Chapter 17 slides.pdf

8/18/2019 Chapter 17 slides.pdf

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Chapter 17

Remedies

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Money Damages

Usually:• Expectation damages• or• Reliance damages• or• Restitution damages

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Money Damages (cont’)

Sometimes:

• Liquidated damages, and/or

• Punitive damages

Rarely:• Nominal damages

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Expectation DamagesWhat the injured party reasonablythought he would get from thecontract.

The goal is to put himin the position he would have

been in if both parties had fullyperformed their obligations.

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Expectation Damagesare the sum of :

• Compensatory damages, if any, and

• Consequential damages, if any, and

• Incidental damages, if any.

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Compensatory DamagesExample

Example: Actress breaches her contract withfilm company.

Compensatory Damages:Incremental cost of new actress $1 millionExtra wages for crew + $2.5 million

Total $3.5 million

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Consequential DamagesThose resulting from the unique

circumstances of this injured party

aka “special damages”

Must have been foreseeable to thebreaching party at the time the contractwas made.

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Hadley v. Baxendale

Summary of factsWhat’s the issue?

How did the court ruleand why?

Discussion

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Berkel & Company Contractors v. Palm &Assoc Inc. YOU BE THE JUDGE!

Summary of facts

Two votes

Discussion


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Incidental damages

Relatively minor coststhe injured party incurswhen there has been a breach.

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Reliance DamagesMoney expended by the injured party in

reliance on the agreementfor which in fairness he should receive

compensation.

The goal is to return the injured

party to the state he was in before heentered into the contract with thebreaching party.

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Reliance Damages exampleTravel, hotel, wages for the cast & crew for four

days.Money spent developing the script after Reina

made her promise.

The unrecoverable portion of money spent oncostumes & sets.

Note that the injured party hasa duty to mitigate damages.

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Promissory Estoppel

Reliance damages are typically given inpromissory estoppel cases.


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Restitution DamagesDesigned to return to the injured party a

benefit that he has conferred on the otherparty, which it would be unjust to leavewith that person.

Example: Toews v. Funk , Idaho Court ofAppeals, 1994

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Restitution in rescission cases

Restitution damages are common remedyin contracts rescinded on basis of:• Fraud• Misrepresentation• Mistake•

Duress


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Mitigation of DamagesDuty to mitigate by the non-breaching party:• Must make reasonable efforts to keep

damages as low as possible (to preventunnecessary loss)

• May not recover damagesthat could have been avoidedwith reasonable efforts.


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Nominal DamagesSometimes people sue even though they

know that proving any damages willbe difficult.

Nominal damages are a token awardthat says “you won.”

Both parties must pay their own courtcosts.

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Liquidated Damage Clause

A provision stating in advance howmuch a party must pay if it breachesthe contract


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Liquidated DamagesA court will generally enforce a liquidated

damages clause if :

1. At the time of creating a contract, it wasvery difficult to estimate actual damages,and

2. The liquidated amount is reasonable.(Penalties are not enforceable.)

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Lake Ridge Academy v. Carney

Summary of factsHow did the lower courts

rule?What’s the issue?

How did the court ruleand why?


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Punitive DamagesOnly awarded in contract case when

it involves conduct such as badfaith or fraud.

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Specific PerformanceA form of mandatory injunction in which a party

is ordered to perform as specified in thecontract.

A court will award specific performance only in

cases involving the sale of land or some otherasset that is unique.


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InjunctionIn contract law, an injunction is an order to

cease and/or desist from doing something.

Example: Money damages willnot compensate for anunpleasant odor wafting in from

neighbor’s pig farm.

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InjunctionA preliminary injunction: A court

order issued early in a lawsuitprohibiting a party from doingsomething during the lawsuit.

A permanent injunction: Defendantmust forever stop the activity.

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Reformation•

A remedy in which the courtrewrites a contract to reflect theoriginal intention of the parties.

• Reformation is rare.

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