REMEDIES QUICK STUDY SHEET

Coasean Contract Theory: K around damages to maximize efciency; Remedy in K; Plan for Breach in K. UCC Goods/ RESTATEMENT Services RELIANCE INTEREST EXPECTANCY INTEREST
$ Promised - $ Delivered = E.I. COST OF PERFORMANCE RULE
VII. WARRANTY A promise by the seller that goods will have certain qualities. Types: 344, "...bene t of bargain by being put in as good a position as he 1) would have been had the contract been performed." Hawkins v. McGee- hairy hand 347 1. 2. 3. DAMAGES BASED ON EI MEASURED BY: Value Promised less Value Delivered Incidental or Consequential Loss caused by breach. Cost or Loss that he has avoided by not having to perform.

Express (2-313) created by overt words or actions of the seller. created by: 1. a rmation of fact or promise made by the seller to the buyer relating to the goods. 2. a description of the goods that becomes a part of the basis of the bargain. 3. A sample or model made part of the basis of the bargain. TEST: "whether seller assumes to assert a fact of which the buyer is ignorant, or merely states an opinion or judgment about a thing." RECOVERY: WTY must be a part of the basis of the bargain between the parties. Implied (2-314) arising by operation of law b/c of the circumstances of a sale, rather than by express promise. DOES NOT REQUIRE RELIANCE as an element of buyer's recovery. see Overstreet v. Norden Labs, vet meds and mares case. ALT. PRODUCT RULE: consequential damages (lost foals) are only awarded consistent with 2-715 if: 1. Alt product was available 2. Product would have been used. FORESEEABILITY Acts as limit on expectancy damages Damages are foreseeable when at the time of K the part who ultimately breached reasonably should have realized that those damages would be likely consequences of the breach. 1) 351(1), damages not recoverable for UNFORESEEN by party in breach. 2) 351(2), loss foreseeable as a result of breach if a. in the ordinary course of events. b. special circumstance beyond a. 3) 351(3), ct. can limit damages for foreseeable loss by allowing recovery only for loss incurred in reliance, or otherwise justice so requires (vague).

348 Diminution in Value Rule (Alt. Loss in Value of Perform.) When COST OF PERFORMANCE rule would result in being in a better position than he was if K was completed. 2. If a breach results in defective or un nished construction 2) and the loss in value to the injured party is not proved with su cient certainty, may recover based on: (a) the diminution in the mkt price of the property caused by breach. (b) the reasonable cost of completion- not clearly disproportionate to the probable loss in value to him Peevyhouse v. Garland- strip mining $300 value for $29K

350 Avoidance of Additional Loss/ MITIGATION RULE Can't recover for damages for loss that could have been avoided if the injured party would have taken appropriate steps. VIII. Must mitigate to recover for loss. Rockingham County v. Luten Bridge- Kept building bridge after noti cation of breach. Hussey v. Holloway- Comparable employment I. MITIGATION & LOST PROFITS (2 Pt. Test) 1) Reasonable E ort of Due Diligence 2) Seek comparable employment or other performance. Olds v. Maples- marble work K1 & K2 to mitigate LOST VOLUME SELLERS AND PROFITS (3 Pt. Test) Could have made both sales therefore lost pro ts. 2-708(2) & 2-706 inadequate for a lost volume seller. 1) Seller could produce unit + actual volume 2) Must be pro table to make both sales 3) Would second sale be made? Probability + Past Diasonics-buyer breached K1, seller sold to K2 and buyer sued for down payment.

II.

349: Damages recovered are those expenses that the injured party incurred in reliance of K Including: expenditures made in prep for performance or in performance LESS any loss that the party would have su ered had the K been performed. see Security Stove- convention delivery mistake. Incorporation Doctrine: Claim expense incurred prior to the K provided it was foreseeable by both parties and likely wasted if K broken. see Anglia Television; Dempsey Fight Calculate New Business Pro ts: 1) Expert Testimony; 2) Comparable Business. Reliance and Extra Pain: Cost incurred beyond pain expected. see Sullivan v. O'Connor Reliance & Lost Pro ts: 351: Unforeseeability & Related Limitations on Damages 1) Damages not recoverable for loss that the party in breach did not have reason to foresee when K made. 2) Losses may be foreseeable as a prob result b/c it ows from breach. 3) Ct. may limit damages for foreseeable loss by excluding recovery for loss of pro ts, by allowing only loss incurred in reliance, or if it concludes that in the circumstances justice so requires in order to avoid dispro. compensation. see Freund v. Wash. Square Press; Ferrel v. Elrod MUST SHOW DAMAGES REASONABLE WITH 352 Damages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty. Evidence of past performance will form the basis for a reasonable prediction as to the future.

RESTITUTION INTERESTS
Goal to return parties to the status quo

"benefits paid less benefits received"

III.

