Chapter 13

Contracts: Breach and Remedies

©2002 by West Legal Studies in Business A Division of Thomson Learning

Damages



Compensatory Damages.

– Compensate injured party for damages actually sustained.

– Sale of Goods: difference between the contract and market price.

– Sale of Land: same as sale of goods.

– C0nstruction Contracts: depends on when and who breaches.

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Damages

  

Consequential Damages.

– Foreseeable damages the breaching party is aware--or should be aware—of that cause damage as a consequence of the original injury. cause the injury party additional loss.

Punitive Damages.

– Designed to punish the wrongdoer and deter similar activity in the future.

Nominal Damages.

– No financial loss.

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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 13.1 Parker v. Twentieth Century Fox Film Corp (1970).

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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.

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Specific Performance

  An equitable remedy calling for the performance of the act promised in the contract.

Remedy in cases where the consideration is: – Unique; – Scarce; or – Not available remedy in contracts for personal services.

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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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Recovery Based on Quasi Contract

  Equitable theory imposed by courts to obtain justice and prevent unjust enrichment. – 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.

Quantum meruit.

(1998).

Case 13.2 Maglica v. Maglica ©2002 by West Legal Studies in Business A Division of Thomson Learning 8

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.

Case 13.3 Palmer v. Hayes (1995).

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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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