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Mann_Essentials13e_PPT_Ch18.pptxChapter 18
Contract Remedies
Chapter 18 Title Slide
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Topics Covered in Chapter 18: Contract Remedies
A. Monetary Damages
B. Remedies in Equity
C. Restitution
D. Limitations on Remedies
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Monetary Damages
Monetary damages is the most common judicial remedy for breach of contract.
Compensatory Damages
Loss of Value – value of promised performance minus value of actual performance.
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Monetary Damages
Compensatory Damages
Cost Avoided – loss or costs the injured party avoids by not having to perform.
Incidental Damages – arise directly out of a breach.
Consequential Damages – not arising directly out of a breach but arising as a foreseeable result of the breach.
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Monetary Damages
Reliance Damages – contract damages placing the injured party in as good a position as she would have been in had the contract not been made.
Nominal Damages – a small sum awarded where a contract has been breached but the loss is negligible or unproved.
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Monetary Damages
Punitive Damages – are generally not recoverable for breach of contract.
Liquidated Damages – reasonable damages agreed to in advance by the parties to a contract.
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Monetary Damages
Limitations on Damages
Foreseeability of Damages – potential loss that the party now in default had reason to know of when the contract was made.
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Monetary Damages
Limitations on Damages
Certainty of Damages – damages are not recoverable beyond an amount that can be established with reasonable certainty.
Mitigation of Damages – injured party may not recover damages for loss he could have avoided by reasonable effort.
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Remedies in Equity
Available only where there is no adequate remedy at law.
Specific Performance – decree ordering breaching party to render performance.
Injunctions – court order prohibiting a party from doing a specific act.
Reformation – court order correcting a written contract to conform with original intent of parties.
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Restitution
Restoration of injured party to position she was in before the contract was made.
Party Injured by Breach – if other party breaches the contract by nonperformance or repudiation.
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Restitution
Party in Default – for any benefit conferred in excess of the loss caused by the breach.
Statute of Frauds – if a contract is unenforceable because of the statute of frauds, a party may recover the benefits conferred on the other party in reliance on the contract.
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Restitution
Voidable Contracts – a party who has avoided a contract is entitled to restitution for any benefit conferred on the other party.
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Limitations on Remedies
Election of Remedies – if remedies are not inconsistent, a party injured by a breach of contract may seek more than one.
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Limitations on Remedies
Loss of Power of Avoidance – a party with the power to avoid a contract may lose that power by:
Affirmance
Delaying unreasonably in exercising the power of avoidance
Being subordinate to intervening rights of 3rd parties
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Contract Remedies
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REMEDIES FOR MISREPRESENTATION
Damages for Misrepresentation
Fraud – “Benefit-of-the-Bargain” and “Out-of-Pocket” rules measure damages due to fraud.
Plaintiff may also be entitled to punitive or ‘bad faith’ damages.
Nonfraudulent – plaintiff may recover general and consequential damages.
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