I. Is there a common law = services or UCC = goods contract
II. Remedies for breach
i. Reliance (restatement only)
1. Put the injured party in the position they were in before the contract.
2. Used when
a. It is impossible to measure the plaintiffs expectation interest accurately, or
b. The plaintiff recovers on a promissory estoppel theory
ii. Restitution (restatement only)
1. Put the breaching party in the position they were in before the contract (limited to the benefits conferred on him by the injured party)
2. Used when
a. A non-breaching plaintiff has partially performed, and the restitution measure is greater than the contract price, or
b. A breaching plaintiff has not substantially performed, but is allowed to recover the benefit of what he has conferred on the defendant.
3. Seller fails to make delivery or buyer rightfully rejects, and if the breach goes to the whole contract, the buyer may cancel and whether or not he does so, may recover so much as he has already paid
a. Cover and have damages whether or not they have been identified
b. Recover damages for non-delivery
i. Difference between market price at the time when the buyer learned of the breach and the contract price together with incidental and consequential damages
4. If goods have been identified, recover them
5. On rightful rejection of acceptance, buyer has a security interest in goods in his possession or control for payment made on their price and any expenses incurred in their inspection, receipt, transportation, care
iii. Expectation (restatement and UCC)
1. Put the injured party in the condition they would have been in, had it worked
2. Measure of Damages (in general)
a. Subject to the limitations
i. Damages are not recoverable for loss that the infjured party could have avoided without undue risk, burden or humiliation.
b. The injured party has a right to damages bases on his expectation interest as measured by a right to damages based on his expectation interest as measured by
i. The loss in the value of the other party’s performance caused by its failure or deficiency, plus
ii. Any other loss, including incidental or consequential loss, caused by the breach, less
iii. Any cost of other loss that he has avoided by not having to perform
3. Damages = Cover $ – Contract $ + Incidental and consequential damages + amount already paid
4. Section of UCC 1-7 / This is the only remedy under UCC
a. Cover: After a breach, buyer may cover by making in good faith and without unreasonable delay any reasonable purchase of or contract to purchase goods in substitution for those due from the seller
i. The buyer may recover from the seller as damages the difference between the cost of cover and the contract price together with any incidental or consequential damages, but less expenses saved in consequence of the seller’s breach
ii. Failure to buyer to effect cover within this section does not bar him from any other remedy
5. Fair Market Value
a. Difference between market price at the time the buyer learned of the breach and the contract price together with incidental and consequential damages, but less expenses saved in consequence of the seller’s breach
b. Market price is determined as of the place for tender or in cases of rejection after the arrival or revocation of acceptance, as of the place or arrival.
6. Difference between market price at the time when the buyer learned of the breach and the contract price together with incidental and consequential damages
a. Consequential Damages
i. Losses that do not flow directly and immediately from an injurious act, but that result indirectly from the act.
ii. Include 1)Any loss resulting from general or particular requirement and need of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise, or 2) Injury to person or property proximately resulting from any breach of warranty.
b. Incidental Damages
i. Losses reasonably associated with or related to actual damages. A seller’s commercially reasonable expenses incurred in stopping delivery or in transporting and caring for goods after a buyer’s breach.
ii. Include 1)Resulting from the seller’s breach include expenses reasonably incurred in
tion or forbearance.
2. An offer is binding as option contract if it, § 87
a. In writing and signed by the offeror, recited a purported consideration for the making of the offer, and proposes an exchange on fair terms within a reasonable time; or
b. Made irrevocable by statute
3. An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does include such action of forbearance is binding as an option contract to the extend necessary to avoid injustice.
V. Types of Contracts
1. Only one party makes a promise
2. Promise for performance
3. Performance and acceptance are the same thing under this contract
1. Both parties make a promise
2. Promise for promise
3. Promise is acceptance
i. Consideration for a promise is
1. An act other than a promise, or a forbearance, or the creation, modification or destruction of a legal relation, or a return promise, bargained for and given in exchange for the promise
2. Restatement Section 77A Illusory or Alternative Promises
a. A promise or apparent promise is not consideration if by its terms the promisor or purported promisor reserves a choice of alternative performances unless
i. Each of the alternative performances would have been consideration if it alone has been bargained for, or
ii. One of the alternative performances would have been consideration and there is or appears to the parties to be a substantial possibility that before the promisor exercises his choice events may eliminate the alternatives which would not have been consideration.
ii. Elements of Consideration