Chapter18 - Breach of Contract and Remedies So, you have...

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Breach of Contract and Remedies So, you have tendered performance and the other party won’t. Now what? What shall we ask the court to do for us? Knowing what to ask for is 90% of the battle. A court will only grant certain remedies under certain conditions. The remedy at law is normally money damages. If money will solve the problem, then money is what you will get. Equitable remedies include: 1. Rescission and Restitution 2. Specific Performance 3. Reformation Usually, a court will not award an equitable remedy unless the remedy at law is inadequate.
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Damages A breach of contract entitles the nonbreaching party to sue for money (damages). In the context of contract law, damages compensate the nonbreaching party for the loss of the bargain. Often, courts say that innocent parties are to be placed in the position they would have occupied had the contract been fully performed. Types of Damages 1. Compensatory (to cover direct losses and costs). 2. Consequential (to cover indirect and foreseeable losses). 3. Punitive (to punish and deter wrongdoing). 4. Nominal (to recognize wrongdoing when no monetary loss is shown).
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Compensatory Damages. These are damages that compensate the nonbreaching party for the loss of the bargain. The important sentence is next! These damages compensate the injured party only for damages actually sustained and proved to have arisen directly from the loss of the bargain caused by the breach of contract. They simply replace what was lost because of the wrong or damage. Propis contracts to write legal briefs exclusively for Giles during the month of March for $2,000. Giles cancels the contract and is in breach. Propis is able to find another job during the month of March but can earn only $1,000. He can sue Giles for breach and recover $1,000 as compensatory damages ($1,000 being the difference in the amount contracted for and the amount actually earned). Propis can also recover from Giles the amount that he spent to find the other job. Expenses that are caused directly by a breach of contract--such as those incurred to obtain performance from another source-- are known as incidental damages . The measurement of compensatory damages varies by type of contract. Certain types of
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contracts deserve special mention. They are contracts for the sale of goods, land contracts, and construction contracts. Sale of Goods. In a contract for the sale of goods, the usual measure of compensatory damages is an amount equal to the difference between the contract price and the market price . For example, suppose that Chrysler Corporation contracts to buy ten model UTS 400 network servers from an XEXO Corporation dealer for $8,000 each. The dealer, however, fails to deliver the ten servers to Chrysler. The market price of the servers at the time the buyer learns of the breach is $8,150. Chrysler's measure of damages is therefore $1,500 (10 x $150) plus any incidental damages (expenses) caused by the breach. In a situation in which the buyer breaches and the seller has not yet produced the
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Chapter18 - Breach of Contract and Remedies So, you have...

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