Business Law and the Legal Environment

Document Sample
Business Law and the Legal Environment Powered By Docstoc
					        Click your mouse anywhere on the screen to advance the
        text in each slide. After the starburst appears, click a
        blue triangle to move to the next slide or previous slide.   18
Business Law and the Legal Environment for a New Century
                         Alternate Edition
            Quote of the Day
           “Everyone complains of his
          memory, none of his judgment.”
                 Francois, duc de la Rochefoucauld,
                                       French writer




                                                       18
Business Law and the Legal Environment for a New Century
                    Alternate Edition
       Breaching the Contract
   Someone breaches a contract when he
    fails to perform a duty without a valid
    excuse.
   A remedy is the method a court uses to
    compensate an injured party.
   An order forcing someone to do
    something, or refrain from doing
    something, is an injunction.
                                                    18
Business Law and the Legal Environment for a New Century
                    Alternate Edition
      Identifying the “Interest”
   Expectation Interest
    • Designed to put the injured party in the
      position she would have been in had both
      sides fully performed their obligations.
   Reliance Interest
    • Designed to put the injured party in the
      position he would have been in had the
      parties never entered into a contract.

                                                    18
Business Law and the Legal Environment for a New Century
                    Alternate Edition
  Identifying the “Interest” (cont’d)
   Restitution Interest
    • Designed to return to the injured party a
      benefit that he has conferred on the other
      party, which it would be unjust to leave with
      that person.
   Equitable Interest
    • When money is not sufficient to help the
      injured party, a court may order a transfer
      of property or may issue an injunction to
      prevent a particular action from continuing.
                                                      18
Business Law and the Legal Environment for a New Century
                     Alternate Edition
     Compensatory Damages
   Compensatory damages are the most
    common monetary awards.
   They generally flow directly from the
    contract, such as an order to pay what
    was promised or to pay for expenses
    caused by the breach.
   The injured party must prove the breach
    caused damages that can be quantified
    with reasonable certainty.                      18
Business Law and the Legal Environment for a New Century
                    Alternate Edition
     Consequential Damages
   Consequential damages are those
    resulting from the unique circumstances
    of this injured party.
   Because damage calculation can be
    complex, there are companies that
    specialize in doing the work on behalf of
    litigants or other interested parties.

         Click here for the web page of a damage calculation company.   18
Business Law and the Legal Environment for a New Century
                          Alternate Edition
               Incidental Damages
   Incidental damages are the relatively
        minor costs incurred when the injured
        party responds to the breach (obtaining
        cover), such as the extra cost of buying
        replacement goods.

   Acme agrees to sell       Big Bob has to    Big Bob can recover
   1000 widgets to Big     buy 1000 widgets    incidental damages
    Bob’s for $1 each,      from ConCo for       of the extra $250
   but fails to deliver.     $1.25 each.           from Acme.

                                                                     18
Business Law and the Legal Environment for a New Century
                           Alternate Edition
           Seller’s Remedies
   If she acts in good faith, she will be
    awarded the difference between the
    original contract price and the price she
    was able to obtain in the open market.
   Most courts hold that the seller of goods
    is not entitled to consequential
    damages.


                                                    18
Business Law and the Legal Environment for a New Century
                    Alternate Edition
          Buyer’s Remedies
   She will be awarded the difference
    between the original contract and her
    cover (replacement) price.
   Under the UCC, the buyer is entitled to
    consequential damages provided that
    the seller could reasonably have
    foreseen them.


                                                    18
Business Law and the Legal Environment for a New Century
                    Alternate Edition
             Law and Equity
   Restitution in Cases of a Valid Contract
    • Restitution is a common remedy in
      contracts involving fraud,
      misrepresentation, mistake, and duress.
   Restitution in Cases of Quasi-Contract
    • A court may award restitution, even in the
      absence of a contract, where one party has
      conferred a benefit on another and it would
      be unjust for the other party to retain the
      benefit.
                                                    18
Business Law and the Legal Environment for a New Century
                    Alternate Edition
      Other Equitable Interests
   Specific Performance
    • A court will order the parties to perform the
      contract only in cases involving the sale of
      land or some other asset that is unique.
   Injunction
     • An injunction is a court order that requires
       someone to do something or refrain from
       doing something.
   Reformation
    • Reformation is a process in which a court
      will partially “re-write” a contract.           18
Business Law and the Legal Environment for a New Century
                     Alternate Edition
   Special Issues of Damages
   Mitigation of Damages
    • A party may not recover for damages that
      could be avoided with reasonable efforts.
   Nominal Damages
    • Nominal damages are a token sum, such
      as $1, given to a plaintiff who demonstrates
      that the defendant breached the contract
      but cannot prove damages.


                                                     18
Business Law and the Legal Environment for a New Century
                    Alternate Edition
             Liquid Damages
   A liquid damages clause, is a provision
    stating in advance how much a party
    must pay it if it breaches.
   A court will generally enforce a
    liquidated damages clause if :
       • (1) at the time of creating the contract it
         was very difficult to estimate actual
         damages, and
       • (2) the liquidated amount is reasonable.
                                                       18
Business Law and the Legal Environment for a New Century
                      Alternate Edition
           Punitive Damages
   Designed not to compensate the injured
    party, but to punish the breaching party.
   In awarding punitive damages, a court
    must consider three “guideposts”:
       • The reprehensibility of the conduct,
       • The ratio between the harm suffered and
         the award; and
       • The difference between the punitive award
         and any civil or criminal penalties used in
         similar cases.
                                                       18
Business Law and the Legal Environment for a New Century
                     Alternate Edition
          “The flexible powers of a
        court should enable it to craft
        a just remedy for almost any
             breach of contract.”



                                                    18
Business Law and the Legal Environment for a New Century
                    Alternate Edition

				
DOCUMENT INFO
Description: Business Law and the Legal Environment document sample