Business Law: Ch 12 Contracts: Breach and Remedies
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| What are the four broad categories of damages? | Compensatory, Consequential, Punitive, and Nominal
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| Describe Compensatory damages: | Compensates nonbreaching party for loss of the bargain.
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| What is the standard measure of compensatory damages? | difference between contract and market price
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| Describe Consequential damages: | foreseeable losses - Breaching party is aware or should be aware, cause the injury party additional loss.
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| Describe Punitive Damages | deter wrongdoer, set example
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| Describe Nominal Damages | No actual damage occurs, usually $1, for a technical injury
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| 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.
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| Define Liquidated Damages | specific amount agreed to be paid as damages in the event of future breach. (In a clause in contract)
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| Define penalties | designed to penalize, generally unenforceable
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| 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?
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| Sometimes damages are inadequate remedy; courts can create ___________ | equitable remedies
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| What are the four equitable remedies? | Rescission, Restitution, Specific Performance, and Reformation
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| Describe Rescission | Remedy whereby a contract is canceled and the parties are restored to the original positions that they occupied prior to the transactions
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| Describe Restitution | both parties must return goods, property, or money previously conveyed.
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| Describe Specific Performance | calling for the performance of the act promised in the contract.
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| 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.
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| In what scenario is the equitable remedy reformation most likely used? | fraud or mutual mistake
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| Describe Quasi Contract | No actual contract exists, court will create one in the interests of fairness and justice (usually granted in good faith)
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| [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
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