PS6 - house in the same neighborhood for $375,000. The new...

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Legal Studies 145 - Law and Economics I P ROBLEM S ET #6 Ms. A. Professor planned to move to Berkeley, California and in preparation for such a move, signed a sales agreement on January 15, 2001 to purchase a house in the city of Berkeley for $ 350,000. A deposit of $ 35,000 was paid to the seller, Mr. D.S. Honest on the date of execution of the contract with title to transfer on July 1, 2001. During the spring of 2001, Ms. Professor spent $15,000 in preparation for her move, $5,000 of which was spent on projects that were specific to the Honest House and could not be utilized were another house purchased. (e.g., she bought fancy stationery with her new address). On July 1, 2001, Ms. Professor tendered the $315,000 balance on the purchase price, but Mr. Honest refused to transfer title to Professor. Instead he sold the house to Mr. Dealer at a price of $400,000. On September 1, 2001 Ms. Professor purchased a similar
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Unformatted text preview: house in the same neighborhood for $375,000. The new house, like the Honest house, needed $5,000 in house-specific investments to be liveable. Ms. Professor has now sued Mr. Honest for breach of contract. 1. Determine the damages owed to Professor under each of the three theories of damages. Explain your analysis. a. Expectation damages; b. Reliance damages; and c. Restitution damages. Why are these determinations more difficult than if the good in question was a car or another good for which there are almost identical substitutes? 2. Suppose that Ms. Professor were entitled to specific performance. What outcome would we expect under that remedy? How does it differ from the outcome under expectation damages? Does your answer depend on Professor's subjective valuation? On Dealer's? 3. What is the "efficient" outcome in this case (and similar cases)? Which remedy will induce the efficient outcome?...
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This homework help was uploaded on 04/16/2008 for the course LEGALST 145 taught by Professor Rubenfield during the Spring '08 term at University of California, Berkeley.

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