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Contracts Outline

Contracts Outline - Contracts Outline I DAMAGES A Three...

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Contracts Outline I. DAMAGES A. Three Principles of Contract Law 1. The law is concerned mainly with relief of promises rather than punishment of promisors to compel performance. a) Economics of breach : it may sometimes be in society’s interest that the contract be broken and the resources allocated. Preventing the breach might impair the efficient allocation of resources . Prescriptive vs. descriptive use of law and economics. 2. The relief granted to the aggrieved party should protect the party’s expectation by putting that party in the position in which it would have been had the contract not been breached. a) UCC §2-712 - Covering for breach of contract is making in good faith and without reasonable delay any reasonable purchase of or contract to purchase like goods in substitution for those due from the seller. i. Cover damages are the difference between the contract and cover price. ii. Cover awards are not discretionary. iii. If the aggrieved party does not cover , the plaintiff gets the difference between the market price at the time the plaintiff learned of the breach and the contract price. a. Buyer is not required to cover LAREDO HIDES: When the defendant breached, the plaintiff was forced to buy hides on the open market for much more than the contract price. The defendant was charged to pay the plaintiff the difference between the contract and cover price as well as additional expenses and transportation costs. 3. The appropriate form of relief is substitutional, awarding money damages rather than ordering the promisor to perform its promise.
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B. Expectation Damages (§2-713): puts the plaintiff in the position he would have been had the contract been performed; damages for a result that did not occur because the party who breached failed to provide a good or service. (plaintiff goes forward in time) 4. Consequential damages (§2-715(2)): compensation for business that you might have had if the contract had not been breached, losses that can be foreseen , not covered by cover damages a) Any loss from requirements or needs that seller (at the time of K formation) should have known could not have been prevented by cover or otherwise. b) Any injury to person or property proximately resulting from the breach of K. c) Foreseeable damages only. 5. Incidental damages (§2-715(1)): damages resulting from the action required after a breach (transportations, costs in looking for a new seller, etc.), expenses incident to the breach a) Plaintiff will get any reasonable cost associated with getting cover such as inspection, receipt, transportation, care and custody of the rejected goods, and any commercially reasonable charges, expenses and commissions in connection with covering b) These would include transportation costs, phone calls, all the extra stuff done to cover for a breached K. 6.
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Contracts Outline - Contracts Outline I DAMAGES A Three...

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