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Unformatted text preview: Contracts II: Final Outline Part 1 Professor Paul Verkuil Expectation interest (at common law and ucc) Value of the performance to the party, based on the purpose of the contract as gleaned from its wording and the circumstances surrounding the contracts formation. Contracts are interpreted objectively, so partys expectations must be in accordance with what a reasonable person in her position would have expected as the benefit of the transaction, given the language used by the parties to express their agreement and the circumstances surrounding it. o UCC 1-106(1) declares that UCC remedies shall be liberally administered to the end that the aggrieved party may be put in as god a position as if the other party had fully performed Law prefers money equivalent of expectation rather than specific performance because of practicality and policy and also the traditional dichotomy between law and equity. Aim of expectation damages is to simulate as closely as possible the plaintiffs economic situation in the absence of breach. Must compare what the plaintiff had a right to expect and what she actually got R2K 347: o Damages = Plaintiffs loss in value caused by ds non performance (deduct the contractual value of what the P received from what she was promised) + any other loss (includes consequential and incidental) - any cost or loss the P avoided by not having to perform o There are many different situations based on the facts and you have to tailor calculations accordingly: (a) Cases involving substitute made by the P: damages are based on the loss incurred as a result of having to make the substitute K 1. UCC 2-712 buyers damages are the difference between the cover price and the contract price (cover being the cost of repurchase of replacement) 2. UCC 2-706 when it's the buyer who breaches and screws over the seller, the seller who reasonable resells the goods to another buyer at a lower price gets the difference between the contract price and the lower resale price (b) Cases in which the P could have made a substitute transaction but did not do so or failed to do so reasonable: damages are measured by a comparison between the K price and the market value of a substitute. 1. Under UCC and Common law, if the aggrieved party did not enter into sub K, she is entitled to sue for loss based on a hypothetical substitute valued at the market rate. o UCC 2-713 allows the buyer the market-K difference as damages and 2-708 provides that k-market damages for the seller. o When market price is sued as basis of determining damages, it must be decided at which place and time the value must be determined....
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