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DIFFERENCE RELIANCE/RESTITUTION 2-715, inclusion of incidental/consequential damages Reliance, like expectation, is conceived of as a remedy based on see Hadley v. Baxendale, mere notice is not su cient under a rmation of the contract, it is an enforcement of the contract Restitution treats the breach as having caused the contract to fall foreseeability. QUANTITY DISCOUNTS away Seller can't recover qty discount which he lost on acct. of 370: A party is entitled to restitution under the rules stated in General Damages breach by Buyer. this Restatement only to the extent that he has conferred arising naturally and obviously from breach of K 2-710- Incidental damages. a bene t on the other party by way of part performance Bene t foregone does NOT equal a cost reasonably or reliance. Consequential Damages incurred! 373: Restitution when other party is in breach. liability for foreseeable losses by reasonable person. See Nobs Chemical (1) The injured party is entitled to restitution for 1) circumstances known to BOTH parties any bene t that he has conferred on the other 2) Should K around special circumstances COVER party Buyer's procurement of substitute goods after seller has (2) No payment if all duties are performed besides IX. GENERAL & SPECIAL DAMAGES breached. due payment 351-2(a), loss may be foreseeable as it stems naturally 2-712, After breach buyer may cover by making in good see Bollenback v. Continental Casualty Co. from the breach. Any easily imaginable direct damages. faith and w/o reasonable delay any reasonable RESTITUTION AND THE UCC purchased of or K to purchase goods in substitution. 1. UCC Buyers Remedies Options buyer may cancel and see Morrow v. 1st National Bank of Hot Springs recover any down payment Tacit Agreement Test: Damages = Di erence between cost of cover and the K 2-711 (Bollenback) 1) To recover, must prove that must have tacitly price + incidental, and consequential damages, less 2. Buyer may cover, seek substitute good and have agreed to assume the responsibility of the expenses saved. damages too (incurred in getting cover) (2-711, 2-712) special damages. See Durawood Treating Co. plus incidental and consequential damages RELIANCE REMEMBER: 3. Buyer may receive pure damages 2-713 Foreseeability is Not speculative CONSEQUENTIAL DAMAGES (market price when learned of breach + incidental and Loss must be probable result of the breach of K terms. When a buyer can't make a sub transaction and some consequential ), consequential damages occur as a result of breach. Like #2, but no cover buyer may sue under equity and SPECIAL DAMAGES Remedy sought when... get speci c performance (when would this happen? 353, loss due to emotional disturbance, excluded unless 1) Breach causes further losses For specially manufactured goods, unique goods, the breach caused bodily harm or the K/breach caused 2) Endeavors Dependent upon K antiques, artwork) 2-716 serious emotional disturbance was a likely result. SPECIFIC PERFORMANCE 2-715, cons. dam. recoverable when 2-601 Perfect Tender rule to the extent of permitting a buyer to see Ainsworth 1) seller at time of K had reason to know of damages and reject goods for any nonconformity. That rejection does Opression, tort term, too general subjective 2) could not have covered. not automatically terminate the contract. (CREATE STATUTE) 2-602 ; 2-508 A seller may still e ect a cure (a sellers right under MARKET VALUE the UCC to correct a nonconforming delivery of goods, see Seaman's Direct Buying If aggrieved party did not enter into a sub. trans. usu. within the contract period) and prevent unfair Punitive damages don't belong in K law. (cover/mit.) then they are entitled to sue for loss based rejection and cancellation by the buyer. on hypothetical sub. VALUED AT THE MKT RATE. 2-607(4): After buyer accepts goods, he has the burden to prove STEPS TO FOLLOW WHEN DETERMINING DAMAGES: any defect What type are they seeking? 2-713, allows the buyer mkt rate - contract $ = damages 1. 2-608: AFTER ACCEPTANCE, the buyer may revoke acceptance 2. Is there mitigation? only if the nonconformity substantially impairs the value 3. Is there reliance? Sometimes mit. can be accomplished but would be of the goods to him 4. Was there a WTY? inappropriate to award damages. i.e., mkt $ rising and see Durfee v. Rod Baxter Imports 5. Do they need Sp. Performance or Monetary didn't have enough time to mitigate. damages Restatement 371If a sum of money is awarded to protect a partys Damages? restitution interest, it may as justice requires be measured by either: 6. Is there a foreseeability problem? 1. reasonable value to the other party of what he recd in terms of 7. Are the damages speculative? 352 what it would have cost him to obtain it form a person in the 8. 353, loss due to emotional disturbance (must be claimants position (bene ts rendered by P) [Cotnam v. Wisdom] foreseeable and serious emotional disturbance)
Quantum Meruit: 374, rest. in favor of party in breach if a party justi ably refuses to perform b/c other party has breached, party in breach is entitled to rest. for any bene t conferred by way of part performance or reliance in exess of the loss he caused by his own breach.