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CONTRACT REMEDIES

I. Overview (measure of the damages is the 2. Look for: whether the amount is price of the K), whether D
A. Approach: expectation interest) a single set sum of $$ or a used it or not.
1. Determine what substantive area 3. Consequential Damages: $1k/day penalty (a) It is okay if the value
of law involved Available for related damages a. The set sum is presumptively of the benefit is greater
a. Torts, K, related real estate foreseeable at the time of INVALID, Range or formula is than the actual contract
b. Always separate the two, and formation (lost future profits, usually ok value
look for both etc.) 3. If Valid: only liquidated amount b. Option #2:
2. What specific type of problem is a. Look For: The lost reputation is available. i. P gets her property back if
at issue w/ substantive area fact pattern i. Note: while a valid it is unique or the D is
(What kind of Tort or K?) i. Luxury developer hires a liquidated damages award insolvent
3. Make sure that P has a case. builder who intentionally will preclude P from 2. The K is breached
Must discuss substantive law uses substandard inferior getting actual damages, it a. If P is non-breaching party
before remedies. materials will not preclude P from (same as if K is unenforceable)
4. Determine which remedies ii. Seriously damages Ps getting specific b. If P is breaching party (no
require discussion. Each type of reputation in addition to his performance unless the K majority. About 50:50) (USE
remedy gets own heading. profits loss specifically provides that BOTH)
B. Discuss in the chronological iii. Will affect future profits this damages amount is to i. Traditional view: no
order: on Ps other projects be the ONLY valid. recovery
1. Legal remedies iv. Can get consequential 4. If Invalid: only actual ii. Modern view: recovery
2. Restitutionary remedies damages here if they were compensatory damages are allowed, but can NOT be
a. First three are legal, last two foreseeable available greater than the K rate
are equitable 4. Incidental Damages: costs a. Trick Question: the clause AND it will be reduced by
3. Pure equitable remedies: incurred dealing with a breach provides that P can get either the injury suffered by D as
regarded as extraordinary form of are always recoverable, actual OR liquidated damages a result of Ps breach
regardless of foreseeabiilty. this is an INVALID clause.
relief. Courts wont give unless no
5. Reliance Damages: put P in the Give P actual damages.
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viable legal remedy IV. Equitable RemediesSPECIFIC
same economic position as if K PERFORMANCE
had never happened. Allowed in III. Restitutionary Remedies A. Cha Cha Is My Favorite Dance
II. Legal Remedies (Damages)
cases where expectation damages A. Purpose is to prevent unjust B. Contract MUST be valid,
A. Compensatory Damages: P is would be too speculative.
entitled to compensatory enrichment certain, definite
B. Nominal Damages
damages to put her in the B. Legal 1. P must be able to show the K
1. No one sues for breach of K
position she would have been in 1. Restitutionary Damages terms with more certainty and
under nominal damage theory 2. Replevin definiteness than would be
had this wrong not occurred. On 2. Throw it in if you have time, but
these facts 3. Ejectment necessary in an action for money
dont spend a lot of time on it C. Equitable damages
1. Preliminary Requirements: C. Punitive Damages: NO punitive
1. Constructive Trusts C. CONTRACT CONDITIONS OF P MUST
a. Causation damages in K law 2. Equitable Liens BE SATISFIED
i. Actual: but for test, actual 1. But if it is willful, bad, or
causation D. Only one fact pattern: Where P 1. P must show that her K
fraudulent, then characterize as has already rendered conditions have been fulfilled
b. Proximate Causation: a tort to obtain punitive damages
foreseeability at time of performance of the contract, and (already performed, ready and
D. Liquidated Damage Clause
contract formation the contract then fails after able to perform or excused from
1. General Rule: clause is performing)
c. Certainty: damages cannot performance (so want to prevent
enforceable so long as its not a unjust enrichment). Contract fails 2. TIP: fact patterns often involve
be too speculative penalty AND
d. Duty to Mitigate: damages in two ways: land sale contracts
a. Damages are very difficult to a. Seller cant deliver the
that could have been avoided 1. The K itself is unenforceable
ascertain at the time of K (mistake, capacity, SoF, illegality) amount of land promised
w/out an undue burden on the formation
P are not recoverable a. Option #1: (agreed upon consideration)
b. The clause was a reasonable
2. Direct Damages: those that flow i. P can get restitutionary in the K (deficiencies fact
forecast of what they would be damages for the value of pattern)
inherently from the wrong
the benefit to D (not the i. P is the Seller:
CONTRACT REMEDIES
(a) Can get specific (b) If court does not give (a) One of a kind or very G. DEFENSES
performance and SP, the modern trend rare 1. Equitable defenses
enforce the K if the will give P restitutionary (b) Personal a. Unclean hands
defect is minor (999 relief significance to buyer b. Laches
acres versus 1000 iii. Equitable Maxim: Equity (c) Circumstances make c. Unconscionability: Must be
acres) abhors forfeiture: Factors chattel unique really bad, tested @ time of K
(b) Cannot get specific Court will look at to AVOID (d) NOTE: Uniqueness is formation. Unfair surprise
performance if the the harsh result of a tested @ time of 2. Contract Defenses
contract defect is major forfeiture: litigation NOT at the a. Mistake
unless seller can cure (a) Loss to seller is small time of K formation b. Misrepresentation
the defect before (b) Tardiness is de 3. Liquidated Damage Clauses c. Statute of Frauds: Part
closing minimus a. Mere existence of a valid performance
ii. P is the Buyer: (c) Waiver: seller has clause itself does not i. How to spot the issue: it
(a) May specifically accepted late payments preclude specific performance will be an oral K for land or
enforce even if the in the past (and therefore that money a testamentary disposition
defect is major (d) Buyer would suffer damages are adequate), of land, and there was
(b) Cannot enforce if the undue hardship UNLESS the clause says that partial performance. First,
defect is VERY major iv. NOTE: fall back on this is to be the only remedy raise SoF defense, then
(Cant take 200 instead restitutionary relief if cant E. MUTUALITY OF REMEDY analyze below.
