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MS 331 Ch12

Business Law: Ch 12 Contracts: Breach and Remedies

What are the four broad categories of damages? Compensatory, Consequential, Punitive, and Nominal
Describe Compensatory damages: Compensates nonbreaching party for loss of the bargain.
What is the standard measure of compensatory damages? difference between contract and market price
Describe Consequential damages: foreseeable losses - Breaching party is aware or should be aware, cause the injury party additional loss.
Describe Punitive Damages deter wrongdoer, set example
Describe Nominal Damages No actual damage occurs, usually $1, for a technical injury
Explain 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.
Define Liquidated Damages specific amount agreed to be paid as damages in the event of future breach. (In a clause in contract)
Define penalties designed to penalize, generally unenforceable
What are two questions court asks if a clause is enforceable? 1.When the contract was entered into, was it apparent damages would be difficult to estimate in the event of a breach? 2.Was the amount set as damages a reasonable estimate and not excessive?
Sometimes damages are inadequate remedy; courts can create ___________ equitable remedies
What are the four equitable remedies? Rescission, Restitution, Specific Performance, and Reformation
Describe Rescission Remedy whereby a contract is canceled and the parties are restored to the original positions that they occupied prior to the transactions
Describe Restitution both parties must return goods, property, or money previously conveyed.
Describe Specific Performance calling for the performance of the act promised in the contract.
Describe 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.
In what scenario is the equitable remedy reformation most likely used? fraud or mutual mistake
Describe Quasi Contract No actual contract exists, court will create one in the interests of fairness and justice (usually granted in good faith)
[Recovery based on Quasi Contract] To recover, party seeking recovery must show 1.Party conferred benefit on other party. 2.Party conferred the benefit with reasonable expectation of payment
Created by: savelae