Contracts II Outline
Remedies
For remedy questions first ask if there was a contract and was that contract breached
Next ask what type of remedy (if specific performance go through requirements)
Compensatory damages
Expectation
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Money damagesSpecific performance- Court requires D to do what he promised to do
Reliance
Restitution
Specific performance
Requirements
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For K’s to purchase real property, the court will normally automatically consider real property unique
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Basically all future speculations as to prices and profits, courts will deem money damages to be inadequateIe. output K with fluctuating prices are too hard to predict, it may be too hard for a buyer to find long term supplier, pretty
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Extreme difficulty or impossibility of obtaining cover. However mere extra expense for cover does not justify specific performanceCalculation of damages is impossible or too difficult Item is unique (2-716)
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Terms like efficiency may prevent specific perforanceCourt doesn’t want to make parties do something they didn’t contract for
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“performance of a K for personal services even of unique nature, will not b e affirmatively and directly enforced”Don’t want to require personal service
Cant require antagonistic parties to work togetherK terms are clear enoughCourt is not required to supervise heavilyMoney damages are not adequate
Applies to all UCC and non-UCC transactions
Specific performance requirements if not met can be overridden by public policy
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For example if too much supervision would be placed on the court specific performance can still be given if public policy would support it
The granting of specific performance is discretionaryàeven if all requirements are met, court still does not have to grant it
Money Damages
Cover formula
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Buyer must use cover formula if they coverConsequential damages –chain reaction damagesIncidental damages (ie. Travel costs to find new cowhides, inspection costs, etc.)
Market formula
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if market formula Is not good to put the seller in as good a position as performance would have doneàmeasure of damages is the profit (omit overhead from profit calculated as they don’t get saved if you suffer a breach, however you include expenses) which the seller would have made from full performance with incidental damages
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in order to recover here seller needs to show they had the capacity to make the sale and that it would be profitable to make the salehypo: buyer breaches K to buy mri machine. Seller sells that mri machine to another buyer, but claims he would have sold another mri machine if the buyer bought hisàsince the mri machine is not unique the 2nd buyers purchase was not a substitute transaction
applies to all sellers that the resale formula would not provide adequate relief.
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if market formula would yield to an excess in P’s loss majority still uses it
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even if D gets a windfall limit P’s recovery to equal his loss
minorityàthe moment when the person expected to receive the goods and don’t take into account what the buyer will do with those goods in the future (selling them to someone else)majorityàinclude what the buyer expected down the road bcause that is part of K
defining expectation-2-708- protects lost volume sellers (get loss of expected profit)The market price that is used is the market price when the buyer learned of the breachUsed if no cover
Substitute transaction
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Since either cover or market formulaàif seller sells for more than what K was for he can get no recoveryThis section however limits recover in that consequential damages are not recoverable, only incidental damagesWhere the buyer wrongfully rejects acceptance of goods or fails to ake payment due on or before delivery, or repudiates part or all of the goods, and if the breach is of the whole Kàthe seller may resell the goods concerned or undelivered balance there of and recover damages based on cover or market formula, whichever he pleases as long as the resale is made in good faith and in a commercially reasonable time/mannerSeller who does substitute transaction does not need to use the cover formula, but can use the market formula if they please. They will use whatever gets more damages for them
If for any reason the market or cover formulas don’t yield expectation that is when you use lost profit
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If there is subsequent experienceSimilar businesses in the same geographical areas doing the same type of workPrior experience in a similar business
Ways to show certainty for
at if they didn’t complete there would be more loss then if they did complete and sell them
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Not exactly similar because no two jobs are alikeSubstantially similar- if job is different or inferior worker does not have to take the job as that is not reasonable
A substitute job must be substantially similar to the original job (actress didn’t have to take the acting role because the first job was a drama and the second was a westernànot substantially similar)
Employment contracts-an employee who suffers a breach by being discharged is expected to make a reasonable effort in finding a substitute job (actress being offered another job had to take the acting role)The victim of a material breach will not be reimbursed for material damages that they created after the breach (builder not stopping to build bridge after he was told by the town that they didn’t want it)
If you suffer a non-material breach then you cant stop performance
(clearest for builders)
If builder finishes the project and the homeowner refuses to payàthe builders expectation would be the K price (which includes expected profit) aka restitution
If the builder has not yet expended any money and the homeowner breaches, the builder still has expectation and thus we would give him only the expected profit as that was what he expected to get out of it
If builder was in the middle of building, court would give the builder expected profit and all the cost that went into the part of the project that has been completedàbuilders cant make a substitute transaction because they are in the middle of building
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Builders get cost expended + expected profit
– ie. Expected profit to seller, substitute relief- this is the normàCOURT WILL ALWAYS TRY TO GIVE EXPECTATION either by specific performance or money damages (they will try to give money damages first)
