Contracts Class Notes
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Contracts Class Notes Week Four Remedies - Chapter 11 ****************************************** Introduction to remedies Big picture context: main goal of contract law is to make the injured party whole. Thus, it is important to understand how the injured party is made whole in order to fully understand whether there is really an issue at breach. Drafting note: write every contract in anticipation of breach There are 2 ways to make an injured party whole: Money (legal remedies) and Action (equitable remedies) Money (aka Legal Remedies) Definition = monetary awards granted to an injured party in a contractual dispute whenever money would be an appropriate way to rectify the injury. remedies refer to all types of compensation and damages refer to money only There are 4 specific kinds of legal remedies: 1. Compensatory Damages (AKA actual or general damages) Monetary damages put injured person in the same position the would have been in had the K gone as planned amount awarded directly relates to the contract and breach Most common remedy for breach Determining the amount of damages - generally common sense 2. Punitive Damages (aka exemplary damages) = monetary awards to punish malicious or reprehensible behavior must be statutory basis for award - not available under common law o clarify that everyone understands the distinction between common (case) law, statutory law (like the UCC), and regulatory law generally some violation of breach of trust like fraud or antitrust RCW 9A.36.083. Malicious harassment (harassing someone based on race, sexual orientation, religion, handicaps,etc ) -- Civil action In addition to the criminal penalty provided in RCW 9A.36.080 for committing a crime of malicious harassment, the victim may bring a civil cause of action for malicious harassment against the harasser. A person may be liable to the victim of malicious harassment for actual damages, punitive damages of up to ten thousand dollars, and reasonable attorneys' fees and costs incurred in bringing the action. Rationale: When criminal conduct is aimed at individuals because of their particular status, the state may legitimately conclude that there is greater harm justifying greater punishment. Punitive damages are designed not only to punish,, but to deter (famous Pinto case) o Damages generally relate to the financial status of the party – the more money they have, the higher the damage award will be Punitive damages go beyond what compensatory damages would cover and thus one would ask for compensatory and punitive damages 3. Consequential Damages (aka special damages) = monetary award for special circumstances and expenses due to breach must give prior notice of special damages, any unusual or unforeseen consequences that could result from breach o Gives offeree an opportunity to determine whether they are willing to take on the risk o Though the damages are unforeseen from the offeree’s perspective – the offeror must be able to forsee and warn the offeree of the consequences o also – this loss would not have occurred but for the breach. If it might have happened anyway, consequential damages are not available consequential damages go above and beyond what compensatory damages cover, and thus one would ask for compensatory and consequential damages. 4. Liquidated Damages = reasonable damages that the parties agree to in the K 3- part test of enforceability o Did the parties intend for a liquidated damages clause to exist? This is the least important, since the courts will often rule the other way if the other two elements are not satisfied o At the time of the formation of the contract, would the actual damages have been hard to determine? o Is the amount under the damages clause reasonable in light of the actual losses incurred cannot be for punishment or speculative damages liquidated damages are the full damage awarded – no more or less don't confuse w/limitation of damages = cap of liability Speculative Damages = monetary injuries suffered that cannot be readily ascertainable, provable or quantifiable Can NEVER be recovered Mitigation of Damages = duty of all parties to limit or minimize harm, to avoid costs that can reasonably be avoided Important consideration in decision making after breach occurs. duty applies if effort not unreasonable or burdensome if a court awards damages and determines that appropriate mitigation did not happen, then the award will be reduced by the amount that the party should have mitigated. Action (AKA equitable remedies) Equitable Remedies = remedies designed to prevent unfairness and unjust enrichment Injunction = court order to stop someone from engaging in a specific action Only ordered if no other compensation available temporary restraining order = prevent action until full hearing Tell Duck story specific performance = requiring breaching party to do exactly what was required in the K * only granted when subject matter of K is unique or when no other remedy would make injured party whole rescission and restitution = court cancels K in interest of fairness and restore each party to wholeness * sought be breacher, not breachee Reformation = changing K terms with the intent of keeping the K intact. Quasi - contractual remedies - contractual damages when no contract ever really existed Quantum Meriut Quantum meriut - the value of the service rendered prevents unjust enrichment recall sick aunt example Quantum valebant value of the property received also prevents unjust enrichment recall newspaper example Waiver of breach express = specifically stated implied = indicated by the actions of the promissee (example - late paid rent w/o late fee) Waiver provisions in K waiver of one term does not waive entire K waiver once does not mean ongoing waiver Alternative Dispute Resolution Clauses alternative to court if there is a breach Discuss Case Horowitz-Matthews v City of Chicago Homework = select any two “additional reading” cases from the end of any of the chapters we have read (Should be from 2 different chapters). Brief the case, answer the question and include a copy of the case with the answer.