Contracts 7: Remedies

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TheoneandonlyMJ
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94172
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Contracts 7: Remedies
Updated:
2011-07-16 07:30:38
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NY Bar Exam Handouts
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MBE Contracts Part 7 Remedies
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  1. What are TWO examples of NON-MONETARY remedies?
    • Specific performance: available for real property and "unique" goods
    • Seller's right to reclaim: within 10 days after receipt if buyer was involvent when it received the goods, or at any time if buyer misrepresented its solvency to the seller in writing within 3 months before delivery
  2. When is SPECIFIC PERFORMANCE available?
    Generally, only when monetary damages are INADEQUATE to compensate the injured party.

    ARTICLE 2 SOG: Specific performance is available only if the goods are UNIQUE or there are "OTHER PROPER CIRCUMSTANCES" (e.g., an inability to buy substitute goods in the market).

    SERVICE CONTRACTS: Specific performance is NEVER available, but INJUNCTIVE relief may be.
  3. Under Article 2 SOG, does an UNPAID seller have a right to reclaim his goods from the buyer? from a third party?
    • From the Buyer
    • Generally, NO.

    • EXCEPTIONS:
    • 1. Buyer was INSOLVENT when it RECEIVED the goods AND seller makes a demand within TEN DAYS after buyer received them.
    • 2. Buyer MISREPRESENTED its solvency to seller in writing within THREE MONTHS BEFORE delivery.

    • From a Third Party
    • NO -- no right to reclaim from an innocent third party
  4. What are SIX types of MONETARY remedies?
    • PUNITIVE damages
    • LIQUIDATED damages
    • EXPECTATION damages
    • INCIDENTIAL damages
    • CONSEQUENTIAL damages
    • AVOIDABLE damages
  5. When can you get PUNITIVE damages for a breach of contract?
    You cannot.

    The purpose of contract damages is to COMPENSATE, not to PUNISH.
  6. What are LIQUIDATED damages? When can you get them for a breach of contract?
    Liquidated damages are damages set out in the contract agreement before breach occurs.

    They are upheld if damages were DIFFICULT TO ESTIMATE and are a REASONABLE FORECAST of probable damages.

    HOWEVER, they cannot operate as a penalty.
  7. What results if liquidated damages were NOT a reasonable forecast of PROBABLE damages at the time of the agreement, but turn out to be reasonable in light of ACTUAL damages?
    • Common Law: liquidated damages are NOT upheld. All that matters is reasonableness AT THE TIME of the contract agreement.
    • Article 2 SOG: liquidated damages are UPHELD. Reasonableness requirement can be met at either the time of the agreement or of breach.
  8. What type of damages is generally used? Defined it.
    EXPECTATION damages: it puts an injured party in AS GOOD A POSITION as full performance.
  9. What are the FOUR types of Article 2 SOG EXPECTATION damages for the BUYER? When are they used?
    • BUYER's damages: cover price - contract price (if buyer covers in GOOD FAITH)
    • MARKET damages: market price - contract price (if buyer does NOT cover in good faith or does not cover at all)
    • LOSS IN VALUE: value as promised - value delivered (if buyer KEEPS non-conforming goods)
    • INCIDENTAL damages: costs to the injured buyer or seller of TRANSPORTING/CARING for goods after a breach and of arranging a substitute transaction
  10. What are the FOUR types of Article 2 SOG EXPECTATION damages for the SELLER? When are they used?
    • RESALE damages: contract price - resale price (if seller resells in GOOD FAITH)
    • LOST profit: profit it would have made on the initial sale (if seller is a LOST VOLUME DEALER)
    • CONTRACT price: (seller cannot resell the goods)
    • INCIDENTAL damages: costs to the injured buyer or seller of TRANSPORTING/CARING for goods after a breach and of arranging a substitute transaction
  11. What are CONSEQUENTIAL damages?
    Damages special to THIS plaintiff that were REASONABLY FORESEEABLE to the breaching party at the time of the contract.
  12. For whom are CONSEQUENTIAL damages UNAVAILABLE?
    seller under Article 2 SOG contract
  13. What are AVOIDABLE damages?
    damages that the injured party could have mitigated with reasonable effort
  14. What results when there are avoidable damages?
    Injured party's damages will be reduced accordingly.

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