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Business Law Chapter 18

Business Law Chapter 18 - Business Law Chapter 18 Remedies...

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Business Law Chapter 18 Remedies Breaching the Contract - Someone breaches a contract when he fails to perform a duty without a valid excuse. - A remedy is a method a court uses to compensate an injured party - An order forcing someone to do something, or refrain from doing something is an Injunction o Courts frequently grant them to employers, blocking employees from leaving to work elsewhere. o Courts will NEVER force 2 antagonistic parties to work together, they will just stop one from doing something else then the original duty they were supposed to do. - Courts award expectation damages – the money required to put one party in the position they would have been in had the other side performed the contract. - In cases involving rare property ie: Ferrari Testarossa, courts award specific performance – forces both parties to complete the deal - If a party is INSISTING on a remedy – a very LIMITED one – they rely on a liquidated damages clause – a provision in the contract that declares in advance what one party will receive if the other side breaches o Courts will enforce these clauses sometimes, but not always – if they are too harsh, then they will not be enforceable Identifying the Interest to be Protected - First step in finding a remedy for a party that breached is identifying the other party’s interest – a legal right to something. - There are 4 principal contract interests that a court may seek to protect o Expectation interest – what the injured party reasonably thought they would get from contract. Goal is to put party in same position as they would have been in if both parties fully preformed their obligations
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o Reliance interest – injured party may be unable to demonstrate expectation damages – so that party may have to show what they EXPENDED in reliance of the agreement and that in fairness they should receive compensation to their expenses o Restitution interest – injured party may be unable to show expectation or reliance interest, so they must prove to court what benefit they have given the other party, and the goal is to give the benefit back to the party that provided it o Equitable interest – in some cases money damages will not suffice to help injured party, something more is needed such as transfer of property to injured party or an order forcing one party to stop doing something (injunction) Expectation Interest - The expectation interest is designed to put injured party in position they would have been in had both sides fully performed their obligations. o Court will give money to party they would have made if the contract had been carried out by both parties fulfilling their obligations o Takes into account all gains and losses incurred – injured party should not end up better off than they would have been if they carried out contract, nor should they suffer serious loss.
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Business Law Chapter 18 - Business Law Chapter 18 Remedies...

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