Equity and Remedies Outline
Professor Jason
Summer 2005
b.
The test is whether at the time and place the buyer acted in good faith and in a reasonable manner and
Compensatory Damages
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e. The Basic Principle: Restoring Plaintiff to His Rightful Position
i. US v. Hathaway
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A plaintiff may be entitled to judgment on multiple legal theories and against multiple defendants but he is entitled to only one recovery for each item of damageThere is no right to a jury trial when you are suing the USNormally juries are not going to give a reason for why they pick damages but judges have to write down the reason for the damages they awardYou must do the damages at the least cost to the defendantThe normal rule with livestock would be replacement costs but in this case they also wanted loss of usethe goal is to restore plaintiff to his rightful position that will compensate him for what was fairly lost
f. Value as the Measure of the Rightful Position
i. US v. Fifty Acres
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Courts will award the cost of replacing component parts of a larger wholeThe usual measure of damage is the market value, not the value to the plaintiff. When value is the measure, courts focus on the value of what P lost, not on the cost of repair or replacement.The city’s argument was that the function was the same, just because it costs more does not really mean that they are getting anything more.If the replacement facility is more costly than the condemned facility is presumably is more valuable and would be considered a windfall to award that amount of money instead of the value of the old propertyThe SC has held that just compensation normally is to be measure by the market value of the property at the time of the taking contemporaneously paid in money and deviation form this measure is only required when the market value has been too difficult to find or when its application would result in a manifest injustice to the owner or to the public.
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iii. Helen B. Moran
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You get the value or the cost of repair, whichever is less
iv. Trinity Church v. John Hancock
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When you discount the present value, you are assuming no inflation so you may not be giving them enough.If you are going to have the lawsuit today and the judgment today, but the repairs in the future, then you need to discount the money and give them the amount it would cost today and interest and not the amount it would cost twenty years from now. This is called a reduction to present value.AN injured party is not required to perform repairs in order to recover for diminution in market value of the property. Just because the repairs may be done in the future does not mean they could not recover.The church was entitled to be compensated for the reasonable costs of restoring the church to the condition it was in prior to the Hancock excavation. The method of damage assessment that the church came up with passes the reasonableness test.Where expenditures to restore or to replace to predamage condition are sued as the measure of damages a test of reasonableness is applied. Not only must the cost of the replacement be reasonable, but the replacement or reconstruction must be reasonably necessary.For certain categories of property, like the church in this case, there will not generally be an active market form which the diminution in market value may be determined
v. Decatur County v. Young
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When goods and crops have fluctuating value, you go by when they could have been harvested as the measure of value.If the crops have barely grown then use market value, but if they are closer to marketable then use the harvest time as the value.
The standard rule is to value property at the time of the loss, but not when you are dealing with crops. With crops the time of harvest has emerged as the standard rule. This is because many crops have no market value when they are immature.The general rule for measuring property damage is diminution in market value. However, market value does not in all cases afford a correct measure of indemnity and is not therefore a universal test.Plaintiff is entitled to be made whole, but D is usually entitled to have P made whole in the least expensive wayFuture loss of income is usually not included in compensatory damages figures
g. Reliance and Expectancy as Measure of the Rightful Position
i. Neri v. Retail Marine Corp.
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6. UCC 2-708
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If (a) is inadequate then the seller can get the profit and incidental damages, due allowance for costs reasonably incurred and due credit for payments or proceeds of resale.
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Loss-volume damages illustrated in the code do not work out the way they shouldThe difference between market price and the unpaid contract price together with incidental damages less expenses saved in consequence of breachIn this case they were trying to figure out what the proper measure of damages would beUsually P has a choice of how he wants to proceed and what damages he wants to getFocuses on the D’s gain or unjust enrichment (you want D to give up what he got)Reliance puts P in the position he would have been in if there was no K or no injury (out of pocket expenses)
ii. Chatlos v. National
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The code allows for expectancy damages as long as it was a reasonable expectation.
iii. Smith v. Bolles
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One of the reasons for this is because with the contract, the expectation is based on something that is promised by the defendant but in tort the expectation is more a result of the P’s own actions.Expectancy damages are recoverably only in contract, not in tortThe court said that because this was a tort case all that was available was reliance because the point is to put P in the position he was in before the injury.
The issue was whether the P gets reliance or expectancy damagesThe code says the correct measure of damages is the difference between the FMV of the goods accepted and the value they would have had if they had been as warranted
h. Consequential Damages
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Medical expenses are general damages
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pain and suffering are special damagesThe reason why people/cts don’t like special damages is because they are more speculative and less certain.Eminent domain cases almost never allow special damages
iii. Buck v. Morrow
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To get consequential damages there must be foreseeability and you have to prove the damagesConsequential damages should refer to everything that happens to P as a consequence of this initial loss.
iv. UCC Consequential v. Incidental damages
1. Consequential damages –
2. Incidental damages –
expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover, and any other reasonable expenses incident to the delay or other breach.
v. Meinrath v. Singer
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2. Judgment interest –
3. Prejudgment interest –
the UCC generally confides the interest-only rule for banks that fail to execute orders to transfer funds. But it authorizes consequential damages in the extraordinarily narrow case of a bank that receives funds, refuses to pay them to the beneficiary of the payment order after the beneficiary makes demand and gives n
ch must be paid in the event of a default.If the non-defaulting party does not wish to demand this amount, he will not be forced to do so, but this does not create the right to seek a greater measure of damages than the amount bargained forThe P is arguing that the liquidated damages clause should not be the exclusive remedy
Here, the liquidated damages are too little compared to the actual damagesThis case was dealing with liquidated damagesThe UCC does not require an invalidation of an exclusion of consequential damages when limited contractual remedies fail of their essential purpose. It is only when the circumstances of the transaction, including the seller’s breach, cause the consequential damage exclusion to be inconsistent with the intent and reasonable commercial expectations of the parties that invalidation of the exclusionary clause would be appropriate under the code.What if there is only a repair or replace warranty and the seller is having trouble repairing or replacing the item?The codes says that you can limit consequential damages but you still must provide an adequate remedyThe code provides that a seller can disclaim a warranty to limit liability. They can say no consequential damages, but we will repair or replace.Most of the time what happens is that the seller tries to limit liability
iii. Avoidable Consequences, Offsetting Benefits, and Collateral Sources
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2. SJ Groves v. Warner
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UCC 2-715 provides that the consequential damages a buyer may recover are those, which could not reasonably be prevented by cover or otherwise. Thus generally when a seller refuses to delver goods, the buyer must attempt to secure similar articles elsewhere as a prerequisite to receiving consequential damages
If you do not mitigate damages you are not entitled to damages that are reasonably avoidableThe code deals with warranties. It is very hard to disclaim express warranties. There are also implied warranties. One type is the warranty of merchantability which says the “thing” will be or reasonable quality. You can disclaim implied warranties but it is hard to do that
The primary tools for restricting recovery of consequential damages areGeneral Damages – arise naturally and necessarily from a breach of contract or injury. You do not have to plead or prove general damages. Expectancy puts P in the position he would have been in had the contract been performed (BOB)The measure of compensation should not be the new facility when the market value of the condemned property is ascertainableIn this case the government improperly confiscated livestock and now we must determine the damagesSometimes it is easy to figure out what money compensates for and sometimes it is very difficultThese are substitutionary damages – you are substituting money as compensation for what was lostThe purpose of compensatory damages is to put P in the position he would have been in bur for the damages he suffered
90% of remedies are damage remedies