Exam 18: Contract Remedies

When will a court enforce a liquidated damage clause? When will a court refuse to enforce one?

Equitable remedies are available any time the plaintiff chooses them over money damages.

Where 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.

Punitive damages are not always awarded as a deterrent in breach of contract cases.

One possible equitable remedy is reformation, whereby a court creates a new, enforceable agreement for the parties.

The remedy for misrepresentation is specific performance of the contract.

The majority of states allow the injured party who has been induced to enter into a contract by fraud to recover only "out-of-pocket" damages equal to the difference between the value of what she has received and the value of what she has given for it.

David enters into a contract to give Edward the right of first refusal on a tract of land owned by David.David subsequently offers the land to Fred without first offering it to Edward.An appropriate remedy for Edward to seek would be:

MATCHING Part III Matching Match each statement with the correct term below.a.A contract that binds an offeror to keep an offer open for a specified period of time.b.Improper physical or mental coercion exercised upon a person so that he is forced to do an act against his free will.c.Taking unfair advantage of a person by reason of a dominant position based on a relationship of trust and confidence.d.A contract in which only one party makes a promise.e.A wrongful failure to properly perform contractual promises.f.A contract that has not been fully performed.g.A binding agreement that the courts will enforce.h.A contract that has been fully performed by all of the parties.i.A contract in which both parties exchange promises.j.An event that must or must not occur before performance is due under a contract.k.Transfer of a contractual obligation to a third party.l.A merchant's irrevocable offer to sell or buy goods in a signed writing that gives assurance that it will not be revoked for the time stated, up to three months.m.A statement in the form of a promise that imposes no obligation on the maker of the statement.n.A defective contract not wholly lacking in legal effect but that is capable of being avoided.o.The inducement given to enter into a contract; whatever is given in exchange for something else.p.A substituted contract involving a new third-party promisor or promisee.q.An equitable remedy that compels the actual performance by the defaulting party of his contractual obligations.r.Voluntary transfer of contractual rights to a third party.s.An obligation not based upon contract that is imposed by law to avoid injustice.t.An understanding or belief that is not in accord with existing fact.u.Restoration of an injured party to the position she was in before the contract was made.v.A formal court order prohibiting a party from doing a specific act.w.An event that terminates a duty of performance.x.An agreement to purchase all the materials of a particular kind that the purchaser needs from one seller.y.An agreement to sell the entire production of a particular seller to one buyer. -delegation

If no performance is rendered at all under a contract, then the damages will be the loss of value of the promised performance.

Bob's brother, Steve, planned to visit over Labor Day weekend.Together they planned to build a deck in Bob's backyard.Bob ordered the lumber, concrete, nails, and other supplies to be delivered on Friday.He also arranged to rent a saw for the weekend (Sat., Sun., and Mon.) at a cost of $20 a day.When he went to pick up the saw, the store had already rented it.He drove all over town trying to borrow another but could only get one for Sunday, Monday, and Tuesday at a cost of $50 per day.Because they couldn't work on Saturday without a saw, Bob had to hire Mac at a cost of $80 to work with him on Tuesday and, of course, Bob had to take off from work.Calculate the damages to which Bob is entitled.Why? Explain.

The majority of states follow the __________ rule in awarding damages for fraud.

MATCHING Part III Matching Match each statement with the correct term below.a.A contract that binds an offeror to keep an offer open for a specified period of time.b.Improper physical or mental coercion exercised upon a person so that he is forced to do an act against his free will.c.Taking unfair advantage of a person by reason of a dominant position based on a relationship of trust and confidence.d.A contract in which only one party makes a promise.e.A wrongful failure to properly perform contractual promises.f.A contract that has not been fully performed.g.A binding agreement that the courts will enforce.h.A contract that has been fully performed by all of the parties.i.A contract in which both parties exchange promises.j.An event that must or must not occur before performance is due under a contract.k.Transfer of a contractual obligation to a third party.l.A merchant's irrevocable offer to sell or buy goods in a signed writing that gives assurance that it will not be revoked for the time stated, up to three months.m.A statement in the form of a promise that imposes no obligation on the maker of the statement.n.A defective contract not wholly lacking in legal effect but that is capable of being avoided.o.The inducement given to enter into a contract; whatever is given in exchange for something else.p.A substituted contract involving a new third-party promisor or promisee.q.An equitable remedy that compels the actual performance by the defaulting party of his contractual obligations.r.Voluntary transfer of contractual rights to a third party.s.An obligation not based upon contract that is imposed by law to avoid injustice.t.An understanding or belief that is not in accord with existing fact.u.Restoration of an injured party to the position she was in before the contract was made.v.A formal court order prohibiting a party from doing a specific act.w.An event that terminates a duty of performance.x.An agreement to purchase all the materials of a particular kind that the purchaser needs from one seller.y.An agreement to sell the entire production of a particular seller to one buyer. -firm offer

Define incidental damages and give an example.

MATCHING Part III Matching Match each statement with the correct term below.a.A contract that binds an offeror to keep an offer open for a specified period of time.b.Improper physical or mental coercion exercised upon a person so that he is forced to do an act against his free will.c.Taking unfair advantage of a person by reason of a dominant position based on a relationship of trust and confidence.d.A contract in which only one party makes a promise.e.A wrongful failure to properly perform contractual promises.f.A contract that has not been fully performed.g.A binding agreement that the courts will enforce.h.A contract that has been fully performed by all of the parties.i.A contract in which both parties exchange promises.j.An event that must or must not occur before performance is due under a contract.k.Transfer of a contractual obligation to a third party.l.A merchant's irrevocable offer to sell or buy goods in a signed writing that gives assurance that it will not be revoked for the time stated, up to three months.m.A statement in the form of a promise that imposes no obligation on the maker of the statement.n.A defective contract not wholly lacking in legal effect but that is capable of being avoided.o.The inducement given to enter into a contract; whatever is given in exchange for something else.p.A substituted contract involving a new third-party promisor or promisee.q.An equitable remedy that compels the actual performance by the defaulting party of his contractual obligations.r.Voluntary transfer of contractual rights to a third party.s.An obligation not based upon contract that is imposed by law to avoid injustice.t.An understanding or belief that is not in accord with existing fact.u.Restoration of an injured party to the position she was in before the contract was made.v.A formal court order prohibiting a party from doing a specific act.w.An event that terminates a duty of performance.x.An agreement to purchase all the materials of a particular kind that the purchaser needs from one seller.y.An agreement to sell the entire production of a particular seller to one buyer. -specific performance

Consequential damages include lost profits and injury to person or property.

To accomplish the basic purposes of contract remedies, which of the following limitations have not been imposed upon monetary damages?

A liquidated damage clause that represents a reasonable approximation of the damages where the actual amount would be very difficult to determine will usually be upheld.

Wayne breaches a contract with Tim causing damages of $25,000 in lost profits, when damages under ordinary circumstances would be $17,000.Explain under what circumstances a court would award $25,000.

A remedy available for breach of contract is: