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Remedies

QuestionAnswer
H1: K for person to build stairs. They do so negligently and a person is injured. A1: Since there is personal injury there can be a tort too. Can also sue under breach of K for not fulfilling their half of the K.
H2: P hires a D by K to work on their house and that contractor causes a brick to fall off his roof and injures P’s car. The brick also hits the neighbor’s car. A2: The P would only have a breach of K claim but the neighbor would only have a tort case b/c there is no K. The contractor owes a duty to those surrounding to act safely.
H1: Best Buy has a K with me and the sales person knows that there was a K to sell a TV for 600 and lets assume the ordinary person knows K and how it was breached? What would the ordinary person think that the harm was for this? A1: How much is it going to cost to buy the TV elsewhere, know the K (terms) and know how it was breached and know what the harm was. NOTE: A K has to leave you with some remedy or it is not a K b/c it is illusory.
Hadley v. Baxendale Defines of general and consequential damages. a) Broken shaft was not delivered on time => mill shutdown, sued for lost profits b) Ordinary person thinking – rental of another shaft; but NOT lost profits.
Spang Industries, Fort Pitt Bridge v. Aetna Late delivery of steel caused additional construction costs; D was in business and knew (or should have known) about consequences of late delivery; but ordinary person would not have known. A: Consequential damages proper.
International Harvester P sued man. for lost crops after being unable to operate tractor at night. Here there was no express K and the facts and circ are not such as to make it reasonable to believe that dealer tacitly consented to be bound for more than ordinary damages.
Disproportionality: RULE: When damages arise from special circ and are so large that they are out of proportion to the payment on the K then it raises doubt that party would agree to be bound by that liability.
What is the tacit agreement test? RULE: P needs to prove that at the time of the K D 1. knew of the special circumstances, 2. those circumstances must have occurred, and 3. D tacitly agreed to assume liability for such loss (reasonably believe that D would consent)
Informal Dealings: RULE: Informal dealings are less likely to shift the risk to the D (to be evidence of tacit consent).
Drews Co v Ledwith-Wolfe Assoc F: Breach of const. K and owner intended to convert building into a restaurant. A: Failed to prove lost profits by reasonable certainty - based on a sheet of paper reflecting the gross profits the restaurant made in the first 11 mo. Too speculative.
Grayson v Irvmar Reality Corp F: Opera singer injured damaging hearing. a) No remedies under New Business Rule b) Holding - Not certain that P would have made more than $20k since she has not achieved any spectacular or extraordinary recognition for her talents by now
Albert v Monarch Fed Savings and Loan Assoc Surgery was found to be a reasonable step to mitigate bc P did not show that: 1) It posed a risk to health 2) Medical expenses would have been greater than injury itself
Norwalk Door Closer Co v Eagle Lock and Screw F: Eagle provided door closers to Norwalk under K with 100K liquidated damages. Eagle sold its assets to another corp and told Norwalk. The new company continued to provide door closers w/o any delay. C: no liquidated damages b/c no actual damage
When are punitive damages allowed? RULE: A court will award punitive damages when the D’s conduct is malicious, willful, wanton or in reckless disregard of the pls rights or interests. NOT recoverable for mere negligence.
Factors for Punitive Damages - Seriousness of hazard - Who caused or concealed it - The duration of the improper behavior and its concealment - The financial condition of the manufacturer - The total punishment the manufacturer will probably receive from other sources
Wangen v Ford Motor Co Business decision to produce defective tank C: Ford had to pay for its outrageous behavior.
What is the limit to the amount of punitive damages a ct can award? RULE: Cannot violate due process. Look at: - The degree of reprehensibility of D’s conduct - The ratio between actual harm and pun damages - The difference between this remedy and the penalties in comparable cases or state law
BMW v. Gore Repainted car, actual damage $4K; punitive - $2M MUST NOT be “grossly excessive” – evaluated based on state’s interest in the law, factors: Found Grossly excessive.
PAST CONDUCT (Punitive Damages) Can’t punish D for out of state conduct that bares no relationship to the Plaintiff’s harm. Can use to show reprehensibility but not increase damage amount.
State Farm Mutual Auto Insurance v Campell F: Bad faith failure to pay insurance claim. A: Campells 2.6 M in comp. damages and 145M in punis. This was improper. Courts can use out of state conduct to show deliberateness/culpability but it must have a nexus to specific harm suffered.
Phillip Morris v Williams F: 821K in comp. dam. & 79.5M in Punis to widow of lifetime smoker. SC reversed. A: The DPC forbids a state to use a punis award to punish a Defendant for injury that it inflicts upon non-parties or those whom they directly represent.
Mathias v Accor Economy Lodging The ratio can be over single digit when the conduct is egregious and the actual harm award is small F: The Plaintiffs were bitten by bedbugs while staying at a motel. A: Here the ratio of 37/1 was okay.
When can punitive damages be awarded for breach of K? RULE: In most jx, the pl must show more than bad faith breach to recover pun damages. The D’s conduct must be an independent tort. CA RULE: For insurance K, can have punis for bad faith breach, where the D breached the covenant of gf and fd.
Egan v Mutual of Omaha Insurance Co (CA rule) Insurance denied the claim w/o proper investigation => award of $130K of actual and $5M in punis => grossly excessive. C: Mutual can have pun damages but here the award too big and the agents can’t have pun damages b/c they were not parties to the K.
Freeman and Mills v Belcher Oil D did not pay under the K; P argued bad faith in non-payment and requested punitive damages => not allowed for non-insurance. Insurance companies are different – more people rely on them and to greater extent.
Hussey v Lectromelt P paid $500K in full, but the product did not work at all times and the condition has been changed with D’s repairs. Amount that P overpaid could not be determined => no interest is awarded.
Anchorage Asphalt Paving Co v Lewis Litigation protracted during the period when inflation rates were really high => P would not be made whole by awarding him legal interest rate; additional amount was awarded – VERY unusual.
Farrar v Hobby Farrar operated a school. A child died b/c failed to admin proper medical. Asked for 17M. The jury found that D had violated the statute but were not proximate cause of the harm. Nominal damages of $1.00. No Atty Fees b/c not prevailing party.
When will a court issue an equitable remedy? - When there is not another area with more expertise, unless discrimination is involved - When there is an important right at stake - When the legal remedy (money award) is inadequate
When does a different place have better expertise to handle an issue? RULE: A court will not hear the case when there is another place w/ expertise unless discrimination is involved.
Georgia HS v Waddel Sports association better place to decide sports calls. Court did not order the replay of high school football game because of the bad referee call => no property right and not appropriate forum.
Blatt v USC F: Blatt was top 10% but did not make order of the coif b/c he was not on law review. In the absence of discrimination, USC Better forum to hear issue.
When is a legal remedy inadequate/when will an injunction be issued? - Property is unique and cannot be obtained on open market - Redress would take multiple lawsuits - D’s insolvency - Damages are so speculative and difficult to ascertain.
Gentry v Poitras D sold the home with water damages and promised to repair, but never did; injunction is not available because P could have hired another to repair and get money damages (legal remedy is adequate).
Tamarind Lithography Workshop v. Sanders Money damages too speculative. P produced film, but was not given credit; Ct could not determine legal remedy, so it gave equitable in form of requiring name to be shown.
Johnson v North American Life and Casualty Legal remedy illusory b/c of insolvency. Wife was beneficiary under life insurance policy pursuant to agreement, but husband changed it and then later died insolvent. Wife should get equitable relief.
What does the court consider when balancing equities and hardships? RULE: Courts will consider the relative ethical position of the parties and the relative hardships when deciding whether to issue an injunction. They can consider anything on BOTH SIDES that is relevant
Grayson-Robinson Stores v Iris Arbitration clause allowed arbitrator to award specific performance; Ct enforced such award; reasons: a) Parties agreed to it and it would ease burden on court; otherwise parties would need to litigate. b) Avoid discouraging from using arbitration.
Wroth and Another v Tyler Husband K-ed to sell property to P; Wife is co-owner and disagrees; P sues for enforcement – this would require husband to sue his wife. Injunction not granted, preserving marriage more important than P getting property. Human Rights > Property Rights.
Hyland v City of Eugene Big public benefit. Residents donated land to city on condition that no-one would be housed there; the city housed WWII veterans; residents sued for injunction, but it was denied because human rights >> property rights.
What are the defenses to a complaint for an equitable remedy? 1. Unclean hands 2. In Pari Delicto 3. Estoppel 4. Laches
How does unclean hands affect equitable remedies? RULE: Unclean hands will negatively affect the issuing of equity only if the questionable things done relates to transaction. Having unclean hands does not mean a party automatically loses, it is just harder.
Giants v Chargers Giant signed a college player (violation) and told him to keep quiet about K, so he can play college football; he later wanted to sign with SF and did; Giant asked for specific performance => no specific performance, Giants don’t have clean hands.
Republic Molding Corp v BW Photo Republic invented Polly Flex but misrepresented that they had filed patent. Republic sues BW Photo for infringement. Photo argues Republic has unclean hands. Unclean hands not available b/c no connection between right asserted and wrong act.
How is In Pari Delicto different than unclean hands? RULE: In pari delicto means if you caused something to happen, then you can’t sue someone b/c it happened. 1. Unclean hands is a defense and does not completely bar equitable claims 2. In pari delicto bars equitable claims.
General Car and Truck v Lane and Waterman F: A cl sued his law firm for malpractice arising out of advice to file a false affidavit in connection w. registering and renewing a service mark C: His claim was barred by in pari delicto because the cl knowingly participated in fraudulent affidavit.
When will a party be estopped?  The other party misrepresented or concealed material facts  The party claiming estoppel was unaware of the concealment or misrep  The party claiming estoppel reasonably relied  The party claiming estoppel may be prejudiced b/c of such reliance
Parks v Kownacki No misrep or concealing of material fact. F: Trimble was raped by her priest, Kownakci and was coerced into being his mistress at age 15. C: No estoppel
How long does estoppel from asserting SOL last? RULE: After learning about the misrepresentation, the party needs to quickly move to file the lawsuit. There is not an infinite extension.
How does the defense of laches work? RULE: Unreasonable delay in pursuing a claim in equity which prejudices the adversary constitutes a bar to recovery although the SOL has not run on the claim unless the delay was excusable.
When can a party get an injunction? RULE: Temporary restraining orders and preliminary injunctions can be provisional procedural remedies. A What are provisional remedies?
Vuitton et Fils SA v Carousel Handbags Must have actual notice to be held in contempt otherwise case will be dismissed. Here Solomon had actual notice b/c he signed the consent decree on behalf of Carousel. However, the evidence does not show whether Joseph or Maurice had such notice.
Does an injunction bind successors? RULE: An injunction will bind a successor only if the successor has actual notice of the injunction. The pl cannot rely on the injunction saying that it binds successors.
Kloster Speedsteel ab v Crucible Inc Crucible won patent infringement case against Stora and got an injunction. Stora formed a subsidiary, Kloster & Kloster bought the facility. Kloster asked TC to modify the injunction by excluding Kloster from the injunction. TC refused. Proper.
When can restitution as a free standing remedy used? 1. There is no K/tort relationship between the pl and D 2. The Pl is not a volunteer 3. Pl conferred a benefit upon the D. 4. The D was unjustly enriched (benefited) by the pls service
Kossian v American National Insurance Asked for service -> not volunteer. P was hired by the old hotel owner to clean fire damage, then the owner went bankrupt and the new owner got money from insurance for the fire; P never got paid => judgment for P based on unjust enrichment.
Bailey v West Not asked to do service by owner ->volunteer. D shipped horse back to seller; seller refused to accept and shipping company dropped horse to P; P sends bill to D, D refuses to pay => judgment for D. No request => no compensation.
When is a D unjustly enriched? RULE: For D to be unjustly enriched the acceptance of benefits must be voluntary. RULE: A person who incidental to the performance of his own duty, has conferred a benefit upon another is not entitled to restitution.
Felton v Finley (atty not asked for services) Will contest and only 2 parties out of 4 agreed to hire an attorney, while all benefited => the other two don’t have to pay because they did not agree.
Greenspan v Slate Girl injured leg and parents did nothing; a friend took her to doctor, who identified fracture and put her into cast; parents refused to pay => parents are responsible, they have duty to care for the child (§113 applies and all factors are met)
How can the pl get the value of the enrichment? 1. Quantum Meruit 2. Equity based remedies: a. Constructive trust. b. Equitable lien: creates a lien on property that can be foreclosed to pay the amt owed to pl. c. Subrogation.
What is Quantum Meruit? Quantum Meruit is the reasonable value of the services rendered provided they were of direct benefit to the D. No K needed.
Maglica v Maglica If no K can only get reasonable value of services. Business is divided during divorce; W wants increased value of business; H wants to give only value of services (hourly rate) => W gets only value of her service.
When will the court impose a constructive trust? RULE: A constructive trust will be imposed when there was a wrongful act that resulting in the transfer of property which lead to the unjust enrichment of another.
If there are two innocent parties affected by the transfer, who prevails? RULE: Between 2 innocent parties who receive a gratuitous property transfer, the first in time prevails (gets the constructive trust) unless the 2nd party is a BFP. 1. Marriage can make a BFP if the marriage is a condition for getting the property.
Hirsch v Travelers Insurance Co J names his first wife as beneficiary of the will and she gave some consideration to be placed in trust; then J names his second wife as beneficiary => First in time prevails, no showing the D was BOFPFV.
Will a constructive trust be imposed when one person has an equity interest in property transferred to another? RULE: A person who has equity in an asset is entitled to a constructive trust if the subsequent title holder even if that person had no knowledge of the predecessors interest unless the second holder is a BFP.
Will the court impose an equitable lien when a D steals from Vs money? RULE: The remedies for the victim of theft go beyond the remedy of an equitable lien; instead they can reach beyond recoupment of the funds + interest and instead can get any increment in value that has resulted from the use of those funds.
Baxter House Inc v Rosen Victims get 1/7th of policy b/c their stolen funds paid 1/7th of the premiums.
Hallett Rule Presumption that all w/drawals were of the wrongdoers own funds until those funds were exhausted. Pl would be entitled to a constructive trust or equitable lien on whatever was left in the commingled fund.
Oatway Rule Pl could have the option of using the rule of Halletts Estate or tracing his interest to any identifiable res acquired w/ money from the commingled fund.
Restoration D’s money used to restore any of P’s money taken from account. Lowest Intermediate Balance Rule
When there is damage to property, what can the pl recover? COST TO REPAIR RULE: The D should pay the cost to repair the damage UNLESS the cost to repair is more than the actual value of the property before the injury. DIMUNITION IN VALUE: The D should pay the amount that the property decreased in the value.
Hewlett v Barge Bertie Owner didn’t care about looks of the barge. Another boat slammed into barge and impact the look of the barge only. C: D must pay the cost of repair.
FREEPORT METHOD 1. The D pays the cost to repair the property to its original state 2. The pl pays for the added value/years 3. No one pays for the time already used.
STRAIGHT LINE DEPRECIATION METHOD 1. D pays the cost to fix the property to restore it to new. 2. The Pl needs to pay for the use of the property for the prior years 3. No one pays for the added value.
Can a pl recover the special value of property that is damaged by the D? RULE: A pl can recover the reasonable special value of property over and above the market value of the goods.
Bond v Belo Newspaper lost P’s photos and docs while attempting to publish an article about her => Ct recognized the sentimental value.
When has there been fraud? 1. D makes a material misrepresentation (dealbreaker) AND 2. The other party justifiably relied on the statement to their detriment 2. In some states, liability for innocent or negligent statement; most states require recklessness or higher.
SI1: When is a misrepresentation material? RULE: A misrepresentation is material when it is a deal breaker (likely to induce a RP to manifest his assent or if the person making the misrepresentation knows that it would be likely to induce the listener to act/not act.
Earl v Saks Boyfriend tries to buy a fur coat but refuses to pay more than $4K; his girlfriend secretly gives $1K to the store and ask to pretend that the coat is now only $4K => Boyfriend tries to rescind both purchase and gift. Court held voidable.
When has there been justifiable reliance? 1. First there must be actual reliance to induce action or inaction. 2. Then the reliance must also be justifiable. 3. Some jx say the more guilty the speaker, the less justifiable reliance needs to be.
What are the remedies for a Pl who has been the victim of fraud or misrepresentation? 1. Rescind the K and seek restitution (Money back plus incidental expenses). 2. Affirm the transaction and sue for K damages When can a party rescind a K due to fraud?
If a party cannot rescind a K, what damages are they entitled if they prove there was a misrepresentation? BENEFIT OF THE BARGAIN OUT OF POCKET LOSS COST TO REPAIR GRADUATED LIABILITY RULE: Intentional misrep -> Benefit of bargain + consequential damages; Negligent misrep -> Loss + consequential damages; Innocent misrep -> no consequential damages.
MIND OF LISTENER RULE Some jx focus on the mind of the listener and apportion damages based on whether the reliance was justifiable and the misrep was material. In these jx, it is irrelevant what is in the mind of the speaker.
Selman v Shirley Intentional misrepresentation. D sold lend for $2K and stated that it had 4K cords of firewood (if it was truth, then the market price is $3.9K) => Ct said that P should have assets worth what was presented awarding $1.9K
When has there been mistake in performance? RULE: A party has made a mistake in performance when: 1. A party performs what he mistakenly believes to be some obligation, often the payment of money, to another. 2. Discovers the mistake 3. Seeks restitution
What happens when it is an insurance company that overpays? RULE 1: An insurance co can get restitution when: (a) An insurance co made a payment (b) due to a mistake of fact that the terms of the insurance K required such payment.
ASSUMPTION OF RISK An insurance co makes a mistake regarding a material fact but recognizes the possibility of the facts nonexistence and knows there’s uncertainty whether the money is due. It is assumed the payment was made to avoid difficulty from non payment.
EQUITY AND GOOD CONSCIOUS: Can get restitution when: 1. Payment made upon a mistake of fact 2. The money belongs in equity and good conscience to the ins. co.
DOBBS VIEW If the party that got the money and has not yet relied on that money then they should give it back to the insurance co. If they have relied, then they don’t need to give the money back.
What are the three types of mistakes? 1. Mistake in performance 2. Mistake of fact in the formation of a K 3. Mistake in integration
For what types of mistakes can there be rescission? RULE: Money paid under mistake of fact can be recovered but not if the other side has relied on payment. There can be no recovery for money paid based on a MOL. RESTATMENT 3rd: No longer distinguishes between MOL and MOF.
Admiral Insurance Co v American National Savings Bank Insurance paid for claim thinking that property was residential and thus covered in the policy; the property was commercial and insurance wants money back; here, mistake of facts => money back.
When is there mistake in the formation of a K? RULE: One party is mistaken about some fact that constitutes a basic assumption on which the parties make a K.
When can a K be rescinded due to a mistake? 1. Allocation of Risk rule 2. Identity/Value Rule 3. K says rule What is the allocation of risk rule?
What is the identity/value rule? IDENTY/VALUE RULE: A person can rescind due to a mutual mistake concerning the identity of an item but not due to a mistake concerning the value of the item unless there is a misrepresentation.
Sherwood v Walker Parties thought that cow was sterile but was in fact pregnant. Pl sold cow for 80 cow was worth 750-1000. Here the mistake went to the identity. A cow that is not sterile is worth 750 at least and barren only 80. K rescinded.
What is the K says rule? RULE: IF the K allocates fault (ex: Buyer takes property as is) there will be no rescission unless the K induced by fraud.
When is there a mistake in the integration? 1. Parties enter into an agreement and reduce to writing; 2. The writing does not accurately reflect the agreement but one or both parties think it does.
Buyer’s Available Remedies for Sale of Land if seller backs out 1. Specific performance will be ordered when the land is unique/location unique 2. If the land is not unique, the buyer will get money damages (difference in price and incidental costs).
Seller’s Available Remedies for Sale of Land if Buyer backs out 1. Money damages if they are ascertainable and adequate. (Difference between K w/ seller and resale and consequential damages). 2. If not, specific performance (rare).
Is specific performance given when a construction K is breached? Specific performance is rarely given b/c: 1. The contractor might not do a good job 2. Difficult to supervise 3. Legal remedies are adequate
What Does Contractor Recover for Breach by Owner? 1. Contractor recovers cost incurred plus the anticipated profit minus any payment received. 2. Contractor recovers the reasonable value of his work. 3. Contractor recovers a percentage of the K price based on the amount spent and would have spent.
What are the owner’s remedies, if the contractor repudiates the K before completion? RULE: If contractor leaves job before completion or his work is defective, the owner can get the cost of completion. 1. Owner hires another contractor 2. Contractor pays cost to complete over unpaid K price.
What will the court do if the cost to complete/repair is disproportionate to the diminution in value? MAJORITY RULE: When the diminution in value is grossly disproportionate to cost of performance, the damages are limited to diminution in value. DISSENT RULE: There is no limit on recovery, the person who breaches should either fully perform or pay.
Peevyhouse v. Garland Coal Co K-or left a pile of dirt that reduces property value by $300; to remove it - $29K (similar in the concept to barge case). Court held only diminution but dissent and Tunick think bad faith and should pay everything.
What happens when an Employee is wrongfully discharged? RULE: The amt of salary agreed upon minus the amt which the ER affirmatively proves the EE has earned (no matter what type of work was performed) or with reasonable effort might have earned from substitute employment (duty to mitigate).
What is substitute employment (Majority Rule)? The ER must show that the other employment was comparable, or substantially similar to that of which the EE has been deprived. (superficial test -> just list differences). The employment must be 75% similar to the lost employment (pretty high).
What is substitute employment (Dissent Rule)? The EE must show that he acted reasonably in rejecting the offer. 1. Objective: Do people in the business think EE acted reasonably? 2. Subjective: Does the EE think he acted reasonably? 3. If there is a split, dissent doesn’t say which weighs more.
Parker v 20th C Fox Film Corp Actress had a role in musical (in LA) which was cancelled & was offered a role in a western (shot in Australia, no dancing, and no production control) which she declined. Majority - requires to mitigate and take substantially similar => NOT here.
International Union v Bagwell In this injunction the TC imposed fines w/o regard to the mandatory nature of the violation. The fines are fixed, determinate, retrospective criminal fines which pl had no opp to purge once imposed. C: Fines are criminal and get a jury trial.
When is enrichment unjust? Not unjust when P acts as a volunteer. P is not a volunteer when he doesn’t act gratuitously AND 1) D has opp. to decline and doesn’t OR 2) Reasonable excuse for not giving D opp OR 3) D requested the performance OR 4) After D knew D promised to pay.
What must a party prove to get reformation? Clear & convincing evidence that 1. The parties reached prior agrmnt 2. They intended the prior agrmnt to be included in the written K 3. The K materially differs from prior agrmnt 4. Not the result of gross negligence by party seeking reformation.
Created by: dmil8586