Class 4 (Contract and Torts)

Class 4 (Contract and Torts) - BUS 320 (BUSINESS LAW)...

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BUS 320 (BUSINESS LAW) Jordan Breslow Fall 2010 Class 4 TOPICS FOR THIS CLASS Contracts Part 3 Breach of Contract What is it? What are the consequences (remedies)? What does the UCC say about remedies for breach (sale of goods)? Can liability be limited? Torts Negligence Misrepresentation Strict Liability (Product Liability) CONTRACTS: PERFORMANCE AND BREACH Performance: completing the contract requirements as specified; or tendering performance (e.g., unconditional offering to pay) Non-performance, if not excused = breach Example: bilateral contract, promise to pay in exchange for a promise to sell a car. Buyer shows up with cash and offers to pay. Seller refuses. Example: unilateral contract, promise to be accepted by an act. Mow my lawn and I’ll pay you $100. You mow the lawn and I don’t pay You don’t mow the lawn. Breach? 1
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Minor breach: Example: MUZE.COM hires Melissa to write a program that sorts music based on tempo. She is supposed to deliver it by June 1. Melissa delivers the program on June 2. Example: MUZE.COM hires an advertising agency to place TV ads in major markets throughout the U.S. MUZE pays $1M. The agency places ads in 29 cities, but forgets Cleveland. Material breach: Example: MUZE.COM makes a deal with Google so that any time someone enters the search term “sort music,” Muze comes up on the top of responses. Google programs it incorrectly, and our competitor’s name comes up every time instead of ours. Remedies for breach may depend on whether the breach is minor or material Minor breach: damages Material breach: Damages Specific performance Rescission The Purpose of Contract Damages Usually, put the injured party into the same financial position he would have been in had the contract been properly performed (the “benefit of the bargain”) Not awarded as a punishment; compensation to an injured party for loss Types of Damages: 1. Compensatory damages – give the non-breaching party the benefit of their bargain (sometimes called “expectation damages”) (Formula: lost profits plus incidental/consequential damages minus avoided expenses) 2. Consequential Damages (aka special): foreseeable damages that arise from circumstances outside the contract, if breaching party knew or had reason to know 3. Liquidated damages 4. Punitive damages 2
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5. Nominal damages Amount and “measure of damages” depends on the kind of contract Damages in Contracts for the Sale of Goods – UCC Article 2 Buyer Breaches – How? Non-payment Rejects goods even though they conform Repudiates A) Relevant UCC Provisions: § 2-703. Seller's Remedies in General. Where the buyer wrongfully rejects or revokes acceptance of goods or fails to make a payment due on or before delivery or repudiates with respect to a part or the whole, then with respect to any goods directly affected and, if the breach is of the whole contract (Section 2-612 ), then also with respect to the whole undelivered balance, the aggrieved seller may % (a) withhold delivery
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Class 4 (Contract and Torts) - BUS 320 (BUSINESS LAW)...

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