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REMEDIES
CHAPTER 18
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Introduction
Most Common Remedies:
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Damages.
Rescission and Restitution.
Specific Performance.
Reformation.
Recovery Based on Quasi Contract.
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the Star logo, and West Legal Studies in Business are trademarks used herein under license.
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Damages
 Compensatory Damages—direct losses.
 Sale of Goods: difference between contract and market price.
 Sale of Land: specific performance.
 Construction Contracts: varies.
 Consequential (Special) Damages—foreseeable losses.
 Breaching party is aware or should be aware, cause the injury
party additional loss.
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the Star logo, and West Legal Studies in Business are trademarks used herein under license.
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COMP AND SPECIAL
 Kathy’s Komputers, K’s with Conrads’s Cables.
Kathy to purchase 100 specialized xyz computer cables for the
KKmodel model 1020 at $10.00 per cable. Delivered by Nov
1,2006.
Conrad breached contract, unable to complete per specifications
and failed to deliver by Nov 1,2006.
Kathy had K’ed with Doug’s computer store, to sell 50 KK model
1020 by Nov 15,2006.She is unable to make sale.
Kathy wants to sue Conrad’s for breach of contract, claiming
compensatory and special (consequential damages).
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the Star logo, and West Legal Studies in Business are trademarks used herein under license.
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Damages
 Punitive Damages—punish or deter future conduct.
 Generally not available for mere breach of contract.
 Usually tort (e.g., fraud) is also involved.
 Nominal Damages—no financial loss.
 Defendant is liable but only a technical injury.
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the Star logo, and West Legal Studies in Business are trademarks used herein under license.
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Mitigation of Damages
When breach of contract occurs, the innocent
injured party is held to a duty to reduce the
damages that he or she suffered.
Duty owed depends on the nature of the contract.
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the Star logo, and West Legal Studies in Business are trademarks used herein under license.
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Mitigation Damages
Tom K’s with Marsha to purchase 50 paper compound
Extra large storage bins. Marsha ships 50 paper compound Extra
Small storage bins to Tom. Tom cannot use these at all and he
had told Marsha he needed the bins yesterday. Tom tells
Marsha he is going to sue her for breach of K. Tom buys the
needed bins from Ben. He leaves the bins he received from
Marsha in the yard, exposed to elements. That very night a
passerby throws a lit cigarette into the storage yard and ignites
Marsha’s bins. They are completely destroyed.
Tom Sues Marsha for breach and Marsha claims that Tom did not
Mitigate the damages…who wins?
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the Star logo, and West Legal Studies in Business are trademarks used herein under license.
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Liquidated Damages Provisions
Liquidated Damages.
 A contract provides a specific amount to be paid as
damages in the event of future default or breach of
contract.
Penalties.
 Specify a certain amount to be paid in the event of a
default or breach of contract and are designed to
penalize the breaching party.
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the Star logo, and West Legal Studies in Business are trademarks used herein under license.
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Rescission and Restitution
Rescission.
 A remedy whereby a contract is canceled and
the parties are restored to the original positions
that they occupied prior to the transactions.
Restitution.
 Both parties must return goods, property, or
money previously conveyed.
Note: Rescission does not always call for
restitution. Restitution is called for in some
cases not involving rescission.
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the Star logo, and West Legal Studies in Business are trademarks used herein under license.
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Specific Performance
 Equitable remedy calling for the performance of the act promised
in the contract.
 Remedy in cases where the consideration is:
 Unique (sale of land);
 Scarce; or
 Not available remedy in contracts for personal services.
 What about Builder’s contracts?
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the Star logo, and West Legal Studies in Business are trademarks used herein under license.
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Reformation
Equitable remedy allowing a contract to be
reformed, or rewritten to reflect the parties true
intentions.
Available when an agreement is imperfectly
expressed in writing.
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the Star logo, and West Legal Studies in Business are trademarks used herein under license.
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Recovery Based on
Quasi Contract
 Equitable theory imposed by courts to obtain justice
and prevent unjust enrichment.
 Party seeking quantum meruit must show the
following:
 A benefit was conferred to the other party.
 Party conferring did so with the reasonable expectation of
being paid.
 The benefit was not volunteered.
 Retaining benefit without paying for it would result in unjust
enrichment of the party receiving the benefit.
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the Star logo, and West Legal Studies in Business are trademarks used herein under license.
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Election of Remedies
Doctrine created to prevent double recovery.
Nonbreaching party must choose which remedy
to pursue.
UCC rejects election of remedies.
 Cumulative in nature and include all the available
remedies for breach of contract.
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the Star logo, and West Legal Studies in Business are trademarks used herein under license.
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Waiver of Breach
If the nonbreaching party knowingly accepts
incomplete or defective performance from the
breaching party, the nonbreaching party has
waived her right to complete and proper
performance.
Nonbreaching party should give notice to the
breaching party that full performance will be
required in the future.
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the Star logo, and West Legal Studies in Business are trademarks used herein under license.
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Contract Provisions
Limiting Remedies
Exculpatory clauses.
 Provisions stating that no damages can be recovered.
Limitation of liability clauses.
 Provisions that affect the availability of certain
remedies.
COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson,
the Star logo, and West Legal Studies in Business are trademarks used herein under license.
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