Slide 1 : 1 Contracts: Breach and Remedies Chapter13 BUSINESS LAW TODAY Standard 8th Ed.Roger LeRoy Miller - Institute for University Studies, Arlington, TexasGaylord A. Jentz - University of Texas at Austin, Emeritus
Learning Objectives : 2 Learning Objectives What is the difference between compensatory and consequential damages? What are nominal damages and when do courts award them?
What is the standard measure of compensatory damages when a contract is breached? How are damages computed differently in construction contracts?
Under what circumstances is the remedy of rescission and restitution available?
When do courts grant specific performance as a remedy?
What is the rationale underlying the doctrine of election of remedies?
Damages : 3 Damages Compensatory Damages:
Compensates injured party (Plaintiff).
Plaintiff must prove actual damages caused by breach. Amount:
Generally: difference between Defendant’s promised performance and actual.
Sale of Goods: difference between the contract price and market.
Sale of Land: Specific performance?
Construction Contracts: Depends on the stage of construction.
Damages : 4 Damages Consequential (Special) Damages
Foreseeable damages that result from breach of contract.
Caused by other than breach of contract.
Punitive (Exemplary) Damages.
Deter wrongdoer; set example.
Nominal Damages.
Damages : 5 Damages Mitigation of Damages.
Injured party has a legal duty to mitigate damages.
CASE 13.1 Hanson v. Boeder (2007).
Liquidated Damages vs. Penalties.
Liquidated: fixed, certain dollar amount agreed to by parties, paid in the event of breach. LD’s are enforceable.
Penalty: designed to penalize a party. Generally not enforceable.
Damages Summary : 6 Damages Summary
Remedies Summary : 7 Remedies Summary
Equitable Remedies : 8 Equitable Remedies Rescission: cancel or undo a contract.
Available for fraud, mistake, duress and failure of consideration.
Restitution: recapture the benefit conferred on the defendant that has unjustly enriched her.
Parties must return goods, property or money.
Specific Performance.
CASE 13.2 Stainbrook v. Low (2006).
Reformation: court re-writes the contract to reflect parties’ true intentions. ?
Equitable Remedies : 9 Equitable Remedies Recovery based on Quasi-Contract. Plaintiff must show:
Benefit was conferred on the other party.
Party conferring benefit expected to be paid.
Party seeking recovery did not volunteer.
Retaining benefit without payment would be unjust enrichment.
Limitation of Liability Clauses.
CASE 13.3 Lucier v. Williams (2004).
Election of Remedies.