing the contract; inherent in the exchange
 Incidental reliance – made because of the K but not inherent in it

 Reliance is protected because of wanting to encourage trust in making

exchanges with each other.

 However, courts do not usually protect people from just making bad deals.
 (i.e. when it’s clear that reliance > expectancy)
 Writing $ into K in case of breach

RELIANCE INTEREST Liquidated Damages

(CONTINUED)
Reasonable Penalty
estimate Clauses
Not reasonable
Liquidated Damages Penalty Clauses estimate

 Goal:  Goal:
 To explicitly compensate for damages if  To explicitly compensate for damages if
breach occurs breach occurs
 Reasonable estimation of damages  To deter breach
 Enforceable  NOT a reasonable estimation of damages
 Not enforceable
(Lake
  River v. Carborundum)
Lake River would make more money the earlier Carborundum breached
Clause used total amount, didn’t looking at the money LR saves by not processing the material they don’t receive
Penalty clause (not enforceable)
RESTITUTION INTEREST Is the contract fully performed?

N Yes
 Restitution interest = party A receives something
o
(money/good/service/etc.) from party B, there is a
breach, and party B deserves to get their stuff back (or
the value of their stuff). Can sue “on” or Can sue “on the contract”
“off” the contract
 “On the contract” = amount specified in contract
 (Oliver v. Campbell)
“Off” “On”
 “Off the contract” = reasonable value
 Contract is considered rescinded, and aggrieved party
gets their service value back. Quantum Amount in K
 Quantum meruit = as much as one deserves meruit

 Rescission = to agree to cancel the contract