of 1000 acres) get SP. 1. Fact pattern: will look EXACTLY ii. Rule: if one has rendered
(c) TIP: if you decide SP v. NOTE: if K fully performed, like this: 1) B who is 17 enters (a) Valuable part
should be granted time of essence clause into a K to buy land from D, 2) D performance
under the rules above, strictly enforced refuses to convey, 3) and B brings (b) In reliance on the K
even though a defect D. INADEQUATE LEGAL REMEDY an action for SP (c) This will take the case
still remains, MUST ALTERNATIVE a. First: indicate there is out of the SoF and SP
1. Inadequate because: will be granted
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include a sentence mutuality fact pattern, one
noting that the court a. Damages are too speculative where the D argues P should iii. What is valuable Part
will lower the purchase b. D is insolvent not be able to enforce this performance (2 of 3)
price to take into c. Avoidance of multiplicity of contract against me b/c I could (a) Payment (in whole or
account the defect in lawsuits not enforce it against him in part)
consideration (Buzz d. The thing bargained for is i. D would not have been able (b) Possession
word: abatement in unique most important for K to enforce against B (c) Made Valuable
purchase price) law because B is incapable Improvements
b. Time is of the essence 2. Unique Property: b. Second: court will reject the (d) Modern trend:
clause a. Real Property is ALWAYS mutuality argument if it feels Valuable services alone
i. Fact pattern: 1) time is of unique secure that the P can and will will suffice if you take
the essence clause 2) w/ a i. Test give you fact patterns perform (despite minority) care of me until I die, I
forfeiture provision that that make the land look c. Third: GRANT specific will convey you my
makes the K forfeited if not NOT unique but it always is performance but have the land
delivered on time, 3) Buyer ii. Special seller rule: Seller decree provide for H. ONE SPECIFIC ISSUES
partially performs, will can get SP too even though simultaneous performance 1. Equitable Conversion the
come in with a late all they have coming is F. FEASIBILITY OF ENFORCEMENT moment the land sale K is signed
payment but this triggers money (purchase price) 1. Personal services contracts (upon execution) buyer has a real
the clause 4) Seller b. Personal Property are NOT specifically enforceable property interest and seller has a
wants to keep both land i. General rule: personal 2. Covenants not to compete personal property interest
and any performance property is NOT unique ARE enforceable IF: a. Death: if seller dies, estate
ii. Buyer will bring a lawsuit (therefore, money a. Protects legitimate interest gets purchase money, if buyer
for specific performance damages are sufficient) b. Services provided are unique dies, estate gets real property
(a) Buyer will USUALLY ii. Exceptions: c. Geographic and durational b. Damage/destruction:
get SP scope are reasonable Majority: buyer bears the risk.
CONTRACT REMEDIES
Modern trend is the risk is on i. P sues for damages First: (a) Must be intentional
the seller rescission is NOT allowed misrepresentation
(a) The suit is considered 3. Defenses
V. EQUITABLE REMEDIESRESCISSION an affirmannce of the K a. Unclean hands, Laches
& REFORMATION ii. P sues for rescission First: b. NOT defenses
A. RESCISSION (Good Dog) Damages ARE allowed i. Negligence of the P
1. Grounds: Determine if there are iii. NOTE: P can sue for both ii. Statute of frauds will not
grounds for rescission (will be a at the same time but must prevent reformation
formation defect) elect the preferred remedy iii. Parol evidence
a. Mutual Mistake BEFORE judgment
i. Mistake of material fact: b. Availability of Restitution
rescission GRANTED i. If a P who is entitled to
ii. Mistake is about a rescission has previously
collateral fact: rescission rendered performance on
DENIED the K (performance
(a) Fact goes to quality, services, advance on
desirability, fitness of purchase price) she can
prop for a particular get compensated for it or
purpose get the property back via
b. Unilateral Mistake restitution
i. General Rule: Rescission c. Legal rescission:
DENIED i. Equitable: here are my
(a) Exception: non- grounds for rescission,
mistaken party knows or please tear up
ii. Legal: P does by own
should have known of
action. Dont go to court. P
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the mistake (palatable
mistake) then sues for restitution.
(i) Modern trend: req B. REFORMATION (Very Good Dog)
proof the mistaken 1. Definition: changes written
party would suffer agreement to conform w/ the
undue hardship if parties original understanding
there is no rescission a. Problem: written agreement
c. Misrepresentation doesnt accurately reflect what
i. General Rule: rescission we agreed to.
granted, P must show she 2. 3 Step Analysis
actually relied a. Must have a valid contract
d. Coercion (meeting of the minds, mutual
e. Undue influence assent)
f. Lack of capacity b. Must have grounds for
g. Failure of consideration reformation
h. Illegality i. Mistake
2. Defenses (a) Mutual: reformation
a. Unclean hands, Laches GRANTED
b. NOTE: Negligence of the (b) Unilateral: reformation
Plaintiff is NOT a defense, the DENIED
subcontractor left out a zero in (i) Unless non-
his bid, DOESNT MATTER! mistaken party
3. Specific Issues actually knew of the
a. Election of remedies mistake
ii. Misrepresentation