Specific Performance

Specific Performance

Equitable remedy calling for the performance of the act promised in the contract.

Remedy in cases where the consideration is:

§ Unique (land);

§ Scarce; or

§ Not available remedy in contracts for personal services.

Rescission and Restitution

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.

Liquidated Damages

Liquidated Damages

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.

Case 17.3:   Green Park Inn v. Moore (2002).

Mitigation of Damages

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.

Case 17.2: Fujitsu Ltd. v. Federal Express Corp. (2001).

Damages

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, because the injury party additional loss.

Case 17.1: Hadley v. Baxendale (1854).

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.

Breach of Contract and Remedies

Contracts: Breach of Contract and Remedies

Introduction

Most Common Remedies:

§ Damages.

§ Rescission andRestitution.

§ Specific Performance.

§ Reformation.

§ Recovery Based on Quasi Contract.

Discharge by Operation of Law

Discharge by Operation of Law

ü Alteration of The Contract.

ü Statutes of Limitations.

ü Bankruptcy.

ü  Impossibility or Impracticability. à

Impossibility or Impracticability of Performance

Objective Impossibility of Performance.

§ Death or incapacitation prior to performance;

§ Destruction of the Subject Matter; or

§ Illegality in performance.

Commercial Impracticability.

§  Key: Circumstances not foreseeable.

Case 16.4: Cape-France v. Estate of Peed (2001).

ü Frustration of Purpose.

ü Temporary Impossibility.

Discharge by Agreement

Discharge by Agreement

Discharge by Rescission.

Discharge by Novation.

§ Previous Obligation.

§ All parties agree to new contract.

§ Extinguishment of old obligations.

§ New Contract Formed.

Discharge by Substituted Agreement.

Accord and Satisfaction.

Anticipatory Repudiation

Anticipatory Repudiation

If before performance is due, one party refuses to perform his or her contractual obligation.

Results in material breach.

The nonbreaching party should not be required to remain ready and willing to perform when the other party has repudiated the contract.

The nonbreaching party should have the opportunity to seek a similar contract elsewhere.

Time for Performance.

Case 16.3:  Manganaro Corp v. Hitt Contracting Inc. (2002). 

Material Breach of Contract

Material Breach of Contract

Breach of Contract - the nonperformance of a contractual duty.

Material breach occurs when there has been a failure of consideration.  Discharges the non breaching party from the contract.

In a non-material breach, the duty to perform is not excused and the non-breaching party must resume performance of the contractual obligations undertaken.

Case 17.2: Van Steenhouse v. Jacor   Broadcasting of Colorado, Inc.  (1998).