April 9 Notes - April 9 2008 Notes Types of monetary...

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April 9, 2008 Notes Types of monetary damages -A breach of contract entitles the non-breaching party to sure for money damages including: Compensatory Damages - Damages that compensate the non-breaching party for the injury or losses substantiated. Incidental damages - Expenses or costs that are caused by the breach of contract, such as the costs incurred in obtaining performance from another source. Consequential damages - Damages resulting indirectly from the breach, which were reasonably foreseeable to breaching party at the time the breach occurred. Punitive Damages - Damages designed to punish a wrongdoer and to deter similar conduct in the future. Such damages are generally not recoverable in breach of contract actions, unless the breaching party’s actions give rise to a separate tort claim. Nominal Damages - Damages awarded to the non- breaching party when only a “technical” injury occurred resulting in no actual damages. Compensatory Damages -Although there are special formula for certain types of contractis, compensatory damages are generally calculated as follows: -The value of the performance as promised -The value of the performance actually rendered. -The value of any loss avoided, or mitigated, by the non breaching party Equals compensatory damages. “Market Value” Damages - In cases involving contracts for the sale of goods, or in most states, land, compensatory damages generally equal the difference between the contract price of the goods or land and the fair market price at the time the goods or title to the land was to be delivered. Mitigation, Liquidation Damages, and Penalties
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-Mitigation of Damages - In most situations, the non-breaching party has a duty to take whatever action is reasonable to minimize the damages caused by the breach. -For example, in most instances, people who are fired by their employer, regardless of the reason, must try to find a new job. Likewise, a thwarted house buyer must take reasonable steps to locate another house. Liquidated Damages - Contracts often contain provisions requiring the breaching party to pay a sum certain of money if he fails to perform as required. These provisions are enforceable as long as, when the parties formed the contract, 1) Damages from a party’s breach were difficult to estimate and 2) The amount of liquidated damages was a reasonable estimate of the value of the promised performance. Penalty-
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April 9 Notes - April 9 2008 Notes Types of monetary...

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